Brent Tilson Interview
[00:00:00] Andreas Deptolla: Welcome to The PEO Podcast, where we interview industry leaders todiscuss all things PEOs from compliance to technology, to client relations,everything in between. I'm your host, Andreas Deptolla.
[00:00:18] Brent Tilson: that's your business lifeline.And it's really fascinating because as you're going. And you're growing and youcan imagine growing as you're going after growing in sales, uh, on one axis isthat, and time on the other axis, as you go over time and your sales go up andyou see this growth, and then all of a sudden, if you see the sales declineover time, and then you hit a bottom and you go back up, that's kind of thestructure of it.
[00:00:43] Andreas Deptolla: Welcome to The PEO Podcast.Today I will be talking to Brent Tilson, author of Grow slow To Go Fast and theconcepts of different stages of the business. We talk about key numbers thatevery PEO should measure and review to grow the business.
Brent, welcome to the show.
[00:01:07] Brent Tilson: Thank you. It's great to be hereand excited to spend some time with you.
[00:01:13] Andreas Deptolla: Yeah. Likewise, likewise,thanks for taking the time. Um, you know, I always like to, just to start offas getting to know or guests here and, um, but is there anything unique aboutyou that maybe your team does know about you?
[00:01:27] Something, uh,like a unique anecdote you can tell us.
[00:01:30] Brent Tilson: It's always interesting whenpeople say what's unique about you, right? You think about, oh, what's, what'sin my history that makes me unique or something that I do. I think what'sunique is I enjoy traveling too. Unique destinations, you know, went to Sydney,Australia a few years ago.
[00:01:45] And for somebodyfrom the Midwest, that's not a commonplace. You hop on a plane and go 20 hoursto go see. Then I had to up that. So I went to Egypt and did a tour of all the,uh, antiquities and have been down inside king [00:02:00]Tutt’s tomb. I actually have been to the great pyramids and climbed up theinner part of it.
[00:02:06] And this littlethree by three shaft that took you up to the very inner chamber of. Greatpyramid, which was pretty cool and got to ride on a camel. And then a, anotherdestination was I went to Israel, got to go see all the history of Israel, gothe dead sea and lay in the dead sea and made the mistake of getting somewhere.
[00:02:29] Water in mymouth, which is horrific. It's a saltiest place on earth. And boy, that was amistake to get just a tab of, uh, that saltwater in your mouth. But, uh, sothat's a little bit unique by me is I like to go do those things. I, you know,it, it's just fun to see what the world
[00:02:45] Andreas Deptolla: has. My next question foryou is what, what what's next on the bucket list and Tom's of traveler.
[00:02:49] I know we werekind of like, so that's law restriction riots, but, um, you know what, once,once we are past that,
[00:02:56] Brent Tilson: Planning a safari. I would liketo go on [00:03:00] about two weeks safari inAfrica and just really go out and just see what that's all
[00:03:06] Andreas Deptolla: about. Yeah. It's certainlysomething that, that you and I share the passion for, for travel adventure,riding experiences.
[00:03:13] So tell us aboutyour journey in the PEO industry. How did you get stuck?
[00:03:17] Brent Tilson: You know, I we're in the middleof our celebrating our 25th year. And in fact it would've been, uh, I guess 26years ago, this last week that I incorporated the business. So it was May 25th,1995. And started it in September of 95, but my background I'm a CPA.
[00:03:38] I started off mycareer back in the day. One of the big eight accounting firms. That's, I'mdating myself because there's not big eight anymore. There's only four, butCape KPMG is where I started my professional career and I've always wanted tobe an entrepreneur. I just didn't know what I wanted to do.
[00:03:54] But I was enjoyedaccounting. So I started my own CPA firm just [00:04:00]within a year after getting my CPA license and just that entrepreneurial bug toeven do that. And then as I'm as a CPA, working with, uh, these smallbusinesses and helping them navigate all the little things that they do to runa business and I.
[00:04:16] More of anentrepreneur than just a CPA. So I just love helping them with their businessplans and strategies and ideas. And so I was on this journey to try to findsomething in addition to do or looking at maybe alternatively to compare tojust a practicing CPA all my life. And I got into the PEO space because I wasworking with a small client who had a, was a new business.
[00:04:41] He was creatingwith the idea of processing. He wanted me to process payroll. Couple of hundredphysical therapists that he was going to have a contract with hospitals. And Ithought, boy, you're always in payroll tax trouble. I thought, well, what if Iran the payroll? What if I was the employer? And I'd let I lease theseemployees to you.
[00:04:59] I'll take care [00:05:00] of all of it. Little did I know it was anindustry? I mean, I, I'm coming up with this idea, sit at my desk one day andhere I start research. It's like, oh my goodness, that's an industry. And. I, Iwas immediately drawn to it because I had what I thought was the knowledge andskills to actually begin it and leverage my CPA firm to start it and inkyincubated as I call it within the CPA firm.
[00:05:21] And so that'swhat I did in 1995. It was like, okay, here we go. I'm going to start a newbusiness inside my CPA firm and off. So, so tell
[00:05:29] Andreas Deptolla: us a little bit about thegrowth of the company. Was it all organically from within the CPA, from, or didyou, did you have some M and a activity over,
[00:05:37] Brent Tilson: you know, we've done some M anda, it was primarily growing and it was kind of funny.
[00:05:42] It's a greatquestion because I was real hesitant to go out and sell to my CPA clients. Ifelt like I had an unfair. Sales advantage as their CPA go say, Hey, try thisnew service as a new business. And as a CPA, you have these ethics andrequirements and things you have to [00:06:00]kind of live by. I felt like I needed to go outside of that market.
[00:06:04] So I went out andreally sold to. Small businesses. And it was a real trailblazing experiencebecause 1995 people didn't believe what we were doing was legal. I was like,no, it's legal. Well, I don't know. And so it it's certainly a group and we didsome M and a work. We, uh, had a lot of organic that we've acquired a total offour competitors over there.
[00:06:26] Twenty-fiveyears. Most of them were smaller deals. Um, local, we did acquire one inArizona, but we did three local deals and one in Arizona and, and they were,uh, you know, good acquisition store growth and good relationships and goodclients. And many of them we still have today. Yeah.
[00:06:41] Andreas Deptolla: So I'm particularlyinterested in something you mentioned earlier, like in terms of yourentrepreneurial journey, right.
[00:06:46] So you had theCPA arm, right. And now you're creating the PEO business. How did you thinkabout. Where to put your energy into, right. The CPA I'm sure was, uh, wassupposed to be a revenue [00:07:00] driver,right. Maybe you saw some more growth on the, on the PEO side, what wentthrough your head? Right. And how did you, how did you allocate the
[00:07:06] Brent Tilson: time?
[00:07:07] So in 1997, thiswas really the catalyst for our growth and the evolution of the business. I wasreally trying to look for relationships that I could develop to grow thecompany. And through, uh, another CPA made an introduction to a publicly tradedtemporary staffing firm, a company called personnel, man.
[00:07:29] And personnelmanagement was looking for investment opportunities and they were aware of thePEO space was growing. We got introduced and through a series over the courseof a few months, they ended up making a minority interest investment. In mycompany. So I had this public staffing firm invest in 1997 and my littlebusiness.
[00:07:53] And that was atrue catalyst because I then had to formalize and put a board of directorstogether. It hits [00:08:00] staffing industrynews reports. So it was all over like, Hey, this company got invested. So I wastalking to all of these, uh, investment analysts. And what are you doing? Whatare you guys going to go public?
[00:08:10] What are yourplans? And my board of directors, literally, it was probably 98. At this point.So year, two years into it, we were at a board meeting and they said, Brent,you've got to pick a team where we've made there's this investment. And you'regot to make a decision either you're in the PEO space or you're a CPA, but youcan't do that.
[00:08:33] And so at thatmeeting, it's like, now I know where the opportunity is. I can do CPA, but thisis really the business opportunity. So, uh, I quickly then started and moveforward and sold my CPA firm in 1999 and transitioned out and put all my energythen into the PEO space.
[00:08:52] Andreas Deptolla: So, so the answer wasessentially to, to make a decision.
[00:08:54] Right. And, andbet on one horse and Nvidia focusing
[00:08:57] Brent Tilson: on that. Right? Yeah. That'sexactly what it is. It's [00:09:00] like, okay.We're invested in you. We need your.
[00:09:02] Andreas Deptolla: So, so you mentioned you hadlike, you know, some, some ideas about the PR space early on, right. To seeingwhat's happening in the market. How did you navigate the industry?
[00:09:13] Right. In termsof like, you know, learning about your competition, um, industry associations,like what, what was your early involvement?
[00:09:22] Brent Tilson: If I think back to 25 years agoversus today, Because, you know, just, I'm going to compare and contrast. So ifI were to open a business today, mean the world's at my fingertips, I can chasedown competitors.
[00:09:34] I can getinformation, I can pull public reports cause there's publicly traded PEOs. So Ican go out and pull their quarterly reports and find out all kinds ofinformation in 1995 that didn't exist. I mean, We were doing something for somemarketing things we're working on. So I had my PR team pull some data in 1995and there was 23,000 websites in total in 1995.
[00:09:59] I think [00:10:00] 13% of the world was on the web 13%.Right. I mean, it didn't exist. So when we started, then it really was. Youknow, trying to actually call your competition somehow gets your hands on theirmarketing materials. It was looking in the phone book to see who's advertising.It was, you know, by word of mouth.
[00:10:21] And one of thefirst things I did was join, uh, Napier, which is our national association forCEOs. And literally that was my second check I wrote first check was for myrent. For my first rental space office space, the second check was to Napier soI could join and have them send me over all the information I could get on theindustry.
[00:10:40] And that's how Iearly on, got to get exposed and go to their meetings. I think it was, they hada national meeting. A month or so after our, I started the company in 90 inSeptember, so it was like October. So I went out there with yellow pad in handand took note after note, after note, ask everybody, I could [00:11:00] think of every question you could imagine.
[00:11:02] And, and that'show we all did it. We all in the early stages of the industry, Boy, we justreally drew it together and try to figure stuff out. And a lot of phone callsback and forth and, you know, trial and error.
[00:11:16] Andreas Deptolla: This is something not justunique to the PEO industry, right? That oftentimes the founders and CEOs of themost successful companies actually collaborate.
[00:11:24] The PR industry.Other industries are not necessarily, we're not texted or market right away.You just have like one, one player. And oftentimes if you call it collaborateand, uh, Exchange ideas, right? Um, it, it benefits to the greater ecosystem.Um, so what was the specific involvement than Napa or.
[00:11:42] Brent Tilson: So it's one of these things hasgrown over time.
[00:11:44] So, uh, early on,uh, back in the day when it first started, the, the association was broken upinto chapters. They were Midwest, I think, mid Atlantic. I'm trying to rememberall the different chapters there were. And so I got involved in the Midwestchapter and was involved [00:12:00] there, gotinvolved with some local stuff in Indiana that we were working on.
[00:12:04] And was trying tolearn how to get more involved, but over the years ultimately was on certain,in different capacities, different committees, government affairs committee,state, government affairs, committees, uh, marketing, you know, committees, youname it. I was just kind of volunteering for whatever I could.
[00:12:23] And then as timeprogressed, ultimately I was, uh, uh, put on the board of directors. And thenon the board of directors became ultimately the chairman. So it kind of grewfrom just volunteering all the way through the chairman, uh, time. And I was, Iwas very fortunate. Uh, the year that I was chairman, we had been battling for20 plus years to get federal a federal law.
[00:12:48] And get federalrecognition. And I was just very fortunate to be sitting in the chair aschairman the year that we finally got a bill in front of the president and itgot yeah. Signed what a big one. [00:13:00]Yeah. And so that was just a watershed moment for the industry. I have a lot offun teasing the former chairman that it finally got done on my watch.
[00:13:08] Um, you know, whycouldn't they have got it done when in fact it was just a little bit of luckand timing, but, but that was an exciting part. And then since then I stillstay active, uh, very active with the, uh, the industry and federal governmentaffairs and other activity, but just, I've tried to cut back my time, sir, voluntaryon as many cases.
[00:13:29] And activitiesthat I used to
[00:13:31] Andreas Deptolla: and dedicate more of thattime to, to travel and adventure.
[00:13:35] Brent Tilson: There you go. Exactly. Andgrandkids.
[00:13:37] Andreas Deptolla: So, so I want to switchtopics a little bit and learn more about, uh, the book that you publish, right?Uh, go slow to grow fast. What was the inspiration to write the book?
[00:13:49] Brent Tilson: When I go back to my CPA days,uh, I was always struggling with helping solve this problem that I saw in.
[00:13:58] Almost every in [00:14:00] fact, in every one of my clients and theyhad the cyclical nature where they would grow and then they'd have trouble,they'd have to restructure, they start growing again. And I'm an, you know,young CPA and I hadn't yet honed business management skills or entrepreneurialskills. I was, you know, I was good on the balance sheet and income statementand helping design business plans, but I hadn't really didn't understandorganizational structure.
[00:14:26] And I was at a.Continuing ed class, uh, for my CPA license. And one of the, the instructordrew this S curve, honest to goodness X, Y axis, and drew this S curve kind ofphenomena and pointed out that all companies go through this, this S-curvelifecycle where they grow. Ceiling. And then when they hit that ceiling, theyretrench have to re either restructure staffing or operations, then they get tothe bottom and then they grow again and they have these life cycles.
[00:14:56] And I was alwaysintrigued by that and that [00:15:00] helped.And, you know, in my mind answer. What the phenomenon was that these businesseswere focused on or are facing. So then I started on this journey of thinking,how can I help companies better understand where they are in their life cycle?So that those levels.
[00:15:18] Ceilings, theyhit those growth ceilings. They don't bounce off half of them hard and then gointo a trough or go out of business. They actually maybe do a slight adjustmenthere or they can anticipate and keep growing and keep scaling. And so that wasthe, the driver for what ultimately became my book was I created these toolsmany years ago, back in the early two thousands and created my own what I callquad for business model.
[00:15:42] And it was allaround a couple key measurements and trying to really bring real practicalapproach to understanding how to run a business. And I had people that I'd workedwith and they say, bring, you've got to write a book about this stuff. This isgood stuff. You know, you really helped me think about it.
[00:15:59] And can [00:16:00] you write a book? And so, um, after yearsand years of, you know, the, the outline sitting in my drawer, I finally, oneday is like my business coach just challenged me at an event. It's like, okay,it's time to do it. It's time to put pencil to paper and write the book. Sothat was the background, me just trying to solve it, coming up with these toolsand ideas, and then finally saying, okay, Put it down on paper.
[00:16:22] So I'm intriguedby
[00:16:23] Andreas Deptolla: the escrow. You walk usthrough the life cycle, right. Of, of company. What are the different phasesthen? Along the desk,
[00:16:31] Brent Tilson: The S curve. It's one of thesethings where for the audience, if you can, in your mind, or if you have a pieceof paper in front of you just draw an X, Y axis and start in the bottom leftcorner, and then just draw your line at an angle up, and then you hit a pointand it starts to curve, and then you go down and then you get to the bottomtrough.
[00:16:50] And then youstarted going back up again. Then you hit a top and then you go down and you,those S-curve lifecycle. I actually call it lifeline. And that's your business [00:17:00] lifeline. And it's really fascinatingbecause as you're going up and you're growing and you can imagine growing asyou're going up, you're growing in sales, uh, on one axis is that and time on theother axis.
[00:17:12] So as you go overtime and your sales go up, you see this growth and then also. You see the salesdecline over time, and then you hit a bottom, then you go back up. That's kindof the structure of it. And I called the period where you're going up, thedriving zone. Then I call the period when you hit that growth ceiling and yourbounce office start going down.
[00:17:33] I call to thebottom trough and back up again, I call that the drama zone. So you're eitherin a driving zone or a drama zone. And it's interesting because as I talk tocompanies, I can start to figure out based on how they tell me about theirbusiness, what zone they're in. And I always like to challenge people, youknow, I know this we're at a cocktail party and somebody says, tell me about,how's your business going?
[00:17:57] Oh, we're killingit this year. We grew 80% [00:18:00] over lastyear and on and on and on. And then when they tell me that I want to say, okay,80% growth. And I'm thinking, okay, how's your staff? How's morale. Are yourcustomers happy? You know, are you able to scale and keep up? And oftentimesit's like, that's the stuff they don't want to tell you.
[00:18:16] They love the topline, but what they don't know is they're getting ready to implode becausethey've just outgrown their ability to sustain that growth. And they haven'tput the right investment in the right places. And I know what's next. And nexttime I see him, he's like, oh, we're getting killed. And that's kind of theS-curve.
[00:18:31] It helps peoplekind of just understand where they are and intuitively people.
[00:18:36] Andreas Deptolla: And what is typically, what,what have you seen as a main driver for the S is it like just top-line growthor the other factors that contribute to being, you know, in one of the
[00:18:48] Brent Tilson: stages, which a lot of thingsthat contribute to it.
[00:18:51] And in, in mybook, I have a couple measurements that I try to talk about. [00:19:00] So I, my quad four was I was sitting atmy. A table at my house one evening back in the early two thousands, I wasdrawn this out and I had my S curve and I was really just contemplated. Whatthat reflected. And I was trying to think about changing up the axes.
[00:19:19] And so what Iended up doing, instead of it just being an X, Y axis, I turned it into a quad.So I took one line of carried it all the way down and took the other line over.And I changed the, the two axes and I changed the, the, uh, vertical the up anddown to a return on investment. So instead of it just being about grossrevenue, Let's make this one return on investment and then let's take thehorizontal line and make that operational effectiveness.
[00:19:48] So over time, andthen I thought, okay, you have high and low and high and low and startedthinking through, I thought, okay, if a company is getting a high return ontheir investment and there's a [00:20:00] highorganizational effectiveness, so they're in that top right quadrant. That's thedriving zone. That's where everything's running really well.
[00:20:09] And then Ithought, okay, well, what if somebody has a real high return on investment? Sothey're at the top of the vertical, but they're real low on the horizontallines. So they're over in the left. So I call that quad one and I thought, youknow, that's kind of, fool's gold. That's that entrepreneur that when I talk tothem, they're focused on putting money to the bottom line and that they takeall the money out of their company.
[00:20:33] They don't investin infrastructure. Talent. They don't hire talent. They probably borrowsomebody's software. They don't go out and buy their own software. Theyprobably have, everybody has 10 90 nines, no employees. They don't pay forbenefits. They base, they're just taking money out. They're not building anorganization that's sustained to grow.
[00:20:53] So when I thinkabout that lifeline and where people are in their cycle, that's where the quadfour came from. It was [00:21:00] me helpingthink about what are those things people are doing to contribute. So. When I'min the bottom two quadrants. So if you think of top left as one, then down totwo, the next, over to the right three, then back up to four, two, and threeare the drama zone areas.
[00:21:16] That's where,yeah. You have a low return on investment. And if you're in quad two at thebottom low return on investment, low organizational structure or effectiveness,that's a company in trouble. That's, you know, and, and I talk about in mybook, I often talk about the people that you can see that. In businesses today,I think about blockbuster goes blockbuster video, and you can look at companiesand go.
[00:21:42] Wow. They were,they were killing it. They were in quad one at one point, had all these retailstores all across the country. That's where everybody, you know, soccer, momsstopped in the way home and picked up videos for the kids that night. And thenthey ignored technology. And all of a sudden technologies hit them across the [00:22:00] head.
[00:22:00] They wentdirectly into quad too. Cause they weren't as always late, usuallyorganizationally effective as the red box or Netflix, and then they couldn'trecover. Right. And then that's the issue with quad too, is you can go out ofbusiness. And so I know it's very severe. This is kind of complicated for thelistener, but it's really that idea that you're in one of four.
[00:22:20] And one of thefour quads is going to help determine whether you're in a drama zone or adriving zone and the decisions you need to make to run your business. Yeah.
[00:22:28] Andreas Deptolla: Right. Because it's sotelling about disruptive innovation. Right. If you think about blockbusterowning the market, essentially here in the United States, right.
[00:22:36] And then to yourpoint, Red box comes in. It's a slightly different model. Right. And then youhave Netflix with a totally different model. Right. And then cleaning up the,the market. If you would think about like the, the, the Brahma zone, right.That you were describing, what, uh, what are typically specifically for, for Palso contributing factors to get into the drama zone?
[00:22:56] You mentionedhigh gross, right? Um, [00:23:00] is itoftentimes about not setting the right strategy? Team alignment, getting the wrongpeople. And what, what are
[00:23:07] Brent Tilson: typical things that you justsaid? You know, it's interesting because I, as I, as I work with companies and,and coach them, or do a seminar and we'd get in these conversations and thisvery much, this conversation, you and I are having, and I'm talking to these,these leaders and we talk about, I Al I was challenged.
[00:23:25] You know, intheir strategic planning to ask the question, what will put you out ofbusiness, put that on every, every time you do strategic planning, what willput you out of business and you have to walk through and you know, you talkabout, it could be the death of the leader, right? You could have the whole hitby a bus thing.
[00:23:42] It could be.Maybe a cyber attack. Uh, you know, I always bring up world events like apandemic that pandemics never happens. So don't worry about those, right.Obviously everyone knows that happened now, you know, but yet no one everthought a pandemic would ever happen, but yet you have to plan for them.
[00:23:58] And. [00:24:00] So this whole idea of what to put you outof business, but the things you just rattled through is high growth. What arethe things high growth is going to do to me? And do I have the talent? Do Ihave the people, do I have the right strategy? Is there a disruptivetechnology? Like the blockbuster example?
[00:24:14] So all of thisongoing planning has to be done. So that people can look around corners andanticipate so that when something does happen and there is a disruptivetechnology, or there is a cyber attack or whatever may happen, that the companycan be nimble enough to have a small drama, but not get pulled way down intoit.
[00:24:35] And, you know,PEOs you know, we were just like every industry, every industry, no one'simmune to this and in our own industry a few months ago, The predominantsupplier technology platform for the HR survey software that I think 80 pluspercent of the, the independence PEOs use had a cyber attack [00:25:00] and, uh, It literally brought the industryto a halt and everybody had to scramble and work together.
[00:25:08] And we got backonline within a week and got through, but it could have been catastrophic hadthat not happened. And that everybody worked together. That's realcollaborative, um, industry that really is competitors. We all worked, but itmakes you realize that there's threats around every corner that you thinkyou're prepared.
[00:25:28] But you, youcan't. So I always start with, you know, doing that, making sure you're reallytrying to think of all those little pieces, but then the other piece is whatare you doing just at a very basic level to make sure your operationaleffectiveness or your what things you're doing internally can scale.
[00:25:45] So if you'regoing to grow and you're going to grow. You know, they say that if you growmore than about 18% a year, you really have to be investing in yourinfrastructure to make sure that you can scale because companies that grow 25, [00:26:00] 30, 40%, you quickly outpaced yourorganizational effectiveness and then you're going to find yourself in trouble.
[00:26:05] So how do you getthat? Balanced between growth and investment.
[00:26:09] Andreas Deptolla: I want to talk a little bitmore about these catalyst savant that you mentioned, right? Well, it's asecurity, uh, issue that shakes up the industry or you, you, you meant that thepandemic year that we all went through, um, you know, typically in this, inthis kind of crisis moments, right.
[00:26:24] You see when, asyou see losers, right, the company is that, that you were involved as what,what were some of the characteristics of the companies that. Took advantage,right. And strife in these typical in environment.
[00:26:38] Brent Tilson: Yeah, I think there'sopportunities in all of these different types of environments and for ourselvesas an example, last year, when the pandemic hit and then the government quicklyjumped into a hyper mode to react quickly.
[00:26:55] And what's reallyinteresting with a little side note here. If you go back and read [00:27:00] about how the government responded inrecession of oh 8 0 9 and how long it took to get stimulus into the economy.Prolong the recession and there were lessons learned. So when this hit, um,the, the race to a stimulus package was much from what was learned when thegreat recession hit.
[00:27:20] And so the PPAACA and the cares act and the paycheck protection loans came and put all thatstimulus money. Really. I helped help stabilize it. Whether people agree ordon't disagree really helped put a lot of money and stabilize businesses whenit was necessary. Well, they were very complicated rules for small businessesto be able to follow.
[00:27:43] And because PEOsspecialize in managing these types of regulations related around employment, wewere able to very quickly. Understand how to comply, what to do. So for us, us,we, we really, we could've gone out and tried to keep [00:28:00]selling their body was in panic mode. We put all of our hands and to stabilizeour clients.
[00:28:05] And so ourclients, you know, constantly communication, constant COVID information. Here'show you get your PPP loans. Here's how you do all of these different things. Sothey could go grow their business and, and, or save their business and, or.Whatever they had to do. So the PEO industry, and I know us specifically theopportunity, there was a really show our value in that they were able tostabilize while some companies just didn't know what to do.
[00:28:33] And in factthere's some studies we've done as an industry. The companies that use PEOsactually responded better and more quickly during the pandemic than those whodidn't. And so it's a Testament to the fact that, you know, your people shouldfocus on what they're good at and what they should be doing and take thosenon-core things like what we do in HR and government regulations and outsourceit to [00:29:00] people who.
[00:29:00] Cause it's wellworth it. Cause you can, you can be so much more nimble as a company to dothat.
[00:29:06] Andreas Deptolla: I was trying to find acouple of nuggets, right. For, for, um, PR leadership's team that are listeningin. We talked earlier about the importance of measuring results and KPIs andwhatnot. What, uh, you know, certain KPIs that you think every.
[00:29:23] PEO owner shouldlook at, like it was on the weekly, monthly quality
[00:29:28] Brent Tilson: basis. The measurements that Imeasure, and these are specific to my quad four methodology is return oninvestment. So ROI, and I'll define that in a moment. So different than whatmost people think it is and revenue per employee. So I'll start with revenueper employee.
[00:29:45] Um, revenue peremployee is the measurement by which I think accompany is. Effective. So it'smeasuring, measuring organizational effectiveness. And if I can measure thatthen on my horizontal [00:30:00] line, in my quadfour, that's the measure. That's how I measure it. Whether a company is highlyeffective or not.
[00:30:07] And becauseeverything we do contributes to revenue per employee, it's either I have feweremployees. So I'm driving more revenue per employee and, or I have moreefficient and effective systems that I can manage more. PEO clients and managemore in higher volume with fewer people or I'm leveraging technology in a waythat I'm able to onboard my client employees, which is becoming more common, obviouslywith, you know, onboarding electronically than we did years ago.
[00:30:37] But that was allabout driving revenue for employees like that. My number one number now, myother return on investment it's return on investment. Based on how much you payyour employees. So if I'm trying to measure revenue per employee, I also wantto know how much profit in my generating based on the money I'm investing inpeople.
[00:30:59] And that's alittle [00:31:00] different than revenue returnon investment. Like you would think about from an investing in an asset. But Ithink that's the same thing. If I'm going to buy a real estate. You know, uh,commercial building. I wanna know how much I'm investing in that. And then howmuch profit do I make each year?
[00:31:13] Well, as abusiness owner, it's the same thing. If you're running an operation like a PEO,that is your asset is your people and how much you pay them, you should be ableto determine how much you're making profit on that. And so those are my key twokey measurements. Then after I get off to that, after that, I like to measurenonfinancial.
[00:31:34] Uh, numbers or atleast some something that not looking in the rear view mirror. And that's whereoftentimes whether you weekly, monthly, quarterly, like revenue per employee,you can measure on a weekly basis. You can very quickly see as real time returnon investments. No more challenging. Cause you got to wait till you get yournumbers, unless you have a system that can generate that timely.
[00:31:54] But when it comesto the other ones, it's like, okay, how much time am I investing in my people? [00:32:00] In knowledge. So let's talk about hoursand education. Let's talk about, uh, tickets that are open and how quickly arewe closing tickets and service requests? What's the velocity of my cash flowand looking at those types of things, you know, PEOs have huge cashflow.
[00:32:17] So what am Idoing and how much money. Am I able to on my current cash, am I retaining etcetera? So I tend to look at those numbers that are non-financial to give mesome idea of how well I'm performing.
[00:32:30] Andreas Deptolla: And how do you think aboutcustomer satisfaction, net promoter score? Like what, where does it live in, inyour, in your, your, your ecosystem?
[00:32:38] Brent Tilson: love the net promoter scoreidea. I do, I think is really novel. I like it. I struggle with it sometimesbecause I get people who ask me to respond. And I guess I've had asked enough,I kind of get numb to it. So I just don't respond. And I know why they'relooking, I know what they're trying to do and I should do it.[00:33:00]
[00:33:00] And I think,okay, are there other people just like me out there that I'm asking? So theonly people I'm getting, it's not maybe a good enough sample size to reallygive me idea if it's that my net promoter score is accurate or not. And. I dothink it's a good tool. I think it's something we all should have in ourarsenal of things we ask.
[00:33:20] Sometimes Istruggle as to how, how much can I rely on that one? Just because I have to geta sample size. That's big enough to really make me feel like I have promotersor demoted. Yeah.
[00:33:29] Andreas Deptolla: And how do we do we overcomethe server fatigue, right. And oftentimes to be a bias, right? Like extremeslike that, the people who are super happy or super unhappy.
[00:33:39] That that thatare responding. Right. Um, but yeah, I think it was, it was any kind of KPIsystem, right? It's, it's a breasts right off of different KPIs that, that thenbuilds kind of like this, this, this puzzle together. Right. Um, and you cansee that the health of
[00:33:53] Brent Tilson: the company, you know, it's kindof interesting and this, you know, from a PEO operator perspective, And I'msure [00:34:00] others have already identifiedthis many years ago.
[00:34:03] It was kind of anaha moment for me, not in the last few years, years ago, when we first startedthe people who bought were the entrepreneurs, you know, they were maybe notbleeding edge, but they were kind of leading edge. Like, Hey, this is a new wayof running my business. They felt maybe a little more sophisticated than thenext entrepreneur cause they were outsourcing things.
[00:34:23] Other peopleweren't. And today though it's changed dramatically because the PEO industry isaccepted as just a way of doing business. And what's interesting is it used tobe, the buyer was just the, the owner and then everybody just jumped in lineand they use the PEO service. Now we think there's two customers.
[00:34:43] You have both theentrepreneur owner. Who's intrigued by it because it's a better strategicbusiness decision. Going back to what will put you out of business and themsaying, Hey, I'm just going to outsource these things. We're not good at. Wefind that the people who run the operations now are, [00:35:00]are migrating towards wanting PEOs because they recognize that the stuff
[00:35:06] A waste of theirtime, where in the past they wanted to do that stuff. Cause that's what theyfelt good about. Now, the operations people are the ones who really alsoembrace PEO. So it's kind of interesting because when you talk about netpromoter score or you think of other ways of measuring, you kind of have tothink about measuring it from two different frame of references from anoperator's perspective.
[00:35:29] And also thenfrom a CEO's perspective. And I think as time goes on, the CEOs orentrepreneurs get further and further away from what PEOs do and what we offerbecause their teams are who work with
[00:35:41] Andreas Deptolla: us. It sounds like salesprocess is getting more complex, right. As you're having different buyer buyingpersonas.
[00:35:49] Right. Andwhatnot. How do you think about positioning and messaging and that concept?
[00:35:55] Brent Tilson: Yeah, we're working on thatright now. If we have some really good things, we're working on trying to thinkabout [00:36:00] the buyer persona specificallyto, um, in my book and people will appreciate this. My book, I have to, I use afable to tell the story, and then, you know, my consulting I do throughout thebook, but my two people in the book are Frank and Susan Frankston, entrepreneurhard charging engineer.
[00:36:18] Susan's thecontroller or been there forever. Um, And the two of them go on this journey inmy book about how they, how they're performing, take them through the lifecycle, their lifeline, the quad four model, help them kind of navigate wheretheir businesses and in the end, the books pretty much selling why they shouldconsider using a PEO.
[00:36:37] It's very subtle,but it's in there. And, uh, so when we think of buyer personas, we use Frankand Susan. So Frank is the entrepreneur persona. Susan's the controller. Imean, obviously we have to be gender neutral and all those things, but in thebook that was there, there who they were, but it helps us think about who thebuyer is.
[00:36:57] And, uh, it alsothe [00:37:00] information we share and how wetalk about our services. And I think it fits really.
[00:37:03] Andreas Deptolla: Well, Brent, thank you somuch for all the insights today and take the time. Uh, I truly enjoyed it. Ifsomebody wants to find you one sponsor, reach out, want to connect with whatwhat's, what's the best way to connect.
[00:37:17] Brent Tilson: best way is to go out to Brent Rtilson.com, Brent R tilson.com. And that's my book website, and there's contactinformation. There. There's actually an assessment that company's 10 simplequestions. It'll kind of help you figure out where you are. Uh, in your lifelineof your business today and, uh, uh, see if you're in a drama zone or a drivingzone.
[00:37:40] So I'd encouragelisteners to go out and take a quick assessment. They can drop me a note fromthere as well. Um, or certainly through Tilsonhr.com, which is. Um, that myPEOs website and, uh, certainly just drop me a line through either of those andI can be connected with them.
[00:37:58] Andreas Deptolla:This podcastis sponsored by ThrivePass, a trusted PEO partner for employee benefits from pre-taxaccounts to COBRA administration, ThrivePass empowers employees to thrivethrough exceptional service in innovative technology. More at thrivepass.com.Thanks for listening to today's episode, don't forget to subscribe and visit uspeo-podcast.com to learn more.
I’mAndreas Deptolla and this is The PEO Podcast. We'll see you next time.