The 5 R's of HR

And then I want to find out the next question after that would be, what are you doing currently from a business perspective, and how did you get started with that business? Sure.

And success is defined in different ways by different people, but also what not to do, in a, in a business. Um, so my earliest memories are running around my parents , uh, little Italian deli in Western Pennsylvania and doing all kinds of jobs. Um, my first job was restocking the candy shelf. Uh, so you can imagine a seven or eight years old restocking the candy shelf.

Um, as my dad would say, I ate all the profits, so, so I had to be promoted to, to, to other jobs within, within the, within the, the , the little Italian business. So it, it , it was a fascinating way to grow up. I would not change a thing. I learned so much what, not just to do, but perhaps what not to do.

Um, to the point where when I eventually graduated high school , um, I didn't know exactly what I wanted to do, but what I knew I did not ever want to do is run my own business. Um , that's because I saw how hard they worked for such little return , um, in, in their business. So I, I, I ran one eighty, a hundred eighty degrees different direction and was pre-med all through college.

Uh, took the mcass , was gonna go to medical school. Um, at the last minute, decided to go work at research and development at Elcon Laboratories as a research scientist with my biochem background. And then about , uh, a few years into that, decided to go to law school. Um , did that for one year , uh, that, that really wasn't, I think, a long-term plan for me.

So after the first year of law school and working full-time, I got bit by the, the , the e gene kicked in, as I call it, you know, the entrepreneur Gene kicked in. And I started a business in, in summer of 97. Uh, long story short, I resigned from Elcon, I dropped outta law school, and I went all in on that business on February 15th , uh, in 1998.

And , uh, a lot of ups , a lot of downs, but I was actually having the , the time of my life , um, and , uh, really found my calling and , uh, end up selling that business in 2016 and , um, to the point where we started a second business and then end up exiting that in 22.

So it's kind of fascinating, and it does, there's a lot of, there's a lot of things I still work today that is kind of nice that I have the, I I I , I can understand biological terms and I can pretty good at math and things like that. So it's kind of, it's kind of interesting.

So we definitely have that in common, which I don't think we , uh, actually knew about , uh, prior to this conversation, which is what I love to do when I talk to people, because I always learn something new. It doesn't matter if I've like yourself, I've known you for years, but it's, it's always great to have these conversations. So , um, so tell me a little bit about the driving force.

I know you've got a new business venture that you started a few years ago. So tell me about your new, your new business and share a little bit what the audience about, what that's, what that's all about.

So I was in the marketing space , uh, my agency was called Mojo Media Labs, which we sold in May of 23, excuse me, may of 22 to a global agency called Global Gravity Global. But through 97, on through 22 , um, there was just like an extreme dedication to growing clients' businesses. Mm-Hmm. .

And what I discovered when I published my book, return on Energy, ROE Powers, ROI back in 2012, is I really also enjoyed growing the people growing the businesses. Mm-Hmm . So that was always gonna be my what's next. And I came home one night after a long day of events and whatnot, and I told Nicole in, in 2013 that we're gonna sell Mojo Media Labs in 10 years on May 13th , uh, for this much money.

And we had run the business together, and as I mentioned, I came from an entrepreneur family, but Nicole came from a family of a pilot and a school teacher . So the absolute opposite of the entrepreneur risk-taking thought process, but she's more adventurous than me and more risk-taking than me. So it was a nice, nice match.

But I did tell her that, you know, I wanted to sell the business in one way, shape, or form to the employees or to me, exit and business continues on whatever form that took. But on May 13th, 2023 in 10 years. And , uh, the reason for that was a couple fold . One was I wanted to reapply myself to growing people, growing the business, not just growing the business.

Um, and I'm, I'm , I'm passionate about culture and leadership and entrepreneurship and, and even the climbers in the career in the, in the enterprise space to continue to grow their careers, how, how that happens . So that's really the essence of , of my book. Um, and , uh, we end up selling on May 13th, 2022, so actually exactly nine years to the date and , uh, one year early.

So it really gave me the opportunity to kind of sit back for a year and really formulate how I wanted to go to market with, with return on energy. And , uh, really happy to say that we launched Return on energy.com and really started putting a lot of effort into helping people grow their businesses, help people grow their careers through getting better , better clarity, alignment, and better communications internally.

So then the people in the business can grow faster.

So it's, and , and I know both Mike and Nicole, and they're both pleasures to , to know as friends and colleagues. So it's , um, so tell me about, so ROE, and I know we, we spoke, we spoke a little bit ago regarding kind of an , an HR model I think you have, regarding ROE.

So did you want to talk about, 'cause I know we talked about, you know, the acronym hr, and it seemed like you might've had a , you have a model behind HR to the fifth power for those people who are science , science, it's kind of nerds, , you know , so HR and R five times. So, so tell me a little bit about, you know, what , what is the basic premise behind that model?

So we, I had a , and a mentor tell me probably 15 years ago that a service-based business is only as good as the people providing the service. And that really hit home for us to really focus on the culture of our business. And you have a culture, whether you want it or not, , you just have to decide if you want it to be good or not.

And we not just wanted to have a good culture, we want to have a great culture. And of all the awards we've won in digital marketing and various other ones, honestly, the Inc 5,000 year over year over year. But the, the one that I'm most proud of is best workplaces in America. That's something that we strove for, for many, many years. Um, we, you don't really appreciate a bad culture, excuse me.

You don't really appreciate a good culture until you've had a bad culture. so true. And, and employees appreciate a good culture because a lot of them have come from, from bad backgrounds, right? From, from environments that just didn't treat or appreciate them very well.

So to us, building a company that was profitable was incredibly important, but building a company that was profitable with high employee , uh, engagement , uh, with a great culture was, was utmost importance. And we would sacrifice profit for people. So our motto was people over profit. So that's really the essence of, of my book, is putting people over profit.

But I think that as entrepreneurs, sometimes we put people so first that we sacrifice profit. And, and I don't feel like that should be a , a compromise. I feel like people in profit should be on a seesaw that's level. Um, and in doing so with this focus, we, we, we created all kinds of tools internally. So Return On Energy is an internal communications framework in business.

So in marketing, we focus so much on external communications, sales, marketing, public relations, et cetera. But what I found was over 20 years is that the companies that excelled really well, were not the ones that had the best external communications. They're the ones who had the clarity, alignment and good internal communications. So that's essentially what my book is about, is how to improve internal communications.

So with that, behind the framework of Return on Energy, we were able to build a toolbox of about 20 different tools that we could pull off the shelf when we needed to create , uh, leverage , uh, and take our culture to the next level. And one of those tools , uh, is exactly that, what you just mentioned, and that is basically called the People Equation. And, and the People Equation is HR to the fifth level, right?

We always, were trying to take our culture up, up a notch, and clearly HR stands for Human Resources, but in , in the marketing space, we have to make everything cool and hip and , and brand it . So, so to, to ultimately answer your question , uh, h to the hr to the fifth level is simply H human recruiting, ramping, rewarding, retaining, and removing.

So it's in those five different areas, is is defines what would be your employee journey or your people equation? So in our company , um, and I think in most companies we had, the word that gets thrown around a lot is onboarding, for example.

So we abolish the word onboarding in our company, because when you say onboarding, for example, it creates instant confusion or needs clarification on are we talking about an employee onboarding or we talking about a client or a customer onboarding? So we ramped employees, we activated clients, Mm-Hmm . . So we had to just create that internal communication of clarity, alignment, and communication.

So for example, ramping an employee meant that any, there's, there's a lot of metrics that you can measure for RAMP as an example, time to productivity, ramp rate, feedback, satisfaction, you know, completion time, time to completion.

There's just metrics and best practices that you can put under what would be traditional onboarding, but we just simply call it ramp that way internally, when we're creating campaigns, we're creating recruiting campaigns or ramp campaigns or rewarding campaigns or retain and removal campaigns.

And that's created the internal communication and ultimately that, that that journey that we took employees on to ultimately get , uh, the best culture we could.

It's interesting because when , when , um, when we talk at HR Catalyst about culture, it's so fascinating because of your view on culture, and it so aligns with what we try to, we try to position and , um, really try to get our clients and prospective clients to think about is that I always go back to the basics of the only thing, the only strategic differentiator you have in a business is your culture.

Because unfortunately, a lot of companies don't, they think it's soft and fluffy and they really say, this has nothing to do with the business, and I'm only focused on the bottom line.

So it's, it's shame on them because of all the things, you know, all of the r's you mentioned earlier, it's really, you know, it's really a , it's a sad state , state of fairway when you have business owners who really are, you know, they, they think culture is way down on the priority list versus for a well run company like you, you've had , uh, for years .

Ah , and I think that's equally as alarming that we won as an entrepreneur, as a business owner, as somebody who lives in a state of fear of losing people, sometimes they give too much and they sacrifice their, the reason why they're in business to begin with is to create profit for themselves and for the community.

And there's a lot of really, really great things you can do with profit, we call profit purpose in our business. So there's a lot of things we can do with that purpose, but when you sacrifice the purpose for the people, then it's as equally as bad, I feel as putting, focusing only on the profit for the sake of people, if that makes sense. Right .

So I really feel like there's a, a seesaw, a balanced seesaw approach that needs to happen. And, and that comes with setting very, very clear expectations internally , um, and , and accountabilities to make sure that we're in business to have a great culture, but we'll never have a great culture if we're not profitable.

So , um, so when you think about, so the five Rs , as you mentioned earlier, how well do, because you know, that kind of that middle market, lower middle market space, companies that are a couple million dollars, maybe $5 million or so in revenue, how will the middle market companies do from your experience, regarding the five RSS and really making sure that they execute all the five Rs and do that? Well,

So everybody understands when somebody uses a term that there's a clear definition to those terms. So , um, for example, the difference between growth and scale growth is when you're growing revenue, but you're also growing expenses at, at or close to the same rate as revenue. Whereas scale, scale is when you can grow revenue and not grow expenses at the same rate.

So there's a, there's a line that the , the space between expense growth and revenue growth is much greater. And that space between those lines is profit. And, and I think some of these best practices should be put in place in the startup phase. But in the startup phase, too many business owners are working in their business. They're working in the tactics and not necessarily working on their vision and their strategy.

So another clarification of term working on your business is working on your vision and your strategy, working in your business is actually doing the work. So when , when you can spend time working on it, creating programs, and you get through the startup, you get through the growth, and you have these programs in place, like the people equation is just one of the 19 of the 20 tools.

Um, then when you get to scale, you can scale faster , uh, with a more, with a better culture, with a more profitable return. So , um, I think it's important to put these programs in place early , um, and, and make mistakes when you can in the growth phase. That's perfectly fine. But , um, but I think all companies should have the clarity of when they do communicate internally what that means.

So I, I'm , I , I do a lot of leadership coaching. So when I'm coaching leaders, they in the same conversation or the same, maybe even a strategic plan they're trying to put together, they combine, you know , uh, hiring people to retaining people, to rewarding people. And it's all kind of put together in one conversation or one plan when I see three different things happening.

So when you can create clarity between, in the clarity, alignment, communication, when you can first create clarity, you say, okay, I hear what you're saying, but these are three very separate different plans. And as soon as you separate those out for people to make, create more clarity, then they can create the plan aligned to that, right? And then ultimately can take action on that plan.

But when you try to put too many different competing good ideas together, ultimately it doesn't, nothing gets executed. So it's just a matter of creating clarity through this glossary of terms and looking at it as a people journey, as a people equation, and then measuring what's working and not working.

You just got your driver's license, you're in the car by yourself for the first time, and you're pulling onto the freeway. You know, you , you're on the access road, you feel comfortable on the access road, but now you're gonna pull on the freeway by yourself for the first time. This is what we would explain to employees on their very first day, right? Right. You're pulling onto the freeway and there's three lanes.

The last lane is the fast lane, the middle lane is what it is, and then the first lane is supposed to be the slow lane, the right hand lane. We want you to pull, we want you to ramp onto the highway and slowly graduate to move over from one lane to the next to the fast lane at your pace, right?

We're gonna say that pace is 90 days, so we're gonna ramp you slowly, we're not gonna just throw you into traffic on day one. So we wanted to create this emotional kind of story to get them to relax and say, we're gonna let you ramp at your pace, and we've put together a program for you for 90 days to ramp. Right? So that's not onboarding, that's ramping.

Onboarding is when you jump on a ship and you take off, right? Right . Sure , sure . One step you , one step on, you're ready to go . And then on the rewarding side, the next step is, you know, rewarding re rewards come in two flavors, you know , um, or sorry , um, incentives come in two flavors, rewards and consequences, and people react differently to both.

So I can't incentivize somebody if they don't have a motivation. So the best way to figure out what somebody's motivation is, is to ask 'em , , what motivates you ? It's not always money. It could be flexible work, it could be four hour work week , who knows ? Or four day work week . It could be so many different things.

And so our incentives need to be aligned to the, the, the motives, and that's where the rewarding comes from. And then of course, retaining the way to retain and reward people. And then lastly, remove each one of those ramp, reward, retain, remove is much easier if you get the first step right.

And that as you re recruit properly, and in my experience, we, the best way to recruit is just to create culture content, what we used to call it in digital marketing. Um, create culture content and, and broadcast to the world how awesome your company is to work for. And the voice shouldn't technically be marketing to communicate your culture. It should be the people in your company communicating your culture.

And in my experience, then that re that attracts the right talent to your company. Um, and then having a rigorous recruiting process aligned to your culture, i , beyond talent, but are you the right person?

And that, that I think is, is really, really important to make sure that everything you're measuring beyond that ramp, reward , retain, remove your, your metrics will determine if you're getting the recruiting step right.

So, but with that, I'll just, we'll take a short break for the audience and we'll be right back with , uh, with Mike Rose and continue the conversation there. Thanks so much.

HR Catalyst was founded in 2013 with the goal of bringing the best in class HR practices to small and middle market companies. We are your outsourced strategic people, experts. We help you solve the people issues in your business that are slowing you down. If you have HR concerns, you can schedule a complimentary call on our [email protected].

So with that, Mike, out of the five Rs you've referenced earlier and we're talking about today, what, what have you found, or which one do you think is that could be a chance that one of them would actually fail, derail, or fail out of what you've seen?

Which is, which out of the five Rs is probably gonna be the, may have the higher percentage of really failure or derailment at some point within the lifecycle of a company.

Um, but the growth phase startup and growth phase of a business is where you can make all those mistakes and, you know, provided their , their calculated risk . But you can make all those mistakes. So I think it's really important to work with your team collectively, the entire team of the business and, and really get their way in, right to step one is to get weigh in on, on the people process, right?

What was your recruiting process like? What was your experience like in searching for a job when you were a candidate with us? What was your candidate experience? Right? Um, if so , if you said no to a candidate, ask them what was, what was your experience like with our, with our brand? Right. Uh , I think you can get very inquisitive through the entire five step process by asking questions, right?

Getting the way in . And I think when people feel like their voices are heard, they're gonna move to the most critical , one of the more critical steps is they're gonna buy in , they're gonna buy into your culture, they're gonna buy into the process, they're gonna feel ownership, and then they're gonna commit to it to help you create the best people a journey, the best people equation.

And what you measure in each one of those five steps is possible. So you can kind of go in with assumptions , um, you can measure those assumptions, but by including everybody in that, creating that people equation that works for you and your culture, which may be completely different for somebody else , um, I think is really, really important.

So I think kind of the, the where, where , if it's gonna break, I think it's, I think it's gonna break in the middle as most things do. Um, and really that middle part is the rewarding. You know, you have recruit and ramp on one side, you have retain and remove on the other, but things break in the middle. And, and that's why I think that that rewarding step, that reward recognition is really important.

And I think we've lost the ability to properly recognize people. And I, I see it all the time from an internal business communications is, Hey Mark , thank you for X, Y , ZI , I think, I think there's an art to say thank you. And, and the way to say thank you or to recognize somebody is to thank them for the contribution to the purpose, the mission and the values of your business.

So thank you, mark, for, you know, being reliable, reliability is one of our core values. Um, you are so amazing at setting expectations, but if you can't meet those expectations, what I really admire is that you follow through and reset expectations in a timely manner. So everybody else's trained can, can stay on time. To me, that's a great thank you. Right ? That's a good recognition. Instead of saying, Hey, thanks.

You know what I mean? , if I , if I'm trying recognition back to the vision of the business, and again, I believe vision is the purpose, the mission and the values leadership loses that they lose the, the proper way to say thank you.

And, and sometimes if I'm a words of affirmation and I'm being recognized and acknowledged for my contribution through words, tying back to the vision, purpose, mission, and values of the business, that might be more important than a 2% raise or a 5% raise or a , an adjustment on an incentive package. So if things are gonna break, they're gonna break in the middle.

And I have to look at the people equation and everything we're measuring in each one of, of the stages of the journey. I think it starts to fall down or break in the areas of , uh, of , uh, of the proper ways to reward and recognize people.

And that's what drives people. And you know, I I I , I look at, and I , I talk about sometimes about, you know, you look at the, you look at, we still have five generations in the workforce, and now we're slowly that baby boomer group, as it continues to shrink, we're getting more and more , um, we're getting a much higher , uh, predominance in the workforce of Gen Zs and millennials.

Millennials are quickly becoming the larger group in the workforce. And what rewards a Gen Z and a millennial is very different because they typically want to be tied to an organization that has a strong purpose, and they want to be able to, to understand that the work is just not, work does not equal, I receive a paycheck every two weeks or every, whatever the cadence is.

It's really about, I'm doing something that's making a change, a fundamental change within a, a, an an environment that's good for the organization, that's good for other people, that's good for the community. So , um, going back to your point, it was, it was really fascinating because, you know, asking people, what would they find, asking people to define what their own, their own construct and framework is around rewards.

And for some people it's around flexibility. It's around different motivators versus, especially with the advent now in 2024 of how many people work hybrid or remote, a lot of times that's a big driving force now that people, that's, that's the number one priority over a , a 2% or 4% increase. If they had the flexibility of work schedule, that that would be awesome.

And most people think leadership is what leaders say or do, but the truth is, leadership is about what leaders don't say or do. In many cases, and in , in starting with weigh-in to ask people, what does a comp package mean to you? And that's generally when you're going discover their motivations. But the truth is, comp packages are divided up into monetary and non-monetary , uh, uh, compensation, right?

And the monetary compensation is very black and white. There's, there's, you can put a bonus program in place, you can put incentives for monetary rewards and, and of course , uh, somebody's salary, but that's kind of a , almost set it and forget it scenario. Mm-Hmm .

When we start within the four corners of your job description and you start executing on your particular role, then what are the non-monetary rewards I can provide people to align to their motivations, to incentivize them to accomplish what we need as a department, as a division, as a company. And that's when you can get really creative on the non-monetary side. And, and that's where you can create a list in your company.

You can create, you know, four day work week , you can create work from home, you can create, and you see all kinds of stories and CEOs proclaiming what they're gonna be doing on this whole return to work and everything else, but every business is different and every person in that business is different.

And we, we can't make a custom incentive to everybody, but we can at least ask them what they want and, and collectively come to that conclusion together so we can ultimately have the best culture possible with what resources we have.

If, if there, you know, for business owners and leaders that are out there listening to this podcast and that they don't have the emphasis on either any of the five Rs or maybe one or two of the five Rs , what is your compelling, what is your compelling rational rationalization for them to actually start doing that now and really focus on looking at the five Rs and really being much more intentional about them?

Or if they're missing one or two, then what kind of message would you give to those business owners who are on the fence after listening to this?

So when you can create clarity, you can get to an alignment of, of people, process, tools, technology, et cetera. And people really, leaders really struggle with creating that clarity, right? So in our business to get that alignment, we had to communicate very, very clearly with everybody in the company.

And so, clarity, alignment and communication, I think is just the , the mantra that, that we follow to have a result of, or the output to people results in , in business results. So too many leaders, I think, focus on the business results first, then they drive the people results, but they're not creating clarity and alignment. So , um, I think specifically in the areas of, you know, h to the fifth power , right ?

Right . Um , HR to the fifth power is, is really first getting clarity as to what your , what is your people equation? What is the journey that you're gonna take to, to measure a good people, to have a good people equation outcome?

And then what are all the little steps along the way based on , uh, looking at it through the lens of what I call return on energy and how the vision, the strategy, and the tactics are aligned clearly within your business. And in , in , from a leadership perspective, it starts with the vision, which again, is purpose, mission, and values.

So long as I'm building my tools, my programs, my processes through the vision, through the lens of return on energy, then it becomes a little bit more clear.

Um, but very, very tactically to answer your question , uh, by simply taking a piece of paper and writing out recruit, ramp, reward, retain, remove, and then doing be figuring out best practices on how to measure each one of those phases can be something as simple as, you know, chat , GPT, what are the top 10 ways to recruit in my business? And how would I measure that?

And what's the predictable , um, positive outcome? There's just so many different tools available to us. There's so many resources like yourself that people can call up and , uh, ask a specific question. I'm trying to solve this problem. How do I retain top performers in my business? Not how do I get better people, but know how do I retain best performers? And then how do I reward and recognize them in my business?

That's a specific problem you're trying to solve. So when you reach out to a resource such as yourself, you can solve that specific problem. But if you have to take 45 minutes to define the problem and 15 minutes to solve it, I'm much rather come to you with a problem that I'm trying to solve that's very clear and specific.

So we can spend 59 minutes trying to solve a problem, not trying to figure out what that problem is to begin with.

So, and I wanna make sure we're, you know, that we wanted to probably segue at , at , at to , to wrap things up here in a couple minutes. But any final thoughts , uh, Mike, before we kind of move on to a couple of, couple of speed, couple of speed questions for you regarding yourself and how you, you know, how you think and , um, any kinda last comments, last thoughts you wanted to leave the audience with today?

And you know, I i, if I, if I could urge anybody to, to, when they're looking at their, their financial statements or they're looking at the bottom line of the net profit of a business just to change that profit to purpose, you know, what's the net purpose of my business? And I, and I feel like that helps me reconcile people and profit on a equal field.

And I feel like if we're, if it is turning one way or the other, if it's getting imbalanced, then we need to adjust appropriately. So when your business or your division or your team that you're managing or leading really starts to take off that you're, you know, what, what levers and what things to, to pull or what things to , uh, out outputs to, to , to keep an eye on that you stay on that balanced approach.

Um, which why I'm a huge fan of the balanced scorecard in general, but take that balanced approach to people and profit.

So if you were gonna recommend, or I was, I'm gonna ask you right now, so three books that you would highly recommend, I'm not sure if you're a book reader, but , uh, uh, but what three books would that really have made an impact for you that you would've recommend? Highly recommended the audience?

And I think it's just, it's, there's so many great leadership lessons in, in that book. Um, I'd be remiss to not mention my book. ROE is return on Energy, or, or ROE powers, ROI . Yeah .

Um, and the , and the other one I'm reading right now, which I'm really fascinated with is , uh, um, the , the great , uh, pandemic or the great , uh, and that , that reading about the, the struggles back in 1918 and , and what our population went through , um, is a very, we can learn so much from the past, right?

And , and coming out of Covid, coming out of the pandemic that we recently had to experience and had to adjust everything in our businesses. And I think businesses are still trying to adjust from that. Leadership styles are still trying to adjust from that. There's so much we can learn. And the , the first part of that book blew my mind.

And , uh, so the Great Influenza, I think is the name of it specifically , um, is, is a fascinating read . It's a heavy read, it's a scientific read, but it's a, it's a really fascinating read on how businesses, politicians, leaders really navigated in and through and out of that. And I think there's a lot of things people can take away from that as well.

Just, just to, just to dive into pretty, pretty good, very, not a hard read to do , but very powerful and just some of the content and just some of the, some of the thought, you know, leadership you have in there. So , um, how about two podcasts?

Um, he , uh, if you, if you are a speaker , um, this is a great podcast for speakers, but even if you're not a speaker, but you're a leader, you do speak and there are techniques in , in , in different stage craft kind of ideas that you can get and how to clearly articulate and deliver and communicate a message that you can pull from the speaker world.

So Mic Drop is another one that I listened to, and, and Josh is a super smart guy, good friend, and , uh, he's got built a great community in that space. Great .

And, and I, I, I took a lot of that information, a lot of that opportunities that I had for granted when I, when I, when I could. And you know, when today and probably over the past few decades , um, I've really learned to love to learn and, and , uh, I, I think perhaps people, I instill that in our kids today, right?

And not just learn the subject matter that you're walking into school and listening to a professor instructor on, but expand that beyond just the, the core subjects, right? And, you know, I, to to to , to really push that home with our youngest , um, my, my son who just started , uh, freshman year in college this, this past year.

Um, I got him a mentor over the summer and I, I really admire this, this gentleman a lot. And I went to him and I asked, would you mind mentoring my son? And 'cause he has this love of learning, and, and I wanted to instill that in him, but not directly through me.

And I'm , I'm , I'm , I know that you left, there's a lot of golden nuggets you shared with the audience today, so I truly appreciate your time. Thanks, Mike. You're