The Employee-Owned Recruitment Agency: How to Turn Recruiters Into Owners, with Mark Waschek and Scott Wedel

0:00 You have the opportunity to be a significant owner of the organization. That matters to the right people and it matters to the people that we want. You guys recently took over the business from the founders. Our company is a little over, it's almost 24 years old. We have 10 recruiters, not including Mark and I.

0:16 You've got a top performer. They want ownership, they want equity. Most firms don't offer that. You're susceptible to losing some of your key people. You guys actually have found the solution to that. Once you're an owner of something, you just act more like an owner. You're not trying to extract as much value out of the organization as possible.

0:34 You're actually trying to build something and grow something to be even bigger. We'll base our fee off of the three. You'll pay a monthly rate, but we are able to treat every search like an engaged search. They're getting the value of a person on our team focused on that company. We have the cash flow and we have exclusivity from that client.

0:52 But maybe there's people who think it's going to be a big expense. They don't understand the value. How do those decisions get made if, you know, you guys want to do something, but then there's other board members who don't want to do it? One of the most interesting and probably different things about your business is the way you're structured, like your whole corporate structure.

1:13 So can you talk, and which is relevant for your story, because you guys recently took over the business from the founder. So can you share that story of like you guys essentially becoming the leaders of a business that was very long established and you were employees before? Our company is a little over, it's almost 24 years old.

1:36 There was three founders originally in the organization, and they had the vision of building a company that was employee owned. And they did it for two reasons. One is they wanted to be different and unique. The other is it actually builds out the perfect retirement plan for a founder as opposed to trying to figure out what do you do with the business when you're done with it.

1:57 We are a corporation, so our employees buy shares in the company. We don't ever give shares in the organization. And so we built the company over time with that model. Great opportunity for people that are retiring, leaving the organization. There are some blind spots, I will tell you, that come with that, and we can get into that later.

2:20 So about... 2019-ish, our founder, who was the CEO and president of the whole organization, said, look, I don't want to work forever. I'm not leaving tomorrow, but we need to start the transitional process of me leaving the organization. And at that time, two of the three original founders were still part of the company.

2:41 One of the founders was closer to my age, younger than the founder, who was kind of assumed that he would take on his role. And he immediately stepped out and said, you know what? I don't want to be part of an organization that scales. I don't want to be part of an organization that grows. I just want to be a boutique recruiting firm with myself and my family.

3:00 So we actually... allowed him to leave the organization, which then is where the discussion started about what's next, which is where Scott and I stepped up and said, we're willing to take the organization to the next level. So we had to go through the process of... getting our founder ready to let go of the organization, both personally as well as financially, which is a complicated process.

3:26 But we accomplished that about two and a half, three years ago and are now here telling the story about it. I love this. So I think there's a few different stories we could get into here in terms of, you know, assuming leadership of an organization, culture change, creating the systems for growth. But I still wanted to learn more about the corporation and the fact that employees can become shareholders.

3:55 Scott, what do you see as being like, Mark, you said one benefit is that it allows for an exit as people retire and that the founders retire. But what are some of the other benefits of that? Yeah, I think as I look at everybody that is a shareholder or has been a shareholder, I think from a decision-making process, once you're an owner of something, you just act more like an owner.

4:19 And so you're not trying to extract as much value out of the organization as possible. You're actually trying to build something and grow something to be even bigger. So our people that are shareholders are not only shareholders. making compensation income from placement fees, but we also do distributions.

4:40 And so we do a distribution per share for our shareholders based on our profitability. So it can be very lucrative for people. So as everybody builds the organization bigger and bigger, they get to get a piece of the pie per se. That is awesome. And something you said, I think there's quite a difference in mindset between the mindset of being an owner of something versus just being an employee of something, right?

5:05 In terms of, how you think about what you're doing and the way you show up really on a day-to-day basis. Yeah, and Mark, I would say, because this might be a question for the listeners, but how someone becomes a shareholder, we have a threshold that each recruiter has to hit trailing 12-month revenue, placement revenue that they have to hit, which is 240,000 trailing 12 months.

5:28 And once they hit that, then the board can invite them to become owners. And one of the things that we've done is once they're invited to become a shareholder of the organization, they have to buy stock in the organization. It's not given to them. And this is after-tax purchases, right? And so we have an algorithm that we use that we take the last – the trailing 24 months profitability.

5:57 We annualize it. We multiply it times a variable of six. And then we divide that by the number of outstanding shares. And that's the stock price. And that's what we use. And the stock price changes every month. And sometimes there's good months. Sometimes there are bad months. And because of the number of outstanding shares, the stock price can change significantly.

6:21 a lot. But going back to how people act, because they have skin in the game, because they've actually had to buy shares, it matters. It matters what that stock price is. It matters that the organization is profitable and their actions show that. Love that. It seems to me though, there's also, that kind of creates more accountability on you guys and the decisions you make as leaders.

6:48 They have to really believe in your leadership. and the vision and what we're trying to do together. So how does that play out? Well, it adds an interesting dynamic to our culture because when 90% of your employees are shareholders, they have total transparencies into the financials. Yes. Right? Even visiting with other firm owners, they talk about, well, we have employees that have equity, but the three founders do this, and then we share revenue there.

7:14 We can't do that. We're a corporation. Our employees can see the P&L every day. They want to, right? And so it – forces us to be clear on what we're doing and why we're doing things before we ever do them. For example, we just went through a major investment in a database change. That's a big expense, right?

7:33 That affects our profitability. That affects our share price, right? We made sure that we were clear about why we're doing those types of things. When we shift the, we recently restructured our team, right? We had to make sure that we were clear why everybody is doing that and It may impact revenue short term, but long term, it's the right thing to do.

7:51 So we're bringing people along. It's just making us be better leaders because of that. That extreme transparency, I can – I can see it being very beneficial. It also feels quite exposed. As a leader, all of your decisions, how is that affecting the financials? Scott, did you have something you wanted to add?

8:13 I was just going to add. We implemented EOS, what, two years ago? Yeah, two-ish years ago. Before we implemented EOS, sometimes our longer-tenured shareholders would approach the leadership team or the board and say, Hey, as a shareholder, I have a question about this. But as we've now implemented EOS, and we have clearly defined core values, and one of our core values is be honest.

8:41 And we do have a culture of transparency. It is what it is. And I will tell you, Mark, we've made good decisions and we've had some pretty significant learning opportunities too that have cost the organization six figures. And so I like the culture of transparency because we hold our recruiting team accountable for recruiting and their placement revenue.

9:05 I think the board members that are making decisions need to have the same level of accountability as well. And it seems like it works really well. So one of the things when people start a business or they're an owner of a business is they like being able to make decisions and not have somebody else tell them what to do, right?

9:24 So let's say you guys want to implement EOS. You will think, I think this is going to help the business. But maybe there's people who think it's going to be a big expense. They don't understand the value. How do those decisions get made if you guys want to do something, but then there's other board members who don't want to do it?

9:42 So, so we actually ran into that. Okay. Because before our founder, before we bought him out, he was involved in the decision-making with looking at EOS, and he was very much against it. Interesting. Because he was at the end of his career, so he wanted to extract as much value as he could from the organization on his way out.

10:04 And again, we're friends. Yeah. We totally get it. And so that, I think us wanting to do EOS was finally the straw that broke the camel's back and caused us to have the phone call with the founder and said, look, It's just not working. And so let's figure out a way that we can still be friends. We want it to be fair.

10:25 And we did. And we're friends to today. But we've actually run into that. And in the end, we have to do what's best for the organization, not what's best for a single shareholder. Understood. And so I guess, does the number of shares also equal, like, voting? One vote per share. Okay, great. For the board.

10:46 Okay. And then the board hires the leadership team. And so today our leadership team is Mark and I. Yeah. But our board is actually Mark, me, and then a woman named Rhonda. Okay. Interesting. This is making sense. So the employees elect the board. Yeah. The board is in charge of the governance of the whole organization, but that's separate from the leadership team.

11:09 Got it. We're a small business, so it looks very similar, but in the future it won't be. Exactly. Exactly. Just a quick point of information, just in case we have our accounting friends listening to this or any business law people, we are a C-corp. Okay. And I think that will just clarify people's thoughts on this.

11:28 Okay. So another benefit I can see is from a recruitment, internal recruitment point of view. Right? It's huge. One of the main reasons people... lead, like you don't retain, traditionally in a search firm, you got a top performer and they want ownership, they want equity, they want to be an equity partner or whatever.

11:52 And most firms don't offer that. And so, you're susceptible to losing some of your key people because they decide to spin off and do their own thing. But you guys actually have found the solution to that. Correct. Yeah, it is a very different conversation when you're talking to somebody that's looking at getting into recruiting and they're visiting with different firms.

12:12 And a lot of them are family owned, right? And we have a completely different story of you can actually be a shareholder in the organization and make an impact on the business in multiple ways. And I like to say, we're not like a Fortune 100 company where when you say you're a shareholder of large corporation, you're a 0.00000001% owner.

12:37 No, you have the opportunity to be a significant owner of the organization. And that matters to the right people. And it matters to the people that we want as part of our organization. I want that to be a motivating part of who they are. Are there any other benefits of this structure that we haven't discussed?

12:55 I mean, we didn't go into it in too much detail, but there is already an exit plan for our shareholders. And what it is is we have a threshold of $20,000. If you're a shareholder that wants to leave the organization and the value of your shares is less than $20,000, we'll write you a cash check that day.

13:17 Because the only people that can be shareholders are employees. There are no other shareholders. We do not have private equity backing us. We don't have investors that are holding shares. This is all like your peers are the shareholders, which is awesome. And then if it's over $20,000, then your share value at the time that you leave is actually paid back to you in five years on monthly installments with interest.

13:44 So it's literally like you're building up an annuity for yourself. That is so cool. That must have a positive impact on retention, right? Yeah, definitely. Also on client development. We have a completely different story. Okay. I shouldn't say completely different, but we can go in and they say, well, you know, everybody says they have a proven process, but I can say yes, but our employees are not only invested in This search, they're vested in the success of our organization, and they wouldn't want to do a bad job because the value they have is in our business suite.

14:21 It's just a totally different story that I can tell to potential clients. That is cool. All right. And what sort of feedback or reaction do you get from clients about that? Well, a lot of the organizations are a little bit caught off guard saying you're an employee-owned company because so many firms out there are either, you know, it's the big corn fairies of the world or small family-owned firms where it's one owner that's always part of the process, right?

14:47 So it actually creates lots of conversation and questions that actually distract them from the reason we're there, right? They're like, really? You're an employee-owned business? How does that work, right? That's cool. So it's a very different story. I think about everybody that we work with from a vendor standpoint, I hate to use the term vendor, but vendor.

15:06 When you're working with a client, when we're working with our clients and they know they're speaking with an owner, a lot of the clients that we have are the main point person that we're working with is the owner of the organization. And so it's owner to owner. And you do go into, oh, that's interesting.

15:26 You're a recruiting company that has a stock program for your employees. How does that work? And we do business with people we like and we trust. And I guarantee you, if you know that the person sitting across the desk from you is an owner of a business, they get it. They understand some of the challenges you run and the opportunities you have.

15:45 That's a great leveler in the status of your team interfacing with customers. And yeah, no doubt that if the client feels they're dealing with an owner, they know that that person cares, right? They really care about what they're doing and making sure that the client's happy. I mean, everybody wants to work with someone that cares.

16:12 Yeah, absolutely. So are there any downsides? Well, the blinds Scott mentioned to it, and I alluded to it earlier, is that as somebody that has a lot of shares like our founder, and I have to be careful because I personally don't want to fall into that spot too. As I approach retirement, I don't want to shift from, okay, how can I maximize retirement my return from the organization after my 20-plus years in the business and have that cloud my judgment of investing in the company versus myself.

16:48 So it really comes out on the distribution side, right? We could invest in adding two or three more people, or we could do a distribution, right? I don't want my judgment to be affected by that. And so I think that's the... It's the one blind spot that we have in that, but I think partly because we're doing EOS and we're very focused on hitting our goals, that drives the right decision every time.

17:14 We just didn't have that, unfortunately, for the first 21 years of our business that it truly was driven more by personal need than actually what's right for the business to hit our goals. Makes sense. Yeah, I guess having those structures and the values and the goals in place – would counterbalance that blind spot to some extent, I guess.

17:36 How many people are in the business right now? We have 10 recruiters, not including Mark and I. And we have 16 employees total. Okay, fantastic. And how many of those are shareholders then? We have eight shareholders today. Talk to me about the transition of, because your story is so interesting because it is, It was difficult.

18:00 Yeah. Like, but we do have, I'm sure, listeners who are employees and they're making some kind of a transition to take over the business. There's like succession planning is always an interesting one. Yeah. So how did that talk me through that process? I think that that's really valuable information for people that are going through this because we have a lot of painful stories to share.

18:29 It's a journey. It's a journey. And I think, like I said, that one of the smartest things that that we did was realizing that we weren't going to figure it out on our own. We needed outside help that people that could give us perspective on what we're seeing. And one of those was this community, right, the recruitment coach community, huge in helping us realizing small things we can do to continue to grow our business because we didn't want – the distraction of how do we transition the ownership and the leadership of the organization to distract us from actually growing the business.

19:06 Right. Scott mentioned we've been doing EOS for two years. That has been a significant step in that process as well. Again, another, we we've actually hired an implementer to help us through this. A lot of people do it on their own. Again, it's that outside person that's saying, you know, I hear what you're saying, but they slap us in the face and say, you know what, that's not the right decision.

19:29 Get back and figure it out. Right. And that's really helped us realize how, as Scott mentioned, because we have so many things going on, we think we're being clear to our employees and our shareholders when really we aren't. Right. And it's forcing us to. Um. Really think about the message that we deliver and really making sure that before we even talk about it, that Scott and I are on the same page for is this the right thing?

19:54 If yes, why are we doing this and how do we tell the story? Whereas before, you know, different style of leadership saying, yep, we're going to do this. Let's give it a shot. I think it's really important to note, too. how we were structured as an organization, before Mark and I, and even a little bit after we joined the leadership team, we were actually competing against each other because we pitted the two brands.

20:22 I wouldn't say against each other in a super negative way, but we like friendly competitions. But Mark and his team were always trying to beat – Me and my team. Okay. And so when we moved into leadership role and then on the board, Mark and I had to learn how to get along. Okay. And we had never worked directly together because I recruited in the banking space and Mark recruited in agriculture.

20:49 And so we never really interacted with that. I mean, we would say hi in company meetings, but I mean, we really competed. We were all top producers and it's like, I wanted to beat Mark. I would be very clear at that. I didn't know that part because you guys always seem like you're such a powerful team together.

21:09 I didn't realize that that's a relatively new thing. Right. So I'm a competitive prick enough that I still keep the traveling trophy that Mark never won. And that's the trophy behind me. But what I do is, and Mark and I, our EOS implementer actually pointed out that we used to say something for like the first year and a half we worked with him.

21:33 So this is very recent that we corrected this. But anytime I agreed with Mark, I would say, Mark, I don't disagree, but... I would never say I agree. And then Mark would say he'd say the same thing back to me. Scott, I don't disagree. And that's literally the definition of not getting along. And we didn't catch it.

22:00 And our psychologist that we work with, we did hire a psychologist. And that was actually our founder that hired him through the transition. He says his main goal is to make sure that we don't kill each other. Yeah. He pointed out, too, that, hey, we both have strengths. We need to figure out how to focus on our strengths.

22:20 And we all have old patterns and new patterns. And you have to build the new patterns. And so some of that I don't disagree, that highly competitiveness, it's taken us – a while to figure it out. And I make the joke, we're late bloomers in the leadership. We're still learning, right? And that's a lifelong process though, right?

22:40 And I would tell you, we are both highly competitive. And you've probably seen that. And so there are times that some of us might poke the other person a little bit. And we just have to remember that's the old pattern. And that's where we have to elevate ourselves as leaders of the organization and say, hey, we don't play in that world anymore.

23:03 We're one team. And the truth is, when we say we're shareholders and we're board members, we're board members of Integra Partners, Inc. We DBA as ag one source and career one source. We're all one company and one team. So get over the whole competition amongst each other. So I love that you've got a coach and community.

23:26 You've got an EOS implementer. Tell me about the psychologist because that's quite unusual. Dr. John. Okay. Shout out to Dr. John. Exactly. He is actually the – Probably the story behind our success from the standpoint that a founder letting go of a business is a very emotional thing and a very financial thing.

23:47 Yes. Right? And he walked us through that whole process, working with all of us individually and as a group. Right? So he would meet with us month to month, just truly like a psychologist. I mean, I felt like I would even tell my wife, yep, I'm going to be getting on the couch in a half an hour here, right?

24:05 Even though it was virtual meeting, right? But it was truly walking us through the different challenges that we faced from our own perspective. Right? Right. So he was working with our founder to truly say, look, we hear you saying you're willing to let go. Are you truly ready to let go? Are you truly ready for the financial impact?

24:23 Because they want to take the business in a different direction. They need to invest. That means you may not you have this number in your head that you envision getting you may not get that number. Are you really okay with that? And that took Two or three years to get to that point. Same with us. Scott mentioned highly frustrated with each other because we were looking at things differently.

24:46 We hadn't worked together before. We had goals for ourselves. We had goals for the business. And he slowly over time got us to the point where we realized we were officially on the same page. It just took us a while to get there. But I can't imagine... Folks that are trying to do that on their own without that outside voice to be able to vent to and the ability for them to basically slap you in the face and say, stop complaining about it, fix it.

25:13 And that's where we've come out with, Scott and I say it all the time, open and honest. We have to be open to ideas and we have to be honest with our employees. Keeping it inside is not helping anybody. And the other thing with be honest is, and open and honest is, be honest with yourself. Because what Dr. John taught me is the new pattern, the old pattern, new pattern.

25:35 And then also a session with Dr. John, he's a business guy. He works with businesses that have generational changes taking place. And he would, a regular call with Dr. John would be, Scott, how's it going? I'm so pissed with Mark. He's doing this. He's doing this. He did this. He's, he's not doing this.

25:58 And then Dr. John would sit back and go, Scott, let me, let me explain a concept called like. Transfer of all of your insecurities to the other person. And are you sure you're not like, like transferring all your frustrations about yourself onto Mark? I said, oh, thanks for educating me a little bit on this.

26:20 You're right. Yeah. So it's a little bit of that. It'd be real. And he's big on open and honest as well, right? And like he said, it's just – it was a great decision that our founder brought him in. And as we've gone through this journey, it has been really helpful that, again, we don't kill each other.

26:43 Mm-hmm. Let's talk about the partnership then because a lot of businesses are set up as partners or maybe two or three partners. I'm assuming, and from what I can see, you have different strengths and different personalities. How do you decide who does what and how you can complement each other to leverage your strengths to the benefit of the business?

27:08 Yeah. So it's funny, as we started this journey, Dr. John had us take a test, and I cannot remember which test it was, but it pointed out strengths and different positions and organizations that we should be in. And the funny thing is Mark and I both profile as both a visionary and an integrator. So we profile the same.

27:31 So then we sat back and we looked and we said, okay, what's Mark really good at? Some people will say, what's his superpowers? Right. And I will tell you, Mark is very good at public speaking. He can make something horrible sound really, really good. And he articulates things a lot better than I do. And then when I look at my superpowers, when we looked at my superpowers.

27:53 Hold on. I'd like to hear what Mark thinks her superpower is. Well, it's also the recognition of what we absolutely don't want Mark to do, and that is to do anything that requires detail or long task lists. Okay. And to get at how we arrived at this, a little bit of was Dr. John, but this is where EOS literally saved us.

28:14 And I would say maybe even saved our company from the standpoint that – the process of becoming an EOS organization, it became incredibly clear who was going to be the visionary and who was going to be the integrator in our organization because of our strengths. Okay, so I'm guessing you're the visionary and you're the integrator.

28:35 Scott's superpower is actually taking a long list of details and saying, okay, based on all of this, here's the priority, and here's how we're going to get it done, and we're going to get it done by then. Right. Yeah. How that works in practice is I will call Scott with ninety nine ideas a day. He may say once every other day.

28:55 Right. Otherwise, everything else is gone because he wants to keep the organization focused on getting the day to day done. Meanwhile, I'm I'm more worried about removing the roadblocks in the future and figuring out where the company can go from here. It took a while for us to learn our roles. Okay.

29:11 And we were stepping on each other's toes. We were crossing the border of the role a little bit for a while until we started really communicating well. So, yeah, it's – We've had to learn how to operate. That's interesting. Because no one is a pure visionary or pure integrator, right? Right. So it sounds like you both have elements of both.

29:32 So that was cool that you were able to kind of just decide, all right, that makes sense. So what has been the... impact of that? Like, can you give an example of either a project or something that has emerged from this, a business change that's emerged from this recognition of your strengths, your roles, your superpowers, and then how you've then worked together in order to create change?

29:57 The best example of that would be, we have an annual meeting with our employees every year in January. We got, we all come together once a year because our whole team is remote across the country. Um, This last January, after being in EOS for a little over a year, people came up to us and said, this makes sense.

30:16 I get this. I can get behind this. Which is another way of saying, love what you guys were trying to do the last four years. None of it made sense. But now it actually makes sense because we are very clear and aligned in what we're saying and how we're saying it. And people now understand what Mark's doing, and they now understand what Scott's doing.

30:35 Because before, we came across as co-leaders, which really... added to the confusion. Who do I go to with this, or why would I talk to Mark, or why would I talk to Scott? Yeah. So before we joined Recruitment Coach and before we did EOS, we'd been doing an employee engagement survey for years. And we scored very poorly every single year in, do we know the vision of the organization?

31:03 We scored low in we don't understand what the leadership team does. And then the other one is we understand our roles and responsibilities. After we did all of this, we're scoring off the charts on those. And our employee engagement increased significantly. Right. That is awesome. That's cool. So I'd love to segue and talk about the remote setup you have because obviously there's pros and cons to anything like that.

31:31 Why do you guys do it that way? What do you see as the benefits? And then how do you mitigate the downsides? The why is one of the things that we can say, well, that's the way we've always been. Okay. Right? So I guess I didn't touch on this, but when the organization was structured as a C-Corp, their vision at the time was to build LLCs in different markets.

31:57 So, again, this was 24 years ago, so the technology wasn't – to do video meetings and all of that back then. Of course. Right? So they still knew that we had to have an office concept, but because especially our company started with the Ag One Source brand. We were, Integra Partners is our corporation name, but the only brand was Ag One Source.

32:22 Okay. And then, because Career One Source came a couple years after that, so... In agriculture, high relationship industries, right? We wanted to bring in recruiters that understood their geography, understood their markets, understood their niche. Yeah. And so the concept was we would have offices in different communities around the country.

32:46 The employees, we would have one focused on agronomy, one focused on livestock, one focused on grain, cover the space of agriculture. Those people would be in one office working together. and they would become shareholders of that LLC. So we had one in Minnesota, we had one in Kentucky, we had one in Kansas at the time.

33:08 And as Scott mentioned before, he and I were competitive, we had that problem with our own LLCs. Because if we had an organization that was based in Minnesota that had a sales rep territory open up in Kentucky, from a shareholder standpoint, we wanted the revenue. So why would we share it with, even though we were coworkers?

33:27 So we eliminated that model. And made us all shareholders of Integra Partners together, which really launched the whole concept. That makes sense. Right? But, yeah, we maintained that element of remote because, honestly, the main reason was our corporate office is Heston, Kansas. Heston, Kansas is a small town about an hour north of Wichita.

33:53 It's a wonderful town. Yeah. Only a few people have ever been crazy enough to remove there for this job. That's a great time. Right? To which he doesn't live there now, by the way. Okay. Right? But you don't get people excited about moving to Heston, Kansas. Got it. And we, at that time – All of us were brought in because we were experts in our industry, we were knowledgeable about our game.

34:16 We were at a point in our career where we wanted to take the next level of success. That's not the type of person that would move to Heston, Kansas for their career because they're established in their markets, they've got families, all of that. So we created a model that would allow people to work remotely.

34:33 And I will tell you that probably was why our organization didn't grow as fast. back then because we didn't have the systems and the metrics and the reporting and all the technology we have today to know whether or not a person is succeeding or if they're having challenges. Yes. It was honestly all conference calls and phone calls and all of that.

34:54 And granted, our founder would come around maybe once a quarter to each of our offices and try and spend time with us. But using that concept, carrying it forward to today where we know how everybody's doing every day. We're having conversations. We've spent the time to identify the right metrics to know when things are working and when they're not.

35:16 Having remote employees is not as challenging as people might think. Okay. Here's where I think people run into – thinking in terms of scaling an organization – It sounds harder to bring in people who maybe don't have recruitment experience, for example, in a remote environment. Because traditionally, probably when we all were learning the business, you were with others who were more experienced.

35:48 You were shadowing. You were hearing what they were doing. Like, you could – like – just little phraseology and scripts and rebuttals and all that stuff you would learn by osmosis. Right. And in a remote setting, you're sort of cut off from that. Now, I know there's walkarounds. Right. But how do you guys...

36:11 bring new people into the organization, train them, and get them performing in a remote setup? Yeah, I think it's – I mean, we do have a standard training and development program. Starts at day one, and we bring them all the way through. It's eight weeks, and then they go into phase two, which is they're on the phone calling people.

36:30 But – It is a lot more difficult because they can't sit next to someone and just hear what they're doing. So we try to record calls. Yeah. And let them listen to it. The other thing is the people that train like me, our new our new recruiters, I can actually listen to their calls and then we can debrief after the calls.

36:49 Now, what I have found is when you tell someone. That you might be listening to their calls. It freaks them out. It makes even the most long-tenured recruiters nervous. You would say, oh, why would a long-tenured recruiter be nervous? Because they know someone's listening. That's judging them, right?

37:08 And so we have to be careful with that a little bit. But yeah, that's what we do. I mean, it's a lot of role play. It's a lot of listening to calls and then debriefing, hey, you could have done this better. That's because we can't sit right next to the person. I think it's actually harder with tenured recruiters who are used to it a certain way.

37:30 With a new person, you can... Preframe that, right? We're looking for people who are coachable. We want, like, we're going to help you be successful. And part of that means we invest heavily in training and your development. And the best way of doing that is we're going to give you feedback on your actual calls, and you're just going to get better and better, right?

37:51 I agree. I'm not disagreeing on that. I'm just saying, if I know someone's listening to my call, I get nervous. Although that's not different to sitting, like if you were in a bullpen sitting next to your manager, they would be listening. I remember my first year in recruitment, I was doing a fee negotiation on the phone.

38:09 My director was literally standing over my shoulder and he was writing on Post-it notes and putting them on my desk while I was on the phone, say this or, you know, and that's pretty intense. Hey, Mark, we have Teams. Yeah. Do this. Are you listening to live calls? Yeah. Oh, okay. I didn't catch that.

38:32 I thought you were listening to recordings. We do recorded, but we also do live. Yeah, so we use Ring Central, so the leadership team has the ability to- Barge. It's called Barge. Horrible name, but it's the truth. That's not a good name at all. We can barge into somebody's call and listen. Let's talk about this a little bit because I really feel this is underutilized and so important.

38:53 I think the benefits are huge, but that must be very time-consuming. How do you know which – Like, how do you allocate the time to that and then decide which calls are worth listening to and which ones are not worth listening? That is actually the number one challenge with our training program. Okay.

39:10 Is if you are the trainer and you're going to listen to calls, you have to sit there and watch Ring Central on when the person dials, when they get on the call, and then you have to hit the button to listen to it. Okay. And I have wanted to listen to a recruiter's calls all day, and I find that, especially new recruiters – They've got to pull up LinkedIn and look at the person's profile.

39:35 And so you may have three minutes between phone calls, but I may click the button and it goes to voicemail. So I listened to their voicemail. It takes a long time. Wouldn't that make sense then to do the recorded ones because then you can allocate the time. What extra do you get from doing the live barge?

39:59 Really, the only thing that I can think of, and I'm not arguing for this, I'm just saying I have helped them during their calls. That's true, yeah. Get a candidate over the hump. The only thing, so then in that case, because I think AI, this is a situation where AI can help, right? You've got the transcripts.

40:17 It can tell you which ones should you look at and which parts should you look at. For the live calls, the only solution I can think of is, If people are doing a power hour or something and everyone is on the phone all at the same time, then you're going to have a lot more calls that you can barge into.

40:36 I think also what we've run into when we train new recruiters is when you just tell someone you should have done it this way. Yeah. I find that they don't retain that. Sure. As much as, hey, let me explain the logic and the why. I'm suggesting you do this. And that discussion takes a little bit. It does.

41:00 And you have to keep reinforcing the why, not just the, hey, you should have done it differently. You should have done this. Even better, if I may, is ask them. what do you think would have elevated this call? Yeah, exactly. What else could you have said in this situation? That kind of thing and try and get them to come up with the idea.

41:18 Because if it's their idea, they're more likely to implement it, right? And I have noticed through the learning process, a lot of the good ones that end up being really good recruiters will self-analyze to begin with. And so when I say, how did the call go? What do you think? They're already analyzing.

41:37 And they usually pick out that one section and they'll say, I did this. That was pretty rough. It's like, yeah, it was. Good job for fighting through it. Fantastic. Mark, you had something you wanted to say earlier? Well, I was going to say, and Scott's kind of alluding to this, is that when you lead a team remotely, you have to be a lot more deliberate about your leadership.

41:57 Right. Meaning, when you're in an office environment, somebody has a good call, you can walk by and give them a high five. You can ring the gong. Or if somebody's having a rough day, you can tell they just had a bad call just by looking at them. So we have to be a lot more deliberate in checking in, a lot more deliberate about celebrations, a lot more deliberate about making sure our employees are working together.

42:19 So Scott was talking about the onboarding and the training is which, in an office environment, they get to meet everybody and they get to be with everybody. In our world, it can be a year. With COVID, there was like a guy that went two and a half years without meeting a single employee, right? So we involve as many people in our organization into the onboarding and training, recognizing their strengths.

42:40 So we have a person on our ops team that's great with Crelate that actually she's the person that trains them on Crelate. We have other recruiters that are really good at taking notes or doing different aspects of the recruiting world. We have them actually do the training, and that person knows they can go to them online.

42:57 for advice in that particular area, kind of developing that relationship so they don't feel alone. They know they're part of an entire community from day one. When you say being more intentional with leadership, like how you celebrate things, checking in with people, what does that actually look like on a day to day?

43:14 It's remembering that, you know, in my case, like I said, I'm not the detail guy, right? And so I have so many things going on that I just need to remember that as a leader, that there are people on my team that I may not have heard from for a while, right? It's like, I should probably check in and see how it's going.

43:33 Even though we have regularly scheduled meetings, right? We have a, we follow the EOS cadence where Scott and I have a leadership meeting every Monday We have a group, so we have an ag one and a career one meeting every Monday. And then we meet with each of our teammates or our employees once a week as well.

43:54 Yeah. Right? So we have that cadence set up. So it's easy to say we're good to go. I'll see you next Monday. Right. Right? But if I'm not seeing activity or somebody's been quiet or somebody hasn't reached out to me in a while, I just need to make sure that everything's okay. a placement, we are celebrating.

44:15 Absolutely. Both as an organization, but Scott and I try and do it individually as well. Great. Our initial training process, actually, the trainer meets with, checks in on the new people. It's a scheduled call every morning. And then at the end of the day, they meet with them as well for the first six weeks.

44:34 And I think you guys have a real success story recently of someone new came into the organization and they're doing extremely well. Could you talk a little bit about that? Yeah. Actually, I just sent her a note saying let's talk about becoming a shareholder this morning. That's awesome. Scott hired her.

44:50 I'll let him take the credit. Yeah, well, and we have multiple employees that are doing a great job. Of course. Right? So it's difficult pointing at one. I would say the one thing that when she joined our organization, she was all in from the very beginning. And she was able to leverage her experience where her experience was, and this is interesting, right?

45:11 She was an HR person for the Department of Defense. Part of her role was recruiting Russian speakers and Mandarin Chinese speakers to our military to train our military on speaking those languages. Wow. Probably fairly difficult to find those people. I was going to say, yeah. And so I figured if she could do that, she can definitely recruit bankers.

45:35 Right. And so she just came in. She's very professional. She came and said, I want to win. I want to achieve. And I trust the process. And I think that's more than anything. When you're in it to win it, you own it and you trust the proven process that The sky's the limit. And she's not even 12 months with us, and she's over $300,000 in placement revenue.

46:02 Let's go. That's fantastic. Hiring great people, obviously, is... Difficult. Difficult and key. Like, if you get great people, then... you're going to be successful, right? If you hire people who are not as good, you can give all the training and tools and everything and everything gets harder, right?

46:24 Or versus easier. But then you kind of didn't give yourself full credit for the rollout of that training because I know you guys have worked really hard on that structure and making sure you have a really effective training system in place. So Mark, you are very good at educating us on that. When you become the leader of an organization, your job is not recruiting anymore.

46:51 It is to hire, train, and develop high quality, best in class recruiters. Yeah. And although it took me a year to, because I said I'm a late bloomer, it takes a while for me to learn these things. After that set in, The sky's the limit because I'm like, hey, we have to be very intentional with training to develop our people.

47:12 I mean, when I started, I mean, everybody loves saying when I started, there was no training program. Exactly. It was trial by fire, right? Yeah. And we don't want to put people through that. Right. That's a very not productive way to start. Totally inefficient. And you end up losing people who could have been good, right?

47:31 Right. So, yeah. So what we're trying to do is take all the energy that we brought into recruiting and put that into our people. Because Mark and I like to say now, our main roles with the organization is to facilitate the team's success. Yes. Not our own success. If the team does well, we do well. Talk to me about...

47:53 That switch flicking because, you know, most people who are owners of recruiting firms came up through sales, are competitive, want to win, want to be the best. And how did you... channel that same, you know, competitive spirit into a different direction, which is, I want to amplify the team. We're still learning it.

48:23 I am personally, right? I'm – I'm the business development dealmaker guy. Yeah. Right? And part of it is finding the right people to turn it over to. And you keep telling us, just remember, nobody's going to be as good as you. Right? And just letting go and understanding that as long as we can start to coach our people up to be able to do it – We'll get there.

48:48 And part of that is why we restructured our company two weeks ago. Right. We were an organization that was primarily based on a 360 model. We had really good people on our team. Everybody had different strengths. It's time to recognize people's strengths. And there's some people that just have a knack for doing business development.

49:07 And I would also say that the one thing we did that may be a little different than other organizations is that We are self-admitting that we are not great at account management. We have so much more opportunity with our current accounts that we haven't focused on that potential because we're so focused on trying to get new customers that we aren't looking at the opportunity with current.

49:29 And we have identified the skill set to grow with a current client versus a new client is exactly the same. So let's bundle that together and then have people that are phenomenal at managing relationships with existing accounts and filling positions and being high customer service. There's that group of people that we were truly hurting them and ourselves by trying to force them to make business development calls.

49:54 That was never going to win, right? Interesting. So we are in that transition to where now we've kind of split our focus on our employees where, like in my case, I'm going to be focused on coaching those account managers up to the next level. And I would say Scott's strength really is helping those people be more effective in filling positions and doing the recruiting opportunity, and we're able to focus a little bit differently on that environment.

50:21 And we are really redesigning how we go to market, right? From the standpoint that we've actually now, because of EOS, it's crazy, but we were literally flying by the seat of our pants for 22 years, right? How many people in this event and you have said, make sure you write down every step in your process.

50:41 We're like, yeah, whatever. Right. We've never paid attention to that. But now there is value in that. And because you can't get mad at somebody for not doing a step if you've never actually told them that step is there. Right. Right. And you can't figure out how to become more efficient at that step if you don't know that step is there.

50:58 And so it's forced us to take a step back, really start at the very beginning of our recruiting process. We've now defined a new account management process, and we're actually redesigning our go-to-market strategy. So obviously being part of this process. This meeting the last two days has been very helpful because it's very focused on how to use technology and tools to become more effective in business development.

51:21 But that's been a big part of our switch is actually we can't get mad at people for not doing something if we never told them that step was there. Right. Right? Makes sense. Absolutely. You guys have made a lot of changes. I know one of them also is switching from primarily being a consumer. contingent organization to getting a lot more retained work.

51:41 Can you speak a little bit about that? It's baby steps, right? But yeah, we've done a lot of work in growing engagement, and it's more of a, you know this, right? I would say it's more of a trust in yourself thing than anything else, right? We have a lot of people on our team that could be very effective at selling engaged search and actually completing engaged searches.

52:06 they lack the confidence a little bit, but I would say once they've done it, they become a lot more successful at it. And we now have a few members on our team that I'm going to say maybe weren't necessarily against it, but lack the confidence, but they're realizing how much more fun it is to be part of a recruiting organization where you don't have to work as hard because you know exactly where your next paycheck's coming from.

52:31 Absolutely. And they've bought into the vision. And I will tell you, one of those individuals... probably had three to four times the number of open positions as anybody historically. That was the way of life for them. Right? Now they have six, right? Versus 25. Just because, and, and it's also, um, as part of that shift, I would say we set a goal that we thought was impossible of going from 20% to 30% to 40% to 50% fill rate.

53:03 And our goal, we've actually exceeded our goal a year ahead of schedule because part of that's because of the engaged search. Part of that's because of the focus on our team to actually raise the quality of searches we're working on and increase the fill rate as well. But that becomes a story to tell when we're doing our business development.

53:22 Absolutely. That's phenomenal. I didn't realize you guys had improved the conversion rate that much. It's more about focus and not taking crappy searches. Right. And I would say, as you think about all the changes we've made, the most difficult thing about all those changes is getting buy-in. And I would tell you, our average tenure of recruiter is 13 years.

53:46 Wow. And so we have new ones and we have very experienced recruiters. And I would tell you, I make this joke a lot within the organization. Once they taste that sweet nectar of success… The sky's the limit, right? And it takes, the proof is in the pudding, right? They have to see the results and it has to work.

54:05 But once it works, they're on board. So can we say a little more about that? Because driving change as a leader is one of the most difficult and frustrating things. You know what you're trying to accomplish and you have a plan for getting there, but we need everybody to be rowing together in the same direction in order to get there.

54:26 And you highlighted that getting buy-in is key. So, you've given one way that you achieve buy-in, which is once they see the result, then it creates more buy-in. But what else is involved in getting people on board with whatever it is you're trying to do? I would also say our structure helps with getting buy-in because Mark is a great public speaker.

54:57 Mark can, like I said, make everything sound good. And the proof is in the pudding. Yeah. He is a rainmaker recruiter, very good at business development. And you can see it in the numbers. Yeah. And then you look at me, and I'm the guy that started at the organization at the lowest level and worked my way through.

55:18 I started as a sourcer, then search consultant. I was given one search to start. And once I had found three people for that, I was given another one. So I've lived the life. And so I come in. Mark presents it, like the grand high-level stuff. And then I'll come in and say, hey, look, everybody. Right.

55:37 this is the logic behind why we're doing what we're doing. And the tag team that we can do, I think really helps get everybody on board because everybody learns differently, everybody thinks differently. And so hearing the high level vision of where we wanna go and then, hey, the logic behind, this is how it's gonna work and this is how we're gonna execute it, I think really helps getting people on board.

56:03 I think the thing that a lot of owners miss is the constant follow-up reinforcement on that. Seven times. Seven times. Seven times is a lot of times. It's a lot. I swear I have check marks on my notepad. You can't just announce, hey, guys, this is what we're doing. This is why we're doing it. And then expect that it's going to happen, right?

56:23 We were actually – Very poor at doing at reinforcing things. That was a learning opportunity for us from a leadership standpoint, because we early on, we implemented things and then could not believe that half the team was doing it wrong the week after we announced it. And then we were educated that it takes seven times.

56:44 Okay. I would say the other thing we've done that has helped the transition of change is recognizing what the roadblocks are for people to embrace that, right? So going back to the engaged search, well, people were nervous to sell engaged search. So what's another methodology? And that is we came up with a program where rather than selling retained searches or engaged searches, we sell a retainer program to organizations that are growing.

57:12 So... It's like a law firm or other organizations where we say, okay, you plan to make three searches. It could be six. We'll base our fee off of the three. You'll pay a monthly rate. But we are able to treat every search like an engaged search. They're getting the value of a person on our team focused on that company every day.

57:34 We have the cash flow. the monthly cash flow, and we have exclusivity from that client because they're like, well, we can't not use them. We're already engaged with them, right? So we don't force our people into having to sell every search. We've locked in that client into that. That's cool. The other challenge we are having on the business development side is every recruiting firm has a proven process, right?

57:59 And so the client says, well, that's great, but why should I work with you? So we branded our process, which makes it completely unique from that standpoint, right? And we are now in the process of training people to sell our process as being unique because it's branded and here's how we do it. It just rolls off the tongue completely different.

58:17 It's a lot easier to discuss our proven process when it's actually documented and very clear. And that's what we noticed with our people when they would go into client development calls, BD calls. Because we hadn't had a clearly defined process, everybody was stumbling and bumbling through those calls.

58:38 Now we have a graphic that explains it clearly. And because of that, it's just so much easier. Yeah. What would you say is the biggest unlock that you guys have made in the last 12 months? And what has that enabled for you? For me, I don't want to speak for Scott, but the biggest unlock was just going through our EOS journey and realizing that, Especially in my case, I'm full of ideas every day.

59:10 I am the opposite of clarity to my employees and the rest of the organization. As much as I love speaking about where we're going, I have not been doing a great job explaining why. And that's really where this leadership partnership comes into play, because I'll get the reminder from Scott. He said, great job telling them where we're going.

59:29 You should probably take some time to explain why we're doing this as well and vice versa. I think that just understanding we just talked about the explaining things seven times. That as well, because we've always been hanging our hat on the fact, well, we're an employee-owned company, we have complete transparency, but are we actually living that on the to-do side of things, right?

59:56 We're definitely living that on the financial side of things, but understanding that transparency has to carry through to the culture and how we deliver our messages and explaining where we're going and why we're getting there. It's the age old, you can't work on the business if you're always working in the business.

1:00:13 And so moving off of recruiting desks has been a massive game changer. Okay. Wait a second. When did that happen exactly? So for me, it happened this year. Okay. As we were finally able to train and develop awesome team members, I was able to hand off the majority of my recruiting desk. Mark is not fully off his desk yet, but that's the plan.

1:00:40 And we were almost there and then we had a little setback. And so we're, we're trying, but that's the ultimate goal because we have found again with systems and processes, I have time to work on those if I'm not having to recruit. Yes. And it was the last few years has been absolutely incredibly difficult because we've been trying to recruit and work on the business.

1:01:00 And guess what? When you're filling roles for a client, you're going to fill those roles. Yes. Before you work on the business. A hundred percent. I'm thinking both practically as well as psychologically what that transition was like for you to go from being a biller to purely being a leader and working on the business.

1:01:24 Okay. So, so I, I will, I liked winning awards. Yeah. I noticed that. I like being close to the top or at the top. And so it's – To me, it's a little difficult. I love it, but I had to get used to the fact that I'm now a leader of the organization and I'm buying awards for everybody else for their awesomeness.

1:01:49 You're the giver of the awards. I mean, I won so many awards at our annual meetings that my now sixth grader thought that I was compensated in wine because we gave out wine and he always saw me come home with wine. But yeah, so it's difficult. Right. Because if your identity is tied to feelings or whatever.

1:02:10 It's winning, right? And so you have to change your mindset to, and my tagline on LinkedIn is winning with people. Right. That's what I do. And I win with my people and I win with the people that I work with. Candidates, clients, everything. And as I've accepted that. Now it's working well, but I will tell you, it's an odd feeling.

1:02:34 It's a weird feeling knowing that I have two people working on all the accounts that I brought into the organization. And I trust them. They're awesome. And they're getting it done. But it is that you have to have faith in those individuals, too, as in EOS, they say, let go of the vine. The reality is that so many owners cap their growth because they're bottlenecking.

1:03:00 Like, there's only so much you can physically do, right? And there's only so many people you can manage and only so many different responsibilities you can carry. And so... you reach a point where you're maxed out and the organization can only can outgrow the leader. So one of the struggles that we've experienced, and we've seen this with some of our team members, is no one can do it as well as that person.

1:03:27 Exactly. And so I've had to have conversations even with myself and say, hey, is 80% of how well I do it enough? The fact is absolutely yes. And then they'll learn the other 20%. Yeah. And if you can come to terms with – and again, that's a very selfish thought and everything. Hey, no one can do it better.

1:03:47 Come on. I also think the be honest that we talk about, open and honest. Yeah. You got to be honest with yourself. You're not as – most recruiters are not as good as they think they are. You can find flaws in what they're doing if they really look in a mirror, right? So I think it's just being honest with ourselves and saying, hey, look, we had to start with the organization somewhere.

1:04:09 I started – I had never recruited before in my life. And so I learned it. And if I learned it and I become a good trainer and developer, we can make rock stars. Absolutely. And once you accept the fact, like I said, the sky's the limit. Yeah. The other thing that Scott and I have had to develop over the last couple of years is recognizing that imperfect progress is still progress.

1:04:32 Yes. Right? That we went into our leadership that first year, hour-long meetings of how to make everything perfect and how can we make sure it's executed exactly perfectly and nobody messes up because we don't want to launch this wrong. And now we're like 80% is okay. Yeah. Right. Let's just, we have to keep moving.

1:04:51 We have to keep focused on making those changes and recognizing some people are going to get it off the bat. Some may need different coaching. That's okay. We're still moving forward. I mean, we literally had to learn to be okay. To be okay with not knowing everything or not being perfect. We had to learn to be like that.

1:05:10 What's the plan? What's the vision from here? Sky's the limit, right? I think we have the right structure. We have invested in our processes. We've invested in technology. We've done all of the things that right now our focus is to grow, as Scott said, grow with people, which means becoming more deliberate about continuing to grow our team, which is part of why...

1:05:35 My role is going to be shifting eventually to where I'm not going to be focused on leading the Ag1 team again. And I can truly spend my time growing our business and growing our brand, which could be more clients. It could be more employees or both. Yeah. Right? And that's really where we're going to go.

1:05:53 We plan to more than double in size in the next five years. Oh, awesome. We have the tools to do it. We just need the people to do it. I guess this is one of the benefits of remote, which we didn't address earlier, is you've got a massive talent pool, right? You've got the whole of the country. Exactly.

1:06:11 So there's bound to be some talented folks there who would love to be part of this story. And I think the gal we were talking about before is a great example of she's one of the few people we've ever hired that didn't have direct experience in the area that she is working in today. Okay, interesting.

1:06:29 So we limited ourselves from a talent pool before by believing that we had to have people that were experts in their field in order to join the team. Now, thankfully, we had that. Otherwise, Scott and I may not be here, right? That's how we were hired. But going forward, again, expanding that talent pool, not just because of remote, but being okay with people that have the right skills and experiences to be effective in this role is going to totally change the way that we can bring people into our organization.

1:06:54 That's fantastic. Guys, we could chat for another hour. That has been brilliant. I really appreciate you doing this. And you brought a really interesting dimension to the podcast. We've never had any other firm that's got, you know, some of the things that you guys have brought in today. So thank you.

1:07:11 It's a kind way of saying, wow, you've had a painful journey. Thanks very much, guys. That was awesome. Thank you. Thank you, Mark. What stood out the most for you in this one? Let me know your biggest takeaway on LinkedIn or in the YouTube comments. And more importantly, what are the one or two things that you're going to put in practice this week?

1:07:32 If you're getting value from these conversations, do me a favor and hit subscribe so you never miss an episode. I really appreciate you listening. Make it a great day and I'll see you next time.