Let's Talk Business Episode 187. HR Takeaways That Your Business Needs Today With Izzy Friedman

because the managers are getting reviewed on the same way that the employees are getting reviewed there's a certain Mutual understanding between everybody as to what does the company want from me the company wants for me those three things they want me to be efficient they want me to be effective they want me to have a culture of Excellence that's what the company wants for me so that message is synonymous to every level within management and every layer of employee I think it's a fantastic fantastic way of looking [Music] Yeah Izzy thank you so much for joining me on the last business podcast thanks for having me really excited one of one of the things of what I love about the podcast and my listeners are used to me saying it is that I I interview guests and then some of the guests introduce me to other people that I've never heard of and then ultimately we end up interviewing those people in this case I think it's the first because we had your brother on the show which was a knock out of a conversation and we spoke all about sales and for our listeners that want to know I'm referring to manasha fredman that spoke about sales and that was a phenomenal conversation and I told him that I'm looking for expanding the topics and he told me that my brother Izzy is a pro in HR I said HR is a very important topic and and then we connected and now we're here it's great with my brother I have very very large shoes to fill he's fantastic at what he does so let's do this sure so actually based on my understanding is you started off in sales as well before you hit HR so for our listeners give us a little bit of your back backstory it's a great I mean my first job was working for a husband and wife appliance sales team husband and wife had sold appliances refrigerators watches dryer stuff like that incidentally that's what I decided that I would never work in the same office with my wife so the way the interacted with each other and it was it was not exactly a winning recipe that was my first job from there I went to work in the jewelry business selling jewelry and I was a traveling H traveled all around the country would travel from Monday to Thursday be home for Shas for the weekends and sold jewelry and at a certain point specifically pearl jewelry and a certain point that decided hey I could do this on my own why do I have to do this for somebody else I could do this on my own tried my hand in my own business and unfortunately was not very successful with that being an entrepreneur of my own business and that was a hard pill to swallow but I still have that you know had that sales desire the drives still that Thrill of the kill kind of thing is always something really special to me and then I went to work for B&H Photo and I was hired there to sell specifically to the federal government they had GSA contracts at the time and I would sell to the Federal Government Federal Government and that also required a lot of travel I would travel different army bases meet with procurement officers and sell to them the offerings the various offerings that the company had to sell and then I went from there into Sales Management and managing the sales department and managing their what they call their bid Department which would prepare government bids for government education then they manage their inside sales team their outside sales team their call centers etc etc etc in the sales space guiding training making sure that the team knows what they're doing and to be successful and how did how did the transition to HR happen it's a great question very good question I get that question often especially when you go from the transition from sales H are a good manager overall deals with a lot of very very typ every single day HR issues you're mitigating conflicts between employees when an employee has an issue with their pay they're coming to you they want you to Advocate on their behalf for equal and even compensation you're training them you're developing them you're helping them out you're coaching you're engaging them a good manager is very very involved in a lot of things that HR is involved in the company at the time went through a senior management change a new CEO came on board I got a chance to work with him together let me see exactly how many the F was running it was a very large diverse Department of every age race color creed and every type and he wanted to revamp the HR department and bring it all Under One Roof and he asked me if I wanted to do it and I was like I love it absolutely I didn't take me a long time to think about it I jumped right into it and like a fish in order I absolutely love it got it so for our listeners before we continue the conversation is I just wanted to make this disclaimer we will be speaking about HR but obviously every business is different and in legal even in every state it varies the different legalities so take this for information purposes only and if you need to know legal it's not if for legal advice consult with a legal professional and your HR in each scenario is it's different so let's start speaking about HR now when you speak if you spoke to a company five years ago 10 years ago 15 years ago 20 years ago about HR or do you have somebody dedicated for HR the conversation was oh well I'm not big enough that's made for large companies that have an orc chart and they have different responsibilities and different SE level positions to fill one of them is HR and a small business owner doesn't need I think a lot has changed a lot has changed from a legal perspective and the requirements of state by state and a lot has changed because of the demands of employees as well what could you share as the overall as a company at which point do they have to have a dedicated HR department or some bit something to follow through that's a very good question in general there is no one-size fits-all remedy and no one-sized fol piece of advice overall if you look at what the objective of HR is every business owner should be looking towards those types of accomplishments so if we can maybe delve into that at a different moment but the concept is whatever HR is to a company whatever they think HR should be is what will guide when they need a lot of things what has changed a lot you mentioned the good fact that a lot of the regulations have changed people have changed types of work have changed a lot of things have changed over the last 15 20 years as you mention it at the same time a lot more of a focus on employee engagement has become a very very important business need whereas in the past there was a lot of like you know you get your paycheck come in punch your clock go home I don't really care if you're happy or not it became a lot more evident over the last 15 20 years how important engaged employees are and most Business Leaders CEOs managers or whatever are not always focusing on that that's something that HR department focuses on so I can't really answer the question in terms of at what point but any business owner should consistently be looking out and as they grow it becomes much more necessary becomes much more important so what would you say is the key responsibilities of an HR position or the HR department fantastic I'll tell you how I look at it and then I was of course like to hear from you what you think about it but I'll tell you what how how I look at it I always say that HR has two responsibilities two main primary responsibilities number one is make sure employees are happy well obviously there are many layers to that but let's just call that as a header number one make sure employees are happy number two keep the company safe from a compliance purpose from a compliance level and help the company minimize its liability now the way I look at it is that they both go hand inand if your employees are happy the company will have much less risk of liability so that's what I would say is the overall if I had to put it on a business card or a bumper sticker it would be keep employees happy make sure employees are happy and protect the company from liability and and I'd love to hear your what do you think yeah so the role of HR based on I said like we're used to this it's a very corporate jargon type of title and you see a lot of you know companies now would Rebrand that with different titles but obviously it's an HR department why because once upon a time it was more for the second half that you mentioned which more for liability perspective than keeping employees happy you know that was the reasoning for that department I think now again it's it's very important to have the liability part set out making sure the company is compliant but it's also for employee engagement and that's why you can see some companies will divide the responsibility multiple people be involved because one is more reactive while the other is a little bit more proactive so I've seen that you know being sometimes split up in two responsibilities but I I guess I'll go back to ask you a little bit again the same question I asked you before but a little in in a different way which is and and this will this will bring me back and I think uh to a memory when I started our company Pet Group we now you knowm 23 and a half years old and I remember when I started off with my partner we were the two you know two partners two people hustling every single day and working in the company finally we outgrew ourselves we need to hire our first employee but we don't have enough work for the first employees so we had a couple of hours of work so twice a week a couple of hours where do I turn to I turned to a family member and I so proudly signed that you know that perel check I'm a boss I could actually sign this apparel check little did I know a couple of months later I hired my it was close to the end of the year I hired my accountant and and my accountant says well these checks are payroll checks you need to have workers account I signed up for workers comp and then I got I got a fine of $165,000 from the workers comp um bar because I didn't have work has come from the first the date of the first check till that day and to a certain extent you know this is how small businesses are are born you start you trial error mistakes and unfortunately we don't want to have those but going back to an HR department you see a lot of those trials and errors of you know between legalities between a 1099 and W2 about PTO requirements and so much so much that goes into that which today's day and age as I mentioned is you cannot get away without having proper structure for those things I remember when we started you know we started having the first employee the fifth employee the 10th employee you know we had different deals with different people about the vacations and the days off and sick days and everything you know we were winging it you know it's a small company winging it one point you can't run a company that that way the the exposure that you have as a company it's just not worth it so I'll go back to my question to you is at which point is a company ready that you know okay you're solo entrepreneur fine you're hiring your first employee your second employee which point you say you know what you got to take HR serious you gotta you got to create those systems and processes that's a very good question and I think I mean putting it the way you just put it leads me to think few interesting things first of all a podcast such as yours and having somewhat a discussion such as discussion that we're having is super important because you have an audience you have a very very wide audience and you have audience of people that are starting off in business and you have well seasoned professionals that have been working you know have larger companies midsize companies midsize business Etc who are listening to a podcast such as this and I think in this type of a format is a very very good opportunity to get the message across and really the best way is it starts day one when a person decides to start their business to right way when a person incorporates their business and they start doing their first payroll runs and they have to set up their taxes whether it's a sole proprietor whether it's a partnership an original partnership and the way those Agreements are going a business person A smart business person proactive business person who really wants to build their business on strong foundations starts thinking about this even before they hire their first employee because even with hiring their first employee which we even touch it on the recruiting aspect of Human Resources even when hiring your first employee there are a lot of regulations in today's day from a compliance perspective as to what you are allowed to how to go about hiring your first employee what information you have to do when you publicize a job for example New York state has laws that you have to publicize the dollar amount how much you willing to pay where the price range that you willing to pay if you don't know that and you put out an ad on indeed or somewhere else and you don't put out the price the price of how much you're willing to pay for the job from day one before you hired your first employee you are already putting yourself into a corner where you're opening yourself up for future for liability and this is something that a lot of people don't think about because like you said with you and your partner when you just started like okay this was going to have three weeks vacation this was not going to have three weeks vacation this one's going to get these holidays off this one's going to get the other holidays off and I'm going to tailor make it this person has to leave early because I have child care and the other person not so we're goingon to let this person leave at this time other some else and then fast forward all of sudden you realiz wait a second this created a huge a huge issue so day one is the answer day one when you're sitting down to think about your business you think about compliance you think about how am I going to structure this business in a healthy manner in a manner that will make sure that I'm not going to have liability and make sure that I again this is purely to compliance standpoint because there's so many more layers to the onion of what a proper HR department or person can do but just from a compliance perspective day one got it so this is an important so so let's talk about the interviewing process and in legalities because I've I've heard that and we have actually started doing that like when we publish an a job opening that you have to have that and people don't know about it I think it's something relatively new correct correct I think it was it was put in place November of either last year or the year before but it's relatively new within the last year or so got it what is something that you know you see people make mistakes as far as what you are allowed or not allowed to do in an interviewing process mistakes that people make it's a good question because again obviously with experience you get a lot more knowledge number one I would say whenever comes to any type of interview trust your instincts that's just for personality level when you meet with somebody sometimes they have everything that's right on a piece of paper they have the right degrees they have the right experience but something about their personality just ticks you in the wrong way but you're looking the other way because you're looking at the experience you say okay but looks like this person has the right the right stuff I would always say pass trust your instincts there's a there's a saying in Yiddish that a guest for GU for a while sees for a mile that's that ESP that people have that instinct that people have when you meet somebody you know you somebody for the first time you know exactly I'm going to like this person that I like this guy or I like this person you know and sometimes you're like something's a little off trust your instincts that's number one number two never ask any questions that are what you'd consider protected class questions don't ask people look purely at their business experience don't ask ask them as little to no personal questions at all don't ask them they if they're married don't ask them if they have children don't ask them any any of those kind of details personal questions because anytime you ask personal questions of a person you don't keep it business focused you're setting yourself up for someone saying the reason why I did not get this job was because the person asked me if I was married they asked me something that was was considered protected class you can go Google today because that definitely varies state by state of what's considered protected class information or protected information don't ask any protected information keep it business and look for your instincts that I'm going to tell you is this going to be a right fit is this going to be something of that I could work with on a regular basis I'll just add to what you just said is that trusting your instinct is it's always going to be easier not to give the person the job in the first place than trying to fire them three months in regardless of how you set up the employment agreement absolutely I think that's a very good point because also another thing the companies don't realize is how much money it cost to hire an employee the statistics out there say between five and $15,000 to hire an employee what does that mean it cost between 515,000 we're not just talking about the HR department of recruiters and if you actually paid a recruiter bring a person and even then you have built-in you know you know you have a built-in out that if the person doesn't last 30 days or whatever it is Bes signs that you know how much it cost to post the ads besides how much it cost the the time and dedication then you have the person actually working for you filling a role that you're paying for that's not going to work out so that every dollar you pay this employee is wasted money so it cost you five and $15,000 to hire an employee so many of the problems are mitigated in the interview process that you don't end up falling into that trap like you said it's a lot harder to fire somebody besides the fact that it's just the process is difficult as human things it's difficult it's very hard to sit down with somebody cross the table from someone and tell them they don't have a job anymore and it's something I take very seriously sure and um yeah I'll tell you another thing that like I've gotten used to throughout the years which is I want to speak to you about the part of the interviewing process of multiple interviews and if there like from a HR perspective but a lot of people the time they want to hire they're desperate to find a candidates what ends up happening is that their mindset is when they do an interview is as long as the person doesn't do anything stupid they're probably good for the job they're like waiting for something like like oh other than that I've seen the resume everything is lining up I took the approach that when I interview somebody I say look I've built this company it's a gated community I've SP so much Blood Sweat and the in my company this person has to prove themsel that they really want to get into my this gated Community like they they want to be here not because of the paycheck yes of course they're going to get a paycheck but they have another reason and did they make enough of a case they're built to the culture they're built for our core values they're built for the environment that we're building because otherwise you get the wrong people on the bus I hear you and I think again I you make some very very good points the thing I wanted to bring up also in the kind of the same realm when I interview people and when I I haven't interviewed recently but I've done my fair share of interviewing every level from entry level through executive positions and I can tell you that what I do is I take the resume and I turn it upside down I don't look at when I'm interv the employee and I ask the employee tell me about yourself give me the Instagram version of who are you what do you like I ask them about their habits what do you like to do what do you enjoy doing these are personal I think it's more personality questions than it is about the skill set because everybody's going to put on their resume their best their greatest success no one's going to put on their resume hey I tried to open my own business and I fa right they're going to put on their resume where they successful how they built and how they this and that you're never going to get to see it but if you're not looking at the resume there's a reason why you brought them in because you reviewed that resume at some point in the interview process I think the rumes are relevant I think it's a lot more the resume is just a backdrop gives it kind of talking points but it's a lot more about personality see the personality Clips which go tweet you're saying is this person going to be allowed into my G Community are they going to fit my culture because in the end of the day if it's the right person that fits the right culture you will probably try to find a way to keep them in a position which means even if you hire them for position a and it doesn't turns out they're not fantastic at position a you might be a lot more willing to Pivot them into position B because they fit the culture they're the right person to have the right Drive they're engaged so it's a lot more about that than it is about what they can put on paper what boxes you can tick on the paper that they have X degree or X experience great point so let's speak about the interviewing process in general is there any legal limitations as far as as amount of interviews or multiple you know getting a person to to do an assignment throughout the interviewing process so good question I am not a legal expert that's my disclaimer is that I give you my experience but I don't give you I don't give you my my legal advice I'm not a legal expert however to the best of my knowledge there's absolutely no limit you can call a person in four five six times for an interview if you want you can give the personality test aptitude test or whatever it is that you can that you'd like to give them you can give them whatever test that you want you have to see if that fits your business practice I know people that I've met in the past and I've spoke to said like company wants to give me a personality test and I really turn them off like personality test Co then have a conversation with me but then there's other companies that absolutely believe in it they say and I've spoken to other Business Leaders and business owners who say listen if the person is not going to go through my my personality test this is my litness test this is how I know who's going to fit into my culture and if they're not what to do then they obviously don't fit into my culture from the beginning so philosophically companies have to decide what they want but to my knowledge I don't see any reason why you can't other than is it really a good business practice are you so indecisive they you call a person for six interviews and there are companies that interview chronically they'll call a person in to meet seven different positions it's very very frustrating for the candidate so it's a lot better to have a system in place that for the position you have the hiring manager they're going to hire they're ultimately going to be responsible for dealing with it so I'm going to manage the employee I'm going to interview the employee you want to also have some you want to have a preliminary HR interview that just does a overall this is okay this person's good now let me have them sit down sit down sit down with many have a direct discussion with him then they'll have a direct discussion ultimately you decide to hire them I was always of the philosophy and am always of the philosophy if you're willing to hire them go ahead and hire them I'm going to judge you by your hire I'm GNA see did you hire well and you're going to have to deal with it if it turns out if it turns out but I want to give you because and I'm als I'm also lifting you up as a hiring manager it's not that somebody else made a decision to put this person in my department I made the decision to so you're mentioning a very important point and I think we' have seen the shift now in Corporate America where once upon a time there were the HR department were the people hiring and all of a sudden shipping out shipping out people to different departments and now the direct report the person running that department got you know 10 new people but they had zero it's the first time almost they meeting that person we've seen now much more integrated um approach to HR which makes a lot of sense in our company and this is something I've been advising small business owners a lot the last couple of years especially if you're let's say solo entrepreneur you're hiring your first employee like I said before sometimes you're so desperate you don't have experience in interviewing you don't see the red flags you don't see those things that wait a minute this doesn't smell right so I always advise people that have another person have a friend that has a business just to have a good conversation with that person and I've had once where the candidate says I'm not comfortable going to another company to interview like for this position said well this is my process like like you coming to work for the company I'm a Sol entrepreneur I don't have experience this guy is my coach my consultant my mentor whatever it is and he wants to meeting you but in our company what we do and this something has been working for us is there's always a direct report so which means the person that's going to be your direct reporter your direct leader and then there's me as a CEO so I'll always have the direct Report interview much more on the skill set of what's needed and getting a feel if they were able to work together and then I'll have a separate interview only to disc to see if they're a culture fit so let's say even this checked off on the skill let's say the graphic designer phenomenal work and the direct report is thrilled to have them on the on the team because they they're short with a graphic designer I still want to make sure do they fit the culture so I'll have a totally separate interview and most of the time and I've heard that from candidates those two interviews are not replicat you know like totally different conversation the tone the questions the conversation and the the best part of it which is very important is I make sure not to speak the direct report of how how the conversation went because if you go into to the second conversation that that person already shared the red flags or shared exactly how they feel then you're right away going in you don't have a free mind of interviewing the candidate but we then we then share notes and then we see if both picked up on something then we know we picked up on something if we didn't we'll discuss it so that's something that we've seen working I think that's very good I just want to comment on that sure you know that's because you are a business owner and a CEO of a company that's very involved in your culture and I think that's also a very very good lesson for business owners is it's not just you're sitting in an office and you're running the company you have to worry about financials and all the things that CEOs or owners have to deal with but you're also directly involved in the culture that is a sign of a very of a company that has a good culture because you're very involved in that so I think that's unique I think that's also a very good list lesson for your listeners and people that listen to this podcast to understand that as a business owner the more involved you are in the direct culture will actually give you an advantage to be more involved in the growth of the company in a positive way yeah so let's speak a little bit about culture because that's one of the reasons of having a good solid HR as we mentioned before I believe happy employees make happy clients which in a result make happy shareholders it goes in that order so that's why working on your culture is a good financial decision people always ask me is it worth putting in the effort and the money and everything goes into a good culture the short answer is absolutely you get a good return on investment if it's done right now culture is not throwing parties and and having a lot of that's perks that's you know ping pong tables and babysitting service these are all perks a great culture is an environment where people feel happy people feel valued of what they bring to the table and it's also a culture where people feel they could grow and they could enhance their skills which leads me to a conversation how do you see HR being part in PH day and age it's changed a lot in the last I would say 10 to 15 years where a good candidate will ask what's my growth potential where could I go where could I grow with your company how does HR deal with that from your perspective how have you dealt with your experience it's great great question and I I love this topic because it's a very important topic to me in in the world of HR and you know I would start it off with how does a business owner or a CEO know where they're standing with a culture so there's a few different things there's creating a culture there's a vision that as an owner you have of what kind of company you want to have and you want to have engaged employees an Engaged employe an employee who cares about the company who wants to do things for the company doesn't only punch a clock in and out does what they have to do and walks away that's okay you might have people like that that's fine they're not what they call qu quitting which we won't get into that but it's a whole separate area of people that just are barely doing their job don't let people to do their job and do their Basics but they're completely disengaged and disengaged means that they don't care about the company they care about coming and going and getting their paycheck and that does not make for a very good company culture but how do you know how do you know as a business owner where are my employees standing whether I have five employees or 10 employees how do I know well one of the ways that you know is doing an employee survey now an employee survey has to be intelligent you have to an employee survey not to ask the obvious question for example you don't ask an employee survey are you satisfied with your compensation package how many people are going to say absolutely I don't need anything else right you're setting yourself up for a question that's going to give you an answer and what it's going to do is if you get the wrong answer it's going to divert your attention to the wrong place so you don't ask those types of questions but you ask questions like as an example do you have a good friend at work these are the types of questions because that speaks to does the employee feel that they have friends are they in a good environment do they like their environment you ask them do you feel heard by your manager does your manager listen to you does your manager give you direction do you understand where the company's going do you know what the company Mission is things like that that are indicators as to where your employees are holding and it's important to do a survey on a regular basis whether you do by annual or annual and you always ask the same questions over and over again because that's how you page correct you compare am I going up and and going down because what's going to happen is you're gonna for example you're going to find out that people that don't feel that their managers listen to them as an example so you're going to train the managers you're going to talk to them you're going to bring in an expert who's going to teach the managers how to talk to people how to make sure people are heard of EX SP money on consultants and you're going to hire a chief people's officer or whatever blah blah blah fine you're going to find you're going to get that person then how are you going to know if you actually move the needle in that category unless you ask the same question next year or the next Sur next biannual or annual survey if you see that you move the needle then you know that the efforts that you made as a company Investments that you made to change were successful and you can move on to other topics and you can't pick every topic you have to go year by year quarter by quarter and and help help so number one first thing is you need to get a pulse you need to understand where people are holding once you know where your employees are holding is when you can start to make decisions on a corporate level as a company level what you are going to do to help improve those areas of the culture are important let me ask you what's your opinion about Anonymous um surveys versus getting the full like the survey with the people responding to it must be anonymous in my opinion okay and the reason why I think it must be anonymous is because you want honest answers and and yeah because what's going to happen is people if they're going to give you lip service for lack of a better term and not tell you the real truth the raw the nitty-gritty unless they feel synonymous for example the concept of a 360 review where the employee reviews their manager which I think is an important part of review process there's three parts there's a self- review there's the well talk about performance reviews actually right now but there's a concept of performance reviews also correlate with culture reviews about their managers you want an employee to give you honest feedback about the manager they are not going to stand up and yell from the rooftop that I think my manager is not nice because the manager is the one who's going to if the company said it properly the manager is the one who's going to make the decision about their compensation their bonus is going to go and advocate for them they don't want to say but they have a real problem with the manager how are they going to ever get that message across unless they are convinced that it's absolutely Anonymous it has to be anonymous it meaning say even you as a CEO can't say it's gonna be anonymous we tell them synonymous but I want to know who said that from the back end backend if you do it properly you'll never know and I'm telling you been in those situations discussing with different business owners performance reviews and employee reviews and okay fine but I want to know who said it you're not going to know and you can't know and this and the good platforms out there won't tell you if they sign random numbers to each request to each response whatever blah blah so long response to the short question I believe that it has to be an hon yeah so in our case we don't do it yearly but we've done it multiple times throughout the years and I I've done it two types of ways I've done it Anonymous and I've also done it through third- party companies which that's has a benefit first of all it has a benefit that third part is collecting the data so it's not even circulating into our database or any type of software we we alone um set up second of all we could get even if you do have a good culture and the responses are good they actually getting validation from a third party about how your culture is and we have won uh two Awards in the last couple of years about great places to work in the York and the Crane's best places to work and because they were surveying our team we have to provide them with contact information and they they actually serve it themselves with their questions and their yeah yeah did you find a difference between the the ones that you conducted and the ones were done by third party like what would you recommend the people that are asking you about the service great so for if you want to take action on it like to take I would say micro changes in your culture then I think it's important that you control the survey questions and you you control what type of questions you're asking because it's really dependent on where you want to move the needle forward so you know where you are and you want to versus the third party have their structure of questions and it could be based on what's happening in the whole in the industry or what's happening in the larger world of business versus what's specifically for your company that's that you need so there's a benefit of both but I think what you mentioned is how you frame the question or do you love working here so there's no option of no nobody wants the you know even getting that neutral answer and you know what the neutral answer means you know understanding how to read the data and and also if you do it on a scale right so you do a scale of you know let's say one through five you know indicate or some people do Smiles you know is it is it flat is it a big smile is it a small smile is a sad face that's the net promoter score very you know because you pick and choose the neutral where they where they fall based on the net motor score I want to speak about a very important topic which is you touched on it before which is the performance and I think once upon a time it was called kpis key performance indicators and it's almost like a report card which nobody wants to go there in our company we call it key results areas so just a better term and I could share with you a little bit how how we do it but I would love to hear from you and I think it goes hand in hand for both one is we spoke about growth of our employees so we want to see them growing so we want to know what they're doing and where they want to go and B is it's also taking the guess work out of I feel this way they feel this way and it becomes like more of a Feeling versus why were you hired how does the company value what you do and where you how are you living up to that what's a simple process for a small business owner that doesn't want to complicate it on a some sort of Rhythm on an ongoing basis to to be on the same page with their employees so there's a few there's a few things related to performance review reviews U which I love this concept and the topic again so far we're touching on Concepts and everyone you say you bring up something say oh I love that one it comes when it comes to Performance so first of all if you do let's say you have a company decide you're doing biannual reviews or annual reviews which I think most companies today still go with annual reviews or you know the annual performance reviews or results reviews as you would call it results indicators on the individual basis most companies still for a while they were going buy but think at the end of the day people go through annual if the first time the employee is hearing about either very negative or areas of improvement or areas of success is at this performance review meeting between the manager and the employee which is another part that we need to emphasize that they have to be done in person which we'll talk about in a moment but if this is the first time that you've failed the employee and you failed the company throughout the year employees need consistent on the moment feedback and that doesn't mean that they need to be disciplined on the moment because they made a small mistake it doesn't mean that they need to get a gift card every time they do something good right but there should be a consistent structured consistent feedback which means that managers should be held accountable for giving feedback to their employees and there are various tools that a person could use today that would indicate that the manager recognized the employee or the employee was receptive to some sort of feedback that they got so that first key to it is there has to be ongoing and that doesn't make a difference whether it's a small business or a larger business and I can tell you just as an an anecdotal story that regard I won't say which company or which one of the in my experiences but at some point there was a discussion with regard to employees you know perks as you call it making employees having them feel happy or whatever it is and I was speaking with a very very senior member of the the company and the member of the company said I I don't have to show appreciation to the employees employees know they get their paycheck they know they get the bonus when it comes time for bonuses what what more do you want from me and I was trying to explain that I think that's very important for manager for employees to hear from their managers and their seni seniors something good once in a while and the person was putting was disagreeing with me on the premise on the conent and I asked them a question I said because this person was very very senior in the company and I asked them if one of the owners of the company or the owner of the company pops his head into your office and says John I just want to let you know you're doing a fantastic job and I really appreciate what you're doing thanks and keep up the good work you're a big executive right who cares I promise you you will go home and tell your wife when you get home you will say you know the owner came in and said that John's doing a that I'm doing a great job today so what does that mean do you agree with me or disagree with me that that employees need some sort of recognition so in the end I don't know if their ego allowed them to to agree with me but the point was made concept yes conceptually the point the point was made everyone needs to hear sure and the same thing because you touched on this earlier the concept of growth everyone needs to hear where they can do something better because everyone a good employee wants to improve and if I don't know what you think about the job that I'm doing how do you expect meally get better so you telling me or the boss or the manager telling the employee hey look this is how the project was completed I think it could have been done in a different way I think you could have done this better I think we missed this I think we missed that let's work on this together because I'm seeing some areas that I I'm not 100% happy this is allowing the employee to grow as long as it's not done in a mean way or in a derogatory way or in a belittling way it's done in a constructive way and the same thing it is when it comes to when it comes to complimenting an employee just saying just giving an ad boy as they call it ding an employee great job thanks I'm so happy that you did this smallest things go A very long way so feedback is a constant feedback is something that has to be in gred in the culture and it has to be systemized in order for people to get used to the concept of giving of giving feedback and in performance then we move on to the more formal type of review the annual review kind of thing so like I mentioned earlier there has to be few parts to the review the performance review has to be the solid review the employees should have the opportunity to tell you what they think about themselves say hey look here's where the areas and the way it should be structured it should be structured the same category you're going to review them on is what they are going to sell out for you so for example give you two examples job performance right overall job performance is very generic and it could fit into every almost every single category a manager's job performance versus an administrator's job performance or a warehouse work as job performance right job performance is a generic term that would be one category for example the other one would be team I let's call it being a team membership or being a team or or um I forgot the term but it's like basically like are you feel a member of a team like are cont contributing to a team those two questions you're asking the employee how do you feel you did what's your job performance and the the the category is basically saying to the employee in the descriptions that you have within your job you can make it as specific as you want it just as generic as you want how do you feel your perform this past quarter half a year a year you give them the opportunity to respond and the same thing is within their team do you feel like you contribute to the team atmosphere and do you think contribute well to the te atmosphere and everything has an ability for the employee to comment not just grade themselves rate themselves in like one to five or one to 10 we have an opportunity to write a comment hey I am great at team building because I you know got donuts for everybody because it was Jack's birthday and blah blah blah and I think this helped Foster a good thing and and we we all got together we figured out a problem together we problem solved together the team so that's those are two very generic things that the employ gets to review themselves I talk too much me off as I'm just saying no no no no it's great right the other the other part of it is then the manager reviews the employee so what's very good about this is the direct supervisor reviewing they're getting to see what the employee thinks about themselves before they write the own comments so why is that important sometimes as managers As Leaders believe it or not we forget when somebody accomplished something very good throughout the last six especially only doing it once a year you forget that John did something amazing closed a fantastic deal or or or helped solve a crazy problem that you know was eight months ago in February and now we're holding December almost a year later he completely forgot about it but John and his self-review said I did a great job because remember I helped save that client and when you're seeing this side by side when it comes to me like it's reminding you hey wait a second you know Jack did a good job in XY you think even if you complimented him you gave him adab boys at the time but it's a year later you're doing the review so it helps you side by side number one number two is it helps you in how you rate the employee so when the manager is writing rating for example job performance the manager can write all the you know John you know you've done a fantastic job in X Y and Z as exampled in the fact that you saved blah blah blah client however there is this and this and this and this and I think needs to be improved or whatever it is or if it's just do need an improvement it's a great job so this helps the manager look at it in a very very positive way under and he gives it the employee a voice that they can actually tell you what's on their mind and because that's a very very important part in engaged employees is employees feeling they have a voice and somebody's listening to them and it gives a manager this side by side very very important is once this process is all complete and the employee is rid and whatever it is there must be a face-to-face conversation between the manager and the employee where they review the reviews where the manager says hey John you said about yourself X Y and Z here is my comment about your performance it cannot be that I send it to them via email I sent it to them I logged it in the system I said here click on this link to see your review doesn't work that way it has to be a face to- face conversation human very very important very important that human interaction that aspect and sometimes those meetings yield a lot because the employee says I know that that's how you feel but how can I do better and how can this which again talks about the growth and there a conversation and sometimes it's the one time a year that they have an indepth conversation with their leader about their performance maybe they have many many micro conversations but the one indepth convers and it becomes even more significant if your compensation system is Merit based which they know that whatever this review is going to be is going to make the difference about what type of bonus or raise they get in the coming year or what type of conversation they can have the coming year yeah it it's amazing and I think uh we see a lot of small business owners avoid having those conversations because they say you know let's push it through it's okay like as long as there's not a fire or something happened or my employee coming that they want to leave or whatever it is you know let's like because they want toid boy they they're afraid of what the outcome of such a conversation could could be but for my experience is that it's similar to like a parking ticket that if you just throw away the parking ticket it doesn't go away it actually accumulates it actually accumulates interest which means is if there's is an issue there either in the performance or in how the employee feels one day they're going to come to you it's the problem will be way bigger versus you having the conversation proactively I do believe in quarterly reviews and internally and just for our listeners because i' I've seen a lot of business owners struggle with coming up with how could we have a good performance review so in our company again if you're certain companies it's very much tied to exactly your job so it's very easy to know the metrics of for key performance indicator so to speak in our case as and at least in our company or I've seen it in other companies where they adopted the same structure which is as I mentioned before we call it key results areas and it's the three es Effectiveness efficiency and culture of Excellence so culture of Excellence is how you actually perform as far as being part of the team and then every type of position has a very simple way of measuring their effectiveness in the job or the efficiency and how they produce the work so let's say if you're a graphic designer it's very easy to know if your work is effective clients like it or not like just before like literally five minutes before I went I went on to do this recording there was a presentation to a client and then the whole team the whole team cheered up based on the client saying on the call it's a 10 out of 10 like the the presentation so which means is it's effective so they worked three four weeks on a project client got it and it's exactly what they're looking for so that's effective now efficiency would be the communication or do responding or is if if they said it's going to take two weeks and it takes four weeks all kinds of anything on the the how do they come on time do they leave on time what are all these different things and when we have these conversations it's very easy to have a very good healthy conversation we could give them immediate feedback to say on culture of Excellence you're amazing or on the on Effectiveness your work is topnotch but if only that will match up with that deficiency now all of a sudden we have a a winning package so to speak so now you give very specific feedback for employee and then you could give them feedback along the way not wait till the next performance of you you could tell them you know what I see you making an effort of on coming on time I see you making an effort and responding to emails on a daily um immediately nothing goes you know 24 hours without responding whatever it is and I think what ends up happening is most people and I and you could tell me correct me if I'm wrong which is I believe most people come to work because they want to perform well they want to be good good employees absolutely very tiny tiny percentage come just to need the money they don't want to deliver value people want to feel fulfilled so the better you communicate feedback for employee the faster you communicate feedback positive and negative the faster you're going to see the results of what that that positivity will bring better results the momentum will you know keep the momentum going so I think it's it's very important and what I see too many times and it's so it's unfortunate where business owners just kick the C down the road so to speak and they don't want to have these conversations and they're not they're not realizing they're just kicking it down the you know the road and and they're not helping nothing employee and not themselves right now I I hear you 100% And I have I have a question for you about it but before I ask before I ask a question on your on your on your three e is not engaging the employee on a regular basis or helping them along the way and telling them I see that you've improved or whatever it is that's what creates the apathetic employee who then only wants to publish a clock meaning you said that every employee starts off excited engaged they want to do a good job you as a business culture owner manager Etc you can set the tone to actually either continue that excitement and continue that engagement or to turn the employee off to the point where they become an empathetic class and it's really in your hands my question about the three e is is the three e relevant to every position within the company the example I mean giving the example of a graphic designer makes perfect sense has is there ad effective was it done in an efficient manner you know those things great how does something like this for example relate to a secretary or someone who's who's an administrator who answers a phone exactly so so we worked years literally years to figure out at one point we want to have different metrics for different employees once we had the system it works across the board so let's say a bookkeeper yeah right very effective if the books are up toate reconciled bank accounts bu yeah M everything it's it's amazing they're they could be a 10 on Effectiveness efficiency means if a vendor is asking for an update on when they're going to get a payment and it takes 48 hours to respond you could be the best bookkeeper your QuickBooks could be to the tea on efficiency you're not getting a 10 culture of Excellence you know if somebody says you know what I know the payments are done on Thursday but we have a photo shoot and we need to pay a vendor deposit On A Tuesday could he accommodate say yes of course let me let me figure it out yeah which means you're part of the culture and you there to support each other so we found this way to work across every s single position now there are positions that it's much more mathematical Than A Feeling but the end of the day the feeling is pretty close to the reality because so when we give feedback on on those three e never did I have where employee would say you totally wrong they might say I'm not a six I'm a seven or you know so we also don't make this into like the scoring system is not the the main part the main part is this bucket needs Improvement the bucket of efficiency needs Improvement now sometimes I will say you know you're seven or eight just to illustrate a point how like in the in the bigger the bigger picture how how I would see you as as as feedback but not necessarily because it's a report card that we're putting down to seven now in our system and just for the records we'll put something there because like I said before we want to see the Improvement so I want to be able to say you know what last time we were six you made a huge Improvement you know and like not only that let's say I had a single employee that runs a lot of emails back and forth and they need also a lot of quiet time like when they need to focus they need a focus time so they had an issue but from one hand people are waiting for responses so I told that employee I want to work with you to help you figure this out I'm not saying that you don't have a a valid reason why we're not at a 10 but I Let's Help and and we figured out okay let's differentiate emails coming in from internal versus external okay and so let's say internal was more important because some of internal people needed their support to finish off of something so we said okay start flat you know with Gmail you could have a filter which comes up with a label so all of a sudden there's like for for a month or two those emails had a label so this this employee was able to skim through quickly their their inbox and know okay these few things I must respond before I leave the day I'm not going get to all my so this is another point is it's one thing giving feedback as a leader our job is also to help support them in improving on the feedback you gave them it's not something okay this is the feedback go find on YouTube some sort of solution to your problem because that's how we uplift our you lift up our employees and we really make them grow and I think that is something that I could say being a business we had throughout the years we had a lot of employees hundreds of employees throughout the years and there's a line that I've learned very early on which I use by every time I interview someone every time I say I shake hands it's the last day of the of their job it is the line goes as follows it's going to come a time either you you're GNA outgrow the company or the company will outgrow you our job is while you're here you should bring value to the company and the company should be valuable for you and it's so true because there is going to come a time that person moves on they want to open their own company they want to move on to a family business they they decided they're getting some another job more money whatever it is correct the job of CEO is taken already yeah so so the your job as a leader is not to have them stick here and stay here for the rest of their life but while your job is while they here they have open communication they have feedback they have you know everything to grow so that's that's just my take on it so I I really like that and I I I really like the fact that you know when you mentioned that these 3es are basically it fits into every position within the company and I like that because I think that as you mentioned a lot of companies over complicated and they want to have one one sort of review for an accountant one sort of review for a salesperson one sort of review for a manager one sort of review for a senior executive when really if you fited into something like this which is kind of something that I mentioned earlier when you talk about Job perform it's kind of it's kind of generic but it's something that that goes across to everybody so I think it's a very very efficient way and it's clear and this way also what happens is because the managers are getting reviewed on the same way that the employees are getting reviewed there's a certain Mutual understanding between everybody as to what does the company want from me the company wants from me those three things they want me to be efficient they want me to be effective they want me to have a culture of Excellence that's what the company wants for me so that message is synonymous to every level within management and every layer of employee I think it's a fantastic fantastic way of looking at yeah I'll just add another one more point to this which is we sometimes as entrepreneurs as business owners we have a certain Vision we know where we want to go with the company and we're very sometimes very macro as far as where we want to go and have this Vision guess what you're not going to get there alone even if you're going to get there alone it's going to take you a very long time if you want to go there get there faster you going to surround yourself with great people now when you're going to surround yourself with great people most of the time most of those people are not Visionaries those are people that are actually technicians and and people that are actually on the ground doing the work for you they don't need to run the vision for you they need to execute the vision so the clearer you are with how efficiency looks how effective you know how these things look in reality they could check off and say you know what I'm ready for the ride I want to do this so what ends up happening is the clearer you are with your team the better results you'll get from those people and the more vager you are and you think let me bring them into my vision and we're going to dream together and we're going to get there together guess what they don't know what that means tomorrow Monday morning what do I need to do Monday morning for that vision I don't know tell me what I need to do today and tomorrow and I'll do it 100% perfect I think I think that's a very very good point you're making and the reason is because I years ago when I I mentioned before that I did a little stint on my my trying my own business at some point and I had a conversation with a very good friend of mine and he mentioned to me this concept that I never heard before which is a concept of an entrepreneur brain that some people have this entrepreneur brain some people have this great Visionary type of brain and not everybody has that brain not everybody has the capability some people are very very good employees they're told what to do they and and and they do it very very well and I think it's very good to recognize that but I think another important thing that you touched on over there was the concept of understanding that it takes great people I saw a video recently it was pretty it was like a comedy kind of video where a boss or a CEO or an executive was basically looking around his office saying what do all these people do what what does this person do what does that person do do I need a guy to do this do this myself I need a guy who to pay a salary to do this doesn't make any sense so he kicks that guy out and he sits there by the guy desk do computer I don't if you saw this video or not isn't it funny like like it was a comedy type of video before you know it the office is completely empty and this guy cannot figure out head head from told what is he going to do how's he going to get the data what is he going to do so when he thought he could do everything so one thing is important that I think is very important for business owners to understand and value the employees and know that I need people like you mentioned to execute my vision and I need to Value the people that execute my vision and understanding that I can't do it all myself is very valuable for business owners to know and it goes directly to to HR sales HR business everything all around when you recognize and realize that I meet good people around me people say all the time whether it's the president whether it's a king whether it's a business leader whoever it is you're only as good as the people you surround yourself with the president of a country is not the the minister of defense is not the Minister of Finance is not the whatever it is they are the leader and ultimately have veto decision a decision to make of who they choose for those positions But ultimately they're only as good as the people they surround themselves in the same time I also want to jump from this into something else which is I know I thought of this while we were talking about it I'm not sure it's fully correlated but we can we can discuss that letting people go I think this is a very very big topic that a lot of businesses get stuck on a lot of times when it comes time for for a business to part ways with somebody or when somebody comes to you and says if I don't get X YZ I'm going to leave I have a job offer and they're going to pay me $50,000 more and if you give it to me I'll stay if you don't give it to me I'll go and a lot of businesses struggle with this back and forth and have major discussions should we offer it should we not offer it what's gonna happen if the person leaves how am I going to do it I'm gonna be stuck there's no way I could do it I need this guy I need this girl I need this employee there's no way that I could live without it or the same thing when it comes time to letting a person go they made some mistakes they're not a good culture fit it's obvious that time has run out they've outgrown the company or the company's outgrown them as using your words or whatever it is people struggle with this a lot and I think it's very important for business owners to always realize and this this is the the the frame of mind that I I tell Business Leaders within the company when they come to me and say you know you say the time for somebody to move on or I need to get rid of somebody or the person's coming to me at spending they going to leave if I don't give them more money or give them some better condition or whatever it is I always my response to them always is what would you if the person walked into your office today and said they won the lottery and they're not coming to work over again that's it they're done they won the lottery a billion dollars a million is nothing billions of dollars in the lottery and they're not coming to work what would happen with your business tomorrow is it going to collapse it won't collapse you'll figure it out you will figure it out the same thing is no employee can hold a gun to business owner's head whether it's I'm pay me $50,000 if not I'm going to leave if you felt this person was valuable by $50,000 more and if you're a good business owner you would be paying them the $50,000 if not you have to wish them good luck I'm very very not in favor of negotiating with people when they come to with that they have a better offer somewhere else it's it's a very very bad business practice in my personal opinion you never negotiate you wish them luck you figure it out you're you're the entrepreneur brain you have that big brain and same thing goes when it comes time to let a person go everyone unfortunately this is not in a negative way but everyone is Expendable in a certain sense not in a bad way doesn't mean that you're worthless you're very very valued and you're very valuable to a company but from the company standpoint you have to be able to look at now one individual is going to hold your company hostage whether they deserve to go or they're putting go on to your head I don't know how we got into this but this Coss my mind this word it's an important it's an important point I'll just add to what you just said because it's it's so important is that some companies have to go through the exercise of knowing that if they could go through all their employees if there's any employee that's really holding hostage a company should that person be replaced meaning to say understanding that the risk that you have as a company if you have a certain position that's being held hostage by a single person because now you're under mercy of that person coming with a gun to your hand so to speak I need this otherwise I'm leaving and now you don't have another choice and which leads me to something that I've been teaching in in our leaders form which is literally you have to fire all your people mentally every year which means go through this process that if I have to rehire this person would I rehire like a year later some people get so used to an employee that that position there's that seat is taken but ask yourself when you go through your company would you rehire this person based on what you know now or is that person just sitting there because it's easier for you than to replace that person and what I mean is not to fire all these people is actually have these conversations with those people to see how they could improve to be that you a a a player so to speak I think that's a great exercise I think it's a very very good exercise and again being that you mentioned so many times you know how is this advice good for small businesses mediumsized business or large businesses I think this is something that's relevant to every single company but it also leads to another topic which is the concept of succession planning succession planning basically means that in you know in every the way I look at it is that within every position there has to be a consistent grooming of who's going to take this position at some point whether this person win the lottery whether they retire whether they find the better offer whatever it is which goes to what you were saying before there's not one person that holds the keys there's not one person knows a combination to the safe and if that person leaves I can't get into the safe someone else there has to be a backup now sometimes the backup is not ready to do it today sometimes the backup is being Grom sometimes the backup is learning as it goes along but as a business owner and a leader you have to have your vision out there picking up on the individual and say that person has a certain Talent or a certain capability that I've noticed in my interactions or that I've noticed in the employee reviews or that I've noticed in the engagement surveys or whatever it is that I've noticed from this employee certain telltale signs that this person has leadership qualities in a specific area where should the need be they can be groomed to move into that position and take that place off and think sucess session planning is people think it's a very big word and it's only meant for you know for City Bank and for for the large companies of the world exactly every single company it's super super important to have that Vision because also what it does is it forces a business owner and a leader to be very very in touch with the capabilities of their employees even the more Junior ones exactly this has been a blast and we didn't you know obviously we're going off timing over here how could people find out more about you well there's uh you know it's interesting I'm not selling anything I'm Notting anything but at the same time I'm always willing to help if anything that I could that I could possibly do I'm gonna I'm age Myself by giving my email address and my email address is IR Freedman Corp aol.com which is AOL like who uses AOL right everybody said I don't know what if there's a there like a Tik toac handle or something that's the new generation but it's it's I fredman like Izzy Freedman I Freedman Corp CP aol.com that's my email address that he'll get a hold of me I'm on LinkedIn as well Izzy Freedman you can send message there and you know anything I could possibly helped anybody and like you know I I agree with you I don't think we scratch the surface but there's so much more to talk about when it comes to HR there's layers and layers upon layers but I thoroughly enjoyed the conversation with you today and I hope people learn from it absolutely for the links resources mentioned this episode check out the show notes at www.p group.com podcast let's close with the four rapid fire questions are you ready who okay I thought myself I was going to be prepared but okay go ahead a book that changed your life who Moved My cheese number two a piece of advice you got that you never forget maybe it was what I mentioned earlier about the entrepreneurial your brain about understanding where I am and what type of person I am number three anything you wish you could go back and do differently pry good question anything I wish I could go back and do differently yeah probably when I had my own business I would have done things a lot differently last and final question what's still in your bucket list to achieve well I I was this back this was scheduled uh before and I was going to say that I want to run the half marathon but I've since done that I ran the half marathon Miami recently so on a personal level that bucket list is is checked you know I'm going to say it from a very personal way I'd love to go skydiving this might not be the best thing for business but that's that's how my B bucket list Izzy thank you so much for joining us I know your time is valuable that is why in the name of our listeners will forever be grateful for sharing some of your time with us today it's been a blast thank you so much I really appreciate it thank you my [Music] pleasure he