During a panel discussion at the Leadership and Economic Summit on November 4, 2015 in Portland, Oregon, three business leaders discuss some of the unique ways they are attracting and retaining talent for their business, given the tight labor market for talent. The panelists discuss the topics of recruiting and finding talent, hiring for culture fit, and offering unique benefits tailored to each individual. The panelists also discuss employer-sponsored group health benefits and whether or not they see this way of delivering health insurance to employees changing in the future.

The panel was moderated by Rick Thomas of Pilot Wealth Management. The panelists included Angela Dowling, President of Regence Blue Cross BlueShield of Oregon, Mark Hellweg, Founder of Clive Coffee and Bill Huseby, Founder of SigmaDesign.

 
Run Time: 29:09

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Rick: Let’s pull on this talent issue that you brought up, Angela. If your experience is anything like what I’m certainly seeing among our client base, be they business owners or part of a business, it’s an incredibly tight labor market for recruiting skilled talent. It’s interesting, if I look at the conversations that have happened over the last few Summits we’ve had, that’s been consistent. And when I look at the data that John shows, it says we’re going to somewhere in the mid 2% range. And from his perspective, you know. I hope it’s better, and I think, gosh, what are we going to do if it gets any faster growth? How are we going to find people? How are you guys wrestling with that, or are you wrestling with that talent piece for your organizations?
Bill: At SigmaDesign, I like to use the term that I just want to get the right people on the bus. That’s what I focus on—just making sure that we have processes for finding the right people. And the right people, in our mind, are what I call “Three C, Plus C.” So there’s actually four C’s now:
Competence—I don’t care if the person’s a production worker, a shipping clerk, front desk, engineer, model maker, manager. They have to be competent in what they do. They also have to have a curiosity. They have to know what’s going on around them. Take their head out, if they’re working on code, what’s the code do? What’s the machine do? And then Confidence. I want people that say, “Yeah, I can do that. I can get that done.” The third is Culture. At SigmaDesign, we value the culture of the company tremendously. We’ve got values that we live by.
Those are what we focus on. Finding people to come in and interview for those isn’t too tough. But finding people that fit those is extremely tough. Our whole hiring process is designed with two mistakes that can be made. One’s acceptable and one’s not. The mistake that is not acceptable is hiring a person that doesn’t fit those four C’s. We, at times, don’t hire people that we should’ve. And that’s the mistake I’m willing to live with, but we can’t hire people who don’t fit. We find lots of people, but finding the people who fit that criteria is tough.
Rick: Have you had to change your recruiting methods to get the right people that fit that profile in today’s labor market?
Bill: Yeah, we created a recruiting method. We didn’t have one before. About two years ago we realized that we were going to have lots of growth and every time we went to hire somebody—and two years ago, by the way, we had probably about 70 people, 80 people. We’re 140 now. And every time we went to hire somebody we’d all sit around, the management team sitting around going, Geez, what do we do?! Where should we place an ad? Who doesn’t have a job that we know? And we realized, well, wait a minute, I want to hire people that have jobs, because those people are good. I also want to hire and be a part of the solution and grow and make jobs.
So we hired a recruiter internally after looking at all the different ways of doing it. When you hire the right person to do a job, it’s amazing what happens. I realized very quickly that I didn’t have a process for approving acquisitions, because every department was just hiring people. I went Whoa, stop! Let’s think about this. So that was a big deal. I hired someone who was a recruiter.
Rick: So, for an organization of your size, 140 people, you have a full time recruiter?
Bill: Yes.
Rick: Is that something you would’ve considered you’d had to have done even a couple of years ago?
Bill: Oh no. There’s a lot of things I didn’t consider a couple of years ago.
Rick: Angela, how about you? How about Regence? Obviously a large organization, lots of employees, how do you keep ahead of that curve?
Angela: The talent curve and retirement? Well, Mark and I were talking about this over breakfast, and it’s interesting. We’re a 97 year old company. We’ve been around a long time and we’re really moving into a space where we have to be incredibly nimble and agile. The health insurance industry has been relatively unchanged since 1964 up until about 2010 when healthcare reform was passed. At that point, everything went into hyper drive, because we had to really be very responsive to what the federal government was implementing, and then each state had its own regulations, and we’re in four states. We were told with 2 weeks’ notice Oh you can keep your plan/No you can’t keep your plan. And I know some of you were told that too. So, internally, we had to double-map products; in other words, build them and get them built in the system. Take them off, put them on, take them off, put them back on. That’s a culture we didn’t have to embrace in 1990, in 2000, in 2005. Healthcare reform really wasn’t there and it was a very consistent market space.
So what we’ve had to do now is realize that the talent we recruit today has to look different. It has to feel different than the talent we’ve had. It doesn’t mean that we don’t keep our existing talent, we have to bring them forward and implement some new skillsets and ways of thinking. But really, how do we fail fast? If it’s not going to work, then find a different way to get it done. I’m proud to say that we’ve learned to be very nimble and quick, but that’s a whole new talent set that has to come in where you’re running down oneLeadership & Economic Summit-28 path and all of a sudden, oh wait, the law changed and this just happened with the PACE legislation, but don’t get me started. We had to flip over to a whole new platform, so we’ve just learned to be very nimble in the moment, and that is not something we have historically looked for, that fast reactionary employee who can switch gears and be comfortable with change, and change that is wildly disruptive on so many levels.
Bill mentioned “curiosity.” We are really looking for that employee who is curious, who understands end-to-end a lot more than maybe what we’ve historically looked for, because the decision you make today as an employee is going to impact 6, 7, 10 other areas of the organization, and then you as our customer. So how do we make sure that the decisions we’ve made today through all of that process and all of those legal requirements are appropriate and that we communicated appropriately and got it out to the market? Well, to be honest with you, it’s really hard to find the talent that can do all of those things. We have a recruiter too, thank goodness, and we use that team heavily because finding that talent is challenging. But John mentioned some statistics around unemployment or employment rates based upon education level, and we’re definitely finding that those people with Master’s and in that market space are in high demand and definitely in demand in the market space and are harder to recruit for obvious reasons.
Rick: Yeah. And just for clarification, in case some people don’t know, you mentioned some legislation, PACE legislation. Briefly, what was that?
Angela: Briefly, for employers that have between 51 and 100 employees, the legislation as of January [2015], those employers were going to be pulled into the small group rating pool. In other words, you had to migrate your existing plan, health plan, whatever that may be, to a bronze, silver, or gold plan. And your rate structure was not going to be based upon your demographics but rather based on the pool. That’s a simplistic way of looking at it. Which would have created tremendous challenge for that market space. It would’ve increased about 40% of those employers would get a 20% or more increase in their overall cost, just because they were being consolidated into another pool. I’m happy to say that in all four states that we’re in, including Oregon, that was likely delayed for several years.
Rick: Thank you. Mark, back to the recruiting. Are you currently continuing to add employees? And I’m curious, you’re not a startup anymore, there is a critical mass to the business, but building that and dealing with this in Portland as manufacturing now and wrestling with the livability factor for employees within the metro area, how do you deal with that? Does that impact your business?
Mark: It’s very important for us to be very agile in our plans, because so many things end up changing. The org chart I have today is not what I would have told you even six months ago what my org chart would be now. So, we have to be very agile, but the advantage that I have when I’m hiring people is that I can offer them an environment where they have a big impact on the success of the company. I hired one gentleman who was working in the food service industry and he was a motorcycle mechanic as a hobbyist. I hired him at $14.00 an hour earlier this year, and he just got promoted, now he’s $55,000 a year salaried. There’s a quick onramp he can make into a salary and he can now probably buy a house. Not close-in, but it’s getting toward a livable wage.
We put up an ad for an assembly position and we got probably 400 resumes to go through. The one I hired, the cover letter started with the sentence, “I am definitely not the person you have in mind for this position, but please consider me.” She’s a 62-year-old woman and she’s doing assembly work for us. She can’t carry the heaviest boxes, her hands tremble when she does some of the work, but she is so devoted and such a sweetheart.
I like having that kind of culture where we find good people and they don’t fit into a narrow box of what you might expect for an assembly position.
Rick: Sure. So would you say your ability to kind of morph and change that quickly, does that allow you to consider and attract people that you perhaps wouldn’t otherwise be able to?
Mark: Yeah, it does. One of my key guys, my right-hand guy, he actually came from Danner Boots and I stepped up and made him a salary offer that he accepted 18 months ago. He has been totally critical to our success of launching the coffeemaker. What do you know, they’re coming back and trying to poach him with a higher salary offer. So now I’m in discussion with him about an equity grant. I have to be scrappy and play ball to retain talent like that.
Rick: Sure. It’s interesting that you mention that, because among our client base you’re not the only small business that is having to get very creative around retaining key employees. And equity or some form of equity is one of the places they’re going to. In your experience, is that the only lever you have to work with? Is that the big bat, so to speak?
Mark: Well, he tells me that one of the reasons he’s there is because culture really matters. Like you were saying, Bill, culture is hugely important. And we take the time to cultivate our employees and to have quality moments as a company where we’re gathering together as a team. So it’s more than just cash or equity, it’s the whole package. But I think to be the next Danner Boots, if I want to be like Danner Boots in however many years, the decisions I’m making now on the team are critical. So cash and equity, that’s the lever I’ve found so far that’s worked.
Rick: Thank you. Yeah, go ahead Bill.
Bill: The whole retention thing is kind of interesting, you mentioned equity or cash. I’ve found that you really need to find what floats that person’s boat. A few years ago I provided equity to a couple of key employees and it meant absolutely nothing—Who cares? What’s this mean? It’s not worth anything. I have a service company of 12 people, and it was useless. I just changed some of the benefits for the better for the employees and I got about 5 or 10 emails saying, “Oh my lord, thank you! This is wonderful!” And Leadership & Economic Summit-20other people go, “Whatever. Doesn’t matter.”
I hand out SCOR cards, it’s a gift certificate any employee can hand to any employee. Some people are thrilled, they got a $40 gift certificate to hopefully a company that’s still in business. They usually always take the Amazon card, by the way. It’s called a SCOR card, a Sigma Card Of Recognition.
Anyway, you’ve got to really figure out what matters to this person. Sometimes it’s a bonus. Other people, they just want $0.50 an hour more—that’s all that matters, that’s it. Other people, it’s the Friday barbecues. It really is each individual and when you get to 140 there’s a lot of each individuals that you have to consider.
Rick: Thank you, Bill. Let’s talk about benefits. And I’m curious, because, Angela, with your perspective and seeing various employers, what are employers doing with benefits to try to retain and attract people? How much leverage do they really have with that?
Angela: When the employment market tightens, as we’re seeing and some of the statistics demonstrate, what employees look for is, obviously they look for compensation and culture. But very quickly they fall right to benefits. What is the benefit, what’s the health plan, what’s the 401(k) plan, what’s the vacation schedule, so on and so forth. They really quickly fall to that because they’re making that comparison, right? This study’s been done time and time again, it’s always salary and direct compensation, then the indirect compensation relative to benefits. They make that comparison very quickly. As Bill said, some employees, it’s all around the health plan because they touch it. They or someone in their family touches the healthcare system either frequently, at least yearly – we all should be getting our wellness exams, by the way. So you should at least touch the system once a year. And so it has tremendous meaning. As the employment market tightens, that gets higher scrutiny relative to recruiting talent. How much do I have to pay, what is the benefit, do I have a health savings account or a health reimbursement account, those kinds of things really play heavily into that process. And as I talk to our customers, some of which are small to mid-size, very large, 20,000 employee groups, it’s a very strong theme right now in all of them, relative to how they’re interacting with their employee base, what they value.
I agree with Bill completely—every employee is different relative to what they value. Some of them want a higher deductible and they want to put some money into a health savings account. They’re 55 years old and they want to double down in that and know that they need to save some money for when they retire. Others really need some type of chronic care and therefore really need to have that benefit program. So employers are investing more heavily in their benefits program. Through the recession the thought was that people would drop coverage and in 2012 when the public exchange went live that employers would drop coverage and allow their employees to go into that free market. We found that actually very few employers did make that move. Almost all of them continued with their employee benefits plan, even through that recession era.Leadership & Economic Summit-29
So there’s an interesting dynamic now that we’re ramping back up and the economy’s getting better, although moderate, the investment in benefits has really continued and I think will continue because it is an attraction and retention tool. It really is.
Rick: So I’m curious to examine one aspect of that, which seems, in my opinion—I’ll offer an opinion here—that John offered some questions around mobility. And certainly, I heard more of this during the recession that the reason people were staying at the jobs they had was because of benefits.
Angela: Yes.
Rick: And at some point, businesses became the delivery vehicle for health benefits, unlike many other forms of insurance. I mean, in your opinion, is there a better way to deliver this, other than through the business?
Angela: You actually have a lot of choice right now, frankly, as a consumer. You can go to the public exchange and there are, I believe, don’t quote me on this, but 14 different options on the public exchange, and open enrollment’s beginning. And then you have options off the exchange and you have subsidy eligibility on the exchange. If you’re 400% at poverty level or below, part of your premium gets paid. By the way, that’s $45,000 a year, give or take. Or the employer’s offering benefits.
For the general consumer, if you’re in the employment space and you’re actively employed, the expectation, still, in the United States is that benefits is delivered via the employer. That may change over time, and it’ll be interesting to see as the economy shifts and the exchanges become more functional whether that continues to really be the case. When there’s a tight labor market, the employees are looking for that via their employer. It’s still expensive if you’re over 400% of poverty level and you go to the exchange. It’s expensive. It’s not inexpensive. We were talking about that earlier, the cost of going to the public market space.
Employees are still looking to their employers to deliver that. And frankly, the relationship between the employer and the employee is incredibly intimate. Think about what Bill was talking about relative to culture. Think about what Mark was talking about relative to his employees and how he was engaging with them. It’s a very intimate relationship, and the trust bond there is incredibly strong, especially here in the United States. And as a result of that, employees really do look to their employers because their employers they trust. For the most part they really truly do trust you as an employer to make some of those decisions for them. And so that’s why I think that relationship is going to continue in terms of delivering benefits, whether it’s a pension. Benefits is broad based, I’m not just talking about insurance, but it’s pretty broad based.
Rick: I’m curious, and to your point, it’s changing, but it’s probably pretty slow change. As business owners, Mark and Bill, if you knew that the employee could get equal benefits whether they got them through the business or could get them outside the business, as a business owner and having to deal with all the things you had to deal with as a business owner—competitive challenges and all the other stuff—is that something you would prefer to continue to do or if they could it elsewhere, that would be fine and not have to deal with the whole benefit delivery?
Bill: I think it’s too intimate a thing. I can’t imagine saying, Hey, go off and do your own thing. I can’t imagine that. I offer full medical, full dental, to every employee. And then they can bring in family, and we try to offset some of that cost if they decide to get a little less coverage. That’s a gimme to me. With all the concern about healthcare going on and Leadership & Economic Summit-34Oh my god the rules are changing! Bill what are you going to do? I go, wait a minute. I offer it to everybody. I pay for it. Isn’t that the right thing to do? So that’s what I do. I don’t think about it too much, actually. There’s a lot of people thinking about it in the company, but when they come up to me and say What do we do, Bill? I say, What’s right for the employee? Because that’s the only thing I have in the company. Our employees. I’ve got buildings and machinery and computers and software and all that kind of stuff. But that’s not what runs the company, that’s not what makes SigmaDesign successful. It’s the people. So let’s treat them right.
Rick: Mark, how do you wrestle with that?
Mark: So, for me, the most important thing that I would love to have in that consideration is flexibility. Because, as both of you were saying, each employee has a different set of needs. My preference would be a system where there was a flexible way where I could make that determination for each employee based on what they needed, and it would be a tax deferred or some sort of clear way where I could offer a benefit without being told exactly how I should be doing that. And there’s ambiguity about that right now. In fact, one of my employees, I was trying to set it up where I could give him a bonus for him to pay a part of his insurance he already gets through his wife’s insurance from her employer. And there’s ambiguity with that from the IRS about whether it’s allowed to do that. So for now I’m just giving him a bonus that he pays full taxes on at the bonus rate. So I don’t have an ideal situation right now where I have flexibility with each employee to work that out. But as Bill was saying, it’s very important for me to be able to take care of my employees. I’m just a small, young company, and so I need flexibility before I make a commitment.