Robert Kiyosaki teaching the cash flow quadrant philosophy

Three Contrasts Between the Entrepreneur and Employee Mindset

When it comes to employee vs. employer mindset, the differences couldn’t be starker

You often hear people say that rich people are greedy. To that I say, what kind of rich people do you mean?

The entrepreneur mindset and generosity

Most of the entrepreneurs I know are also some of the most generous people I know. Not only do they give a lot of their time and money away, but they’ve also built great businesses and products that enrich the lives of people around them. Some of them even go well above and beyond what’s required, such as the CEO in Seattle who cut his own pay to give his employees all $70,000 a year.

His generosity is making a real difference in the lives of his employees: “The number of children that employees were having increased from zero to one per year to six to seven per year, while more than 10 percent of its workers purchasing a house for the first time, according to the company. More than 70 percent of employees inundated with debt have been able to pay some of it down and personal individual 401(k) contributions have also more than doubled, the company added.”

The high-paid employee mindset and greediness

On the other hand, there is another kind of “rich” person—the high-paid employee. While they may be charitable in their personal life, the high-paid employee can often be very greedy when it comes to the workplace. They will always want more, even when the business is not doing well.

A great example of this was the news about Roger Goodell, the Commissioner of the NFL, wanting a raise in 2017. At the time, Goodell was negotiating a contract extension with the NFL, and he asked for a reported $49.5 million a year, lifetime use of a private jet, and lifetime health insurance for his family. He had made about $30 million.

The contract negotiation had one anonymous NFL owner saying, “…Several owners in this league who don’t make $40 million a year. That number for Roger just seems too much. It’s offensive. It’s unseemly.”

For those who may not be familiar, until recently, the NFL was a non-profit organization with tax-exempt status. And Roger Goodell is a life-long employee for the organization; having worked his way up from intern to what many people feel is the most-powerful man in sports.

High-paid employee mindset: “I deserve a raise! (no matter what)”

At the time Goodell was negotiating his massive raise, the league was struggling. Ratings were down. As Michael McCarthy reported:

The league’s average TV audience through Week 5 of the 2017 season dropped 7 percent vs. the same period of the 2016 season, according to Nielsen data obtained by Sporting News. Worse for the league, the average game audiences are down 18 percent compared to the first five weeks of the 2015 season.

The NFL’s average TV audience (including Sunday afternoon, Sunday night, Monday night and Thursday night games) slid to 15.156 million viewers through Week 5 of the 2017 season. That’s down 7.42 percent from an average of 16.371 million viewers through the same period of the 2016 season, and 18 percent down from the average of 18.438 million viewers through the first five weeks of the 2015 season.

Additionally, the protests of the national anthem, a host of other scandals, and continued concerns about player head injuries were all dragging the league down.

Call me crazy, but that seems like an odd time to ask for a 20-million-dollar raise (In the end, he got $40 million—only a 10 million dollar raise). Yet, that’s what Goodell did. That is greedy.

High-paid employee mindset: “Show me the money!”

In many ways, it seems the corporate world has gone mad, chasing after these greedy, high-paid employees for fear of what, exactly?

The trend is strong, high-paid employees like CEO’s keep getting raises, even when the businesses they run are not performing well. As Theo Francis and Vanessa Fuhrmans write for “The Wall Street Journal”:

Median compensation rose to $12.4 million for the bosses of S&P 500 companies last year, up 6.6% from 2017 and the highest since the 2008 recession, the Journal analysis found. Yet the median shareholder return for the companies was minus 5.8%, the worst showing since the financial crisis.

For 97 CEOs, last year’s pay was a high-water mark even while their shareholder returns were in the bottom half of the group. Among them: dialysis chain DaVita Inc., which doubled Kent Thiry’s pay to $32 million and recorded a negative 29% return, and Gap Inc., which paid Art Peck $20.8 million, the most of his four-year tenure, when it logged a negative 21% return.

All of this is a good reason to contrast three mindsets of employee versus employer.

Employer mindset: take ownership; employee mindset: take from ownership

One of the things I love about successful entrepreneurs is that they put their businesses first. If the business is struggling or not making money, they don’t make money and they are responsible for fixing it. They have to take ownership.

This is both at the high-income level and the struggling owner level. One friend I know often skipped his salary to pay his staff when he was first starting his company. He was making $6,000 a month at the time, when he got paid, and he had a young family to take care of and feed. Yet, he sacrificed his comfort for his employees. Today, he’s very successful.

Employees, on the other hand, don’t have to make the sacrifices that owners do in that regard. In fact, many of them, like Roger Goodell, want more money even when the business is struggling. If they don’t get their raise, they move on to another company.

Employer mindset: create stability; employee mindset: demand stability

Starting a business can be a rocky endeavor, with a lot of risk and instability. Yet, successful entrepreneurs are able to take chaos and make it into a thriving business that provides stability for many working families. In fact, often times the employees don’t know how many sacrifices an employer makes in order to keep them employed and feeling stable.

Employees greatly fear instability and demand stability from their employers. One of the reasons employees want more and more from entrepreneurs, even when the business isn’t doing well, is because they think money provides stability. Unfortunately, it doesn’t, as many riches to rags stories can attest to.

The reality is that being an employee is highly risky. You have no control and you pay the highest in taxes. And if business gets bad enough, you’re the first to be laid off—especially if you’re asking for more money at the time.

Employer mindset: look at results; employee mindset: look at tenure

When things go wrong, a successful entrepreneur is the first to raise her hand and admit it was her fault. And when it comes to rewarding talent, it is based on results not effort or tenure.

Conversely, employees think that effort or tenure should be rewarded. This is why someone like Goodell, who has spent his entire life working for the NFL, can feel comfortable asking for so much money.

At the end of the day, tenure and effort are worthless unless you have results. Employers understand this because if there are no results, they have to close the business. They can’t tell their investors they tried hard or lean on the fact they’ve been open for business for twenty years.

Which mindset do you want?

At the end of the day this is not a knock on employees. I have many people who work for me. They are wonderful people, but they think very differently than I do. That’s OK. It’s just not OK for me to think the way they do. I’m not wired that way.

Sometimes, people choose one path but change later. These become employees that operate like entrepreneurs in your organization. They are your most valuable employees—and usually the ones who leave pretty quickly, often to start their own thing—as happened to me recently. While it is no fun to lose a great employee, it is a lot of fun to see him become an entrepreneur. His mindset changed. In the process he brought more value to my organization, and later to his own life.

Each and every one of us must at some point decide what path we will follow—that of the entrepreneur or that of the employee. Which will you choose?

Original publish date: November 21, 2017