In The Thick of It

For your founders,

somewhere around employee five, the

laws really start clicking up.

And by 15 and 20 employees,

they really start clicking up.

So you have to have the right

policies and procedures, employee handbooks, mechanisms for

filing complaints, investigating complaints, resolving complaints, all

of those things are just a necessary

part of running an organization.

Welcome to In the Thick of It Toolbox,

the special series where inspiration meets implementation.

Here, we don't just share success

stories, we equip you with proven

tools and strategies from seasoned founders,

turning entrepreneurial dreams into actionable plans.

Prepare to be enabled and empowered on your journey.

You're not just listening to a

podcast, you're gaining access to an

essential toolbox for your business success.

Let's dive in. I'm excited to have my

longtime friend Ben Haile join me on this bonus

episode of In the Thick of it Toolbox series.

Ben and I go way back to

our college days in the late 90s.

He has spent his entire 20 plus year career with

Ethos Group, a leading provider of outsourced HR services.

Since graduating with a business degree focused

on human resources, Ben has worked in

nearly every facet of ethos Group's business.

He's risen to a leadership role, guiding the company's

overall vision and strategic direction with an insider's view

into hundreds of small and mid sized businesses.

Over the past two decades, Ben has seen

it all when it comes to the HR

challenges that entrepreneurs and business owners face.

We'll tap into his expertise, covering everything

from the basics of HR compliance to

wild stories from the trenches.

Even if you have an HR manager

on staff, I expect you'll learn something

new about safeguarding your organization.

Ben, thank you so much for coming in and

being a guest on our special Toolbox Edition of

In the Thick of It for our audience.

Just some background.

Ben and I have actually known each

other for well over 20 years.

We met at the young age of 18 as we

were freshmen in college and lived in Dun hall.

It's okay if I date you here.

We've been friends since the 90s.

It's a long time.

Puts it in perspective.

You must be old.

So we go way, way back.

And actually, before we get too far into it, you

have actually been in your position with your company.

Not in your position, but you've been

with your company your entire working career.

We live in a world where two years

these days is almost a long time.

And yet you've been there for 20.

I think will be good insight

for people that are listening.

What is it that has kept you there for so long?

What I was looking for when I was graduating from

A and M back in three was an opportunity in

HR because I was a business major there in their

school, their business school with a human resources management emphasis.

So I really wanted an HR job.

And the more I looked around, the

more I realized most entry level HR

jobs were like payroll, benefits, analyst.

They weren't the interesting parts of HR to me.

And I was much more interested in the

employee relations side, like something with people.

And what I really wanted was opportunity, right?

That's what most people want.

And when I found Ethos Group, which is still

today our parent company, they had been in the

finance consulting space since 96, so they were a

fairly new company, but they were established.

And the people who started it had been in

that business for a while before that, and they

wanted to get into the HR space.

And so here I had this unique opportunity to kind of

do a startup, but within the loving arms of a parent

company who could give us some resources and some support.

So 20 years later, I've now had

every job that we have at ethos.

I've bounced from field rep to sales to support

to admin to our human resources help desk.

Our hotline, we call it now, for the last

handful of years on the leadership team and most

recently getting to lead the whole operation.

And it's been really rewarding.

But what has kept me there is the same thing.

That is what brought me there, which was opportunity.

And I would have probably left years ago

if I found some better opportunity somewhere else.

I don't feel like I was ever just willfully blind.

My father had some entrepreneurial history with him

and had taken some different, unique jobs, and

I saw how that played out.

But he's also had a lot of loyalty

to really good places when he worked there.

So I feel like I was ready for that mix

of, hey, I'm okay trying some different things and figuring

out what works, but if it is a good thing,

you've got great opportunity right in front of you.

Why would you leave it?

So takeaway for founders is make sure

there is always opportunity for your people. Absolutely.

Let's kind of go back into the background.

Coming out of college, your area of study was human

resources, HR, and at a m in the business school,

they kind of divided it back then into some marketing,

some finance, some accounting, and then HR and HR still

today, but then was a mix of the psychology side

and the pre law legal side.

And that's the part of HR that I

love, which is what we really call today

employee relations, which is like a subset of

this large umbrella that is human resources, right?

When we talk about HR, that can mean a lot.

HR can be payroll.

That's really important, right?

Everybody, any company, you've got

to get your payroll down.

HR can be the benefits part, or the larger

comp or even employee rewards, it's sometimes called.

Now, HR can also be recruiting.

One of the most important parts any company has is how

are they going to recruit and onboard their new people.

The salesman side of HR is the recruiting side, and

the payroll side of HR is the accountant side. Right?

But then there's that part in between, which is,

all right, we've recruited them and we're paying them,

then how are we engaging with them?

How are we making this place successful for our

people, where we're going to follow all those laws,

the really boring labor laws that nobody likes, but

they're very real for every business.

For your founders, somewhere around employee five,

the laws really start clicking up.

And by 15 and 20 employees,

they really start clicking up.

So you have to have the right

policies and procedures, employee handbooks, mechanisms for

filing complaints, investigating complaints, resolving complaints, all

of those things are just the necessary

part of running an organization.

I'm going to probably oversimplify what

it is you all do.

Just take this as the jumping off point.

I think, of what you guys do as outsourced HR.

You may have a different term,

but maybe explain what that is.

Well, there's a lot of ways

you can outsource HR, right?

Even just the concept of outsourcing things in general.

It's not uncommon today to outsource lawn care

or janitorial services or all sorts of things

that we don't necessarily want to do.

Once we have specialization and division of labor,

the whole economy grows a lot faster.

And so that's what we do at outsourcing HR.

Just take another little piece of specialization and

divide that labor because we can do it,

frankly, cheaper, faster, better than you can do

it for yourself in a lot of cases.

So when you're looking at

outsourcing, almost everybody outsources payroll.

Now, they might have a payroll person who

still manages part of the process, but it's

not like old payroll where they literally ran

the reports and filed it with the bank.

Now they're just using software.

So that's where we come in

on the employee relations side.

Much like companies years ago started figuring out how

to use payroll, they are now using tools like

ethos group or egcs to outsource the onboarding, the

training, the new employee orientation, the distribution of the

employee handbook and then the problem solving.

One of the big features that we provided first years

ago was our HR hotline, and we thought, we even

referred to it as the employee complaint line.

And we thought that, like, all right, this is

really for employees to call us and let us

know about all the problems I have.

And that definitely happens.

We get plenty of those, and that's

a valuable part of that tool.

But month in, month out, about 85%

of our calls come from managers.

They're not filing complaints.

They're asking for help.

Because your managers of companies are

in this great middle, right?

They're not the employees, they're not the owners or

the upper echelon of leaderships, but they're in the

middle, and they're in charge of applying all of

the policies and then solving all of the problems.

And they need help.

And most companies don't provide very

good help to those managers.

And so for us, whether it's the owner, the

executive team, or the frontline manager, we're giving them

a person to call, a vp of HR, an

HR pro to pick up the phone and call.

In our case, they're literally Sherm

certified human resources professionals to get

some answers, to get some direction.

Sometimes just to brainstorm with or one of our

most common things is just to do documented write

ups or reviews or things like that for people.

We get a whole lot of calls

just to help find the right words.

HR, the words matter a lot.

So we're professionals at helping with the words.

Indeed.

Real quick, one of the things we always try

to do is, when there's acronyms or industry specific

terms, help people understand what those are.

So you mentioned Sherm.

Could you just break that?

In the HR world, Sherm is our people.

That's the society of Human Resource Management.

And they have a very highly

regarded, difficult to achieve certification process

like a CPA would in accounting.

HR folks can be certified as well, and

Sherma is the governing body who does that.

That test has got, like, a 43% pass rate for first

time takers, and you have to have years of experience and

education just to be eligible to take the test.

So it means a lot in the HR space if

you can hire somebody who's got that Sherm credential.

And we hire only people who have

that to work on our hotline.

How many times it take you to pass?

It was a first time passer. All right.

Yeah, I had some great experiences with Sherm.

I actually got to work with

them and help create the test.

And so I spent a week in DC with

the fine folks of Sherm and the prometrics testing

team helped them come up with more questions.

And man, that was a really cool experience.

I learned a lot about the test creating process.

What they call actually item writing is their version of

a test question, and it's amazing how it works.

It made me, joining the process to help create another

version of the test made me way more impressed with

the test and the amount of effort they go to

to get high quality questions and really try to measure

accurately that the test taking candidates know what they're doing.

I'm glad to hear that for a number of reasons.

In our world, a lot of what we

do involves Salesforce.com, and we expect that all

of our people that are working on Salesforce

for our customers have certain certifications.

I went through the process starting over a

decade ago, and I remember just how mentally

exhausted I was after the exam.

And it's not a Mickey Mouse exam.

It's not something you just show up for cold.

And anybody that knows just a little

bit can get their way through.

And sounds like that same rigor is

there in a very crucial area.

Yeah, absolutely.

Why would someone consider outsourcing Hr?

And maybe just to kind of expand on that?

What are some situations, if you're experiencing this,

what's that tipping point that makes you call?

Most of the time when we're talking to an owner of

a company, they have an idea of a thing they want

to do, but they need like a pro, right?

They need somebody who's maybe had a couple of laps on

the track before them to bounce those ideas off of.

And most good founders, I find because we work

almost exclusively with small, mid size, family owned companies,

our average customer has got 50 employees.

So we're working in that small,

mid size space all the time.

They're really good at finding a board of directors.

It's probably informal.

They wouldn't maybe even call it that, but they have people

in their life that they go to for resources on these

different areas, but most of them don't in HR.

And it's because a lot of people just have

not, so to speak, gone to school in HR.

And so they make these really important, impactful

decisions about their company with big blind spots.

They're making them in the dark.

And so what we're giving them is a way to say,

well, why don't you call a pro in this area?

Because you would have called a

pro in every other important area.

Call one in this area too.

And it's a service that I've provided to friends

or anybody who I know needs it for free.

That just, like, friendly hotline HR advice, but

bought a couple of rounds of drinks here

and there in the early days. Absolutely.

And we're still happy to do that.

It's a way that I find that gets us leads. Right.

Because as those people, as we give

good advice, the reward is you get

the opportunity to give more good advice.

The package we've put together is based

on a 1999 US Supreme Court case.

So, as you and I were going off to college,

the Supreme Court was ruling in a situation where they

said, this company lost a sexual harassment case, and the

company felt like, short of having a magic wand, they

didn't know what else they could have done differently.

Right?

They had trained their people.

They had provided a hotline.

When a person complained, they investigated

it, and they took appropriate action.

So, like, what else could they have done?

Well, in that case, the Supreme Court literally ruled

in favor of the company and said, you're right.

And so that what we call established

an affirmative defense that companies can now

follow and say, hey, here's a roadmap.

Here's a list of things that I can do as a

company to protect us, to give us an affirmative defense.

If we do get accused of harassment or discrimination

or some crime against man and humanity, they can

point to a process that they followed.

And so we built our company to give people that.

That's why we have our online training program.

That's why we put in that hotline.

And while we don't come out and do that investigation

for you, but we can coach and guide you.

We can give you training and tips

and tricks on how to do that

investigation effectively and get it documented.

And then if there is those elevated cases, we

can even point you to a law firm who

might help you if you need that.

But in the vast majority of cases, if you do

these things right, you're not having to deal with lawsuits

because nobody came to work wanting to sue their employer.

That's not their goal.

That's only like that last ditch

effort when nothing else went right.

So we put all these things in place so

that it can get resolved before it ever has

to become an EEOC claim or a department of

labor or an attorney or something like that.

You touched on something that I think

might be worth doubling down on.

When we first started working together, one of the things

that you told me was, we want to be preventative.

We want to be proactive, not reactive.

And the training aspect, the handbook, creation, the

policy creation, that's such an important part.

How often are people coming to you for those kinds of

things versus coming to you when they have a problem?

So when we first started it, we kind of looked

at it and said, well, where should we help people?

Right?

And so the natural places. Well, when they have a

problem, that's where we'll help.

But then we realized, when they have a problem, like

I like to use this analogy, if there's ten steps

to this process, and you come to me at step

seven and say, what should I do?

Well, that's a really hard question to answer.

But now step one is very easy, and I

can walk you down a path at step one.

But when you're already at step seven and

you've done steps one through six on your

own, that's a tougher problem to solve.

And a lot of times there's

no good answer at step seven. Right.

We've already messed everything up.

But if we can start you at step one

and we can help you create the policies and

procedures that you need, then sometimes you never even

run into those problems at step seven.

Like you said already, it's a preventative pill.

So if you can take these,

swallow these pills in advance.

If you can get the policies and procedures in place and

train your people on them, give them a nice outlet to

ask questions, and then answer those questions in a timely manner,

you actually prevent a lot of the real blow ups and

real nasty problems from ever showing up.

Instinctively, most business owners know that

they need a CPA, right?

We all got to file our taxes, and

we know we need an expert for that.

I would say that many know that

at some point they need an attorney

for creating contracts and things like that.

And as an aside, I've got an attorney friend who is

in litigation, and I called him a while back and said,

hey, can you help me with some contract stuff?

He goes, Scott, I'm the guy that you

call when your contract stuff doesn't go right.

So here's the people you talk to first, right?

Let's get these contracts done right.

And then if something falls apart, then you come to

me and you guys offer both ends of that.

That's kind of a good way to look at it.

There is still the area where we reach our

end, right, where now the attorneys do begin.

And there's always a need for attorneys.

We live in a litigious society, so we're

not taking any business away from them.

In many cases, we have great relationships with

attorneys because they love taking on our customers.

Cases, because they get all of this

evidence, they get all of these things

that most of their customers bring them.

Their clients, they didn't have a policy.

They didn't write anybody up.

They never trained anybody.

They just woke up one day, fired a guy,

and then he accused them of some terrible act,

and they had no way to defend themselves because

it was all just in that founder's head.

Well, in our world, we've got documentation everywhere.

We've got all of this training.

We have all of the right tools.

They're all customized for your company.

It's not just the kind of stuff that

we just rubber stamp a name on it.

We literally, if you'll remember, but

we have these onboarding meetings with

you where we customize everything.

So it's how you want to do it at your company.

Talking about that for a second, I can

remember sitting in your conference room, and you're

asking me questions in order to help design

the handbook and policies and procedures.

You're asking me questions that I didn't even

know were questions I should be thinking about.

Right on. Yeah.

Is that pretty common, or do most

people come to you already educated?

No, that's part of what that meeting is. Right?

Actually, internally, we say, that's our

first training meeting with you.

It's because we're making you think about

things you've never thought about before.

But the goal is, if you think about them now, before

there's a problem, it's like, okay, we can solve this.

There's no emotion. Right?

We're not mad at this person.

There's not even a person on the other side.

It's just a theory.

How would you like this to be?

So we map it all out that way for you.

Then we put it in place.

So then when there is a problem where there is a motion,

well, now we can kind of fall back on the formula.

What's the policy say we should do?

Now, of course, we write everything, so you

can change the policy if you need to.

That's an important part of being a founder. Right.

And I think it's actually one of the things that pushes

people away from HR a little bit, is they say, well,

look, I'm making it up as I go here.

I don't have the answers to all the questions yet.

I don't want to write the policies that pin me into

a corner that says, oh, I must do it this way.

Because what if I don't want to do it that way?

Well, if you write a smart policy, then it still

gives you space to make adjustments where your legitimate business

needs, provide for adjustments, but it also allows you to

have the peace and the comfort of knowing, well, we

have a way to do that.

I don't have to think through that

problem every time there's a new problem.

I have a manual, I have a thing I can

go to that tells me, and not just me, but

my whole team of people who work at this company,

what we should do in this situation.

There's a lot of freedom there, because if you're

a founder running any sort of small to mid

sized business, you're having to answer so many questions.

There's so much brain fatigue with

that because everything's an important decision.

And employee relations are some of the most

important decisions because if you mess them up,

you lose the person in charge of some

important department or you lose the key driver

of some business for you that really matters.

So you can't mess up employee relations.

The bar is too high.

Not just like, oh, I might get sued

or something, but the actual cost to your

company, your culture, the environment you're creating is

too high to mess up in this space.

So you want to have these tools

in place even if they seem optional.

You mentioned already like, oh, my

CPA, my attorney, probably not optional.

Like, the government's going to get me

if I don't do these things.

And you're right.

But I would say HR and doing employee

relations right is every bit as important.

It just seems like it's optional, but it's really not.

Talking about that flexibility makes me think

you're not Toby from the office. Sure. Love Toby.

God bless Toby.

Oh, man, he got such a bad rap.

The biggest heart, right?

I mean, poor guy was always just trying to help people,

and Michael hated him, and yet he put up with Michael.

I imagine y'all probably have some michaels a minute

ago about that Supreme Court case that was tied

to what I think most people would think of

as like, worst case scenario, like sexual harassment.

I'm sure that that's the sort of thing

that if people think too much about it,

it's going to keep them up at night.

It's a huge fear and it's one that's important.

But the reality is there are a lot of much

smaller, if that's even the right term, incremental things that

are not near that level of severity but can still

create liability can create exposure, and they can also impact

the employee experience with the organization.

What are some of the common things that you

guys run into that aren't the worst case scenario?

The extremes often allow for good examples. Right?

Because that's the thing in the headline.

But the actual day to day is people being late to work.

That's the single most common thing.

A management asking for help on a problem employee

situation is our most common call to our hotline.

And then the most common subcategory

of that call is just tardiness. Right?

It's like no different than high school.

It's like the bell rang.

He wasn't at his desk. What do we do?

It happened again.

We talked to him about it.

It happened again. We wrote him up.

It happened again. Right.

It's sad.

It's just human nature, I guess.

Like, being at work on time is hard to do.

It hasn't changed.

But there is some things you

can do to manage through that.

And a lot of it is clear communication of

policies and then consistent implementation of those policies.

Different companies have different things.

You guys don't operate a place here where being at

work at a specific time is a big deal, right?

But other companies, like, that's a huge deal.

They need somebody logging into a phone

system at a certain time or being

logged into a queue for customer support.

And so being late is a big deal to them.

So there's ways to structure the time,

structure the schedule, structure the communication, all

just strategic things to help.

And then sometimes you just don't have the

person in the right seat on the bus. Right.

They might be a good person, real friendly, but if they're

just not in a season of life where being on time

at a job is a thing they can do, you got

to give them an opportunity to do something else.

And so we'll help you do that in a right

way as well, where with the right write ups and

documentation, we can move to termination of employment document.

All that in a good clean way so that when

that unemployment claim pops up or when that workers comp

claim showed up out of nowhere, or when you're trying

to fire them, but then they mention Ada or know

American with Disabilities act or Family medical leave act, right?

They're throwing something at you that you weren't ready

for, and now you don't know what to do.

And when you guess at it, you'll probably

make the wrong guess because you're uninformed.

So instead, you call your friendly ethos hotline

and you actually talk to the pro who

says, okay, here's what you need to do. Here's the form.

Here's how to address that.

Here's a word track, right?

And that peace of mind, that comes with that more.

So it's twofold, right?

Because for the founder, you need the peace of mind for

you that you know who to call for the right answers.

But really quickly after that is you need to know that

your people have a place to go for the right answers.

Because a lot of founders, like, the longer you do

it and the more it becomes small to mid size,

it's not really you doing all those things anymore.

It's this whole staff and

management team that you have.

And you might know, well, I trust Billy.

He'll do a good job, and Susie will do a good job.

But then there's Walter over here.

I mean, he's a high performer, but,

man, he doesn't always like people.

And if Walter's just firing from the hip all

the time, then that guy or girl or whoever's

creating a lot of liability for you.

And then eventually, when something goes wrong, what might have

been what you call these little incremental small things here

and there over the course of months and years, those

can add up to be a disaster.

That can add up to be a paper trail

now of problems that you have that can be

extremely costly to a company, not just in culture,

financial cost as well, but cultural cost, obviously.

And not to mention the time that it takes for

an organization to deal with these kinds of things.

Sure, yeah.

Time away from what?

You wanted to be focused from your mission. Exactly.

You mentioned at my firm, we

have a pretty flexible work situation.

We're not punching a clock.

We do have to track time for different

reasons, but we're not looking at when somebody

buzes into the door each day.

But that got me thinking.

From industry to industry, there are

all kinds of different implications.

Being an office is very different than being

in a machine shop or in construction or

in a factory, on and on and on.

And I got to thinking a second ago about

how a year ago, we made an acquisition, and

thankfully, that business was similar enough to what we

did that there weren't really any implications.

But I would think that as businesses are

doing mergers and acquisitions, you need that extra

set of eyes to help you understand.

Okay, well, now that you've moved into this

space, these are things that are important.

Yeah, absolutely.

Another thing that you're probably not considering

because you're a good Texas man, but

crossing state lines, man, oh, man.

Do the labor laws in our

country change when you cross state? You.

You've actually done that before?

We've talked about it before, just a few weeks ago.

Reached out about that. Yeah, that's right. Sorry.

It's an amazing difference.

And we've spent a lot of

time in the retail automotive space.

And so the buying and selling of dealerships is

as common as buying and selling of cars.

And so constantly our owners of dealerships, selling

this store, buying these two stores, selling those

two stores, buying these four stores.

And so they're always in need of, when they take

over those new stores, to come in and put in

the right policies and procedures, because they don't want to

let that store run with whatever culture it had.

They want to immediately start shaping

the culture to their family's model,

how they want that business operated.

And so it's really easy, once you've already started to set

up your policies and procedures, you kind of have a framework,

then you can go put it into any place.

You might have to customize it a little bit, right?

You might have to turn some

knobs up and some knobs down.

There's a different state FMLA here,

there's a different program over there.

So you'll make those adjustments.

We do all those things right there with you.

The gun laws change, right?

There's so many things that change state to

state that you have to make those adjustments.

Right now, we have customers

in twelve different industries.

So there's a lot of industries out there.

We're not experts in every single one, but

it's amazing how much is consistent across.

And so we'll start with what we know and then learn

what we need to learn to help that particular industry be

successful when we do take on a new one.

If someone were to say, hey, yeah, this

sounds great, I think I need this.

What does the timeline look like?

What are the steps that you go through to get

somebody up and running, to be compliant, and then to

have that ongoing maintenance, for lack of better term.

We basically have about a 1 hour sales presentation

where we just explain everything that we do.

And we do that not so much to

sell you on it, but to make sure

that you're getting what you think you're getting.

Right.

I tease our sales that it's not really sales.

All it is is explaining what we do.

And so we just really try to make sure

that you understand what it is that we do

and then how we're going to do that.

And we need to then understand what

it is that company wants and needs.

Because if it's not a fit, we don't need that business.

But if it's a fit, then we schedule what you referred

to earlier as that day, where we create the stuff.

That's the idea of all of the policies and procedures.

And it's pretty much a workshop day.

It doesn't always take all day, but we're going to

spend about a day with you and help identify with

your leadership team, what policies and procedures you have, what

needs to be adjusted, what needs to be customized.

Then we go back to our office.

We take all of your employees, we put

them into the software, build out, everything customized.

Our training is at the job title level, so

that means we can train a sales manager this

way and we can train a salesperson that way.

Then we can train a software developer this other way.

So it doesn't have to be uniform, which

is really important because we want to train

different people on the things that actually apply

to their job, not just, oh, everybody's an

employee, so everybody gets the same stuff.

So we build all of that, but

from a timeline, we're talking weeks.

So from a sales presentation where somebody says, yeah,

this is interesting, I like it, let's do it.

Then within a week or two, we'll have that

onboarding meeting scheduled where we do the workshop.

Then within a week or two, we'll have the software built

and ready, and then we'll come out and do what we

call, like an installation meeting or a kickoff meeting.

We did one of those here at VIN

where we got in a conference room and

just explained how this works to everyone.

Change management 101, right, is to let people

know what's going to stay the same.

And when a new HR company comes in, people

raise an eyebrow at you and they're like, all

right, what are you all doing here? What went wrong?

Who messed up that?

Now we have to have this right.

So we're just explaining.

This is part of a natural growth of a company.

Any company grows.

You start kind of checking new boxes.

And for most companies, you reach a

point, you need some HR help, you

need some training and policies and procedures.

And we put the hotline in place.

And employees only respond really well to that hotline.

Some of them will call to just

be like, does it really work?

Who is answering this?

Is it going overseas?

Hosted here in Dallas, Texas?

And they'll just ask some simple questions

and start to build that relationship.

But from, hey, I'd like to sign

up to, we're actually using the product.

I think our average time right now is around 30 days.

Yeah, it doesn't take too long.

Early on in the conversation you talked about,

there are so many different facets to HR.

There's recruiting, there's payroll.

Very few people are doing payroll themselves.

They're using some kind of service and

some people even go the peo route.

Do you typically come in alongside a

PEO or payroll provider that has some

light service or how does that work?

We don't really step on the toes of payroll. Right.

So we can work with them.

We have some different APIs that we use to integrate

with payroll companies, so we can push or pull data

back and forth just to make onboarding new users easier.

A lot of our customers use paylocity.

It's a really good payroll company that's pretty forward

with their software and it works really well with

ours, but we're able and willing to integrate with

other payroll providers as well where it's needed.

Managing users in our hrms, our

user system is pretty easy.

We're not collecting everything about that user, so there's

some conveniences in using the APIs, but it's not

like a must to do it for ours.

So we can work with any

payroll provider that you already have.

A lot of the peos will either try to

offer something similar or have their own version.

So we don't have a ton of customers that also have

a PEO, maybe a few, but they all have a payroll

provider and we're not stepping on each other's toes there.

What can a founder expect to achieve

by having an outside HR group?

I think the first thing they're going to

get is that peace of mind, right?

That the reason that you buy insurance is because you're

looking for that peace of mind, but it doesn't actually

prevent anything, it just helps to make it better.

Like if there was a problem, we're

literally trying to prevent it, right?

So the peace of mind that we're providing is

that you now have answers to your questions.

You know that if it does all go wrong, that

you've done the right things, that your business is acting

like a real business or a big business should be,

not like a startup that hasn't found their way yet.

There's a reason that every big company in the world is

doing all of the things that we do, because these are

the best things to do if you run a big company.

And so somewhere along the way of becoming an idea

and a small company and then a mid sized company,

these are the things that you need to do, right?

So you can take the long way and you can

hire all of the staff and you can build your

own software and you can train your own people at

a great time and expense, or you can just take

advantage of the fact that other people have already done

that legwork and solve that problem.

And you can race right to the front of

the line and get all of these tools and

have them rolled out in a month.

And just the peace of mind that comes with it

of just knowing that you're doing the right things, that

you're not going to get hit upside the head with

some law that you guys have never even heard of,

and all of a sudden you're in violation of it.

That peace of mind is huge and

that's something that totally resonates for me.

And just kind of talking about the scale aspect

of this, I think that we started working with

ethos when we were probably 1012 employees and when

we were that size, it didn't make sense.

I mean, at that size, it doesn't make sense

to have 10% of our organization be HR.

It was exactly what we needed.

And I'll share a little peek behind the curtain and

I'll keep things vague, but I was incredibly naive getting

into the business that I'm never going to have an

HR problem, I'm never going to have any kind of

people issues that need to be dealt with.

This is a confession.

I genuinely thought that just because you're a

nice guy, just because I'm a nice guy

and I hire good people, right.

And how could anything ever go wrong?

Truly, truly believe that?

Purely naive.

And yeah, you and I had had some conversations over

drinks here and there and gotten some advice about different

things, but we had a pretty major incident.

And even as I think about this, I don't even know

that we could have had a policy around the situation.

Didn't impact a customer.

Definitely wasn't a sexual harassment, but it

was something that was of consequence.

And we engaged you when we were in crisis

mode because we had to take difficult actions.

What would you tell people about getting

in before you have a problem?

Most people go to a personal trainer because their doctor

said if you don't lose weight, you're going to XYZ.

Right.

They go after the heart attack,

they go after the shell shock.

That's what causes human beings to change.

Something dramatic had to shake them and then

they're willing to go make the needed change.

Rarely is there anything about that change

that that person didn't already know. Right.

It's not like they didn't know diet

and exercise were going to help them.

It's not a news flash that

they were not aware of before.

They just were not compelled to make the change.

We're no different in the HR space. Right?

If you have people, you will have people problems.

It's a simple equation.

It's a one to one.

It's a guarantee.

If you have people, you will have people problems.

You just get to decide for yourself, would you like to

be ready for them or do you want to put out

the fire once the whole house is going up in flames?

We have all of the tools, they're all available, they're

all ready, and none of them are rocket science.

And they're all actually today surprisingly affordable.

They're much more inexpensive today than they were

20 years ago when these new pieces of

software, new things were rolling out.

So if you want to do it, if you're a

small to mid sized business and you're thinking, yeah, I

ought to do it, then it's worth at least learning

a little more, getting a phone call, taking a look,

because otherwise you're going to do it eventually.

It's just probably going to be when your house is on

fire, which is the least desirable time to do it.

We're currently hovering right around 30 members of

the team and we're still nowhere near the

point where it would even remotely make sense

to have a full time internal HR person.

And without getting into specifics, what we pay for this

service is the peace of mind that I get for

very little is an incredible return on investment.

And we follow that like the user count model.

So it allows us to price the 1015 employee

business very affordably, but then it allows our price

point to scale up with the work.

Because we have customers who have

2000, 3000 employees in ten states.

The amount of work we do for them is considerably

more than the amount of work we do for you.

But their price per user follows the

scale where it makes sense to us. Right?

So it's a great model.

It's worked really well for us.

It allows the small businesses.

When I was a kid, my dad had a

sporting goods store and he had a few employees.

And I can remember times where the police would call us

in the middle of the night because one of the college

kids who worked for him didn't lock the door.

When he left the sporting goods store,

the whole business was unlocked, right?

And I could just remember my dad thinking or talking

to, just venting to my brother and I about like

it's the people that make it so hard to do

business and it's because we're all broken, fallen human beings.

It's part of still being alive on earth.

So if you got to work with people, then

you need to put the tools in place to

work with people the best way you can.

And so things like this, outsource HR is

just a great way to do it.

If we call you one time in a year,

it is worth every penny that we pay.

And if we don't have to call you,

it is worth every penny that we pay.

Yeah, it's a good way to look at it.

What are some things that are going on in the

HR space, HR law, that people need to be aware

of, like what's kind of the current event?

What's the, hey, if the court

rules this way, this could impact.

Is there anything major coming?

Yeah, there's several interesting things out there.

HR Law and how the courts are structured

follows presidential elections in a really big way.

Because in our country, the way is designed is

whoever's the president gets to appoint the heads of

the EEOC and the National Labor Relations Board and

a lot of the judges and those people are

really shaping how labor law works in our country.

And so there's an election year, next

year, there's generally not too much that

happens right before an election.

The things that happen are often for visuals.

Then they really change the law like they're paying

dues to people who donated in their last election.

And so it's just no secret who's in the White

House right now got a lot of union money. Right.

They were the big supporter.

And so there's needing to pay back for those votes.

And so we're seeing some pro union things

coming out right now in the news just

lately, some massive negotiations through the automotive manufacturing

plants for unions got good union wins, which

is good for labor, broadly speaking.

But there's this kind of push and pull of

how easy is it to form a union?

And you have a lot of people

on all different sides of that.

But the general trend is union membership

is getting less and less and less.

And so the other side of that is

trying to make it easier to form unions,

to try to get more people into unions.

So we're seeing some interesting changes with that.

The National Labor Relations Board was formed because

the National Labor Relations act and that law

governs how unions work, and that's how so

much of that impacts non union workforces.

And they don't ever think it impacts them.

Non union workforces think, oh,

NLRB, that's for the unions.

And yes, it is, but it actually affects every worker.

What's in your handbook today is impacted by

that law, and more so than the law,

the board's interpretation of what that law says.

And so that's what's interesting.

With the EEOC or the Department of Labor.

These regulatory agencies, they're not really

designed to write new laws. Right?

That's Congress writes the laws for us,

but they interpret the laws for us.

And so their interpretation can vary tremendously

from one administration to the next.

So one of the things we're seeing

right now is joint employer status.

So that's the idea that if you

own a franchise, who's really the employer?

Is it Scott, who owns the local McDonald's?

We'll say, or is it McDonald's corporate?

Well, for years and years, that's been split.

Those are not the same employer.

But the definition gets redefined sometimes on,

well, what is a joint employer?

And it's how much control

that those different parties have.

So what you're typically looking for is

attorneys need deep pockets to sue.

That's what makes lawsuits valuable.

And local guy owns a franchise is not near as deep

a pocket as any of the big brands we all know.

And so if they could say Ford is now the

joint employer of the local Ford dealership, well, that's a

much deeper pocket to sue than just the guy who

owns one Ford dealership in a small town or every

fast food restaurant in the country.

It was an example of that kind of joint employer deal.

The other one is gig economy.

That still continues to be a big deal.

We see that definition changing.

A lot of people in our country want to

work on their own time, at their own schedule

for an Uber or a Lyft or any other.

They like those options and the

freedom that those options have.

But our labor law system in the United

States wasn't ever really designed for that.

So our unemployment insurance doesn't work that way.

Our workers comp insurance doesn't work that.

Like, nothing was really designed for that system.

And so here we have this weird thing

going on where there's now millions and millions

of people still working, but not in the

normal system that everything was built for.

They're working in the air quotes gig

economy instead of the typical employment law.

So that's been weird.

That's got bumper cars all over the place.

The thing that we're all kind of watching and toying

with right now is how AI is going to start

affecting the workplace, more particularly in the hiring processes.

When you have large scale companies and they're trying

to make decisions, think of the Amazons of the

world, people who are employing tens of thousands.

It's hard to make a decision on

a case by case individual basis.

Just takes a lot of time.

So if they could use some sort of

AI to help them make better hiring decisions,

firing decisions, performance decisions, they'll take it.

The problem that we find is that in

some cases, those decisions that that piece of

software is making could have or be perceived

to have some sort of discriminatory impact.

They're affecting some race or some religion

or some gender differently than others.

Well, why?

We know if there's either desperate treatment or desperate

impact from a typical human point of view, we

know how to identify that and say it's bad.

But sometimes it's harder to identify it when

software makes that decision because we can't say,

oh, well, they just did it on purpose

or because of some sort of known bias.

It might be an unknown bias, it might be

a programmer bias, it might be a learned bias

from the data that was inputted into.

There's all these potential issues.

So labor law and employment law in the US, it's an

exciting time to be know there's a lot going on.

Sounds very fluid.

And if there is a change in the White

House in this cycle, it sounds like employers need

to be prepared for some amount of. Yeah, always. Always.

And whether there's a change or not. Right.

Because if there's not a change, then that means

he gets an opportunity to pay back all the

people who voted for him on the union side,

and that will cause some change.

Or if there's a change the other way,

then you'll see it swing the other way.

So there will always be a change.

That's been the definition of HR, right?

Like, even the fact that we

call it human resources is changing.

Not that long ago, they called it personnel, right?

It was the personnel department, and then it was the

human resources department, and now there's all sorts of other

fun names that they start to use for, too.

So it's always changing.

That's part of the fun, though.

Knowing other HR professionals, I've come to learn that

some of them have just the wildest stories.

Your chuckle tells me that you've got some man.

Can you, without sharing names or anything that would give

it away, can you share your craziest HR story?

It's always hard to know what is the craziest, right?

Because it's kind of situationally specific.

Every good HR person will tell you the same thing.

That is, I'm going to write a book one day.

None of them really write the book.

They'd get in trouble if they wrote the

book, but they always say they're going to.

And when we have our quarterly staff

meetings, we bring everybody into Dallas to

our office, we have an HR corner.

And every meeting, we share a half dozen,

at least censored, cleaned up for distribution.

But we share just the unique stories of

the last quarter, so it's never ending.

I'm trying to think of something that nobody could then

google and see who was really the people behind it.

I didn't mean to put you on the spot.

There's always something out there.

But as an aside, I used to do this every time I got

in an Uber, and I've done it less and less over the years.

Every Uber driver has a crazy story,

and I love asking them, what's the

craziest passenger experience you've had?

And, man, it's entertainment for sure. I think.

Now, having done HR for 20 something years, my brain

is so wired to discretion that I take everybody's confidence

so seriously that a part of my brain is always

helping and then trying to forget what I just helped

you with so that it never comes up again.

I did have one the other day.

I enjoyed the great outdoors and just being outside, and

we had a customer who, an employee, had just purchased

a new firearm, and he was very excited about it.

And so he carried it into the office to show

a coworker who immediately upon grabbing that pistol, just squeezed

the trigger and fired around right into the floor.

In between everybody that

got their attention, obviously.

For those that don't know, treat

every firearm as if it's loaded.

Yeah, we could list all four. Right.

Treat them as if they're loaded.

Keep your finger off the trigger

until you're ready to shoot.

Don't point it at anything that

you're not willing to destroy.

And know what your target is and what's behind it.

Might got the order wrong on those, but

those are the four rules clearly in violation. Yes.

Well, Ben, is there anything else that you would

want people to know about this service that could

have a major impact on people's business?

The most common thing that we get from a customer after

about a year is we didn't know you did all of

this, and we didn't know it was so affordable.

And so I think what that tells me is that from

just a PR point of view, most small and mid sized

businesses have been overlooked by this outsourcing HR space.

And the people in this industry have gone after big

companies, and they go and take care of them.

And the small and the mid sized

businesses don't even realize that these tools

are there and they can afford them.

And so that's a missed opportunity for

our country as a whole, right?

Because if this country is going to succeed and

do well, it's on the backs of innovation.

And innovation comes from small and

mid sized businesses trying new things,

figuring out new things and growing.

And so if we can help those companies

grow, we're making this world a better place.

I'm a happier person.

So just know that you can have these tools.

It's not exclusive to high dollar, big fancy companies.

Everybody can take advantage of these types of tools.

Really just a phone call away.

One of the things we talk about on

our traditional, in the think of it podcast.

I don't know how many times I've put this out there.

I tell everybody, find a mentor if you don't have one.

My exhortation from today's episode is,

don't be naive like I was.

And if you're ten employees or larger and you

don't have this, don't wait until you need it.

Go get this in place now.

Take that preventative medicine and be prepared.

Not if, but when something happens. Great advice.

I like that.

As we wrap up, we were talking

just before we started the interview.

This is not the first time that we've both

sat side by side with headphones and a microphone.

Yeah, back in the late 90s there was a

dj show, a radio show that we hosted one

day, one time, one time, one afternoon session.

But man, we rocked it. Yeah, it was good.

I don't remember a single song we played.

I wish you could go back and find that list.

Do you have any idea?

I do remember one guster was really

big and I remember playing their stuff. I can buy that.

Maybe a little oar in there or something like that.

It was a good time.

Probably some Dave Matthews and counting crows

if you were there in the 90s.

Dave and counting crows for sure.

Yeah, I'd probably try to squeeze in some

Robert Earl back then, but who knows?

We already talked about years, but

just talking about those bands, we

definitely have dated ourselves for sure.

Those are good times though.

Nice to be back with you in studio.

Hopefully it's not another 25 years. Yeah.

Well, Ben, thanks so much for coming

in and sharing about outsourced HR. My pleasure.

You.

For more information, visit egcs.com.

If you or a founder you know would like

to be a guest on In the Thick of It,

email us at intro@founderstory.us.