Episode 61: How HR is Killing Your Overall Business Value

Welcome to the Exit Engine Podcast, episode 61.

Welcome to the Exit Engine Podcast. My name is John Kniff, and I'm here with my business partner, Jo Stapleton.

Hey, John, good morning, man.

Today we have Brian Vogel. He is a leadership and HR performance coach. He started coaching NCAA swimmers on how to perform under pressure. Decades later, he helps people navigate high-stakes moments. The setting has changed, but the fundamentals remain the same: clarity, commitment, and the courage to grow. Today he works with founders, executives, and high-potential managers through Sundog Couch Coaching. and Sensible HR. Whether you're stepping into your first leadership role or leading through complexity, Brian helps you communicate with impact and lead with intention. No fluff, no jargon, just honest conversations and practical strategies. Welcome, Brian.

Pleasure to be here. Thank you.

Brian, what— I'm really excited to have you today because this is one area that we have been lacking in focus, and that is the, you know, the human part of all this business stuff that we talk about all the time, which is obviously the human beings, right?

Right, right.

And so, you know, when we are— whenever we're talking with people, we always talk— there's 3 big things that we talk about with our audience that are going to affect their value and salability. And this is true of any business, right? It's product, Process and people.

Right, right.

Thanks. I'm having—

Talk to us a little bit about, about the people part, right? And what you— why the people part in the, in the, in a, in a high-value exit is so important.

Well, yeah, I'm stepping back just in people in general. I always tell founders, owners, and co— and leaders I coach that really, if you think about results, results are nothing more than aggregated behaviors. And those aggregated behaviors come obviously from people. So, you know, as a leader and within your company, you have to either affirm or adjust behaviors to get the desired results you want as a company. But stepping more into a granular view of this from an exit standpoint and people, I think always it's about first and foremost, what data do you have on your people? And how readily available is that data? What I've often seen is you, you ask, or companies that are interested in buying businesses ask for what would seem to be pretty basic data, and they have their hand— they have trouble getting their hands on that data. Like almost, um, like, well, no, our broker already always pulled that information for us when we're doing benefit renewal.

Sure.

Um, I, I— we don't really have anybody that can pull down that level of data. Well, you have to have a viewpoint and have all that granular data on an employee to understand the business and what you're buying.

That's an excellent, excellent point. Really, really excellent. And I think that's what, again, from an HR standpoint, people are not thinking about the benefits package that you offer, right? The things that you're doing to, you know, all the incentives that you want, the things, all those things, right, that you've been doing it like this for this span of time are potentially now gonna change because you are being absorbed into, right, potentially another larger company. They've got their own stuff. Your benefits and things like that might be going away because you're gonna bring in this else.

Sure.

But more importantly, it's about the, like you said, it's about the employees themselves. Because guys, I hate to break it to you, but a buyer is going to examine every single employment contract. They're gonna look at every single, right? They're gonna look at every single employee, at least on the surface level, about what they do and how much they make and what, where they're They are engaged and all that stuff, right, John?

They're gonna interview the people that are key. You know, if you start mentioning Wendy or Paula or Marjorie or whoever it is, and that they're doing something that is critical to the business, that buyer is gonna wanna interview them and talk to them. So, you know, you need to know about those people and you need to make sure that they know that they're gonna be part of this deal, whether they like it or not.

Yeah, the intel on people are table stakes as I see it. Like, you know, as a buyer, of a company or an organization, I don't want to buy that company and organization and then find out afterwards that no one has gotten a raise in the last 3 years, right? And, you know, I want to understand, okay, when was the last time folks got an increase? What was that increase? How did you determine what that increase was? And oh, by the way, I want to look at the data and see, okay, are you paying market for these positions? I mean, what's holding on these people? Is it the pay? Is it the benefits? To your point, Jo, what's driving retention? And I want to know what are those drivers of retention? Because the last thing I want to happen as a buyer is see this be announced and people just run.

Hey, I'm Jo Stapleton from the Exit Engine Podcast. Building a business is hard enough, right? Planning your exit shouldn't feel like another lonely, confusing project you have to figure out on your own. That's why we created ExitEngine. ExitEngine isn't just a software tool, it's an entire ecosystem designed to help founders engineer a successful exit. You'll get access to self-assessments, growth roadmaps, and a peer community where you can learn from other founders who've been in your shoes. You'll also find the guidance and expert resources you need to build a business that's actually worth buying. And to do it without burning out. Imagine having the clarity to know what your business is worth, exactly where to focus to improve it, and the confidence to exit on your own terms, whether that's next year or a decade from now. You don't have to do this alone. You don't have to build a business alone. Join us and let's build your exit strategy together. Visit myexitengine.com to get started. That's myexitengine.com.

Right? Because again, the business is the people, right, in the end.

Well, let me ask you a question. So when, so sort of related to that point, Brian, when's the typical time that you're brought in? Like, are you brought in to deal with a burning platform, a problem employee, or, or when's the typical time that someone engages you to come in and help them with a company? And like, if you can talk about the, like, the size of the company you typically deal with would be Would be really helpful too.

Yeah, I mean, typically we're engaged when in really at 2 pivot points. One, they, they have it, unfortunately, they have an event. So meaning they have an EEO claim that was put against them and they realize, oh, we, we don't have the resources or the smarts to respond to this inquiry from, you know, the Equal Employment Opportunity Commission, right? Or they Have realized that Susie, who was the office manager, who took over running payroll, and then they've grown to a size of 100 employees or more, and they now have to file an EEO-1, and they realize Susie doesn't even know what an EEO-1 is. And then we're brought in to right the ship. So really, you know, in short, it's when they realize that to scale they need strategic HR. And they need structure and/or infrastructure, to say it differently, to scale from an HR standpoint. You know, we advise them on how to build that structure or what it might need to be involved. You know, we don't— Sensible HR typically doesn't come in and do payroll, for example, but we'll figure out for the company how to get payroll done and remain compliant and also remain You know, comply from all regulatory standpoints as well. Got it.

Which, by the way, there you go, right? There's yet another issue that's related to this, right? Which is your compliance and the ability to say, hey, look, I've got, you know, you might be in an industry where you've got, you know, certain regulations, right? You've got certain licensing situations and stuff like that. And being able to actually make sure that you've got all your employees are licensed and compliant and that they're all doing the things they're supposed to do and that, you know, And that you can document it.

Right.

Yeah.

Right.

Yeah. And there's certainly areas that are more, I would say, high risk from a regulatory and compliance standpoint than others. And where we most often see folks sort of scratch their head is like, you know, no, you're over 15 employees or you've reached this threshold. And yeah, you have to have an FMLA policy. Where is that? Why haven't you put that in place? And they honestly, sometimes they just don't know, depending on the size of the organization. Right, right, right.

And I guess the question is, how do they find out they need you? Like in some of those cases, right, I could be, I'm going through my thing and I've been running this company for 10 years or whatever. And now I've hit this 15-employee threshold or whatever, or it's just one example, but it could be any of these things where suddenly the things change. And how am I aware, right, that those things might be changed? And I could be out of compliance potentially for a long time before I even realize I am.

So, I mean, more often than not, it's a triggering event from an agency, and they need— they realize the ship needs to be put in the right direction to stay afloat and remain compliant. And, you know, I always approach is, and from an HR standpoint, is I'm here to drive your business forward. I want to lead with yes, but at the same time, I'm not going to let you do anything unethical or illegal. But I mean, so I, you know, I don't approach my work as coming in and telling you everything you've done wrong and, you know, put my police hat on and make sure, or hall monitor hat, make sure you're checking off because, you know, there are things that are going to get, you know, going to get you in trouble. Or they're going to look under the covers, and there's things that are more regard to business risk, right? So for example, here in the state of Texas, very much employment at will. Yeah, you know, you can fire anybody anytime, or you can let go of anybody at any time. Now, is there risk associated with that in certain cases? Yes, I'll make you aware of that risk, but it's up to you. It's a business decision whether you want to take on that risk or not.

Right.

Right.

Got it. Yeah, that makes sense. Because again, it's a matter of there are— and this is why HR, and as you grow, right, HR becomes more and more important. The more people you add on, the more thresholds you hit in terms of regulation, right, and things like that. What are some of those common, common things that people think as they grow?

I think it also depends, Jo, on where they're growing. So I think oftentimes You know, I'll, I'll stick from where I'm at in Texas. So then they're looking to move from Texas to Louisiana or Texas to Oklahoma, and they don't understand the different labor laws that exist in each one of those states. They may not even understand that they have to register a business in that state to pay somebody in that state.

Right.

So there's all those, the checkboxes that need to be checked, and they don't have anybody in place One, to do that, and two, even to think about it. So, 'cause they've been running so lean and mean and so small, and they may probably may have been doing payroll on Gusto and, you know, or something, some small platform, even QuickBooks, and they don't, they're not alerted that they need to set up another entity in the state of Oklahoma, for example. So it's that rapid growth that also brings us in. And then specific to when exits occur, they get, they get a PE firm or an investor that comes in and asks for this information, and, you know, they're, they're, they're like, what? And then they, they're like, I don't even know what that is, right?

Yeah.

So, you know, um, and there's certain, you know, again, delineations or pivot points. Like, once you're over 100 employees, you have to file an EO-1, and it PEO— or not a PEO, a PE firm, excuse me— is going to ask, can I see your last EO-1? And they're gonna be like, what are you talking about? And they might not even know they had to file it and they didn't file it. So—

Right.

It's those types of— I call them aha moments. I also call them oh crap moments. Um, like, okay, I have to— okay, I've got to get somebody who knows more about human resources Because the unfortunate truth is, until they reach a size or they have what I would call a trigger moment, it's the last thing they think they need.

Yeah. Well, yeah. And it's so funny that a lot of those questions and a lot of the questions that PE firms and buyers say to small companies, they want to do it on a conference call as opposed to an email because they want to see the reaction. Sure, right.

Yeah, they want to see the reaction.

Like, like if we— if someone asked us if we filed our EEO-1, I know my reaction. I'm not a very good poker player. I'd be like, uh, what? And because it's almost like table— not table stakes, but it's like the PE firm wants to see and sort of wants this— wants the startup to demonstrate that they know that this is something that they have to do, as opposed to something like the form is less important than the reaction. Like, oh, Well, we're only at 97 employees and we don't have to file that yet, or whatever it happens to be. They're aware of those sort of threshold regulations and challenges.

So it's fine. Sure, for sure. And that's just one example. There's numerous examples that we could point to.

And I assume too that now in this day and age, true, with remote work, right, it's even more complicated sometimes, right? Because it's a matter of where are my employees living? They may not be living in the state in which I'm doing business, right? That presents a whole other level potentially of challenge and stuff too, especially employees are all over.

And it even goes beyond the state level. So for example, I had a client who decided to let employees work remotely from the city of Chicago. Well, the city of Chicago has its own sick pay regulations. So, you know, and of course they're a company who has unlimited PTO and they're like, well, shouldn't we be fine? And we're like, No, you're gonna have to start tracking sick time separately because according to Chicago law, if this person leaves you, you're gonna have to pay out so much sick time. And so they— it's, again, it's not— they're doing— they're not purposely doing anything wrong. They just—

Right.

They don't know what they don't know, and they don't know what questions to ask, right? And then, but the PE firm or the buyer knows what questions to ask. And they're like, okay, so you don't want to get caught off guard. So, you know, we get brought in where too often it's, it's, it's in the— it's late in the game. It's the 4th quarter. Yeah. And we have to do a bit of scrambling. But that's our business. We're used to that. So—

And it's just not to cut you off, but, but, but this is worth noting, right, for everybody, that the idea is that, again, This HR stuff, right? And anything that goes on where you are potentially even thinking, right, about one day trying to transfer this business, right? You got to pick up the phone and you got to call somebody and you got to get some advice.

Okay?

Yeah. Do not assume, okay, anything on any level when it comes to this stuff. And we're talking about exit planning being the thing that people don't, you know, think about until it's too late, until it's the fourth, you know, the end of the fourth quarter. But if you're not thinking about your HR growth, right, and the way in which you grow the business and how it relates to the people that are in it and all that stuff, and understand, again, not that you per se as the owner have to, have to know every single rule and regulation, but what you have to do is to be able to have the people in there and have the, the ways of being able to understand what that information is. To your point, what is it that I don't know about this? And then we haven't even talked yet about The strategic HR growth.

Sure. Yeah. And just to share one more aha moment as an example, and more often than not, you know, a company who's, you know, been crushing it, you know, maybe, maybe they'll only have 25, maybe 50 employees. And then, you know, they're going through the due diligence item, the PE firm or the buyer, and they're like, so talk to me about FLSA and your your exempt and non-exempt employees. And they're like, well, what? And we're like— and they don't understand what exempt and non-exempt employees are. And then you define that as hourly and salary.

Versus salary.

And they're like, well, they're just all straight salary. And then, well, when's the last time you did an FLSA audit? And they don't know what that is. And then you've gotta come back and you understand that, you know, half the population should be hourly, should have been making overtime. And then you got to work through all the issues to tell people that are going to go to hourly and go to overtime. And then they're going to ask, well, why didn't I get overtime before? So there's, there's tails to these things that have to be thought through that then become strategic, right?

Right. There's like, there's like a lot, like there's a place where you recommend changes and the changes are to comply with some type of regulation, right? That change opens up like a Pandora's box of, like you were saying, of, well, Well, if we do this, then we have to do X, Y, and Z and restate things over the last couple of years.

Yeah.

It's why people get so frustrated with the regulations of things and the compliance and the whole thing, right? They'll blame the HR guy, right?

Well, and then, well, we were just fine before you came in, right?

Because ignorance is bliss, right? Exactly.

There was a risk that you may not have been aware of, but the buyer is not going to inherit that risk. They're going to want that straightened through or a plan to straighten it out before they make that purchase. And they're also going to want to know who's going to do it, right?

Yeah. And let me ask you, what about like your, you know, HR and legal, right? So like a lot of the challenges that I've had with HR issues that have come up have always involved like we've We've needed to get a legal person involved or someone with the law. How are you navigating sort of those, or what is your consult? What do you consult companies to say and to do with regard to like HR and sort of the legal aspect of that?

That's a great point, John. So more often than not, we are pulled in because there's an issue. And, you know, an attorney employment counsel will— the good ones will say, hey, look, you know, you don't need to keep calling me about this. A seasoned HR pro can help handle this for you.

Got it.

So, you know, we tend to, when we come in, we'll still— we'll have employment counsel and we'll reach out to them when we need to. But when we've come in, their use of employment counsel generally Because we're able to, based on experience, know and assess the risk with certain— in certain areas. You know, where it gets sticky and where we'll pull in employment counsel is if we get a demand letter for, you know, what may be considered unlawful termination or something like that. And then we have to have an attorney answer that versus somebody in HR land, right?

Right.

We actually have services where, like, look, I'm just— I just need someone to call when I need advice. And we, and we let folks buy blocks of our time, and our blocks of time are much less than calling an employment counsel. So we call that our bat phone service.

I love that.

For those, for those on the— for those listeners who remember what a bat phone is.

Yeah, well, after this podcast, we'll talk about one particular crazy story that I had that I'm not going to tell on this podcast. But I wish I had a Batphone at that point. It was 7:30 on a Tuesday morning, and it was sort of just a crazy— but that's another story.

Yeah.

Well, talk about— you started your career working and coaching, frankly, like elite athletes. So how does that elite athlete coaching relate to dealing with, you know, high-powered founders who are, who are go, go, go? And what are the commonalities between those 2 audiences?

Yeah, I think an elite athlete who has always seen success, it's really about that success being challenged or knowing it's going to be challenged and what frame of mind that they come into the competition with. So they may have gone the whole season swimming dual meets in the conference, and then they're going to get to championships or NCAAs, and they're going to face someone that they've never faced before, and they're going to be behind in the race after the 4th 100 or whatever it might be. I think the similarity is, okay, how do you handle being in a place that where you have to come from behind? Right. And You know, in the case of folks that you're working with, you know, they've probably never been questioned about their business. And they, they've always seen it as success. And when they're challenged, they're not accustomed to be challenged. And how they respond is, you know, usually defensive, like, who are you? Why are you to question me? My business has this revenue year over year. I'm willing to sell it for you for X. It's a bargain basement price. Stop asking me all these questions. And they react that way. Same thing back to it.

Were you in the room during our last negotiation?

I'm just thinking the same thing as we had when we got— when we were purchased, right? You know, we— the questions just kept coming and it's like, how many times can I answer seemingly this similar question, right? Like, What do they want to hear in my answer? Because I think I've answered this question 4 times and I hadn't. It was all different questions.

But yeah, for sure.

Yeah, I think, again, we cut you off, but I think what you were talking about was, again, the notion of these founders and the whole thing having to even ask for help, right, is the first challenge and getting them to be able to say, oh, and again, like you said, The reason that they start asking for help is that they suddenly realize, oh my God, I'm in— I don't know what to do, right? Yeah. Or I didn't know about this. So now I'm scared and now I'm reaching out because I need, you know, obviously, you know, for her to take a look at it. And by the way, it's not much different from the way it works with us, you know.

Right.

It's just that, yeah.

And it ties into also to the Sundial coaching part of my business and the leadership coaching I do. You know, I focus on first-time managers and all the way up to the C-suite and executives. But the difference between working with the C-suite or the founder executive versus the first-time manager is the first-time manager, I can start coaching right away, right? The, the founder or the C-suite executive, the first thing I got to do is get, is get them to park their ego, right? Because that— because until they park their ego, they're not going to really listen, nor are they going to understand. Um, and we all have warts and we all have blind spots, and so much of coaching is about self-awareness, right?

Mm-hmm.

But, you know, a founder and someone who's been uber successful and has a company that someone's willing to buy, they someone may have never, ever pointed out their warts or their blind spots.

Yeah. And also, it's like with regard to business, like a lot of these founders, like most of these founders, I should say, are like the 1% of the 1%, right? They've succeeded.

Sure.

And they've driven the business, as you said, to millions and millions of dollars in revenue. And that's just their natural business sense. Where HR comes in is it's not intuitive a lot of cases, like the things they should do with an HR issue. It's, it's based on a regulation. It may seem exactly the opposite of what they think that they should do in that case, right? The sort of reflexive action is, let's get rid of this person, whereas that could open them up to, like, incredible amounts of risk.

Yeah, and there's certainly this check-the-box elements of HR, and then there's the strategic Which you were speaking to earlier, Jo. And, you know, the other thing that I've seen happen is you'll have— and it really doesn't really matter the size of the employee population or the organization— you'll have the firm come in or the buyer come in and say, tell me about your succession plan.

Ugh.

Like, you know, okay, who do you feel is ready to step up after we buy your company and you're through your earnout? And they're like, they have no idea. They've never even thought about it. You know, I call it the beer truck scenario. So you've never thought about what happens if you were to get hit by a beer truck? You know, and they're like, no. And so, you know, and the cascade effect of that is, so you've never done a talent review? And they're like, well, no, we do performance management. We do performance reviews. I'm like, no, that's not the same thing.

Same thing.

Yeah. Have you ever done a talent review? And then you have to explain that to them. So they feel like almost to your point, John, they interpret it as insulting.

Yes.

Sometimes. Right.

And they get defensive, as you said. Right. Because it's either not something they've thought about or not something that they've put any time against or enough time in the same way that they've put time to growing geographically or working on their expenses or hiring a fractional CFO. Whereas in reality, what they're really doing is they're opening themselves up or they have this unknown risk that they're not dealing with that could potentially sink their acquisition.

Or even taking it to the 30,000-foot view. Oh, wait a minute. I guess I really never had a people strategy. Yeah.

Well, that's what— let's dig into that because I think this could be really, really helpful, I think, to our audience in terms of something they can take away today. I think that the notion is that let's talk about the strategic side of HR. Yes, right. Let's talk about what is a talent review, as an example, and why and who should be doing it and what does it mean and what do you get out of it and what is that and how is that going to help me understand, you know, make my— grow my business or move my business?

Yeah, I mean, the classic talent review tool dates back to, you know, Jack Welch and GE with the 9-box, which some of your listeners may be familiar with. The problem with the 9-box, which is, you know, the axes were potential and performance, the problem with that is you ask someone to put people into a 9-box, where do all the people go? They go in the middle of the 9-box, right? So it's the easy answer.

Right.

Where, you know, what we utilize is something simply, you know, as a 4-box or a Johari Window. And we, we make folks the same thing— potential and performance. And you want people in the upper right, but you don't have a middle. You got to put people in a box, right?

Right.

So, you know, and sometimes you'll identify misaligned. Now, you know, listeners may think about and be familiar with Jack Welch, where he used to do forced rankings. We don't abide by that. But, you know, to think that everybody is a champion and up to the top right. That's not realistic as well, you know, right? Not everyone's going to be a Champlin. But I will tell you my personal philosophy, you know, we only hire A players. Really? I mean, not everyone can be an A player. And by the way, I think you're going to need some B players as utility players. So, you know, don't tell me that everybody's an A player. It's okay to have B players because every organization needs what I call utility players, or the label I give in the box is called ambassadors, right? But also, there are folks that are going to be misaligned, you know, and does that mean they need to be put on a performance improvement plan and exited? No, not necessarily. They're just on the wrong seat on the bus.

Right.

More often than not, what's the right seat on the bus for those folks? And if there isn't a right seat, OK, maybe it's time for them to get off the bus. But, you know, that's the talent review. And then looking beyond that, you jump off that talent review and you get into succession planning. You're saying, okay, is Julie going to be ready in 2 or 3 years to take the CFO role or the, you know, head of finance? Well, maybe, but she needs these experiences. Well, okay, how are we going to get her those experiences? Does she need to rotate into operations for 6 months so she better understands the business? If that's the case, then let's do that. Let's make that happen. So, or give her a project where she has more exposure to operations if it's a smaller organization. So those are the things that are strategic that you need to think through as you grow and scale the organization, as you're trying to get it ready to sell. But if you're at the point of selling, you know, you're gonna need to put those things in place because someone's gonna ask you, right?

Right. That's exactly it.

It's one of our, it's one of our core pillars, right? It's one of those things that we've found is we found the same response that you get with the succession plan, Brian, right? Like when we ask about a succession plan, they're like, well, what do you mean? And we start, we start with like a leadership team. Like, do you have a leadership team? Well, yeah, yeah, kind of, you know.

Yeah, right.

Sure.

Yeah.

And yeah, I was gonna say what I find fascinating again about all this is that Your, the way that you're dealing with your employees is directly tied to your value and saleability.

For sure. Yeah. And it's, it's like, you know, I have this exercise I work through with leaders, and I talk about the importance of, you know, people management and affirming and adjusting behaviors. It's sort of where I started with you. And I ask people, you know, tell me what results And they're like, well, profit margin, ROI, top-line revenue, right? Those are measurements of results. They're not really results.

Good point.

And results, you know, you talk about product, process, and people, you know, and those are all, you know, you could argue equally important. But of those things that really, really drive results, It's people's behaviors, right? And in the end, aggregated behaviors are what drive those results. And they drive ROI, and they drive profit margin, they drive top-line revenue.

Yeah.

So, you know, you know, if I tell folks, you know, what are the strengths of your people management skills within your organization? How well are those people affirming and adjusting behaviors that align to your mission, vision, and values, and the behaviors that are associated with the values. That's what makes an organization, you know, great, right?

Yeah.

And that's what people want to buy. They want to buy, you know, the other word is the intellectual capital that is coming with that organization. And that intellectual capital includes How people are being managed. Okay, I'm off my soapbox.

But it's a great point. It's absolutely correct. And I think that, again, this is where— this is where, again, there are people out there. We've been through it. I've been through it myself. You know, we got lucky. You know, the HR thing wasn't even really a question. And we're like, well, you know, of course all these people are going to go over. I mean, I'm— you know, it was— you can luck your way through it. Or you can plan to be able to actually do it on purpose and to optimize it. And again, within the, just in the context of the exit planning thing, which is really where we are today, but in general for growth, the point is to be able to say, hey, look, I want, if I want to have a healthy, sustainable company, forget about selling it. If I just want to have a healthy, sustainable company, I need to be paying attention obviously to the way that I deal with my people.

Right.

people are everything. If I don't have my— and again, I think every founder pretty much knows this. Again, their ability to be able to hire good people, that's an issue. I mean, that's one area where people are good, bad, or whatever. I don't mean good, bad. I mean, where there's a strength or a weakness, right? There is the way that I manage those people in terms of what they do every day and what the organizational structure is and what are the processes in place where people do that, right? But then, but how are, and then how are people allowed in order to be able to actually enable to do the job, right, that I'm asking them to do that does create the result or create the growth or the revenue or whatever? And so, you know, again, what, what Brian does is, you know, is to be able to help you figure out what to do with your people.

Exactly.

Who do you have, right? Where are their strengths and their weaknesses? And what, what, where, and are they in the right places? Are they aligned the right way?

And if you think about it, like, you know, from, from like a technology company perspective, right, they're, they're constantly working on their product. Everyone talks about sprints, right? They're doing a sprint; they're doing an improvement. There's continuous improvement, right? Oh, we preach continuous improvement. And I think where a lot of companies fall down is, yeah, we have our people too, right? Like, And of course, yeah, we only hire A-players, but they don't put the same sort of effort to improve the product and then to improve the process. To your point about Julie earlier is that's a really, that's a forward-thinking company to say, hey, we need to rotate her into operations, right? But I don't think many of your clients may not do that until you come in, Brian, right? Until they really think of their people as a true asset to the company. Right.

And the other question that often from a strategic standpoint that we'll ask as we go in and do our sort of due diligence as we take on a client is we'll ask, so talk to me about how you're developing your people.

Yeah.

And they're, and they're like, well, you know, they do this, this, and this, and they take on these projects. No, but how are you developing them from a career standpoint so they're going to want to stay with your organization? And, and because, you know, retention is key, right? And they're stable. And again, what they— a buyer doesn't want when they buy a company is for people to exit. So, you know, along with this comes all the employee communications piece in regard to the sale and how you get folks not scared, but you get them excited about the next chapter for that company because they're going to have this infusion for growth or they're going to have— and they don't just see it, they see it as a beginning, not the beginning of the end. Right.

Well, yeah. And let's dig into that just like we did about strategic HR, that retention piece. Right. Because I think that's not forgotten, but it's not emphasized enough. Like, people put a lot of effort into hiring people. Right. Oh, it's going to take us XYZ. We're going to have 9 interviews for people or whatever it happens to be these days for people going through to hire a person. But like, talk about ways that you help clients with retention strategies and making sure that they retain the employees that they want to retain.

Sure. I mean, most folks, it's, you know, it's the adage is true, as true today as it was 10, 15, 20 years ago. People work for people, right? So if, you know, if they are, they're working for someone that is a good people manager and they like working for that person and they feel like they have developed under that person and have grown, they're not going to necessarily leave by a change in ownership. Ownership, right? They're going to want to know, okay, I'm, I, I'm safe, my boss is safe, my manager's safe, um, it, you know, I'm good, right? We'll see what happens. I'm not going to immediately start getting my resume together and start looking because ABC Company is being sold to XYZ Company. But, you know, to create a stickiness factor, um, You know, where we work is we really start with the basics. It's amazing how many folks sit in people management and don't have the basics on how to manage people. Not their fault. They do. They were just never trained. They never had to be a people manager.

They never—

if they were trained, it was by watching their former leader who was also never trained. So they have, they have these bad habits.

So yeah.

For many folks, they're like, you know, we'll sit down and like, okay, tell me about the one-on-ones you're having with your, your team. And they're like, one-on-ones? Or they don't know what they are. Or 2, they're like, well, yeah, I do them every couple of weeks. And we use Asana, and we go through a project list, and they give me a status update. Well, no, that's not a one-on-one. It's just what you called it. It was a project status update meeting.

Right.

You know, one-on-one is you know, really the team or the employees meeting. And, you know, and that's where, you know, I like to say, you know, one-on-ones are the strongest and most influential and most powerful management tool ever. And if you're not utilizing those, then you're missing the mark, right?

It's so true because, like, you find out about, like, the status meetings, you find out, like, which project is screwed up? Like, oh gosh, like, you know, oh my gosh, the IT CRM system is, is, project is screwed up. Shocker, right? But the one-on-one is where you find out about the person and about like the things that she's struggling with or that, that she doesn't know how to tackle or the problems that she's having in her work. And as a manager, that's what you, that's what you're paid to do.

Yeah, I mean, and, you know, the other sort of litmus test we do is we'll sit down with a people manager or a leader and we'll talk about their team and you'll say, okay, you know, you know, Mr. Founder, Mr. CEO, you know, Susie's been with you for a year and a half. She's your head of finance. Um, does she have a partner? Does she have children? And he's like, oh yeah, he's a partner, children. Partner's name? And they sometimes fumble.

Great.

Do you know their children's names? They don't know. Well, back it up here. You know, if you want them to go over and above for you, um, and you want to elevate the organization and the team wants to work at a higher level, you know, continuous improvement to your point earlier, well, they have to know you care about them as a person first and foremost.

Yeah.

And the only place you usually find out about those things is in a genuine one-on-one done with them. Hopefully once a week, right? Right. So, I mean, it's not— I'm not saying you need to get to know their personal business, but you do have to know them as a person and they have to know you care.

Yeah, it's a huge thing. This is, again, that's the biggest retention strategy there is, right? I mean, exactly right. I mean, that's the first one is—

It's not rocket science, right?

No. Yeah, no, it's not. And it should actually be kind of, you know, it's just a human interaction, right? I mean, at the end of the day, But, but you're right, it is the kind of thing where we get bogged down in what we're doing and in the process we've gotten, whatever. Sometimes people are also— look, this is an issue too— people don't know what to say or what they're allowed to say anymore. I think that's obviously something that's, that's on people's minds. Again, as well-intentioned as, you know, as all this stuff is, I think that the reality is some people are like, I don't know what to— can I even ask you about the fact that you're married anymore, or can I do that? You know, I mean, to be fair, that's, that's a, that's a real thing too.

No, there's, there's guardrails for sure. Absolutely. But to completely not take it to some level, to some, not to, not to a personal level, is a mistake, you know? Right. And so I think it's, you know, I often, we often say in HR land that the harder skills are the soft skills.

It's so true. You're exactly right. Because, you know, when a company is saying something like, oh, we're a family on one hand, and then they don't know the family members' children on the other, like, well, which one is it? Right? It's got to be one or the other, you know?

Right.

Yeah.

And, you know, sometimes it's just nomenclature or jargon. But I'll be honest, when someone tells me that, you know, we treat our employees like family, I get a little squirmish, right? Because, you know, because really, so how often do you have to let go of your family members? I mean, you're sort of stuck with that.

Or do you know my relationship with my uncle? Like, we don't, we don't have enough time on this podcast or anything. Like, no one would want that relationship, you know, like even, you know, so.

Yeah.

Right. Yeah. It's a nice thing to say because what we, I think we know what you mean, but the reality is, is that yes, Right. Not something that—

yeah.

And by the way, it's the second podcast in a row that someone has said that exact same thing, by the way, that exact same line.

It's very true.

It's— no, which obviously, you know, makes it, you know, it's very true, right? It's like, it's like we're family, we're whatever. It's like, okay, but, you know, again, it's, it's, uh, there are some things that go along with that that aren't going to be very family-like, and you've got to be able to know the difference, right? Again, back to the retention thing, because I think, again, this is a big thing. So we talked a little bit about, again, that one-on-one meeting being the most important meeting that you have on a regular basis with whoever you're managing, right?

Exactly.

What are some of the other retention strategies that you talk to founders about?

I think oftentimes, People are there and want to have a purpose. So what, what level of autonomy do people have?

Right.

But, and I think that, you know, knowing their manager cares first, knowing they have autonomy and they can do and make decisions and feel empowered too. And then 3, where we often have to also dig in, is do they feel like they're being paid fairly? Right. And so when was the last time you looked at market for any of the roles that you're paying? And are you competitive within, you know, being paying at the mean or the 50th percentile from a market perspective? Often when, even when we talk about that, we get deer in the headlights. Like, what are you talking about? But the reality is, you know, even 90 days after someone's even hired into a business, they're already out there looking again. So everyone's— the loyalty is somewhat out the window. Now, are they necessarily chasing a paycheck? Not always. And more often than not, they're running from a bad manager or a bad boss. But they're also, you know, what's equally important is from the benefits side of things, what level of flexibility does an employee have? Like it or not, it ranks high with, especially with many generations that are in the workforce today, Gen Z being one of them, that they have some level of flexibility. You know, the pandemic proved out that, you know, people could work remotely. They want that flexibility in their schedule.

They need it.

And the idea that You don't have that level of flexibility and you don't have a good reason why they're being chained to a desk between 8 and 5 every day. Well, you know, if you don't have a good reason why they need to be there other than you feel guilty because you, you're paying for expensive real estate because you've signed a lease that was 10 years long and have office space that's not occupied all the time, Mm-hmm. then you need to think about, okay, how is this being consumed by your employee population, and if they are getting the work done and they're doing it well, where does it— why does it really matter how many hours they're in an office or how or where they're doing it from, as long as you're staying within compliance? Not saying let all people work remote. I'm not of that opinion, but I do believe that you're going to have a greater level of stickiness and better retention if If you have some type of hybrid model between remote and in-office work.

Yeah.

And even if not directly that, like, look, you have situations, right, where you just can't do that. Someone has to be on site doing it.

Yeah.

No, in a manufacturing setting, you got to have somebody there.

But in general, I think the point is to know is that what you're saying is that it's not— that's one way, right? But the reality is that what people want is not just a paycheck. People now do need— they need this flexibility. And here, right, it's not— I can't get the things done I need to do as a human, right, if I am unable to be able to get away from my desk for 15 minutes in the afternoon, right, to do anything, right? I see— we see this all the time. I do a lot of coaching too, you know, sports kids coaching and stuff like that.

Right.

And I'm constantly seeing parents who just are like having a problem getting there at 6:15 or 7 o'clock, you know, for a practice at 6:30. Well, I can't get off work in time. I can't do the thing. It's like, we can't get there. And then I've got the exact opposite, right? Which is so many people now are working from home, including myself, right? That I can do all kinds of things that I couldn't do before, right?

Sure.

I mean, but the, but the benefit that, that brings to me as a person is like, I would, I would, I would much rather get paid less and have a flexibility, right? Than, than, than making, you know, money and being chained, like you said, to You know, to a desk for 40, 50, 60 hours a week.

And certainly, you know, the caveat is it depends on the job, right? I mean, there's certain jobs where you can't do those remotely. You can't work in your home office like you and I and a lot of folks are able to do because we're knowledge workers. But at the same time, you know, don't— if someone needs to cut out at 3:30 to go pick up their kid from daycare, And they want to come in at 7 to do that after they drop them off and not be there necessarily what may be considered core hours, which is 9 to 5. If it's not going to hinder the business, you're going— you're enabling them to do that and having that level of flexibility. That's going to mean a whole lot more than giving them 50 cents to a dollar more an hour, right?

Yeah, which all they'd have to do is spend on, on, uh, you know, on child care or something.

Exactly.

But then think of it from their perspective, right? Because I've been in that exact situation with you when someone has come to me and said, hey, can I do this? And this is before the pandemic. It's like, yeah, and yes, of course you should, and don't ever ask me that again, right? Just do it, right? Like, and that, that's the way that you— the, the, the, the, um, and I'm forgetting the word, but like, you gain so much credence, or you gain so much sort of cred with that, with with that employee when you say, hey, no problem, do that when you need to do that.

Yeah, I think it's in, you know, there's ebbs and flows to everything and tides turn. I think, you know, what I see from my vantage point that is concerning is I think the word around competitive or the meaning behind competitiveness today And what that means for people. I don't know if we want that being tied to it. So I think, you know, the idea that to be competitive, we need folks in the office, we need them grinding, we need them here, you know, 8, you know, 10 hours a day. Do I think people can be more focused? And do I think in certain situations is remote work taken advantage of?

Yes.

But I think we're turning the pendulum too much to the other side currently, in my view. And what you're seeing and what all the studies will show you is the result is more stress in the workplace, less engagement, and, yeah, and higher levels of burnout. Right? Yeah.

Which is directly related to your retention. And so, right, that's why people start to leave. You brought something up before, and I think actually, John, you mentioned this the other where we were talking about this too, which is that people don't leave jobs, they leave bad managers.

So true.

No, they do.

Right.

Well, when I, when I, when I think of— sorry, when I think of the jobs I've left over the course of my career, I go back and it's like, it was either like a toxic situation, one, or craziness, or a bad manager.

Right. Like, and if you think about, John, your best manager, That's probably a manager that really, one, knew you, two, knew your family and your situation you were in and where you were in the cycle of life, and you knew they really cared about you.

And I still talk to her today. It's so funny you say that. Like, I sent an email to her 4 months ago about catching up because I haven't caught up with her in a couple months, right? And that job was 13— no, it was, sorry, 20 years ago. Yep, I'm still talking to her.

Yeah, for sure.

Yeah, it's the kind of stuff that makes it— that makes a huge difference. It makes an impact on people's lives. And it's not just about— but again, bringing it back to the business thing, the notion here is that it's nice that we're all nice to each other, and that's good. But like you said before, it's like if I'm looking at my competitive situation and I've got a highly charged competitive situation in my business where I need to make sure that, that I'm getting out what I'm getting out Etc., etc., whatever that result is, and then I'm pumping the widgets out or whatever I'm doing. Um, what you're saying is that there's no— the 2 things are not mutually exclusive, right? Not at all. Yeah, yeah, for sure. The ability to be able to say, hey, look, there's a fine— you're, you know, you're striking the balance. That's what you're looking for, right, in, in this stuff. Whether you have the employees here, you have to or not, or whether— no matter where they are, where they're sitting The ability to be able to recognize that your employees are giving your— what you're saying is giving your employees some flexibility in terms of what they do and how they operate is one of the best ways to be able to retain them long-term.

Right. And I think some of this is just a mind shift, right? So oftentimes we'll sit down with a founder or a leader and, you know, the margins are slim and they're trying to Increase those margins to make the organization more sellable. And immediately where they go to is, well, my highest cost is people, you know, and salaries. Well, no, don't think of it as a cost. It's your biggest investment.

Right.

Yeah.

Yeah. No, that's an excellent point. I mean, that's— if anybody's looking at their employees like they're a cost center, you know, that's— then I would urge you to actually hire Brian immediately. All right, and take a look at that stuff and take a look at yourself, because the reality is, is that there are probably other things that you are missing, um, you know, by having that mentality, right? In other words, what we see all the time, the financials and the things that when we're looking at, you know, remember what we're doing a lot of the time, you know, the essence of what we do is putting people through due diligence before they go due diligence, right?

Sure.

I mean, if you think about it in its kind of most basic You know, you know, thing, what exit planning really is, is understanding where I am right now and where I want to be able to get to. And then I'm going to formulate a plan to be able to get there. And that plan is going to take a year or 2 or 3 or whatever, how much time I have. And I'm going to work that plan as much as I possibly can. And I'm going to bring people in to do the thing that I got to do to fix it or to raise it or to, you know, or to solve that issue so that when a buyer comes along, they can see this stuff and it's all buttoned up. They're getting all the information they want and it looks like a healthy company. And boy, this transaction is going to go really well. And I've just raised my multiple as a result because I got 4 or 5 different companies that want to buy me right now.

Right.

So, that's the kind of the big picture. But the notion is that your people, the employees that you have that are actually making this stuff happen, are the biggest investment you make. More important than the equipment, more important than the office space, for sure. More important than my subscription to You know, certainly more important than my subscription to whatever software thing I'm using, right?

Right.

There. So I mean, the, the bottom line is that, that, that if you, if, if you are already at a point where you are looking at your— like, you're frustrated by the cost of labor, that's a problem, then you've got a bigger problem.

Right.

And Brian, what are some things that we haven't talked about so far that, like, either come up in your business or you feel are important with regard to, like, this, the strategic stuff you're doing or the consulting you're doing that either we haven't addressed enough or something that you want to mention that's sort of critical to the work that you do with your clients?

I think, you know, there's several areas. I think one I would highlight is the level of leadership within an organization. Because, you know, what got you to where you are today is not necessarily going to get you to where you want to go tomorrow, right? It doesn't mean that folks are not good at what they do, but, you know, so a quick story. So when I, I spent 4 years at Indeed, I worked as an HR business partner before before I started my two— the two companies I have now, Sundog Coaching and Sensible HR. And I— what I tell folks is I rode the wave at Indeed. So Indeed, um, you know, 2009 was bought by Recruit out of Japan for $1 billion. They let those folks, you know, sort of move along for 5 years. They invested a lot of money and then they expected, you know, growth. So what did the growth look like? When I came into Indeed in 2016, there was, you know, 2,500 employees in 10 locations around the world. What the growth looked like 4 years later was 10,000 employees in 30 locations around the world.

Wow.

So in 4 years, that's how quickly they grew.

That's fast.

Right? Well, I don't care how good those folks were who helped found that company, the complexity of that company And what was required to make that engine run with 10,000 employees is much different. Now, some folks can step up and do that. Other folks are better suited for a company that's not that big and it's not enterprise and are scaling and coming out of the startup phase and growing to 2,400 or 500 employees. They, they need to move along. They need to be taken off the bus. And in the end, they'll be better off. You'll be better off because they're better suited to, you know, not everyone's supposed to play in the big leagues. You know, they can make an impact playing in the minors. And it doesn't make them a bad leader. It doesn't mean they're not successful. It just means that's where they're better suited given the skill set they have. Yeah.

Or, or conversely, right? It's like, know that you don't have the skill set. Who can I bring in that does, that can manage this stuff? And it's not just about fractional, you know, maybe it's a fractional or a consultant like you to start with, but potentially I'm sure that you're in a situation too where you can often even recommend people they can then bring in and hire full-time and all that stuff to be running this stuff and to be doing the things that they can't do that help it grow.

Yeah, and I think oftentimes it's about having those what I call crucial conversations with employees.

Right.

And, and, you know, they don't have those. They punt on those, right? And they rely on, they rely on really what I call a strategy to hope. They hope the person's just going to leave. They hope the person, you know, you know, will maybe find another role, or they hope something will change. Well, hope is not a strategy. And more often, you know, tied to that Strategy of hope is really procrastination.

Yes.

So, you know, it's—

And then at the end of that is actually fear at the end. Yeah.

And in the end, you know, you know, you know, I always go back to, you know, my dad, and we often go back to our fathers. You know, my dad was a very successful business person in my eyes, and I'm like, well, what's the one piece of advice you would give any business owner or executive that's got a high-level position? And he goes, oh, that's simple. Just make a decision.

It's the vacillation and the wishy-washiness.

Yeah. You know, and you know, and you know, the other thing we often find is they're they're looking for perfection, and they want to check all the boxes. And and by that time you do that, everything has changed. We often talk about look, it's it's demo good enough move on. And, you know, or pilot it, or at least do this and then tweak it along the way. Don't look for perfection. I think so often, especially with founders, and you talk about product, they want the perfect product before they launch.

Well, no, no, it's so, it's so hard to get people out of that mindset though, like, you know, with regard to No, you don't want to launch something that no one can use. But if you wait 2 years to build a product before anyone uses it, then you get feedback and it's like, no one likes this. Like, oh gosh, I wish I'd learned this a year ago.

Yeah. And in a software company, we all know this. It's, you know, someone wants to come in and invest or buy a software company. They want to know what the MRR is. They don't want to know how great the product is and what are the next line of features that They're rolling out.

Right. There are some chances if you have that MRR that your product is good.

Yeah, like, that's how you tell.

That's how you know the product. That's how we qualify it, right, is that it's making money. Now, they could— the product could be, uh, you know, changed and adopted, and we want the user feedback, and you want to, you know, optimize it and twist the screws and make it, you know, as good as possible, whatever. Or maybe you want to realize that you need a new product. To be able to enter into that market or whatever. That's how we treat product development, right?

Yeah. And when employees are not naive, they want to see, they want to see traction when they're sitting in those situations. They want, they don't want to be told, let's, oh, we're going to iterate on this product feature again because we feel like it's going to be more sellable. Well, no, go out and tell me that this piece is sellable and then we'll add product features after we have customers, right? I think oftentimes They get, you know, founders get stuck, especially if I call them the mad scientist types, and get stuck on building the perfect, you know, widget or product or software as a service. And, uh, no, you're better off instead of investing those dollars, go invest in marketing. Go out and find someone who was willing to be a beta customer and willing to go along for the ride with you. And And you add features based on their input, not what you think is what—

So true.

The product—

But the same thing is true, right, Brian? I mean, just to bring this back to specifically to HR, you know, the notion of how I, how I'm looking at the growth of my business and the, and the value or the growth of my employees that go along with it. Because it's not right. It isn't just a situation where We talk about human resources and we talk about, you know, in some cases, you know, I think people think of the— as human beings as commodities, right?

Yeah.

It's kind of like, well, that— and look, there are— let's face it, there are businesses, right, where you can plug one person in for another and whatever, and there wouldn't be much difference, right? I mean, that's the truth. But at the end of the day, if you've got 5 people with this personality working in this whole thing, that would be really great in some other situation, but are now in a situation where that creates conflict.

Right.

Something like that. Or, right, or, you know, the ability to be able to get people that will— like that person, you know, that fictional person we were talking about who's like, you know, are they really going to be able to work this out? Are we going to sit here and hope that they get better? Right? Or are we going to have to actually commit some training? Right? Do I have to put more money into training these people and getting them to a level and things like that? Those are all things that— so, I mean, And I'd rather train people ahead, right, than, than be constantly spending money trying to find new people to fill in that require to be re-onboarded and retrained in what we do and how we do it. That's the expensive part.

Right. And, you know, it's a great point, Joe. And, you know, you talked about people, process, and product. And I, I will tell you that an hour invested in people Versus process versus product will have a much higher return than that same hour invested in product or process. So I think the message I would leave listeners with is when you're thinking about investments in your business, think about what, how you will invest more and better in your people.

Well, Brian, thank you so much for joining us today. We really appreciate it.

My pleasure.

How can people, if people, when people want to get in touch with you, what's the best place that, where they, where can they get in touch with you?

Yeah, I'm on LinkedIn. So Brian M. Vogel. There's a lot of Brian Vogels out there, but M is my middle name. So, or Matthew. So Brian M. Vogel. You can also go to my 2 websites, sundogcoaching.com or sensiblehr.com.

Great.

Excellent. Brian, thanks so much for being on the ExitEngine podcast today. We really appreciate it. John, you know, we're gonna do more talking about the HR side of things because I think, again, what we have always said, right, that the, again, people, product, process, but people are all a business really is at the end of the day, right, is a bunch of human beings, right, working together, trying to row in the same direction to accomplish a goal. That's it. It's like any team and anything and any group of people together, right? Optimizing that team through HR, right? Optimizing it through in a proactive way, understanding your compliance, understanding your risk around those employees and how they work and all that stuff is as important a part, right, as delving into the details of your product or working on some kind of system or process in the background that basically helps you drive profitability, right? They are As Brian said, it's $1 of investment in each of those 3 things is going to be a greater return if you invest it in the people than it is in anything else.

Well said. Absolutely.

Brian, thanks again for being here. We really appreciate you and looking forward to doing some more, guys. Brian will be around with us, hopefully, moving down the line here. As you know, with all of our advisory partners, Uh, the people that are on this podcast, we, we stay very close to them. We will work with, uh, with Brian to see what we can bring you guys next. Um, in the meantime, uh, we're asking everybody right now to go to myexitengine.com. It's a— we're going to ask you for your email address. That's it. Why do we want your— their email address, John?

Uh, because we are launching, um, a community and we want to let you know when that community launches. So again, as Joe mentioned, www.myexitengine.com. We will ask you simply for your email address. It takes about 2 seconds, and then we will let you know when our community launches.

Exactly right. That's, that's what we're using this for, no other reason. We're going to get you in. We're going to, we're going to talk to you about when this community launches. There's going to be lots of other information coming down about this too, so please, uh, you know, stay tuned here. Again, uh, find me, Joe Stapleton, uh, jo@myexitengine.com. That's John Kniff, John, j-o-h-n@myexitengine.com. And of course, find us on LinkedIn, our YouTube channel. Um, we're, uh, we're putting a lot of work behind the YouTube channel. So if you want to look for content like this, um, short-form stuff, long-form stuff, the entire podcast in its entirety, both in audio and in video, all the webinars that we do, all the content, all the advisory partners that we talk with, the whole thing, it's all there at YouTube. And that is youtube.com/exitenginecommunity. You can find us there as well. So go check it out. Subscribe, like, subscribe, share with a business owner you love, all that great stuff. John, thanks again for being my partner. Really appreciate you. Brian Vogel, thank you again so much for being here with us today, and we're looking forward to seeing you again really soon.

My pleasure. Thanks, guys.