”2 Fund managers pay attention to your leadership style. If you are a hard task master, you tend to put people off . During a team building workshop, a manager blindfolded an employee and then helped the person navigate an obstacle course to the other side of the room. Th e manager would ring a bell whenever the blindfolded person began moving in the correct direction. By the end of the course, the person would respond quickly, almost running. Th e exercise was then repeated with one diff erence. Th is time the manager was given a small, rubber hammer to tap the blindfolded person gently whenever he went in the wrong direction. It is extraordinary how much the whole journey slows down-the employee, not wanting to receive that tiny tap, froze in his movements. Make your staff successful and use incentives such as a simple verbal thank you at the weekly meeting, dinner coupons, or tickets to the hockey game. Or you can become more structured with cash bonuses and opportunities to earn stock. Sales teams may be more motivated if you set up objectives for sales where they can earn points and at the end of a quarter, receive a bonus. The Importance of Feedback and Pay What gets measured and rewarded gets done. Th is seems simple, yet a fund manager shares a story of how he judged an investment in a store franchise. 2 Scenes from a Private Equity Roundtable, Knowledge@Wharton, 22 February, 2007, posted 11:38 A.M. ET. 136 CHAPTER 7 He recalled visiting a problem retailer in his portfolio. “I went into the store and was initially impressed as the staff had cleaned up the shelves since my previous visit. I asked the fi rst staff person I saw about the cleaner shelves.” She replied, “Th e order came down for us to do that.” Th e fund manager asked, “What was the incentive to do your job well?” She said, “I don’t know. I have no idea what my priorities should be or whether I am doing the right thing.” Th is young woman did not know if her focus should be on cleanliness, on customer service or on keeping the shelves stocked. It did not matter if she kept the shelves clean or dirty because either way her pay appeared like manna from Heaven. Did it change her performance? No. Th e beauty of private equity is how it ties pay to the performance of the senior team. Everyone’s got “skin in the game,” from top managers to the private equity partners. It’s serious stuff . Since private equity gives cash without claiming assets if the whole thing blows up, they are psychologically invested to ensure that they give you their best. Public company pay is supposed to be tied to performance but there is less incentive to make that link. Dunkin’ Donuts’ CEO, Jon Luther, partnered with Bain Capital, Carlyle, and Th omas Lee Partners. Luther says, “I insisted that the offi cers invest personally. Management has a substantial amount of personal money in this venture. It makes a huge diff erence to the 40 offi cers of the company when they show up for work.