Moderator: 0:01

Welcome to the Empowering Healthy Business podcast, THE podcast for small business owners. Your host, Cal Wilder, has built and sold businesses of his own and he has helped hundreds of other small businesses. Whether it is improving sales, profitability and cash flow; building a sustainable, scalable and saleable business; reducing your stress level, achieving work life balance, or improving physical and emotional fitness, Cal and his guests are here to help you run a healthier business, and in turn, have a healthier life.

Cal Wilder: 0:34

Welcome. This podcast, as you know, is dedicated to helping small business owners run healthy businesses. And a lot goes into that as there are a lot of challenges that businesses face. For small businesses, one of those challenges is filling the seats of a well rounded management team. Big companies will have a CEO and a CFO and a COO maybe, a VP of sales or chief revenue officer, a VP of HR or Chief Human Resources Officer, etc, etc. Small businesses cannot afford to go out and hire all those people, and so they will often take a fractional approach to filling certain management seats that they feel like they need to have. And as other episodes have talked about the fractional CFO, or Chief Financial Officer role, it's kind of an established thing over the past 20 plus years. Some of these other seats are a little bit newer to the fractional game, where they're just not as many folks out there who are, you know, working as fractional COOs or HR leaders or sales leaders, but they're out there. And today we're joined by Scott Baker, who works as a fractional HR leader for businesses. Welcome Scott.

Scott Baker: 1:50

Thank you. Calvin.

Cal Wilder: 1:53

I work primarily in finance and accounting at SmartBooks. And I'll often say, you know, founders who start businesses are often very skilled in developing products or selling goods and services, very passionate about fulfilling a need in the marketplace, trying to build a valuable business. Most of them don't really have background and expertise in finance and accounting. And, you know, similarly, a lot of them don't have a lot of background and passion for HR, right? And so I think it's at a certain point they probably come to realize they they need some help in the HR area. So Scott, you can kind of let us know what are some of the signs and symptoms that small businesses maybe should bring in some HR expertise. But before we kind of start digging into the details, could you give us a brief, you know, kind of background of how your career has evolved and brought you to this point where you're working as a fractional links are leader for multiple businesses?

Scott Baker: 2:50

Sure, absolutely so. I have over 30 years of experience in human resources, probably 12 of those in senior leadership positions, including board interactions, executive team, that sort of thing in a variety of industries, including manufacturing, high tech service industries, you name it, pretty much have experience in it, and I've lived in various parts of the United States, so most of my career has been developing programs, being part of the executive team, it's been supporting employees in various states all around the country and globally.

Cal Wilder: 3:30

Great. And what brought you to this, maybe small, the midsize end of the market, where the fractional solution is what they need or can afford?

Scott Baker: 3:40

So about three years ago, I started as a fractional CHRO, VP of HR, HR support. And my niche is companies between five and 500 employees. I love the chaos and the growth and the opportunity to make an impact on a smaller business that you can't get at a company over 1,000 employees. Smaller companies usually need to make decisions quickly. They have a sense of urgency, and I love playing in that space,

Cal Wilder: 4:12

So let's drill in a little bit on, you know how small businesses can structure HR? And you know, what are some it tends to be one of those things. As business owners, we probably neglect a little bit until something bad happens. Then we realize we've been neglecting HR and need to invest some energy and time and money and beefing it up and improving it. But you know, what are some of those signs and symptoms you see in the, you know, in the smaller business market that indicate businesses need to invest in improving their HR practices?

Scott Baker: 4:48

That's a good question, and there are so many different things that can lead to that right. One could be compliance, and every state has different rules and regulations. It's not like it was 20 years ago where there was more of a state, I mean, a United States framework. Now it's more individual states and even cities that you find in California that have their own individual rules. It is also employee relations which are critical. You might have some employee issues that are festering that need somebody from the outside to help out with. It's you realize at a certain point that you need you know different HR programs, whether it's performance management or performance feedback or coaching and training for your leaders, or it could be a reorganization or recruiting that you need some help with. It could be a variety of different things that you just know there's something that you could be doing better, or you could be doing more of, or that you just don't know if you're on the right track, and that's where you need somebody to come in on a fractional basis and give you some support.

Cal Wilder: 5:54

I think it sounds like there's kind of an endless number of areas that you could help with, their businesses might need or want or benefit from some help in. I kind of think is of HR as a spectrum from very day to day tactical things like getting payroll processed on time, getting a new hire set up on benefits--they don't necessarily add value the business, per se, but if they're done wrong, they certainly detract a lot of value. And there's more of the compliance side, making sure they're good policies and procedures and an employee handbook, and, you're not violating laws and things like that, which is important, you know, potentially adds a little more value, but still, it's kind of keeping you out of trouble more than it is making the business a lot more valuable. And then there's the the kind of work you could do where you really partner with the senior executives and the owners on driving the business forward, making it bigger, more valuable, and a more attractive employer, improving employee retention and performance and and all that good stuff that becomes really valuable. So where do small businesses start? Where do they start?

Scott Baker: 7:10

So I think the best place to start is just an assessment, and that's something that I offer to companies I talk to. It's just I'll do an hour over the phone talking about every aspect from recruiting to compliance to employee relations to programs to employee handbook, whatever it is right. And that usually identifies some areas where the company just needs a little bit more help and and wants to know if they're they're on the right track. Every company is different, but most of the companies that I find in this particular size, they are growing, and so they want to know, if they have, they they know they have a need for some specific policies, and or they need some help with, hey, look, are we competitive in the market from a compensation and the benefit standpoint? Or, hey, we've got, we've lost some people recently. Can you help us understand what might be going on and how we fix that? Or we're going to be looking to hire a whole bunch of people. Can you help us with some ideas of how to recruit better, more effectively and more efficiently? So there's a variety of different ways that leaders bring me in. The good thing is, is I'm very comfortable working with CFOs and CEOs and CEOs, and I understand I bring kind of a business mindset to it. So everything I think about from an HR standpoint, is not about you can't do this, you can't do this, you can't do this, you can't do this, which HR is sometimes known for. It's more of what are you trying to accomplish? And how can HR help you be better, more effective, more efficient, more successful.

Cal Wilder: 8:42

So let's say I'm the owner, or one of the one of the owners of, you know, a $5 million annual revenue, marketing services agency, B2B services. I've got, you know, 15 or 20 employees in the business. What are some of the best practices to go about structuring HR in that kind of an environment? Because that represents the kinds of companies that are probably in the audience, for example, today

Scott Baker: 9:11

Absolutely. So at that level, you need to have somebody assigned to be able to do payroll and benefits and onboarding and offboarding. That's really what you're looking for at that particular level. And you have to have somebody assigned to that, and that could be somebody from the finance organization that's very detail oriented to do payroll for that size of a group. Let's say it's all in one state, and most of your folks are exempt level. It probably takes no more than a couple hours every week to get payroll set up. And then, of course, you've got your benefits piece with any questions and that sort of thing. So I don't think that you necessarily need to have a full time dedicated HR person in that particular role. Now at 15 employees, what you do want to think about is, what are some other ideas that can help us, or what are some areas that we should think about from an HR standpoint, at a higher level, strategic level, and that's where somebody like me and my skill set might come in.

Cal Wilder: 10:10

Okay? And what, I know a little bit about your background from speaking with you before, Scott, and it seems like you've really successfully transition from working in big companies to working in small to mid sized companies. What's the background that the small business owners would really look for in somebody that they're considering bringing on a fractional HR leader, and kind of what, what makes people successful in the SMB space versus more the larger enterprise space?

Scott Baker: 10:44

Very good question. So there is a difference between somebody that's coming from just a large company and having to, you know, really understand how a small company operates. A smaller company, smaller business, that is completely different. In a large company, an HR person would have centers of excellence. So a person who's an expert or an SME in benefits and compensation and learning, you know, LMS and and, you know, employee relations and that sort of thing, and a smaller business, an HR person would handle all those themselves. So one of the most important things to look for is if they have that small company experience, because otherwise they'll bring a hammer to every situation that you think that you have, because they could potentially be looking at it on a larger scale versus what do you what nudge do you need? What? What? What small redirection do you need in a smaller company to barely be successful?

Cal Wilder: 11:45

Okay, how do you go about structuring an engagement like, how do you manage the cost? What's a reasonable cost investment to make in kind of that 10 to 50 employee kind of company where they've identified that, you know, they have some gaps they want to fill, but, you know, they're not going to spend six figures a year to fill those gaps. How do you how do you go about prioritizing and structuring a fractional engagement where you have to, you know, deliver as much value as you can for a certain number of hours per month or per week?

Scott Baker: 12:21

Well, Calvin, it's every every client, every company, every business is different in terms of what they need and what's most important to them. So the priority is, what is important to the business? What are they what problems are they trying to solve? What are they trying? What opportunities are there? What challenges are there? Many times at a business's size, it's just coming in maybe a couple hours a month, or it could be a few hours every quarter, just to assess things, help out with things. It could be project related. Hey, we'd like to have a new hrs system. We'd like to have more feedback on how to make our recruiting process more efficient. We'd like to have more information on how to be competitive in the marketplace with comp and benefits. So we'd like you just to focus on this. Give us a deliverable, and then we'll see you next quarter or next month. And then also, in in other cases, what companies hire me to do is they already have an HR person, but they want me to come in and help mentor and train and coach them so they can level up. They're not ready for a VP of HR or CHR. They have somebody that's been doing the benefits, doing the payroll. They have an ability to move up and do other things in the organization, but they just need a little bit of mentoring and coaching.

Cal Wilder: 13:44

That makes sense. One of the challenges we see clients have is navigating operating with employees in multiple states. And you know, over the last couple of decades, that's become more and more prevalent. And then, especially after work from home, became pretty much mandatory for most people for a certain period of time during during covid, it's really exploded, right? And so there are all kinds of challenges, everything from, you know, the nuts and bolts of how do you put somebody on payroll in a new state to, you know, how do you successfully manage remote employees, right? And so let's drill in a little bit on HR issues that relate to having employees in multiple states. What, what's been your experience there

Scott Baker: 14:34

Every state is different in terms of how they look at a variety of factors. So, for example, every state has a different site that you go to. You have to register the employee in that state. You have to pay unemployment insurance, right, workers comp. Every state has different laws in terms of, just as example, Leave Law, sick leave do you have to pay out? About vacation time, unused vacation time during a termination or end of employment. There's also, when do you need to have start doing the state tax withholding? And that's a big issue because it's not consistent. Every state is different, and it could be anywhere from 24 hours working in that state to a month working in that state before a company's required, required by the state to withhold taxes. So let's say somebody says to you, hey, look, I'd like to go work temporarily in California. Well, the first thing to think about is or New York or Massachusetts, the first thing you have to think about is, how long are they going to be working there out of their house? And then you have to think about now, you have to do tax withholding. You have to think about unemployment insurance, workers comp, all that the but every state is different in that particular aspect. Now, sales, it's not necessarily an issue, because you're going to different states to just meet with customers, and, you know, that sort of thing. But when you're going to a state to work there or even, and even gets worse, if it's another country, because now, if you go to another country and you don't have an entity, somebody says, hey, like to go work for it's in Singapore or Germany or whatever. Now, if you don't have an entity there, now there could be some potential tax consequences for you as a company, because you're not paying into the state pension or the country pension programs, and you're not paying taxes in the country and that sort of thing. Yeah, and so it could be, if I'm working as a CFO and put my compliance hat on and just say that hiring managers, you're just not allowed to hire that person in California or New York or wherever it is. But that's not necessarily feasible. It's a tight job market. If you've got that great candidate who lives in a state that you're not already employing people in, and you're the hiring manager, you're falling in love with this candidate and what they could do for the business. Or you may be having a heck of a time finding the right candidates in your home state. And you need to go outside your local geography. And you know, you've got some candidates you really think are great. You want to hire one. You know, the business needs to hire great people, and then HR, kinds of has to figure out how to adapt to support that. But you know what's kind of that short checklist of things to think about when a hiring manager comes to you and says, Hey, I've got this great candidate in this new state, I want to make an offer. Sure. So one of the things is, Has it really been a robust interview process? I can't tell you how many times people have hired candidates and they haven't been really interviewed. It's been more of a discussion. So some of the some of the companies that I have, I work for, they'll say, Scott, can you just do an interview with this candidate? We think they're good, but can you just interview them as a third party, and tell us what your thoughts are? The other thing is, do you really have the person appropriately classified as exempt or non exempt, or even a 1099. Are they in the right position? So if you don't have, if you have somebody in a hourly position, and they should be salaried, that's okay. But under the the rules and regulations, if somebody is in a salaried position, and they should be in an hourly position and receive overtime and and that sort of thing, because it's an hourly should be categorized as an hourly position based upon the work they do. There are some legal liability there that can go back three years and, you know, triple damages. So it's huge, especially if you're in California. A lot of companies that, and also the state, obviously, is a is an issue too, that they're being employed in-- a lot of companies, which would really surprise you, say they do not want to hire candidates in particular states because they're going to have to change their policies or do things differently for that state. For example, California, Massachusetts, they have state disability programs that companies have to pay into, and it's not easy to to do that if you just have one employee. Now, if you have several, that makes sense. We get one, it's a little bit of you got to jump through some hoops, and you got to spend some time and if you don't have an HR person, you're going to be doing it in finance. And it's not easy, and you got to run reports and provide reports on a regular basis. So keeping up with all that complexity.

Cal Wilder: 19:44

And then come the end of the year, your income tax CPA preparer may tell you that you need to start filing tax returns in multiple states. And that can get challenging, especially if you're a pass through entity like an S corp or an LLC, owners may be recognizing income in multiple states. It gets complicated fast. So one of the ways we've we've seen businesses help address the multi state HR issues, is through a PEO, a professional employer organization. And we could probably spend a whole podcast episode talking about how PEOs work and the pros and cons, but can you give us kind of a brief rundown of what they are and in what situations they're effective and what situations they might be less effective?

Scott Baker: 20:32

Yes, PEOs have their pros and cons. So first of all, we just all need to be aware that a PEO will say, we will take all of your HR from you, so we'll do everything for you. The reality is, the way it really works is they will have a system for you to process your payroll, but you still need somebody in your organization to submit payroll. They will say to you, we will, you know, give you benefits through a group plan, and that group plan may be better or not as good as what you can get on the open market, that sort of thing. There's also an administrative fee that will go along with the PEO, just need to be aware of that. Use your system. In some cases, the PEO, because they're a co-employer, they'll have the employees doing completely new I-9s or E-verify with the new company name. And remember that the employees generally see the paycheck with the PEO name, and it might say on behalf of your company, but it will come across as the PEO. So what I tell people is talk to a lot of companies if you're thinking about a PEO. Make sure you're aware of the cost. There's a stickiness to a PEO in terms of being able to get off of a PEO, which is a big lift. So if you're going to do it, usually companies do it under 100 employees, but once they get over 100 then they start determining that maybe it makes sense to bring HR in house. Not to say that you need a team of five, but a team of one or two to handle all that stuff and think about bringing it in house.

Cal Wilder: 22:15

There can be a little bit of conflict of interest with the PEO, right, since they're doing taxes and compliance under their own tax ID number, their own legal entity. They kind of force the PEO's policies and procedures on you, to some extent, to cover their own butts, you know, justifiably, they don't want to take too much risk. But I think my advice is, if you're thinking about a PEO, certainly are some benefits, but make sure you talk to a few other business owners who have used PEOs in the past to know what you're getting into. Because it can sound all all well and good with the sales pitch. because, of course, they don't point out the complications and the hoops that you have to jump to and the limitations that you're going to have working within a PEO model. So just make sure you know what you're getting into and you're confident that for your particular business that the benefits outweigh the cons. You mentioned overtime. And so a lot of us may just think, over time is for people who work on assembly lines, or are, you know, fast food restaurants or places like that. Not so much people who work in an office who might historically have worn a jacket or a tie. But that's not really true, right? So talk to us about what kinds of employees generally fall within that non exempt category that businesses might not necessarily think about.

Scott Baker: 23:54

So first of all, remember that there's a minimum amount of money or compensation that a salaried employee must receive, and it kind of varies by state, to be considered an exempt level employee. Generally non exempt or hourly employees are those that do a lot of data entry and don't make decisions on their own. So some cases, it could be an office manager, it could be an AP person or a payroll person. It could be AR. It could be somebody just doing, you know, general data entry within the company. Those positions generally fall into an hourly position and where, where the liability is is that they may have worked and not gotten paid, so a call on a weekend or an evening, or they did a little bit of work, or not taking you're not getting paid for hours that they worked additional to, you know, 40 hours in a week, or something like that.

Cal Wilder: 24:50

Okay, and so what does the business owner do to try to validate the proper classification for the different roles in their business?

Scott Baker: 25:01

There are some very good online checklists that you can use to evaluate whether an employee should be exempt or non exempt. Anybody on your call that would like to receive some information about that, I can send them the documents to look to just do a high level audit of the positions. I would be happy to forward it to them.

Cal Wilder: 25:24

Great. Yeah, we'll get your contact info in the show notes, Scott, so folks can reach out to you directly. Another topic you alluded to earlier that we see come up is treating people as independent contractors versus employees. And I think the rules got a lot tighter a few years back. We used to see a lot of employees getting paid as independent contractors by clients because it was easier and the business was saving on payroll taxes. And then the rules got clarified and in some ways tightened, a number of years back, not in the last, you know, 5-10, years, something like that, right? So what's the general outline of who, who could qualify as independent contractor and who really should be classified as a w2 employee?

Scott Baker: 26:08

So generally, where I see and I'm not a lawyer, so I'm not giving any kind of legal advice on this is just my personal opinion. The the government seems to be cracking down on organizations that will hire people, take warehouses and manufacturing, on a 1099 basis, and work them overtime, you know, not give them, you know, the folks breaks and that sort of thing, not basically following government standards for a non exempt employee, an hourly employee. So the government tightened it up and said, if you have a position that should be a, and you're hiring all these other positions, and it really should be an hourly position, full time, then don't use the the 1099 to get away from it. So when you think about what is a true 1099, an example be a fractional person, where you have several businesses that you're supporting. It's not just one like where you show up to the same job every single day and you're working alongside an assembly line or warehouse like everybody else. It is, you've got your own business, you have your own equipment, you give your own direction. Yes, you're part of the business. You have other companies that you support. And it is, it's considered that you have some independent judgment in what you do,

Cal Wilder: 27:40

And so I assume there's, you know, an online checklist people can find or ask you for to help make this classification decision, right?

Scott Baker: 27:47

Absolutely. And remember that in some states like California, that can be a little bit more critical of what is a 1099, versus a w2. But I would say, especially if you have non exempt employees, especially non exempt, working side by side with other people that are 1099s in similar positions, in similar classifications, doing similar work, then there should be an opportunity to be able to evaluate that very carefully.

Cal Wilder: 28:22

We are kind of mentioning California a lot, but what is that short list of states where their HR laws and regulations are significantly different or outside the standard range for a lot of other states where you really need to be careful and think through how you going to be compliant if you start hiring employees in those states?

Scott Baker: 28:43

It's mostly the west coast and also the Northeast, New York, anything in the northeast, those are the states, and even, you know, Massachusetts, that sort of thing. They're the states that you want to be very careful on and register. So a lot of states now are going to the state leave programs. So as soon as you hire somebody in that state, you have to start participating and funding that state leave program. A lot of companies don't know that. California, Colorado, Massachusetts, New York, you have to immediately start funding that.

Cal Wilder: 29:18

You're talking about paid family and medical leave, right?

Scott Baker: 29:20

Family paid family leave, exactly.

Cal Wilder: 29:24

And some of those states have state run programs, and some of them are requiring you to buy private insurance, right?

Scott Baker: 29:30

Yes, very complex, exactly. Okay, got it, okay. Northeast and West Coast make sure you know what you're doing before you hire people in those those areas. Be triple sure that you're doing that you know what you're doing.

Cal Wilder: 29:47

What are some, you know-- we talk about employee handbooks and policies and procedures and things like that-- but what are, what are some of the things that you really want to make sure you have covered in writing or in some kind of handbook or statement of policy and procedure?

Scott Baker: 30:04

So the most important thing to think about when you think about employee handbooks and, you know, policies, procedures, that sort of thing is to have a code of conduct section. What are you expecting of your employees? To be professional, to be collaborative, to be, you know, obviously, to operate with integrity, not to steal theft, you know, treat each other professionally, not have any issues with harassment and bullying, that sort of thing. Have a really good, solid code of conduct, because then when you have an issue with an employee, then you go back to the code of conduct and say, Here it is in writing. The other thing that we touched on earlier is a lot of companies now are adding a section in their handbook about, if you decide to work in a different state or country, you need to have the CEOs or coos or somebody within the organization's written approval to do that, so that people just don't go on their own and say, Hey, boss, you allow me to remote to work remotely, I'm gonna go live in California for the next six months.

Cal Wilder: 31:11

Yeah, I think the the code of conduct is an important thing to note. Because you could have somebody who is technically proficient in the nuts and bolts of their job, but they could be a cancer in the office, or be providing terrible client service or abusing vendors and subcontractors. And they could point to, look, I'm accomplishing my core job responsibilities and really skilled, how dare you put me on a performance improvement plan, or let me go or something?

Scott Baker: 31:45

Exactly.

Cal Wilder: 31:50

What are some other areas that you find yourself really digging intp and helping clients with?

Scott Baker: 31:57

It's like we talked about: Recruiting. It's programs. What do we you know, we're scaling quickly, what do we need to know? What kind of foundations do we need to have? Or we might be shrinking. What do we do with that right? Or we have some leaders that might need a little extra training or coaching. I see that a lot. Or we were thinking about what our structure should be organizational structure. Can you give us some input into what that might look like, or it might be just something basic, like, can you help us look at our job descriptions and just rewrite them or our offer letter and just make sure that it's got the appropriate pieces in, or take a look at our onboarding process. What are we missing? So in my role, especially companies that are smaller, I scale from the strategic to getting into the weeds and and taking a look at at what we can do on the on the lower levels too, right?

Cal Wilder: 32:56

And then, presumably, unfortunately, some clients need to let go an employee from time to time, right? And so what are some best practices when you've got somebody that unfortunately needs to get let go so they can pursue a better opportunity that to fit for them somewhere else?

Scott Baker: 33:12

Well, usually, keeping in mind, the person will find a better opportunity. And then once that discussion has happened, either to exit the employer give them some coaching or some, you know, a written warning, is that you wish you had done it sooner. Because you see the impact. So that's the important thing. But the overall philosophy is to be respectful and professional. And there's a lot of different ways to, you know, put things in writing. It doesn't have to be, you know, let's say a six month improvement plan. It could be 30 days or less than 30 days. There's no time frame that you need to have on it. Can just say significant and immediate improvement. What I find a lot of times is I spend time with managers or leaders, giving them the words to say and the phrases and role playing. What a difficult conversation might be, because some of these conversations can have a lot of conflict, and, you know, can be very charged. And so how do you how do you communicate with somebody in that way? What phrases should you use? How you know, what do you anticipate, what some questions might be, and how you might be respond? I do a lot of that just helping managers and leaders know how that conversation might go.

Cal Wilder: 34:26

Yeah, those were always the worst days of my career when I've had to do that, for sure, and certainly, especially the first few times I had to do it when I was younger. I'm sure I could have used some help to do it better. And then, you know, part of your role, I assume, is some businesses end up wanting to, you know, acquire other companies or sell themselves for ownership to get liquid on their investment through an M&A process. So what's the HR component of an M A process? What does that typically look like? What do people need to be worrying about?

Scott Baker: 35:06

Oh, great question Calvin. I would say that a lot of companies do not bring HR in early enough. So they just look at it from a financial or product strategy, business strategy standpoint. And oftentimes, what I find in a situation where there's been a merger or acquisition is that there's hold over employee issues or compliance issues or, you know, employee fit issues, culture issues that are not known or addressed before the acquisition or the merger. And so bringing somebody in to say, I'm thinking about this company acquiring it, or I'm thinking about selling my company, can you come in and tell me what I might need to know that might be out of out of whack, that or something that we want to address beforehand and resolve, or to support or to strengthen, whatever it might be, and and then also HR comes in after the the M and A to really make sure the integration goes well, right? Because a lot of integrations fail because of the people aspects. It's because who's the leader, who is what are job titles, who reports to, who did we have the right retention bonuses? Do we communicate it in the right way? There's a lot of things that are involved that strategically and financially, it makes perfect sense. But from a people standpoint, it failed.

Cal Wilder: 36:43

Yeah, that is very true. So in a lot of businesses HR kind of falls under the finance function, especially in this small and mid sized business space. And then finance people are not passionate about HR, right, and we've got blind spots. And so what do you see as some of the blind spots that you know, the VP of Finance or the CFO should think about if they find themselves running HR for their business. What are those areas they really know, you're supposed to know what you don't know, right, but you might not if it's a real blind spot. So what are some areas where they need to know they don't know and need to focus on or get some help with?

Scott Baker: 37:28

I work very closely with CFOs, VP of Finance. I have a business mindset, so it's very, you know, very tight bond between finance and HR, right? Because you're following headcount benefits and payroll and that sort of thing. So those are the important aspects of it. So one of the blind spots that I find in finance is it's just purely, you know, payroll might be done by finance, so that's that's fine, but it's just the blocking and tackling of HR, and it's typically when I come into organization, the finance person will tell me, I need some help, or we need some help with these particular employee challenges or organizational challenges that I'm being pulled into that you know, the finance person is being pulled into just by the fact that they do payroll, and so therefore they're the HR person, but they have no desire. They don't have a skill set or the ability to be able to, you know, get into those at the level that they need to be into them. So they look at me coming on board, almost as a relief. Thank you for taking these off my plate and helping to drive them to conclusion or implementation or whatever it might be.

Cal Wilder: 38:44

Right. So the organizational development initiatives, the training, the executive coaching, those areas, maybe the blind spots or areas of neglect.

Scott Baker: 38:57

Right. Or, Hey, listen, we've got an employee issue, or we have a leadership issue. We just need some help. I don't want to, I don't want to walk into that as a VP of Finance or CFO, can you help us?

Cal Wilder: 39:10

Right, okay. So, Scott, specific to your practice, how do you go about structuring an engagement with a client in terms of figuring out the scope of what you're doing, the time and price for what you do. You know, what does, what does that process look like, and what does it often boil down to, if there is any kind of commonality you can point to between multiple engagements?

Scott Baker: 39:36

So I start with coming into organization, just listening, so it's understanding what their needs are and where the opportunities are. So it might be that part of that might be a gap assessment, and then we identify what, what the company would like me to focus on where they need the most help. I put Excel spreadsheet together. We prioritize. We talk about, you know, what's most important to the company I provide. A status update on what it is. It can be structured anything from a project basis, like, give us, you know, take eight hours a month and help us on, you know, do this or that. Or, hey, look, we wanted you to do this project. How many hours do you think it might take? Or we'd like to have you as a retained model. We have a lot of things going on, we want to hire you one day a week, two days a week to do our HR for us. And so there's different, different ways that we can structure it that really hits the needs of the business. So that's a most so it maximizes the value for the business.

Cal Wilder: 40:37

Okay, so we've covered a lot of ground in this discussion, Scott, are there other things that you want to mention while we're talking?

Scott Baker: 40:47

What I would say to you is, if you are a business that's growing, if you're a business under with a lot of chaos to it, or a business that's shrinking, that's when you need to have strategic HR, need to have somebody come in and help guide you, especially if you're growing that foundation that you put in place in HR, in terms of titles and compensation and benefits and org structure and whatever it's the best time to do it is when you are growing. So when you do it when your 15 employees versus 50, it's it's much better. It's like building a house. And if you want to build a house or or a building, commercial building, that's 10 stories tall, you want to make sure that your foundation is solid. Because if you just build the foundation thing, it's just going to be one story, then you're gonna have to tear it down. It's gonna take you a lot of time and money to do that before you can build your 10 story building.

Cal Wilder: 41:45

HR, those decisions, yeah, those decisions you might make around, you know, giving somebody a title they want, or somebody a compensation package that helps retain them at the time, keep somebody happy at the time, might really be, you know-- you might think you're doing what you need to do to keep the business going and able to grow when you're at 15 or 20 people, but then it can come back to bite you when you're two or three times as large, and you've got all these custom deals that don't seem like they're necessarily equitable or sustainable, right?

Scott Baker: 42:18

Exactly, and they can be very difficult to unravel.

Cal Wilder: 42:25

Yeah, nobody likes a title cut or a pay cut. Well, great. This has been very informative, Scott. I really appreciate your time. I'm sure some folks gonna have some specific thoughts or questions around their own businesses. If somebody wants to reach out to you directly. What's the best way for them to get in touch with you?

Scott Baker: 42:44

The best way is on LinkedIn or just by email. And my company name is Stage3, the number three, leadership.com. So it's ScottBaker@Stage3Leadership.com or my LinkedIn is ScottBaker365 if you look that up.

Cal Wilder: 43:08

Okay, great, we'll definitely get that in the show notes. And if there's anything else you want to attach in the show notes, happy to do that. And I really appreciate your time today. Thank you, Scott.

Scott Baker: 43:19

Thank you. Calvin. Enjoyed it.

Cal Wilder: 43:22

Reference show notes and find other episodes on EmpoweringHealthyBusiness.com. If you would like to have a one-on-one discussion with me, or possibly engage SmartBooks to help with your business, you can reach me at Cal@EmpoweringHealthyBusiness.com or message me on LinkedIn where I am easy to find. Until next time, this is Empowering Healthy Business, the podcast for small business owners, signing off.me this is empowering healthy business the podcast for small business owners, signing off you.