A business is only as good as the people behind it. As such, it is very important for business owners and leaders to learn how to bring out the best in their team. In today’s episode, Steve Farber brings out a guest who has the perfect formula for that! He interviews Chuck Runyon, the CEO of Self Esteem Brands and the co-founder of the world’s largest and fastest-growing fitness club, Anytime Fitness. Here, Chuck lets us in on his Anytime Fitness Formula that revolves around people, purpose, profits, and play. He takes us deep into the center of his leadership philosophy on ROEI (Return In Emotional Investment), where he shows just how love truly is damn good business. Follow this great conversation to learn more and get a sneak peek into Chuck’s book, Love Work.
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People, Purpose, Profits, Play: The Anytime Fitness Formula For Bringing Out The Best In Your Team With Chuck Runyon
This show is brought to you by the Extreme Leadership Institute. It’s a shocking coincidence, since I am that company’s Founder and CEO. I invite you to come check us out. Take a look at what we do at ExtremeLeadership.com. We are in the business of helping organizations to operationalize love, energy, audacity and proof, otherwise known as the Radical Leap method in the way they do business to extraordinary results. There are a couple of case studies on there too that I think you will enjoy. My guest is Chuck Runyon, the CEO and Cofounder of Self Esteem Brands. Chuck leads a global collection of franchises intent upon improving the health and wellness of millions of people worldwide. He’s a leading authority in the field of fitness. He revolutionized the industry when he and Dave Mortensen cofounded Anytime Fitness in 2002.
Did you know that Anytime Fitness is the world’s largest and fastest-growing fitness club? It serves four million members in nearly 40 countries. It’s the first franchise in history with locations on all seven continents. In addition to Anytime Fitness, Self Esteem Brands serves as the parent company to three other rapidly growing franchises: Waxing the City, The Bar Method and Basecamp Fitness. Central to Chuck’s leadership philosophy is the concept of ROEI, the Return On Emotional Investment. He’s the co-author of a book called Love Work: Inspire a High-Performing Work Culture at the Center of People, Purpose, Profits. Under Runyon’s leadership, Anytime Fitness has earned numerous industry accolades, including one of America’s most promising companies and the world’s number one franchise.
Anytime Fitness has been honored as a top franchise for minorities and the best place to work in Minnesota four years in a row. He and his partner, Dave Mortensen, also were named Entrepreneurs of The Year by the International Franchise Association. Chuck and I discovered that we have a lot in common when it comes to our leadership philosophies. I’m sure you will enjoy his clarity, his passion and his method for helping people to understand it’s all about people, purpose, profits and play.
What I like to dig into is your leadership philosophy and the kind of culture that you strive to create both corporately and throughout your franchisees, extending to the experience of your customers.
For me, it’s been a leadership learning curve because I think it’s rare for a founder, myself and my partner to still be involved with a company that has reached the size in terms of revenue and overall number of units. Prior to Anytime Fitness, we had some nice businesses. We had a marketing consulting firm in the fitness space and we own some health clubs. I would say they were a nice small to medium-sized businesses, but they never scaled because we fell victim to the trap of profits above all else. Seeing our employees almost as an expense. Meaning that if our payroll was 39%, we look at that and say, “How do we lower it? How do we get it under 36%?” We know that 3% would trickle down to like more profit.
We always fell into that trap. As we’re growing Anytime Fitness, it was me and two other partners who founded this many years ago. About 5, 6 years in, we’re starting to see this incredible growth but we’re falling into the same trap of profits first. Putting shareholder above stakeholder, meaning that my partner specifically at the time wanted to pocket most of the profits. I could see us falling victim to employees are expensive and do we want to invest what it takes for the long game to invest in the business to grow long-term? Realizing that we’re going to run into this again, I was coming to the leadership of epiphany that, “We’ve got to make massive investments in people and value them as people not as an expense.”
Are you talking specifically about your corporate employees or your franchisees or both?
Both. It started with the employees here. You’ve got to bring on great talent and invest in their whole self. To create a climate in our workplace that empowered them, that they could bring out their best with purpose and with those who play and giving them the resources and autonomy to grow the business. Give them the freedom to do that. If you hire smart people, give them that freedom to do it. The best player, the workplace perk they value the most is trust and autonomy. That started with our employees, but then it vibrated to our franchise owners, that same type of philosophy. The reason we bought out a partner back in 2009 was he valued shareholder over stakeholders. We said, “We’ve got to put stakeholders first, shareholders second.”
After we bought them out, we made a massive commitment to invest in the brand, to grow it for the long-term. To make sure that franchisees were profiting first. Make sure that our members at the time, when they’d walk in a store, they have whatever it took to help them get to a healthier place. We put those stakeholders first. It’s like being a great party host. Make sure everyone else eats, make sure everyone else is entertained. As a franchisor, we’ll get what they want in the long run. That’s how we formulated our four values of people, purpose, profits, and play. We try to operate with all four of those in our brand every day. Surround yourself with great people, give them the tools to be their best, have a meaning to what you do, stand for something. For us, it’s better health. There’s a great deal of purpose in what we do. Profits are monetary as well as lifestyle and health and then play. We still try to have fun every day as well. Our four values: people, purpose, profits and play, are our compass for how we steer this brand and make sure that we’re enriching all of our stakeholders with a sense of that.
The other thing that strikes me about that is congruence. From my understanding, congruence between your internal philosophy and what the customer experience is. There are two words that jumped out at me beside the four Ps. You said trust and autonomy. My understanding of the value proposition of Anytime Fitness is those two things. One of the things that people love about being a member is autonomy. They can go wherever whenever and that sense of trust is extended. You can bring a guest, but only X number of times. That’s congruent with what you’re saying to your people.
You can go into our clubs and sometimes they’re not staffed. You almost feel you have some ownership as a member. There’s the trust for you to go anywhere, anytime you want, whether our staff is present or not. There’s also trust is to coaching, meaning that you trust us to give you education, motivation and to guide you with your workout or maybe give you nutrition advice. There’s a great deal of trust and autonomy on the member side and the same thing on the franchise owner’s side. We struggle to do this, but we balance like if you’re super passionate about TRX, Zumba or Yoga, we try to find a way to get all of that to happen.
We have this uniformity and consistency of a franchise model, yet we make some exceptions for the local owner’s passions. You can do a community event or an exercise that you want to get behind. That’s autonomy in a franchise. It is rare because normally you can’t decide if you’re McDonald’s. Everything has got to be the same. I’m not saying we always get that right but generally, we try to balance their local passion and the care they have for their community along with the uniformity of our model.
What do trust and autonomy look like as far as your employees go?
We use something called CAT because the breadcrumbs of every problem almost always come back to three things: Communication, Alignment and Trust. If something is going wrong in our organization or some initiate that is not being executed properly as a leader, I’m always like, “Has this not been communicated often enough, or do I need to do it differently? Do they not have the deep information they need? Are we aligned strategically in what we’re trying to accomplish? Are we aligned culturally and how we work? Do our teams trust each other to collaborate and bring this to the market?” That goes around with that autonomy. Communication, alignment, trust is something that we try to emphasize every day. When we’re in a meeting and something’s going wrong, we’ll say, “Is it C, A or T? Which of those three do we need more of to get this project where it needs to be?”
Our top people love the fact that they have trust or they can shape the alignment and they are a part of that communication. We’re not a place of tenures or titles. We want everyone to weigh in and everyone to drive this brand forward. When you’re operating a startup with 10, 40 or 50 people, it is way different in the leadership requirements when you suddenly have even 250 people in this office. It is different. I hate to say this because I’m a people guy, but there are people in this business whom I don’t know beyond the first name. That’s bothersome for a founder when you know your people well. It’s been a learning curve for us on strategic planning, budgeting and radiating a culture that goes beyond us having a pizza with our team twice a week. It’s been an interesting challenge.
How do you close that gap?
I would focus on that CAT. I find that I cannot over-communicate enough where we’re going, what we’re trying to accomplish. Whether that is through social media, whether it’s through all-staff emails, whether it’s through videos or meetings. I’m always asking myself, “Does everyone know where we’re going? How we’re trying to get there? Why we’re trying to get there?” We hire for culture to make sure that we have people who have the company’s best interest in mind because it’s part of their values and then strategically, do we know why we’re trying to win? You hire great people and trust them. Every now and then, someone is going to abuse that trust, but trust is a business multiplier. When someone abuses it, that’s like a short-term loss. We’re willing to take that risk.
You mentioned that you went through this classic growth transformation from founder to running an enormous global enterprise and that you guys as founders navigated that transition. A lot of people either don’t do it well or they shouldn’t even try. They should step aside or hand over the reins. They can still be involved, but not take that same hands-on leadership role because it’s a different skillset and all of that. When you think back between that first time when you said, “This is not the same little startup that it used to be,” what did it feel like for you? How did you adjust? What did you do differently both internally and behaviorally to adjust to that transition?
I’ve almost become an obsessive student and I think that started years ago. When I saw the real potential, the incoming scale of this business and how I’m going to have to up my game as a leader. I became a little bit obsessed with consuming information, whether it’s reading, learning, listening and asking questions to those around me and trying to absorb and get better. I’m more of a student now than I ever was during my formal education years. When we do strategic planning, I look back on some of the stuff we used to do 5, 6 years ago and it was crummy. I can look back at it and laugh. It wasn’t nearly as focused as it should be.
It wasn’t nearly as data-driven. Our financial reporting was flippant. We’re much tighter and better on strategic planning, budgeting, forecast, and for this business size, it demands that. Before, we’d get caught up in a cool idea and run off and try it while putting a solid business case behind it. Now, you can’t do that. You have too big of a team and it would be too much chaos. It requires an entrepreneur to self-edit their ideas and make sure that before you suggest something, you better be able to prove out a business case because the strategic plan is already in motion. The last thing you want to do is swerve your team off into something that may or may not be useful. It’s little stuff like that. The reporting has to be far more rigorous than ever before.Everything about your brand has got to start at the corporate headquarters, and then it radiates out. Click To Tweet
It sounds like the perspective that you guys have. The attitude that you have is like, “Because we were able to grow it to this point, we know what to do next.”
I tell our staff and even our franchise owners, I’ve said this at our annual conference. I’m like, “Every day I wake up, it’s the biggest company I’ve ever run.” I haven’t been formally trained for this. I’m still learning. We’re still going to make mistakes, but I hope you see it’s all for the right intent. Where we’re trying to go and what we’re trying to do and how we’re trying to enrich stakeholders. We are not perfect but we care like crazy and we will do it what it takes. At the same token for what we give up and maybe that experience like we’re still scrappy and we are still close to the front lines and our franchisees. We still blend that micro and macro approach.
If you think at scale too much, if I sit around here thinking, “We’ve got nearly 4,000 units globally.” That’s a dangerous mindset because I still need to think about the franchise owner in Omaha or the men who had gone to operate or going to walk into our store in Florida. How is that number going to feel? How’s that owner going to feel? I think part of our success is we still think micro along with macro. Sometimes those professional CEOs are the big macro thinkers and that can get you into some trouble.
You say macro or micro or you put it in simple terms, big or small, global or local.
We are single/network.
The others that I’m hearing are future and present. That eye towards growing the future yet taking care of people now. There’s the other dichotomy, which is numbers and people. When you said, putting people over profits, but yet at the same time, the bigger you get, the more important the strategic plan becomes. The challenge a lot of times with that reliance on the strategic plan is you tend to forget that it’s people that are executing that plan. Over-reliance on the plan can lead to underutilizing or paying not enough attention to the people’s side. You’re balancing all of these things in both/and scenarios, not an either/or scenario.
A leader has to balance enriching all the stakeholders, employees, franchise owners, consumers. Making sure everyone is getting what they need presently as well as investing in the future. We still want to be nimble. We still have to pivot when necessary, but historically, we’ve pivoted way too much because we fell in love with too many new ideas. I having to be more disciplined as a leader at a company this size and being selective about where we want to be nimble.
That’s part of the transition from entrepreneur to a different kind of role. As an entrepreneur, we’re wired to the idea. That’s easy for us to fall in love with the next new idea in the next ten minutes.
I did that way too much in the early years and frankly wasted some of our team’s time and resources when they could have been executing on something else. Being aware of that, you want to balance it. Going back to your question earlier, for the first few years of this, we were in the fitness business, and then as we learning franchise, then we consider ourselves in the franchise business. Years ago, I’m like, “We’re in the people business.” Every day I wake up, all I think about is, “How can I provide value to our stakeholders? It’s not about fitness or franchising. What do they need? What’s the value to them and how can we continue to provide it?” We’ve got to enrich people.
It’s an over-generalization and maybe not an entirely fair question, but if you’re sitting down with an entrepreneur running his or her own company small, just getting started where you guys were a while back and they’re thinking, “I want to grow my business. I want to be successful. I don’t want to stay at a small mom-and-pop shop.” What advice would you give me, Chuck? Tell me what I should look out for what I should do. What are the principles that I should adhere to?
Number one is everything about your brand that starts at your corporate office. I’m always a little bit perplexed at leaders who are constant about doing Net Promoter Scores and are obsessed with their consumers. I get that, but how can we expect our consumers to love us if our employees don’t? How can we expect loyalty out of our consumers if our employees are not loyal? Everything about your brand has got to start at that corporate headquarters and then it radiates out. You’ve got to enrich your employees and treat them like a valuable stakeholder just like you do to a consumer and for us franchise owners.
As part of our strategic planning, we spend time talking about our employees and what is our strategy to help them grow personally, professionally and perform better at their job. If you get it wrong at your corporate office, I don’t know ultimately how you’re going to get it right far outside of that. It’s almost like an inside-out approach. Make sure that your employees are valued stakeholders. Happy, healthy, productive employees equal happy, healthy and loyal consumers. It’s not culture or strategy. Its culture is strategy.Happy, healthy, productive employees equal happy, healthy, and loyal consumers. Click To Tweet
Number two, our book is all about infusing people, purpose, profits, and play to create a high-performance culture that is getting results. You get people together and it’s like making music. If you have those four elements, the right people, a sense of purpose in your business of why your company exists, you’ve got to have profits and then you have a great deal of fun. That formula brings out the best in a team and will create high performance and high engagement from your team. At that time, it’s easy to be disengaged. I want our team driving to work, looking forward. It’s not easy but looking forward to the task at hand, looking forward to who they work with, looking forward to why we work, do they believe in our mission and what we stand for? If you can get their heart into it and their brand into it, you’re going to get high performance.
I don’t even know if you know this. We’ve been selected number one company to work for four years in a row for Minnesota. We’ve received tons of Minnesota accolades for being a great workplace environment. Do you know that the 3,000 tattoos story where 3,000 people have gotten tattoos of the Runningman permanently etched on their skin of franchise owners, employees and members? That tattoo loyalty, that culture around there is usually around purpose but it’s got to be people, purpose, profits and play. I think those four elements when combined are an interesting chemical reaction for people. It brings out their best.
LEAP stands for Love, Energy, Audacity and Proof. That’s the model that we teach. When I speak and do my work, it’s typically around illustrating and teaching that model and encouraging people to apply it. We are philosophically aligned and it’s awesome.
Love, energy, audacity, and proof. I love it because I often say leaders are in the energy business. We have to give energy to our team. You have a culture, whether you design it or not. You better be intentional about designing it. A lot of leaders are still afraid to use the word love. Number one, I don’t mind being vulnerable. We work a third of our lives. I can’t imagine not loving it. It’s sad to me to think that 70% of people drive to work and they’re miserable.
Thanks for joining me in this episode. I enjoyed chatting with Chuck Runyon. He is a legend in the franchising industry, and now if you ever visit or go back to Anytime Fitness, you’ll be able to look at it through a whole new lens and understand where they’re coming from. He does have a formula for bringing out the best in his team as evidenced every day in this company. Hopefully, you’ll feel it in the experience of their gyms. Be sure to check out his book, Love Work. I’m sure you’ll enjoy it. He is a brilliant guy. Until next time. Don’t forget to do what you love in the service of people who love what you do. We need it now more than ever.
About Chuck Runyon
CEO and Co-founder of Self Esteem Brands
As the CEO and Co-founder of Self Esteem Brands, Chuck Runyon leads a global collection of franchises intent upon improving the health and wellness of millions of people worldwide.
A leading authority in the field of fitness, Runyon revolutionized the industry when he and Dave Mortensen co-founded Anytime Fitness in 2002. The world’s largest and fastest-growing fitness club serves 4,000,000 members in nearly 40 countries and it is the first franchise in history with locations on all seven continents.
In addition to Anytime Fitness, Self Esteem Brands serves as the parent company to three other rapidly-growing franchises: Waxing the City, The Bar Method, and Basecamp Fitness.
Central to Chuck’s leadership philosophy is the concept of “ROEI” – the return on emotional investment and co-authored a book called “Love Work: Inspire a high-performing work culture at the center of People, Purpose, Profits and Play®.”
Under Runyon’s leadership, Anytime Fitness has earned numerous industry accolades, including “One of America’s Most Promising Companies” and the world’s #1 franchise. Additionally, Anytime Fitness has been honored as a “Top Franchise for Minorities” and “The Best Place to Work in Minnesota” – four years in a row, and he and Dave Mortensen also were recently named “Entrepreneurs of the Year” by the International Franchise Association.
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