"To Retain or to Replace" Why bad hires are costing your store thousands!

The hosts agree: there's no universal time frame. Some decisions are clear within a week. Others take 90 days or two years. The key distinction Danny draws is "will do" vs. "won't do" — a training issue can be fixed; an attitude problem usually can't. Pete's approach leans on data and documentation, while Danny leads with instinct and energy. Both agree: always follow your gut.

The Brady Rule — Veteran vs. Rookie

Inspired by a conversation with Mike Skehan, a 15-year Buddy's Home Furnishings division manager overseeing 43 stores, Pete and Danny tackle the classic dilemma: do you stay loyal to the reliable veteran, or bring in the high-potential rookie? Their take — keep the rookie on the bench as motivation for your existing team, and never be afraid to make the tough call when the business demands it.

Lean vs. Green: Who Do You Hire?

The episode introduces the "lean vs. green" framework — experienced RTO hires who come with old habits versus brand-new employees who are a blank slate. Both have tradeoffs. The lean hire is quicker to accountability; the green hire takes longer to develop but can be shaped exactly how you need. Best recruiting sources for green talent: Walmart, Target, and call centers — environments that already develop time management, quota awareness, and people skills.

Bench or Cut? Handling Burnout

Sometimes retain-or-replace isn't about performance — it's about burnout. Pete and Danny discuss the nuance of stepping a GM back without losing them entirely, using a sports analogy: do you bench the player or cut them from the team? The answer depends on loyalty, tenure, and whether the person stepping in is outperforming the one who stepped out.

The Bottom Line

Every retain-or-replace decision is situational. Document performance, have honest conversations, avoid blindsiding people — and at the end of the day, trust your gut. Pete and Danny invite listeners to share their own take and vote on the topic via email.

Transcript

Danny Lastra 0:03

Hello, everybody, and welcome to the RTO show with Danny and Pete. I'm your host, Danny.

Pete Shau 0:07

And this is Pete, and today we're going to find out if we're going to retain or replace.

Danny Lastra 0:11

Retain or replace. Pete, is there a time limit that we should be placing on new employees or current employees? On what what is the time frame of evaluating someone to replace them? Is there a time frame? I personally don't think so.

Pete Shau 0:25

I think that that frame can honestly change in every situation. I think that you can look at depending on your experience and how much you've done it, I think you can literally walk into somebody's store and sit there with them, and you can know after a couple of days, you can know after a couple weeks, and it could take 30 or 90 days. But I don't think a couple years. It could take a couple years. I don't think there's a limit. I really believe that it starts from from the moment you say hello to, you know, could be a couple years. But I definitely think that you can make a decision fairly quickly, even if everything seems on the reel okay.

Danny Lastra 1:01

So, okay, I'm just gonna go ahead and put some personal history out there. I I've made several decisions in my DM career. I have terminated employees after one week, after 30 days. I have let certain managers skate by for two years and then finally made a decision. And one of the one of the topic conversations that me and you have, me and the owners have, is how much time is too much time or how much time is short time? I'm just gonna go ahead and say, I think you go with your gut. I'm just gonna leave it like that. I gotta go on my gut.

Pete Shau 1:33

I've been always a pen and paper kind of guy, and I want to say that my always go-to was to look at the numbers and go, how long can I let this affect me before it's created uh something that I can't come back from? Is it a training issue or is it, you know, I won't do issue? Uh it will do and I won't do, will do I can work with, I can train you. I won't do means probably an immediate replacement. But then you have the this is the thing here. This is the big question. If you have a tried and true, but not really shining, and you have a brand new guy off the bench, but this guy's got some serious potential, when do you say I'm called, get out the game, I'm putting in the new guy? When does that happen?

Danny Lastra 2:14

You know where I stand on this, and Larry says this to us all the time. If you have an opportunity to get Tom Brady on your team, what do you do? Do you tell Tom Brady no? Because you've had a guy for five years that's you know given you eight and four consistent seasons, but Brady's gonna take you to the Super Bowl, hands down. And so if you were the Bucks, then you were like, I'm Brady all all day long. I'm Brady, I'm putting somebody in pasture. Sorry, man. Like, you're not a bad quarterback, you're not a bad player, you're not a bad leader, but I'm getting Brady. No hard feelings. Business is business. That's how I kind of stand on the whole thing.

Pete Shau 2:48

Okay, so what happens if you get you got the tried and true guy, and you have somebody who doesn't necessarily have the Brady stats? Now they're looking good, but they're a rookie quarterback. Now they're coming in, they might be a little younger, but a little bit less experienced, a little bit less tried and true. Well, you have the guy who's put in maybe seven or eight seasons, but he doesn't have a real big injury list problem, right? Somebody who comes to work, somebody who shows up on time, somebody who's consistently there and will show up on the days that they should normally be off because either they're short of person or they know they're not performing, maybe not performing to where they need to be. Or do you go with the rookie GM who has the ability to do everything, but then you really don't know the history?

Danny Lastra 3:26

Now that's a tough question. And that where I would probably take a look more of your expertise and do a pen and paper type of mathematical statistics and weigh out pros and cons and potential risk and rewards. And but then again, my my main thought that comes to mind is a rookie, I have the potential to train and develop exactly how I want them to be, and I could probably get even more years off of them. On the other hand, I got this tenure loyal guy who's given us consistent performances. I kind of hold some loyalty to him and stand by his side and just try to keep working, developing him as well. That that's the tough question, right there. What you just proposed to me. It's that's where I feel like I'm probably gonna snatch that rookie and keep him as a bench warmer and probably use him as a motivator to my existing guys to let them know hey, at any point I have a replacement ready. If I need to sub someone out, I will. I will make that tough call. I'm rooting for you, but just know I'm also a businessman and I can't afford a losing team. I mean, does that sound too cutthroat?

Pete Shau 4:34

No, because business is business. But I will tell you this. So you you've got your tried and true, right? He's out on the field, he's out in this, he's out in the streets, he's trying to do his best, he's taking customer complaints, he's talking to his guys, he's he's doing his best, but you can see the wear and tear. He's been doing a little while, he's been he's been a starter for you for a while, but now he's not as customer oriented as he was. He is a little bit tired. He shows up on time, but man, he might not start working for the first hour because he's just getting all the kinks out of his armor, right? And then you've got this new guy who's not tried and true, but then you're looking to put him in place. And here's a question: let's say you go with the rookie GM and you want to put him there. What do you do with the guy you just pulled off the field that's given you the time, the tenure ship? He's given you growth on you know your recurring revenues, he's given you customer growth, but he hasn't been doing it in the last year. Well, what do you do with that guy?

Danny Lastra 5:21

Well, first of all, if you're talking about a year, then a year of poor performance should have already been coached on paper a couple times. So it should have already been a direct message, it should have been addressed, the accountability should have been assigned and followed up on my part. So the last thing I ever want to do is completely blindside someone, not saying it doesn't happen. I have blindsided people last second, last minute. I'm I'm guilty of it. But for the most part, if you're a guy that's been with us for a couple years, then in my honest God's opinion, is you should already know if you're on the hot seat or not. And that falls on me to make sure I'm having those direct conversations with you, putting things on paper, evaluating the staff and team, which is my opinion a direct responsibility of the GM. Not mine. I would assist you, I'll help you. But, you know, Brady, again, I'm going back to Brady, he helped recruit and he helped organize the team that the Bucks have right now. He went and got, you know, Gronk, who's retired now, but the first time he came back, he's the one that convinced him to come out of retirement, come with me and play.

Pete Shau 6:26

So you're saying the GM should be on the point of bringing in people, staying on top of them, make sure they're they're good to go, if especially if you're a tenured manager.

Danny Lastra 6:34

Oh, yeah, exactly. And even from a rookie manager, because I again I make that, I try to make that as clear as possible. For me, a good manager, a leader is coming to me and addressing with me a weak length they have in their team before I'm even coming about performance issues.

Pete Shau 6:49

Now, you know, something's funny. Back in when we were in Indiana, right, I got a chance to meet up with Mike Skehan, who's somebody I've known for a few years in the rent-owned industry. Mike is somebody that I really look up to. Just so you're aware, Mike Skehan has been working for Buddies Home Furnishings for quite a while. He's actually working in the um as a division manager. Now, their division managers are a little bit different than our division managers. Uh, regionals to them are division managers to us, which a regional would have like seven stores. And a divisional manager would be a regional to us. He has 42 stores, or excuse me, 43 locations. So he's a 15-year vet, division manager with 43 locations. We just had this conversation, and one of the things that we were discussing is when you start coming across these things, number one is you want to fix the problem before you're a part of the problem. When you're a part of the problem, now there's an issue. And I agree with you 100%. If you have a GM that hasn't brought these issues up to you to say, hey, I need to address it. Hey, I've been trying to train. Hey, I've been trying to maybe replace or or look for some new talent or find a way to get this person to do what they are good at, maybe change positions, well, then that means that you might actually be part of the problem. And if you're part of the problem, then it led us to the conversation of retain or replace.

Danny Lastra 8:04

That's a tough call as managers. We make whether you're store manager, district manager, regional manager. I've had several conversations, and you know, let's just let's just put it out there. A lot of the managers they hold on to tenure guys and and they're looking more at the pros and the cons. Oh, this person shows up. Oh, this person is bilingual and they're the only bilingual person in the store. Or, hey, they're really good with computers and services, or you know, I've heard all kinds of excuses from several GMs about certain employees that we admit that they are probably the weakest link on the team, but yet the GM, for whatever reason, holds on to that weak link because they make up certain pros that they feel outweigh the cons. And it kind of goes with that saying, you know, the devil you know is better than the one you don't. A lot of people are scared to make that replacement change because they don't know what's gonna happen. I'm guilty of it. I've done it before. I remember when I was a store manager, I was I didn't want to replace an individual because I didn't know what I was gonna get for the next one. And sometimes you roll the dice and it doesn't work. I had a mediocre salesperson, we replaced them with somebody else. That person lasted one week. I immediately started regretting the decision we made as uh upper management to replace the C associate. So then now I don't have anybody, and then I had to go months looking and looking and looking, trying to find. Now, in the end, did we make the right decision? I think we did because then it we catapulted forward once I found the right person. And in my experience, that's what I feel is the right answer. You can't be afraid to make the decision to replace someone because you're afraid of the unknown, you're afraid of who's gonna you might have to go through two or three people and then find that fourth one is that right replacement person, but you gotta go through that process, you gotta go through the pain. Just like when you're working out, you want that mass, you want that muscle, you gotta go through the pain of lifting the weight. You're not gonna get it there overnight.

Pete Shau 10:02

Well, another part of the conversation that we uh had, me and Mike, was also, and what I called it was the lean or green. The lean being a new hire that is somebody that's already kind of done rent-to-owned, they have a little bit of experience, they they've been around, maybe they've had a couple of experiences with uh one or two other rent-to-owned companies, and you look at them and you say, Yeah, you know what, that's a great person to replace them with. And then you find out that that person might come with some preconceived notions or some old habits. Or do you take that person who's already been kind of trained, a little bit experienced, and kind of try to refocus them? Or is it easier to go with the green person who hasn't been in the business, but will take everything you have to say a lot more direct and a lot, you know, in a sense that you're trying to get them to somewhere and they're actually going to listen to you in a different way than somebody already has that experience. So the lean versus green, and I think at this point in time, everybody's scared of the green because we're having employee shortages, which makes it extremely difficult to, like you said, you almost are okay with the devil you know versus the devil you don't.

Danny Lastra 11:05

So with the green, with the exception of the employee shortage we're facing, but let's take that out of the mix for ex for for just a second, and let's pretend that it is okay, that we're we're okay. It's you know, 2018, 2019, and hiring people is you know easier than it has been since the pandemic, okay? Even then, people were scared of letting go of the lien for the green. Why? The excuse of it's gonna take time to train and develop this individual, and a lot of people are impatient.

Pete Shau 11:35

Well, the investment is there because when you talk about an experienced person, you've already made the investment, so it might be a little bit easier on the pocketbook to get them retrained, versus a green person who's you're making a huge investment. So you're going through a drug screen, you're going through a background, you're possibly going through a motor vehicle check, depending on what they do, and then you're putting them in there, and these people can't answer the phones. They can't answer the phones, they really can't talk to customers. You have to put in that training effort to make sure that they get on par with the rest of your people so that they're not left holding the bag while the new guy is just kind of you know edging along, right? So you put that money up front to train and get them set up and learn to then maybe find out they're not gonna work out. So you have on one hand the guy who's already been here, he shows up, he might not do everything great, but it'd give you 80%, or you've got the green that might give you 110%, but it's gonna take you a month to really kind of get them there and then probably another year to be experienced. When do you make that gamble? And what is it that you think would set that gamble on one side or the other? When do you think to say this is not a lotto ticket? This is a for sure bet that I'm putting money in it now that I'll get back later on.

Danny Lastra 12:38

Well, let's talk about the lean and green again for a second. So if you go with the lean, I feel upper management feel, well, I can hold this person to a quicker time frame of accountability because they're experienced and they have knowledge. So they've done this before. They run a store. So hey, it's put up a shut up time. Like you can put a time frame, I'm gonna give you 30 days, 60 days, 90 days. Where if you go with a green guy or girl, you're probably more inclined to extend that courtesy of time frame of evaluation because you understand that they've never done this before, you got to take time and develop them and train them. Listen, in my experience, is this is I've seen it with a brand new manager, I've seen it with a veteran manager that from the outside perspective, whatever, maybe you have 15 plus years in the industry, but you're only with the company three weeks, and I'm giving you a GM spot because you've done it before. But I've seen it. It you know right away, instantly, without looking at number performances, anything like that, the actions that are being taken every single day, you know if you made the right decision or not. And I also believe that goes on the other side of that coin. You know almost immediately is if the person you put in there is not the right person and it was a wrong decision. You just know you might work with them and you can develop them, you might help them become better. I'm not saying that's out of the the question, but I I'm just a believer that you know almost instantly, immediately, give it a week or two, you just have a good or bad feeling right away.

Pete Shau 14:06

So this is a little bit of a side note, but I've got a question because I'm curious. We've all mentioned in the past when we talk about new hires, people that have come on board that we think the profession that they had before is probably not a good pull, right? I've learned that restaurant managers that we've pulled on historically just aren't set out for what we do. They see things a little bit differently. So being that we might know some of the places we shouldn't get them from, in your opinion, what is a good industry that might make a good pull?

Danny Lastra 14:36

Retail. You can get good if you're talking about a green individual who has no experience in rent to own, I think you go and look for at least supervisor experience. You know, personal experience, Walmart. Walmart develops good supervisors, and they are adamant about time management, which you and I both know in this business, you have to be excellent at your time management skills. You have deliveries, you have showroom perfor showroom merchandising, ordering, collection practices, sales, marketing, like reports, auditing. You have to be on point. And it's almost like an every hour thing. Where are we at every hour? Where are we at? How many rents we got? How many customers we have? Have we dropped any percentages? Where's our revenue at? You you're always kind of thinking about the time and where you're at at the day. And I know for a fact Walmart does implement that training as a supervisor. I'm I'm a product of that. I came from Walmart. I recently have hired an hourly employee who was a manager at Walmart. She took a step back. Now she's with us. We just promoted her to assistant, and I'm already told some of my people be on the lookout, just just watch her. She's gonna be good. And you can just see how, even though with no experience of rent to own, the immediate impact she made and how she just handles the supervisory of the other employees. It's it's a presence that they display. And I think and it doesn't have to be Walmart, it could be Target, it could be you know, cash and carrier food, restaurant management. You know, that's another good one. If you do a grocery manager like Publix or I don't think Swee Bay is around cash and carrier, I don't know that's how far back I go, but yo, he's old.

Pete Shau 16:15

Um just talk you know, another another place that I found was a really good poll place was actually call centers. People who are uh call centers, they're not afraid to be on the phone. They are held to a time limit. They have a professionalism that they usually come with. And if you happen to talk to a supervisor that was in a call center, they know how to manage several people, they know how to diffuse situations, they are very good on the phone, and they're quick thinking on their feet. So for everybody out there in you know the RTO world, the RTO land, two guys have been doing it together for 28 years. Our opinion is Walmarts and call centers, probably the best place that you can you can make a poll from.

Danny Lastra 16:52

Yes, I agree. I wholeheartedly agree, and that's why it's important to when you're recruiting, you can use all the ads and the platforms like Indeed, Zip Recruit or whatever. But look at your Walmart, and I'm saying Walmart now, but everybody shops there, and look at the faces of the employees, and specifically if you can find a supervisor there, bump into them, have a chat with them, give them your business card. Not knocking any company down, but I know how many hours you have to work, I know the pressure that is applied to them, and when you can bring that over to us, not saying we don't apply pressure because of course we do, we have quotas you have to meet, but they're actually used to that quota. Same thing with grocery managers or grocery supervisors, call centers, you're right. They I believe they have quotas, they have a time limit of how much time they have to speak to a client and document and notate. So they're already used to that environment. And I mean, I it's hard to go into a call center and recruit and pass out cars, but retails, you could do it all day, every day.

Pete Shau 17:56

When it comes to the retain or replace, we kind of know an idea of where to get people from. We kind of know what we're looking for as far as uh replacement. But go to the first part. When do you think it's a better time to retain versus replace?

Danny Lastra 18:10

When is a better time to retain? Like time of the year? If it's if we're talking about time of the year, no no no.

Pete Shau 18:16

When when do you think when you're when you're talking about replacement versus retainment and you're given a situation, what would make you think maybe just retaining this person will be better than replacing them with the rookie on the bench?

Danny Lastra 18:28

For me, and again, this is the difference between me and you're wheels of turning. Well, wheels are turning. This is the difference between me and you. I I think I'm more emotional and you're more logical. All right. You said it yourself. You, and we've had these conversations. Okay, you have told me before in the past that you, like me, also knew right away that a certain individual probably wasn't the right candidate. But yet, in your mind, you allow this individual a certain time frame and you collected all day, all kinds of data and information so you can present it on paper to justify, hey, XYZ, this is why this is not working out, and I gotta make a replacement. And that is exactly true. Where that is exactly true. I am more of a feeling kind of person. I want to feel the energy in the office, I want to feel the energy of the staff. Are we happy? Are we laughing? Do I see that ambition and drive? If I don't see that, I personally don't need no paper and pen. Like, you know, I might, you know, I get with HR, I get with our owners, and but I'll I'm already making that comment instantly. Hey, I don't think it's a good fit. Now, do I make that decision right then and there? Probably not. What I do is what I do best is start looking for my backup. That's what I do. But the answer to your question, when do I decide to retain rather than replace? Is it goes hand in hand with what I'm just saying? It's it's it's that feeling I get. Do I believe that this individual maybe they're in a funk? Maybe they're complacent, maybe they need a new challenge. That person, in one way or form, needs to convince me that they still have fire in them and that they want to climb to the top, that they want to be better. It might not be at that location, and they might as long as we can have that honest conversation and let me know. Listen, I think I wore my welcome at this door. I really would like a new location, a new challenge, or whatever. I'm always open for that, but that does tell me that there's something more there than just complacent, I'm just here to collect a check. I'm just here to work, I got responsibilities.

Pete Shau 20:26

So, one of my biggest concerns is that when we talk about it, right? Let's say I'm sitting down with a GM and we're having a conversation about how they are, how they've been performing, what are they doing, and then you know, maybe they do need a break. Now the big question is, do we step them down or do we actually give them a break? Because the thought process is you can only have one driver, right? And if you put in another driver, in other words, if you put in another GM to that spot, nobody wants to be a GM for a week and then move. Nobody wants to be a GM for six weeks and then move. So in my thought process is if you need to take a break, we're gonna have to step you out of that position and put somebody else in that spot. Now here's the other side of the coin. You step somebody out of that position, you put them, you know, somewhere where they can kind of just not sit back and relax, but somewhere where they can kind of de-stress a little bit and kind of handle that position very well, but know that they're looking for another jam position. Are you willing to possibly lose what you retained because you stepped them back? Or do you give them a different way to de-stress? And I don't know if that's a really easy answer to come up with, but my thought process is you might just have to deal with removing that GM out of that spot and almost having to see where you land.

Danny Lastra 21:37

Okay, so the best analogy I can give you, sports reference again. All right. Sports. Do you bench a player or do you cut them entirely from the team? That's how I look at that situation. You need a break, okay. Do I still see value and asset of you to my team, but you need a break? I'm gonna bench you and we're gonna talk. Now, if you're unhappy with the bench and you decide you want to talk to your agent. And get traded to another team because you feel you still should be in that starting position, we have that direct conversation because then maybe the person I just subbed in for you is doing way better than you. And I hate to lose you off my team, but we both agree that you needed a bench for a little bit, but now you feel like you're ready to get back into that position. But I don't have that position for you because this guy was doing better than what you were doing. Hate to lose you, but hey, we we can make that trade. You know, I wish nothing but the best for you. You know, I want to see you do good, but I just don't think you're there for me at this time, and that's not what this team needs. On the flip side, you bench a player and they stay loyal and they they put in their bench time and then they get that shot. Maybe that person that you subbed in gets injured, leaves on their own accord, and then it's time, hey man, Joe, you ready to step back in? You know, you took a couple months off out of that starting position. You think you're ready to go back in the game? Yeah, coach, I'm ready. I needed that time off. I'm watch what I do. It's a flip of the coin, you go with your gut.

Pete Shau 22:56

Historically speaking, I have had the unfortunate privilege of talking to a few GMs that I think needed a break, needed to step back and say, hey, listen, you got to gather yourself and when the time is right, step back to it. And I've had people take that very negatively, and I've had people take it like, all right, you know, I'll do what I have to do. And I will say, for the most part, the comeback is worth the wait. But I think that they have to be open and forthcoming and know we're doing this for a reason. You're going through this for a reason. Sometimes we do get burnt out, sometimes we aren't the right person in the right spot. Sometimes uh it's a matter of the drive. Sometimes, and when I say drive, that could be both drives. It could be the drive time to work and the drive that you have to be at work. It could be what's going on at home. I've seen a lot of guys suffer from being really great, and then all of a sudden something happens at home, and they're their work is suffering, and it's big time. And there's nothing that you're really gonna do to get them to be better or learn more or be more efficient, it's the fact that their mind is not in the game.

Danny Lastra 23:51

You know, that that happens quite frequently and more often than I would like to admit, but that's a different subject to me. I think that's an episode on its own, like personal work problems, but obviously family problems, health problems, they're going to affect your day-to-day work. And that's even a uh even difficult decision for me to make. When do you when do you make that decision? Because the personal problems that it's out of control of their own, you know, but it's affecting the work, and when do you make that decision? I you know, that's I think at that point, that's probably when you look at longevity, tenureship, what they have done for us. But then you have to be realistic of the time frame of how much time I'm willing to allow this individual to go through this process, and you know, and we're all humans, you know. I mean, we go through our own hardships and obstacles in life, and it's just a sad process sometimes. But again, I hate to sound like that cutthroat Roy Croc, but we have a business to run.

Pete Shau 24:44

Basically, retain or replace is a situation by situation. Very much that you should go over with a fine-tooth comb, make sure that you make the best educated answer you can get, and at the very, very end, follow your gut.

Danny Lastra 24:57

Always follow your gut. Now, I would love to hear feedback. I'm sure I will. I probably upset at some people. Um, I think some people will agree. There'll be some disagreements, but I would personally like to hear anybody that's listening to this specific episode what's your take? What's your theory? How do you calculate? Email us. Um Danny at the rto showpodcast.com. You can email Pete at Pete at the RTO Showpodcast.com. I'd love to hear what you guys have to say. Uh, hear the feedback. Maybe we'll talk about it on the next episode and if we get enough replies from it and let you know what what the vote is.

Pete Shau 25:31

We'll take a look at the replies, we'll tell you what's going on, and we'll try to give you some feedback. Don't forget on the website coming soon, we're gonna have some um the RTO show apparel. We'd love for you guys to be a part of and have. We're also gonna probably have a giveaway come up soon. We're gonna give you more on that in the next show. Uh, but we do want to let you guys know we love every bit of the support uh that we've been receiving. Guys, we do this for you, and I'll tell you right now, this is this is why we're doing it. If you have any questions, again, hit us up on the emails, go to the website at www.thertoshow podcast.com. We'd love to hear from you. Take a look at our videos, send us anything that you need to have a question about. We are we are open to our listeners. With that being said, any note. This is the RTO show with Danny and Pete.