Finding the right people can be a challenge at every level, in any industry. One way to handle it? Create more entry level jobs that allow people to grow and develop into the leaders you need. Joaquin Lippincott, CEO of Metal Toad, joins us to discuss how he approaches job creation and career development at his company. He talks Metal Toad’s approach to entry level positions, career development programs, how people within the organization have grown their careers, and many other topics.
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Brandon Laws: Hey. Welcome back for another episode of the Human Resources for Small Business podcast. I am your host, as always, Brandon Laws. Hey, today, our guest is Joaquin Lippincott. He is the CEO of Metal Toad and in this episode, Joaquin gives us some insight into a lot of the people practices in his business and in the overall tech industry.
We dive into topics such as hiring entry level jobs and how to career path them, developing employees, wages and benefits. We touch on wage compression, how that’s an issue sometimes. We talk about his culture and so much more. I just want to say I appreciated how open and authentic Joaquin was in this episode. I really think you’re going to enjoy getting kind of a fresh inside look at Metal Toad and what they’re doing from a people practices standpoint. I really hope you enjoy this episode because I know I did.
Brandon: Hey, Joaquin. It’s great to have you on the podcast. Welcome.
Joaquin: Thank you. It’s good to be here.
Brandon: So talk about your business a little bit. What types of employees are you often hiring in your business? Because I think the listeners will be interested to hear what your experience has been like in your industry.
Joaquin: Yeah. So the best way to summarize what we do is probably to describe us as a digital transformation agency. That sounds like a mouthful. But what we’re doing is we’re helping companies become more digital. That may be web-based. It may be cloud servers. It may be really just even doing technology selections for other things, for internal processes or ERPs.
So in terms of the employees we hire, they are broadly tech employees. But their areas of expertise vary from very specific expertise around certain technologies or it could be somebody who’s a project manager. It could be somebody who’s a QA person and then we have folks that are involved in finance and operations.
So it does run the gamut. We’re about 50 people, so we do have quite a few folks that are doing non-technical jobs in support of our tech folks. But our offering for our customers, the reason they come to us, is expertise around technology.
Brandon: Because the positions vary greatly – I’m sure levels of experience and just technical expertise – it varies greatly position to position. Have you had challenges finding really experienced and technical people with very specific roles, in terms of trying to recruit them and bringing them into your organization?
Joaquin: Yeah, yeah. And I think part of that is because we have high standards and because we are a values-driven organization. That is to say, we have come to understand that it’s not enough for people to have the technical expertise – that area of technology or specific experience around project management or what have you – but really being aligned with company values is critically important.
So we will pass on people that might be able to fulfill all the obligations of the job if they’re not aligned with the culture. So that certainly does add a wrinkle. That said, we invest a lot in our employees and try to create a really amazing environment to work in. We have a great reputation in the community as a place to work, but that certainly is a flywheel and that reputation has been developed over time and we have really created a better and better environment and we’re not done. Of course we’re going to continue on that.
Brandon: When you bring people in to your organization, do you find that – especially those technical positions – that they’re often very expensive? That a lot of these people are looking for a high wage, that maybe you’re not able to match? So then it becomes an alignment of culture and values and hoping that they more align with your values and they’re willing to take less pay. How does that work in the tech industry?
Joaquin: I think there is a quantifiable number for having a great culture. We have a lot of benefits. But it’s not just the benefits. People like working with great people. They like working in places where they’re going to feel like they have autonomy. They like working places where they know that they’re making a difference.
So from our perspective, there are certainly people that are out of our range – you know, salaries is one of those places where it’s like that. That does need to be aligned. But in general, I think that if we were a larger faceless corporation, we would have to pay higher salaries than we do because people understand that there is a cost to investing in growth and in autonomy.
So it does affect our bottom line. It does affect what we can pay. But it also creates an environment where it is safe to take chances. And we encourage people to pursue things that they’re interested in that maybe they need to develop some skills in.
So yes, I would say in general, tech workers are expensive, especially when you compare them to other industries. But a lot of that really allows us to create that latitude because we’re not ultra-focused on margins and we’re not working with minimum wage employees or a product that is 99 cents. That would be really tough.
So the sure answer is yes, they’re expensive. But there’s also a lot of give and take there and people that are attracted to work at our company are actually looking for growth and development more than maximizing their salary today.
Brandon: I’m sure those people that are really expensive are the ones that later on in their careers are very experienced senior level people. But what’s the balance of you bringing in those types of people versus maybe junior developers or junior tech-focused people and just really growing them? What’s the ratio or balance that you have in your organization?
Joaquin: Well, you would be surprised. To say that it is only the junior folks who are interested in growth – that’s not where people are at. There are a number of people who are quite experienced, but they’re feeling stuck where they’re at. So they may be continuing in their jobs but may be working on say technologies that they’re feeling are end of life or dead end.
There’s plenty of money to be made there. But in terms of a trajectory, it often makes sense to invest in growth and in particular in technologies. You now, somebody with 10 years of experience today, if they’re not constantly looking for what is the new technology, they’re going to be on technologies that are 10 years old.
So I don’t think it’s so much a junior versus senior issue as much as it is a mindset around being a – to borrow a phrase – a constant learner, a student forever. Those are the people that are really attracted to the Metal Toad culture and frankly, Metal Toad is attracted to those people because that’s core in our values. Curiosity is one of our dearest values.
Brandon: That’s an interesting distinction because I think most people think like it’s about a level of experience, and that you’re going to bring in somebody with a certain level of experience. But you’re thinking, OK, let’s bring in people who are just really growth mindset-oriented because that’s what our culture is all about.
We’re going to give them an opportunity to continue to grow – it doesn’t matter where they’re at in the life cycle of their career. If they come in at a senior level, they’re still going to grow, they’re still going to be challenged, still going to grow.
How do you make sure that you’re always giving them opportunities to be challenged, regardless of what level they’re at?
Joaquin: Career pathing is incredibly important. You know, providing opportunities for mentoring other people is incredibly important. Creating opportunities for people to move into – and invest in their managerial skills is also part and parcel.
We also have a development fund in terms of a career development fund. So people have money that is given to them, that they have latitude to invest really anywhere. And that might be conferences, that might be online tutorials, and what have you. But they have the autonomy to basically spend that money in places where they are interested in growing.
So all of those investments in terms of building that infrastructure I think is incredibly important. And then just talking to people about what their goals are. There are people who have really great experience and are masters of a particular facet of a technology. But you get into a place where maybe they want to work on their managerial skills or maybe they want to pivot to another technology. So it’s important to have a culture that supports people. Being able to take those chances, well not even taking chances, but rather having people who are constant learners and people who are really interested in investing in themselves, they’re going to succeed. But it takes time and it takes a culture that is supportive of that.
Brandon: Absolutely. I love that idea of giving people a bucket of money to spend on development because they’re going to really own it. I think that’s probably what you’ve experienced.
Joaquin: I had an experience like that too.
Brandon: Yeah. Well, do you mind disclosing how much you allow people to spend on their development?
Joaquin: You know, I would tell you if I knew and that sounds a little strange being the CEO of a company. But that is really our Director of Employee Experience. She’s the one who manages that with our Director of Finance. What I’ve done is I’ve set overarching goals in terms of what the margin of the company should be and those expenditures then fit within that overall margin and it really is their latitude not only to figure out what that budget per employee is, but also the nuance of, “Do you give it to everybody all at once? Staggered?” So I actually don’t know the answers to that.
Brandon: That’s OK.
Joaquin: But that – I guess that’s also hopefully a testimony to the autonomy that does exist in our business and that the people who are responsible for really creating an amazing employee experience are the ones who are empowered to make that decision. And the folks who are in charge of being the stewards of our margin and making sure that everything comes together and we have something that works out in the end of the day in terms of profit and revenue, that is what they focus on.
Brandon: Yeah. I know if I was on the receiving end of something like that where my CEO is giving me a bucket of money to spend on development, I’m taking ownership of it, right? I’m going to use that money wisely and I’m going to try to work with my manager to probably develop goals around like, “OK. What’s actually needed for later success in the role?” versus like – you know, I think some people would probably just use that money and say, “OK, I’m going to spend it over here.” But maybe that’s not necessarily tied to what the business needs.
How do you balance that? Do you have employees who work with the managers to set goals around development? Or is it truly that the employees just spend it however they want?
Joaquin: You know, we hire people that make good decisions and it’s important to work on that trust. Certainly if somebody was spending it in an inappropriate way, that would be something that would provoke a conversation. But we are not proponents of creating a culture that manages to the lowest common denominator.
Brandon: Yeah.
Joaquin: Just because one person would abuse it and the rest of the people are doing amazing things with that, what do you do? Do you put in a process that says nobody is allowed to have this autonomy? Everything needs to be approved?
For a lot of companies, the answer is yes, that’s exactly what you do. You prevent the leakage. But that’s not the way that we operate. And I don’t think that is the way that you get to autonomy and trust. And unfortunately, that is something that larger corporations have often fallen victim to. I don’t think that’s necessarily an aspect of being larger. We plan on growing until we are a large corporation. However, maintaining that core and maintaining that autonomy and continuing to hire people that are going to manage those things appropriately, that’s incredibly important. Rome wasn’t built in a day and yet it’s so easy to erode that trust. All it takes is one CEO coming in and saying, “OK. Everybody, nobody gets this freedom,” and that can be crushing to employees.
For example, another aspect of things. We have a foosball table and we have a standup arcade and we have a kegerator in the office, right? Should people be drinking beer at 9:00 AM on a weekday? Probably not, right? That kind of goes without saying. Should people be getting their work done and not spending all their time on a standup arcade or a foosball table? You know, absolutely. But if you trust your employees to act like adults and you hire people who act like adults, then that’s OK. It’s not that the kegerator or the foosball table or the standup arcade is the culture. And I think a lot of companies make that mistake.
They think like, oh, all we have to do is get a foosball table and then it’s fun. But it’s a matter of, “Do companies create an environment where employees feel safe enough to actually go and play foosball in the middle of the day?” and all I would have to do is walk through the halls and shake my head and let those folks see that I am judging them. I guarantee that foosball table would be vacant, right?
I’ve been through companies where they give me the tour and I see the Ping-Pong table and it’s covered in dust. They’ve got it but they’re not creating that environment where people feel safe to do that kind of thing.
Frankly, as the CEO of the company, what matters more? That somebody is playing foosball or that they’re getting their job done? If, for whatever reason, we’ve got an environment where we’re hitting all of our numbers in terms of revenue and profit, and somebody can play foosball 40 hours a week, then great! They’re getting it done and we need to be paying attention not to the – what should be a mom-and-pop metric of “butts in seats” – but actual productivity.
You know, really it’s incumbent on the rest of the company to make sure that we’ve got the revenue. We’ve got the projects that are really engaging people and they’re making good use of their time. But it’s not the foosball table and it’s not people playing on the foosball table that is going to hurt your margin and I think that’s a small gain for people who play operations in that way.
Brandon: I love that distinction because if, for one, you’re trusting your people, “go play foosball if you want to, go have a beer during the work day if you want,” because the results do end up speaking for themselves. Over time, the results will show and if they’re poor results, I’m sure employees will have to make an adjustment and that could mean leaving the company and that’s just not a good fit. But I’m sure people will make quick adjustments based on whether they got great results or they are lacking.
Have you really seen people make adjustments based on that, on work habits?
Joaquin: Oh, yeah, yeah. And there are times when we have more work and there are times when we have less work, right? But I think that people probably play games more when they’re working hard and really driving because they’re going to be there for a while. So they’re taking care of what they need to take care of. They’re blowing off steam and that’s OK.
It’s one of those things where you’ve got to be looking at metrics that are actually aligned with the business interest and telling somebody to sit in their seat. Whether that’s spoken or not is going to result in people sitting in their seats, right?
Brandon: Yeah.
Joaquin: So that’s not necessarily going to involve them doing more work. They might be surfing the web or doing something else. But it’s better not to be doing that surreptitiously. One of the other things that we encourage along that same mindset of growth is I want people to be updating their LinkedIn profile when they are adding a new great brand name client.
I mean, why shouldn’t they, right? Why should it be a strange thing for somebody to continue to develop their personal and professional brand? I don’t see why that needs to be something that is incongruent with – that does not mean that somebody is not aligned with the company that they’re at. They can just be proud of their work and be wanting to develop how people are perceiving them online.
One of the things we found, I’ve actually had recruiters come up to me and it’s a little bit of an awkward conversation from their standpoint, but they’ve come up and they found out that I work at Metal Toad and I’m the CEO.
Then they come over and they say, “What are you guys doing over there?” and I say, “Well, what do you mean?” And they say, “Well, this is a little awkward. But I’ve tried recruiting like 10 of your people and they won’t even return my calls.”
And they’re like, you know, people always at least take my call, but your employees don’t do that. And I say, “Well, we encourage people to be updating their LinkedIn profile and really making themselves known as leaders in the industry. And when you do that, people don’t take the calls because they’re just tired of getting them. And they don’t need to take the calls because they know they’re going to get another one next week and the week after.
When you allow people to build their personal and professional brand, one, it’s good for the individual and it’s just ethically the right thing to do. But it’s also good for the company because people know that the company is staffed not by people who are not leaders in the industry, but by people that they would want to hire. And that’s great for recruiting. It’s great for companies that we’re working with, knowing that they’re really dealing with amazing individuals and so I don’t think those things are incongruent. I think that it’s important to build the company where people don’t leave not because they’re afraid, but because they know that there’s always more opportunity around the bend. And frankly, that’s where people do depart.
We are a growth company because the people that we’re attracting are growth individuals. So our company is basically in a foot race with the most talented employees that we have, to grow our business fast enough that we’re providing those employees a better platform. But it’s also a matter of making sure that we’re growing or those employees are going to go elsewhere because they need the opportunity.
Brandon: I’m so glad you brought up the personal brand because I talk about this on the podcast quite a bit and actually internally at Xenium, I try to talk about it a lot. Like hey, look, we are this overarching brand and we have a bunch of smart, capable people. Let’s highlight each of those people, humanize the brand a lot more and our clients want to connect with us. They want to know that there’s a real person on the other side of that.
I don’t think it can hurt the business and I think as an individual, they’re going to be more excited about the work that they’re doing because they get to showcase it online. Everything is so interconnected with technology now and social media. It can’t hurt. It can’t hurt and I’m glad that you opened up the doors for your employees to do that.
Joaquin: Yeah. Well, in the short term, it might if you’ve been – if a company has been sort of stifling that type of growth, I would imagine there would probably be a few people that would get out there and there might be a small exodus. But ultimately, those are people that aren’t happy with where they’re at.
If you have people that aren’t happy, it’s much better to empower them and get them into a place where they are happy and they’re performing both for themselves, but also for your company. Because once you do that, you open up a spot where somebody can come in and really come in because they’re passionate not just about the work, but about the opportunity that exists at the company.
I think that blogging is a critical part of building both a company brand and also the personal and professional brand. So I really do encourage all of our employees to blog and that’s a tough one. You know, it’s one of those things where a lot of people say they want to be thought leaders. But when it comes to, “Are they going to blog or are they going to write another line of code or are they going to close another ticket?” they’re going to opt towards the things that they do and that they’re comfortable with just because it’s comfortable. And blogging, if you’ve never done it before, it’s hard and it takes a lot of time and you want to build this masterpiece of a blog that everybody is doing to love. I tell everybody the most important part of blogging is pushing the publish button and pushing it as often as you can.
I don’t care if it’s a paragraph, the first one you publish. If you publish a series of blogs, one blog a day for a month, those could be terrible quality blogs, but that would be so much better than thinking and thinking and thinking and writing for a month to create one blog because it’s that act of publishing that really gets you to a level of comfort.
Frankly, I always challenge people that are worried about how they’re going to be judged on the internet. I say, “Well, you’ve read my first blog, right?” They’re like, “Well, no.” I’m like, “Exactly.” I can tell you exactly what it was. It was on paper prototypes and then it’s like – it has nothing to do with anything that I do today and nobody ever reads it. But it’s out there. What people don’t understand is that it might be one in a hundred that catches fire and maybe not even that.
So you can publish on the internet worry-free, right? And I’m talking not letting anything be a blocker. Grammar, word choice, topic. Because it’s also going to take a while and not just a while, but it’s going to take many, many blog posts before you will find your personal and professional brand and your voice, and there’s no substitute to just doing it.
Brandon: How are you getting your employees to do this? Is it just like practice what you preach and lead by example or are you really actually talking to them about, “Hey, you should be blogging or you should be doing video,” or doing something just so they can bring out that human element to the work that they’re doing externally?
Joaquin: Well, yeah. It’s a combination of those things, right? Because when you talk about it in abstract and you say, “Hey, everybody should be blogging more,” I don’t think you’re going to get one person saying, “No, I don’t think I should be blogging,” but the devil really is in the details and really to get people blogging that haven’t blogged before, you have to gamify it.
We’ve done things in the past where we’ve created like the Blog Thunder Dome. You know, we’re – that actually makes no sense if you’ve actually seen Mad Max because you’re not doing a head to head blogging contest. But basically everybody’s name was written down and nobody got off the list and they couldn’t cross off their name until they had actually published a blog post.
So it was this combination of peer pressure and timing because you had a certain window to get across the finish line. Those things – those frameworks where it’s like ‘you have to do this’ and it’s just a requirement, and here’s the ticking clock, and here’s your name for everybody to see.
That is sometimes the level that you need to go to, to actually get folks past that point of inertia. But then people start building it and certain employees are better about continuing that. But I think that you do need to go a step beyond. You can’t just say, “Everyone has permission to blog and I want everybody to blog,” because they’re all going to say, “Great!” and then they’re going to continue doing their day to day work.
Brandon: Exactly. They’re probably going to be like, “Well, I’m busy. I don’t have time for this,” because maybe they don’t see the value in it necessarily or maybe they understand what the value could be. But it takes time, to your point. It’s hard.
Joaquin: No, no, no. It’s hard. It’s like saying everybody now has permission to learn a musical instrument. How many people are actually going to do that? I imagine almost everybody in the world has some musical instrument that they would love to play and even if work said, “You now have time to learn a musical instrument,” people would say, “Wow, that’s great. Love being here, love that they have support for learning to play a musical instrument,” and probably 10 percent would actually take that time. Because it’s hard.
Brandon: I imagine, just based on our discussion, that you’ve built quite a culture. People probably don’t leave, do they? What’s the tenure like at your company?
Joaquin: You know, it’s not as good as Xenium because you guys are amazing. It’s like 20-year tenure.
Brandon: Yeah, yeah. A lot of people are in the 10 to 20-year range. Actually, this month will be nine for me.
Joaquin: Yeah, that’s amazing. No. I mean our industry is drastically different. You have technologies changing all the time and frankly as a growth company, we grow and there are things that change with growth and specializations that need to occur and swim lanes that crop up that didn’t exist before.
So our tenure certainly has gotten better over time. Our longest employee has been with us for about eight and a half years. You know, a little bit more. He’s rounding nice years. Our VP of Technology has been with us for six and a half years. But those are certainly the outliers and then we have folks that are four-year veterans. Our leadership team is relatively new. Most of the folks there – we have some people who have been with us for three years. But some are like a year and a half, two years.
But it’s one of those things where, for our industry, I would say it’s pretty darn good and for a company that’s growing and changing as radically as we are, it’s pretty darn good. The other piece of that is really making it OK for people to depart. Anytime we lose somebody because there’s a misalignment – we’re transitioning to a different technology or we’re transitioning to something else. That’s OK. It’s OK for people to want something different in their career. We’ve had employees who have left and come back.
Brandon: That’s when you know you have a good culture.
Joaquin: Yeah, yeah. It’s the concept of a boomerang employee – it’s pretty interesting. It’s one of those things though where also every time that there’s an employee that leaves, that’s a little note for us in the leadership to say, “OK. Well, why did that happen? If it was because they’re looking to develop their career and the opportunity wasn’t at Metal Toad?” That’s a miss for us, right? Because again, we’re in that foot race to create the opportunities for the most talented folks at Metal Toad.
So it certainly happens. But as a company, we should be learning from those departures and we really do try to, as much as possible, make the departures really good. When people leave at their own accord, we throw a little party. We give them a parting gift. We refer to people who have worked at Metal Toad as “alumni,” not “ex-employees”.
I think that culturally, we see when we do our extracurricular activities – I mean we had a pumpkin carving contest. There are a number of former employees who come for the extracurricular activities. And that’s a really good sign, I think, of a company culture that’s healthy, and frankly amazing people, right?
If you’ve got people coming back – and we do. We see alumni around the office quite a bit. Some of them have started consulting gigs, and they consult for us. But those great relationships, I think, are also really, really important.
Brandon: Yeah. I think that’s a great strategy because you know people talk when they leave. And if you don’t leave them with that great impression of like maybe wanting to come back and allowing them to do so, you know they’re going to rip you apart to their friends and family and then that word just travels. So I think you’re taking the absolute right approach just by making sure that the exit goes well and if they come back, they come back. That’s great.
Joaquin: Yeah.
Brandon: So you mentioned – like at Xenium, we have people that have been here 20, 15 – you know, 10 years. In the tech industry, it’s a little different, right? You have people that probably jump year to year, and it’s very ultracompetitive, and people want more money. Do you ever hire people like at an entry-level job and then really grow them up to senior level folks? Because we have that in our industry quite a bit, in professional services. It’s probably a little easier for us to do that. In your industry, are you doing that?
Joaquin: Oh, yeah, absolutely. Case in point, our VP of Technology, he started as developer and he had experience externally being a consultant, running your own business, which I think is really important. We do have also some standards in terms of – you know, when people are moving into let’s say a Vice President role, we like them to be cross-trained across a number of departments.
So our department heads are directors. That’s the level. We have a managerial group underneath that. So for the manager, the key thing is to really be moving into a space where they’re comfortable managing people, and developing those career relationships, and really investing in their direct reports as a service provider, right? They are there to get the people who are working “for them,” they should be serving them and bringing them value. And those people should be excited about their weekly one-on-ones that they have with their boss. That’s a dimension.
And then when you get into the director level role, it’s about really owning a department and really bringing a lot of mastery and great experience to a department, whether that department is Finance or HR or Cloud or Client Services or Project Management. All of those things are really important. They should be not only managing people, but managing managers, and also really bringing best practices to their area of expertise.
Then when somebody is moving into the Vice President role – and we have at least one person from the director track that is on track for this – they need to pivot away from their area of expertise, that department, and cross-train across other departments. Because, really, the vice presidential role is about interconnectivity between departments. Because that department head is going to really be focused on let’s say finance, or creative, or whatever those things are.
It is in the bridging of those different departments and managing that interconnectivity and that interconnection. That’s really what the Vice Presidents do at our company. Ultimately, I would love to see a career path where an intern can become the CEO of the company, right? And yet – you know, just to set the bar, I’ve been doing this for 18 years professionally. I started Metal Toad 14 years ago.
So that’s the bar currently, right? You know, they want to put in 18 years? Then heck, yeah! They should be able to be the CEO of Metal Toad today. As we continue to grow and as the company continues to evolve, maybe that bar changes. Ultimately maybe I get outperformed by the company and I’m no longer qualified to be the CEO. This is certainly possible. And I think that’s a really important inflection point – I’m both an owner and the CEO. Those are different roles and as the company grows, there is going to be some need for diversification and ownership and there’s going to be a higher and higher bar for what is required of the CEO of the company.
So I need to be working on perfecting my game – getting business, coaching and developing my skillset. I can tell you, if you go back even just three, four years, I was a very different person professionally. I look back at that and I sort of shake my head at all of the bad decisions or bad leadership that I brought to bear. And yet, Metal Toad is a company supportive of my growth, as well.
So it’s a different world. It’s sometimes hard for people to fathom how rapidly we are iterating and growing and changing. But frankly, that’s one of the things that’s so exciting. And as far as how that dovetails with our industry – man, this industry has changed dramatically, over just the past year or past couple of years.
So it’s really exciting. That’s one of the things that gets me out of bed every morning and that I have always loved about working in this industry, is all of the change. And for us, and for the people that are working at our company, that’s really exciting.
For some people, it’s not the right fit. It would be maddening to have to revisit your skills every six months or every year. But I think I would be bored if it weren’t that way.
Brandon: I’m glad you brought up the fact that your industry is just so rapidly changing and I really wanted to ask you one thing about wages, in general.
Joaquin: Yeah.
Brandon: So when you have somebody that has maybe grown up through the company and then you – let’s say you have one person that has grown up through the company. They’ve been there for a while. They’re in like a development type role and now you have to hire the same position, but externally. Have you ever run across wage compression issues just because your industry is so rapidly changing, just in terms of technology, wages, all those things because it’s ultra-competitive? What have you experienced?
Joaquin: Oh, yeah. Well, just to kind of put it in perspective, for programmers, we’ve seen a 40 percent increase in salary over the past four years.
Brandon: Wow, wow.
Joaquin: That is dramatic. So one of the things that, as we’ve evolved, has been really, really critical to getting to a place where, you know, ethically, we’re doing the right thing, is creating brackets for wages. That’s one of the things that our Director of Employee Experience has done, and it’s critically important. It’s critically important for making sure that you don’t have people who were hired early on, and have developed their skills here, and are sort of languishing because they’re not going out there and not interviewing. It’s critical, so you don’t bring somebody in and pay them a drastically higher wage.
So that can be a sticking point. But if you have brackets and you say this is the low end and this is the high end. The other thing that this also really ensures is that we’re taking the danger of gender bias out of there.
Brandon: Yeah.
Joaquin: You know, women may not advocate for salaries as much as men. I’m going to go out there on a limb and make some broad, sweeping generalizations. Men tend to overestimate their skills and women tend to underestimate them. So what you end up with is women not asking for the wage increase and men asking for the wage increase, and if you operate in a company where you simply respond to what people are asking for, you end up with inequity.
As a plug for Xenium, we have really leaned into Xenium heavily for those salary reviews to help inform what those brackets are for us. That’s not a one-and-it’s-done when you’ve got that kind of wage growth. I have seen in the Portland market – I think there’s a tapering off. There was a huge burst of outside investment from San Francisco and Seattle, and that has dwindled. There has been a reduction in the amount of tech startups in Portland, in part because I think there was a mismatch in culture for people coming in from Silicon Valley. They were thinking once they hit six-figure salaries, they basically owned the people’s soul. And yet the great thing about Portland is people move here because they want work-life balance, right?
They’re tired of an 80-hour grind of just trying to get it done and the rat race that you may find in some of the larger metros. I happen to think that it’s OK to have work-life balance. You can have some incredibly productive work where you’re working 40 hours a week or 50 hours or week or what have you.
For me, my experience in terms of working, it’s not a matter of number of hours worked, but there are – I could have a week where I work 35 hours and I hate it and I can have a week where I work 55 hours and I love it. So it’s important for me that we’re getting to a place where people are loving what they do and yet they’re also getting home to see their family, their spouses, their children, their pets. But it’s one of those things where it has been an interesting dynamic in particular over the past five years, watching that rapid wage increase, and now a little bit of a crash or a hangover, which certainly is OK from an employer standpoint. But whatever the market will bear, we’re going to keep pace with that.
Brandon: Hey, what’s nice is that you mentioned you’re going to keep looking at it on a regular basis because it will change. You mentioned tapering off. What is that going to do? Is it going to mean a lack of supply of talent? Is it going to mean maybe wages just kind of stay steady for a little bit? What impact is it going to have on the way you go to business?
Joaquin: Well, the market is going to tell me that. I wish I could decide that, so that we could sort of fix what we’re charging and fix what we’re paying, and to have a guaranteed margin. I think importantly, big picture for us, our goal is to get to a 15 percent margin. On some quarters, good quarters, that’s going to be higher than that. On some quarters, it’s going to be less. I think that anything more than that, and you’re in danger of being in a bubble where you’re going to see more and more competition coming in.
Brandon: Yeah.
Joaquin: Any less than that, and you’re in danger of going out of business because you’re not going to have the cash reserves when things do go down, to be able to weather those storms. Unfortunately, as a service provider, we often get stuck in sort of this – as wages grow, you’ve got to pay that. And then as the clients are saying, “Whoa, this thing is getting very expensive,” you get pushback from the other side.
So, we have to be very conscious of making sure that that margin is in place and we’re not getting to a place of a spending binge or a hiring binge. And I think that from a hiring standpoint, we’re always on the lookout for new talent. But it also helps us make sure that we’re not hiring people willy-nilly. We’re hiring people that are going to be a great cultural fit, that are going to over-deliver, that are interested in work-life balance, not just maximizing salary or compensation.
You know, and from the other side, making sure that we’re really not going towards the lowest common denominator in terms of the customers that we’re bringing on. But we’re bringing on projects that are our team is excited about. Again, making sure that if that’s the value, if you’re going to have people coming onboard, you need great employees. But you also need great customers. And not every customer is going to be a great customer.
Some of those things do have to align with those values. And I tell our customers when they are sort of figuring out, “Are we the right vendor? Are we the right fit for them?” I will tell them that if all they’re looking for is fingers on keyboards, they can find much cheaper fingers on keyboards. What we provide as our value is the right lines of code being written and a collaboration where we can really sort out not just what they might need and what they think they need, but really help get them to a place where we vet things and get them to what they do need.
Brandon: I think that’s well-said. I love your philosophy on business and culture and all that and I think I’m better for having had this discussion. But I know our listeners are going to be better for this because I don’t know if a lot of business people have this sort of philosophy of taking care of your people and hiring for culture first. And I think you guys are going to do some great things in the next few years and beyond.
So I appreciate your time, Joaquin. This has been a great discussion. Anything else you want to say about what you’re doing? Yeah.
Joaquin: Yeah, the one thing that I will also say – and this is, I think, critically important for our industry is not just looking at a business as a standalone unit, but looking at our role in the larger ecosystem. And I think that’s actually where tech is, in many, many cases, getting it wrong.
I think that it’s critically important for tech companies to not “hire” the best and in doing that, hire people with ten years of experience and then isolate them; but look at what are the entry level positions that we can create within our company that’s going to allow and foster mentorship between that next generation? Because right now, if you have 10 years of experience, you’ve got a job. In fact, you’ve got 6 job offers that you could pull the trigger on at any point. And yet, you look down the talent pipeline and look at people that have zero to one year worth of experience and there are almost no opportunities.
Brandon: Yeah.
Joaquin: That I think in large part, and sort of the perpetuation of only hiring senior talent, is really what we’ve seen in terms of the dramatic climb in salary. And what that does in an environment and in a community, when those salaries are drastically out of alignment with what the community is making, is one, you’re starving those incumbent workers and keeping them out of this real growth industry. But you are also perpetuating this ivory tower where everything is great there. You’ve got tons of money. You can throw it around. You can buy whatever home you want at whatever price. And yet, that has a really negative impact on the surrounding community.
So to that end, I have started a non-profit. There’s a Portland chapter. There’s a Los Angeles chapter. The focus really is getting employers together and looking at how you can create entry level opportunities, what that curriculum looks like, what that model looks like in terms of compensation, sort of getting people past that prejudice of thinking that the people who are programmers are somehow these differentiated individuals. Because the difference between a programmer with 10 years of experience and a programmer of zero years of experience, it’s 10 years’ worth of experience, right? It’s that simple.
But if we don’t provide the opportunity to somebody at the very start of their career, they will never have the opportunity to move into that amazing career. So it’s really, really important that our pipeline at the beginning of somebody’s career is the same size as we want to see workers in two years, five years, seven years, ten years. Because there’s no other way it’s going to happen.
Brandon: Do you find that, as an owner/CEO, you have a hard time justifying adding the expense for an entry level position? I sort of know the answer for you, because you have this philosophy around it. But I think most employers probably look at it like, “We just can’t afford one extra person.” But that’s an opportunity for a fresh perspective, somebody with zero experience who can grow, right?
Joaquin: Well, I would put it like this. Yes, people at the start of their career are really just a cost center. But being a high level programmer is a lot like being a doctor in terms of a professional service person. You do need an education, but also, it’s critically important that you’re practicing. So you can imagine what the medical field would actually look like if we had no interns. Can you imagine that? If people graduated from medical school and we said, “OK, go out and be a doctor and call me when you have 10 years’ worth of experience,” I mean what does open heart surgery look like for somebody with zero years’ worth of experience, right?
That’s the same sort of challenge. In medicine they’ve obviously recognized, “Well, shoot. We need to educate the next generation. But medicine has – what? You know, a 300, 400-year head start. They figured this out over time. But I’m sure that there was a point at which they had this existential crisis and people who were doctors were aging out and they had to figure out how to replenish that pool.
Interns in medicine, I’m sure, are purely a cost center. And yet, in the programming arena, we need to get to that same place where it holds the same level. It is an existential crisis because right now, the majority of programmers – let’s say they’re in their 30s and 40s, right? Play that out for 10 years. OK, forties and fifties. Play that out another 10 years. You know, play that out another 10 years.
People are going to retire. And then what? You know, we have to address it now and the market demand is not going away. It’s just growing and growing and growing. So it’s critically important that we get ahead of it and we start figuring out how we can invest in people for our pipeline, from the company standpoint.
It’s the stop-gap against wages that get to a place where only Facebook and Google are viable places to actually be a programmer. And for the workers that are out there, anyone can learn to program, right? It’s just like literacy. It’s hard. It takes time, but anyone can do it.
Getting to a place where we can integrate incumbent workers and people who might not otherwise have an opportunity to move into this field because there is no other way. And from a diversity standpoint, there is no way that we get away from this young, white male bias to a place where we have people throughout the ecosystem that are people of color and women, unless we create those entry level opportunities. Anything else, hiring diversity from somewhere else, that’s a zero sum game.
Brandon: It probably even starts before that too, like in schools, right? Where you get diverse people, different cultures, programming and in the tech space because otherwise, I think you are at risk of just hiring the same type of person and again, putting pressure on those wages long term. I think that’s the big issue.
Joaquin: Yeah, not just at risk. But you are absolutely going to do that. There’s no other way around it. People don’t pop out as programmers. And frankly, the bar in the industry of self-education, we can do so much better and we have to do so much better.
Brandon: Well-said. When are you getting into politics, Joaquin?
Joaquin: Oh, goodness. Not until my kids are grown and out of the house.
Brandon: I love it because you’ve got a really fresh perspective on economics. You really understand it. So yeah, keep up the good work. This is good stuff.
Joaquin: All right. Excellent. Thank you, Brandon.
Brandon: Thanks for being part of the podcast, Joaquin.
Joaquin: My pleasure.