Latest / The Start, Scale & Succeed Podcast / Why HR Shouldn’t Be A Bad Word with DeeAnn Palin (stage 4) - Ep. 436

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Why HR Shouldn’t Be A Bad Word with DeeAnn Palin (stage 4) - Ep. 436 · The Start, Scale & Succeed Podcast

• 0:00
  Scott Ritzheimer: Hello, hello, and welcome, welcome once again
• 0:03
  to the Start, Scale, and Succeed podcast-the only podcast that
• 0:05
  grows with you through all seven levels of your journey as a
• 0:09
  founder. I'm your host, Scott Ritzheimer, and way, way too
• 0:12
  many founders treat HR like a necessary evil that they can
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  just hand off to a bookkeeper, or probably more likely just
• 0:20
  keep ignoring altogether.
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  But once you're leading managers, once you've reached a
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  certain level of success, in particular, the people problems
• 0:29
  you've been in ignoring start to compound. The new higher
• 0:34
  revolving door-you experienced that yet, or the empty seats
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  that you just cannot, for the life of you, figure out how to
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  fill, or or even the key leaders who you don't realize it, but
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  they're already looking at other job offers. There are some
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  really big challenges and opportunities all in the world
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  of HR, which for many founders is brand new territory. So, with
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  me today, my guest helps founders turn HR from overhead
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  into a growth engine. Deanne Palin is the founder and CEO of
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  OnPoint Business Solutions, where she partners with CEOs and
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  boards to help growth-focused companies navigate critical
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  transitions. With over 20 years of executive leadership
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  experience and more than a decade as a business owner and
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  coach, she brings both strategic insight and operational
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  expertise. She's known as the CEO Whisperer, and Deann helps
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  leaders solve complex HR and organizational challenges while
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  preparing their companies for the next stage of growth. And
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  she's here with us today, Deanne. Welcome. So excited to
• 1:35
  have you here. I want to start off with with you know. I was
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  telling you when we were starting, I was just having this
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  conversation with a client, but many of the founders I work with
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  think HR is just a big waste of money, or even worse, a bad
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  word. You know, it's like just don't talk about that. It's not
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  a good thing. Why do you think that HR has such a bad
• 1:54
  reputation with so many entrepreneurs?
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  DeeAnn Palin: Oh, we could spend six hours on that, but I'll
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  start with just a couple of key things. One is it HR doesn't
• 2:04
  really show up on the PNL other than like salaries and benefits,
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  right? And for most companies, when you hit a certain size,
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  that's their number one, number two, or number three expense
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  line. So it feels like an expense to companies, but what
• 2:24
  we're missing are the opportunities to really create
• 2:27
  behaviors in a growth engine for companies. And the other thing
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  that we're facing is the leakage on the profitability side with
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  turnover. The things that you mentioned; those are real
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  problems for companies, and a lot of founders just think they
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  can, you know, shoulder through the hiring process and the
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  issues, and just write the check and build it in as an expense
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  line, and are continually frustrated, feeling like they're
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  pushing rocks up a hill. It's the place where I see most
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  founders not be able to graduate to the next level of growth,
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  whether it's 1 million to 5 million or 5 million to 20
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  million. If you don't crack this code on people management and
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  people strategy, it does feel onerous, painful, and like
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  something you should avoid because most of the time CEOs of
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  things they've tried aren't working, so it just feels like a
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  waste of effort. The other thing that I see a lot of times is a
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  CEO will have their controller, their office manager, their
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  spouse running HR, and so it feels very tactical,
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  transactional, and and frankly not fun. You know, a lot of
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  CEOs, I joke with, gosh, running a company would be fun if we
• 3:44
  didn't have to have employees, right? And that's not what you
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  want for a company. Most CEOs want to build a legacy. They
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  want to create a lifestyle for people. It's not just about
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  making the money. It's about building a culture and and
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  having a really good purpose. And the way HR is run to a
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  certain level doesn't set it up for that kind of success. And a
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  lot of times, a person that we've got working on HR in the
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  company, even that first hire, they they do what I call going
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  native, where they forget that they're trying to help a CEO
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  grow a company, or they've never had the skill to do that because
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  a company can't pay for it, and they end up just being a
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  tactical person that ends up advocating for employees and
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  causing more hardship for CEOs rather than not.
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  Scott Ritzheimer: Yeah, well, it's it's interesting because
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  there's a certain extent to where a CEO needs the skill of
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  picking the right person, but needs to have you know hopefully
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  not experience the wrong person, but like needs to have
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  experience to be able to do that. And so it's a little
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  chicken and the egg to some extent. Like, how do you know
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  what the right person is? How do you help folks to recognize?
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  Let's start just with. The opportunity of what a great HR
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  leader would do for their organization.
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  DeeAnn Palin: Yeah, I'll start off by saying, a strategic HR
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  leader isn't usually the first hire a CEO should make on an
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  executive team because, frankly, they're too expensive, and if
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  you don't have 200 employees, it's a hard position to
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  rationalize, right? Usually, companies that are at this
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  growth stage need every nickel they've got to invest in the
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  business. So, oftentimes, we serve as a fractional support to
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  help them build the right executive team in the right
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  order, and fractional support is a huge way to do that on
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  marketing, on HR, on finance, oftentimes. But what we can do
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  with and for a CEO is really help them build the correct
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  strategy. And if they've already got a great business strategy,
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  align an HR strategy around it. And that means what's your
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  workforce plan? What kind of skill sets do you need to have
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  to build your company? You talked about it, Scott, with the
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  different layers of leadership. When is it the right time to add
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  a person or a function or a skill? And I use tools. I've
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  used DISC, Predictive Index, Culture Index. I am 100% aligned
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  around Aptiv Index. I've become a national reseller for them.
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  It's an index tool that helps a CEO know that they've got the
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  right people in the right seat. It DNA maps the skill sets to
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  make sure people are equipped to do the jobs that you're hiring
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  for or need. A lot of what CEOs are scared to hire around is,
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  what if I fail? What if I hire the wrong person? What if they
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  don't achieve what they need to to achieve? It's expensive, and
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  so doing everything we can on the front end to make sure we
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  define the role clearly, we understand what the success
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  factors are, we know the types of skills and behaviors, and and
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  frankly, like DNA personality assessment to have the right
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  person in the right job, and then onboard correctly. Those
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  are really really important, and most CEOs don't have the skills
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  or the experience to do that.
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  Scott Ritzheimer: Yeah, DeeAnn, one of the things that you've
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  words that you've used quite frequently, and and I think for
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  good reason, is that this is expensive. And not only is it
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  expensive, but it feels expensive. Payroll can be one of
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  the biggest expenses in on a PNL, but for a lot of founders,
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  hiring the the right people to help make the most of that
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  payroll feels even more expensive. How do you help folks
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  figure out when when it's the right time to start bringing in
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  some outside help?
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  DeeAnn Palin: So the first thing I will tell you is if you've got
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  if a CEO's got more than 20 employees, they're going to need
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  some level of HR, administrative, tactical support
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  somebody to process payroll somebody to help them with the
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  benefits enrollment somebody to help onboarding employees hiring
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  that kind of thing that's a very different role than changing HR
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  into a strategic lever if that makes sense so there's part of
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  the blocking and tackling of HR to create a legally sound team
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  to make sure you're fully staffed to execute the day to
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  day. When it becomes an expense that is not smart anymore is
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  when you get to an employee size where you're not leveraging your
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  total rewards package, meaning all of your payroll, your perks,
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  your compensation plans, your benefit plans. If you're not
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  100% that sure that that's driving growth for your company
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  and altering behaviors. If you're just writing a check
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  because you were given a 20% or 14 or 30% increase on your
• 9:09
  benefit plan, and you feel backed into a corner, and you
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  haven't looked at the strategy and haven't looked at your
• 9:15
  workforce to say who do I need to attract, what what matters to
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  them, how do I execute high performance here? What
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  compensation plan will attract the best people and help us
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  retain and drive productivity? If you're not having those
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  thoughts and you've got an HR person, then your HR function is
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  tactical and it's an expense center. And I'll give you an
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  example. We had a company that we just went into not too long
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  ago. 85 employees, manufacturing organization, and like any
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  company I've been in, and I've been in 25 different industries,
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  their payroll and comp and perks were one of the top two expenses
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  in the company. We got in, looked at their benefit plan
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  immediately, and they wrote a check to have us come in.
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  Obviously, we we come in as an advisor and support to them.
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  Within 30 days, we found $500,000 of misallocated benefit
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  design, and you think about that from an organization and their
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  profitability. 500,000 can hit really, really hard on the PNL,
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  but it wouldn't show up as leakage, right? It shows up as
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  an expense, and that's why I'm saying you got to look at it
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  bigger than an expense. What is our strategy? What behaviors is
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  it driving? What's the best model to deliver what we need,
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  and even on compensation, you know, a lot of CEOs think of it
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  as I have to pay at market for every position, or way over, or
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  they don't even know what market rate is for a position. And
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  having someone who's got the experience and the background
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  and the tools to go do comp analysis and really look at your
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  turnover, look at your higher challenges to identify which
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  jobs are key jobs that we need to overpay to get the best there
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  are, versus which are the jobs where we either have great
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  retention, steady hands, they're not as critical. You know where
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  can we, where should we leverage our comp and and build plans to
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  drive behaviors and really leverage and harness our key
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  talent? So it's those kinds of thinking and decisions that
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  matter a lot. And and I'll give you just another example. I just
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  presented to a Vistage group last week about the math
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  equation of people issues, and if I had a CEO who was working
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  70 hours a week, and I know this is a lot of these founders,
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  they're working 70 hours a week, and they don't know how not to.
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  Okay, and they feel like they can't afford a new person or
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  some help, whether it's an EA or you know a next in command,
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  whatever that that next biggest function is, and I'll have them
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  really, really, really identify what's the highest and best use
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  of me, whether it's biz dev, whether it's product
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  development, whatever the industry and the expertise that
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  CEO has, and then I'll say, "What was your take-home pay
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  last year? Write it down. Write that number down. Okay, now
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  divide that by 2080, and that's how many hours in a given year
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  for a 40-hour work week. And we know they're not working 40
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  hours; they're working 70, right? But you say, okay, look
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  at your calendar last week. How many of those hours were not on
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  your highest and best use?
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  Unknown: Right, and one example that just sticks out of my mind:
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  I had a construction CEO, and he had grown up in the ranks as a
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  project manager, and then you know ran the operation. He's now
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  the owner, and he had spent time moving trucks from one project
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  to the other. Right? Sounds reasonable. Sounds logical.
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  Sounds appropriate. I said, "How long did that take you? An hour
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  and 45 minutes, because it was across town, and I said,
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  "Remember that hourly rate you gave me? And I said, "So that
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  equated to $325 for an hour and a half. I said, "What employee
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  in your company would you pay 125 or $325 to move a truck? And
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  he threw down his pen and uttered some choice words and
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  had a very different perspective from there about whoa you know
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  where should I invest money and I can give you math equations
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  across benefits like I just described across turnover the
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  cost of turnover for an hourly employee to lose one employee is
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  point seven five times their base salary. So you, if you have
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  100 employees and 30% turnover, do the math on that. For a
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  $60,000 employee, that's over $1.5 million a year in lost
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  revenue and leakage. That doesn't show up on a P and L. So
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  these are the things that we help CEOs see. If you can fix
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  your turnover by even 20% by hiring a manager to lead that
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  team and do better onboarding, you've saved yourself $700,000.
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  It's an investment in cost savings, and that's per year. So
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  those are just a couple of the math equations that CEOs don't
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  think a bout and don't know to think about.
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  Scott Ritzheimer: Yeah, totally. DeeAnn, there's this question
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  because I could talk about this for a very long time, but I want
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  to get to this question because it's one that I ask all my
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  guests. I'm very. Interested to see what you have to say, and
• 15:02
  the question is this: What is the biggest secret you wish
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  wasn't a secret at all? What's that one thing you wish every
• 15:08
  founder watching or listening today?
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  Unknown: Oh gosh! After coaching hundreds of CEOs through growth
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  and sale, I would say the number one thing is don't feel like
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  you're the only one that doesn't know everything about how to run
• 15:24
  a company. We do not need imposter syndrome as CEOs. Every
• 15:30
  single CEO, myself included, running a outsourced HR company,
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  know that you cannot be good at everything. Find the things
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  you're not good at and get help, and do that proudly. That is
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  that humility is the success quotient for CEOs. The ones that
• 15:52
  think they have to figure everything out and they're
• 15:54
  pushing rocks up a hill and they're spending hours trying to
• 15:57
  crack a code that somebody else could do in 15 minutes is the
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  worst cost savings and brain damage a CEO can have, and it's
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  it's a soul killer, let alone a financial killer.
• 16:10
  Scott Ritzheimer: Yeah, yeah, for sure, for sure. Deanne,
• 16:14
  there's folks listening to this, and they're like, "Yep, made
• 16:17
  that mistake. Made that mistake. Felt like that was expensive.
• 16:19
  There, there's got to be a better way. How how can they
• 16:22
  reach out to you? How can they find more about the work that
• 16:24
  you and your team do?
• 16:25
  DeeAnn Palin: Probably the best places on our website. It's On
• 16:28
  Point Biz, so it's O N P T B I z.com, and there's a contact us
• 16:34
  button. You'll get right to my direct email. We'd love to talk
• 16:38
  to you. I've got some tools that we can help CEOs with. I've got
• 16:41
  an Aptiv Index personality assessment that I'd offer to any
• 16:45
  executive team free. Really diagnostic about the skills that
• 16:50
  someone has, and we have an X-ray that allows an
• 16:54
  organization to look at what they're great at and the stage
• 16:57
  that they're in and help them prepare for growth. So I'd be
• 17:00
  happy to share either of those.
• 17:04
  Scott Ritzheimer: Brilliant, brilliant. Head on over. We'll
• 17:07
  put all of that in the show notes, so you can click or tap
• 17:09
  directly to it. You don't have to go searching for it. Deanne,
• 17:12
  it was fantastic having you here. Thank you so much for
• 17:15
  coming on the show and sharing with us today. I really
• 17:18
  appreciate it. And for those of you watching and listening, you
• 17:20
  know your time and attention mean the world to us. I hope you
• 17:23
  got as much out of this conversation as I know I did,
• 17:26
  and I cannot wait to see you next time. Take care. Hey
• 17:34
  everyone, Scott Ritzheimer here. Thank you so much for listening
• 17:37
  to the Start Scale and Succeed podcast. I hope this episode
• 17:39
  gave you exactly what you need for the level you're in right
• 17:43
  now. If you want to discover what level you're in, take our
• 17:47
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• 17:51
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• 17:55
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• 17:58
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• 18:02
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• 18:05
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• 18:09
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• 18:12
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• 18:16
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• 18:19
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