Dashboard: Is Pay Transparency Good for Businesses?

[Music] welcome to another 21 hats dashboard this week I'm joined by Lou mosa who runs American Management Services a consulting firm based in Orlando some of you may recall that Lou was a frequent and terrific guest on my old serious radio show mind your business welcome Lou how you doing Lauren it's been a long time it's been way too long I'm doing great it's great to be back with you uh for those listening who weren't able to join us on Sirus uh Lou tell us a little bit about American Management Services what do you guys do absolutely happy to do it so American Management Services is a uh consulting firm we're based in Orlando Florida we have employees all around the country and our focus is almost exclusively to try to help independent business owners improve what they've got whether that's grow sales whether that's improved profitability whether that's deal with succession issues transitional issues you know whatever an independent business owner might need to help make his or her life better that's where we try to step in and help folks okay I know this is an impossible question but can you in any way generalize about what it's been like for your clients the last couple of years um what have you observed during this crazy period we've been through yeah I will tell you that uh when this uh when the pandemic hit back in March April 2020 none of the clients we were working with were prepared and when when I say prepared I mean none of them had a you know like a DEFCON 5 plan to get through this so you know we've had clients fortunately thank you God we've had we had no client died during the pandemic but we've had clients that definitely had Topsy Turvy times and we had to help them in many different areas to make sure that they could continue so or that they would move forward through the pandemic and every time we think we're star move forward through the pandemic and things might see a little bit of sunshine you know it seems to get pushed backwards a little bit as you might imagine yeah I've seen that a little bit has it changed your thinking I mean the fact that nobody was was prepared with that kind of break glass in an emergency uh plan are you giving different advice now looking forward Beyond this pandemic to you know be better prepared next time something hits you know we've been always we've always been firm believer that every business should have quote unquote business plan and that sounds a little cliche is but we've always believed the business every business should have business plan and it should be part of the fabric and DNA of how the folks in that organization operate and conduct themselves but you know when crisis hits no matter what um unless you're these big companies that can you know float bonds or you know sell more stock to the public if you're typical three four five 1020 million independent business owner you don't have access to liquidity that others might have you need to have a different type of strategy so our advice before the pandemic and during the pandemic and will always be afterwards is to make sure your balance sheet is as strong as humanly possible and make sure that everybody in your organization knows the direction that we're trying to go in good times and bad times Lauren got it all right there are a few topics I've been really looking forward to Running by you um number one The Wall Street Journal ran a piece about this last week uh starting in May New York New York City is going to join several States in requiring businesses to disclose a salary range with every job they job opening they post um New York's a big place there are a lot of jobs that get posted there and I think there's some expectation that this could have a big impact around the country well beyond New York City um the goal here obviously is you know addressing uh Equity issues in in salary but it's it's something that I think a lot of businesses are going to have to think about any thoughts on this I actually um you know um you've asked me some tough stuff in the past but here's what I'll here's what I'll sh I know you do here's what I'll I'll share with you I think um I think businesses can't be transparent enough and I think that with you know this seems to be a market that we're all in lately where employees have the edge you know they just um they just seem to have the edge over employers that for an employer to want to make it a quid proquo and and be totally upfront about what you're doing I think that's only a good launching point for an employee to be consider considering you to to join and be part of your team so I actually think it's um it's actually pretty positive to me would you recommend that a business that is not yet affected by a law like this um go ahead and be transparent to begin with I mean even so far as sharing the salaries of current employees well you know you remember we chatted years ago about uh you had some folks you were working with where they were showing all of their financial results to all of their employees open book management yes right and I was never able to get my head around that and to this day I'm still not able to get my head around it but the world of other people I would imagine the world has changed so much in the last 24 months Lauren that I think that you know the federal government has people on you know ranges or grades or you know you're an E1 or you're whatever and they know that if you fall in that uh black white male female whatever you are your pay range is going to be X I don't think there's anything wrong with doing that and disclosing where people are at right now when you have competitive when you when you have people competing for jobs I don't think there's anything wrong with that interesting times do change don't they yeah some sometimes it still hurts but they do next topic uh we recently got GDP numbers for the fourth quarter of 2021 and the economy grew at a surprisingly fast 6.9% annual rate uh fastest in decades I think that surprised a lot of people uh a lot of people don't feel like we're in such a great economy there's a seems to be almost a um you know a real you know it's it's a mix people people don't know what to think I don't you're not an economist I'm not an economist and I I I don't want to try to get out of our lane but I'm curious what you're seeing with your clients are they planning on growth are they thinking that this is a strong economy how are they looking at it well I'll tell you that um I read the same thing you do and I saw you know the economy expanded by X I just think that there's still a lot of um uh right sizing from the last 18 24 months so you know I always think about the growth started from a foundation of what so 6% 5% 6.9% in the fourth quarter uh you know that's all well and good but I also think where you started matters and I think who you are matter matters so when you talk about growth for big companies like fiser and they tacked on 30 billion last year just by selling you know their fiser covid drug um what's what was the impact on the economy just on that when you compare that to you know the companies I deal with that are doing 3 million 4 million 8 million 12 million um you know I see folks and we have folks that are doing extraordinarily well expanding trying to grow have taken advantage of other people's weaknesses and then we have plenty of folks that are in significant degrees of distress that no matter what that uh they just are going to struggle to come through this because their balance sheet was so weak it's kind of tough to to to outrun your problem sometimes sure how do you advise a client to if a client's trying to decide whether to invest in the business and you know bet on growth H how do you advise them to to look at the combination of both their own results of their own business but in the context of the economy which which is more important if if one is more important let me see if I can answer it this way I have a was dealing with a business owner about three days ago and it's not a huge business he does about $2 million and he wanted to open a second location to do EX exactly what he's doing now and we talked about Staffing it the the incremental fixed costs the overhead and the opportunities in the existing facility he's got that he has not maximized and I said if you're going to listen to me for what you're paying me I wouldn't do it well I might lose an opportunity well you might but you haven't maximized the opportunity that you have today and right now you have no debt and the opportunity to expand your business where you're at by about 50% why would you take on all that other overhead so I'm very sort of anti rent more buy more tie up more Capital until you've maximized your Roi and what you can do with what you've got that's what I always loved about talking with you Lou you always brought great anecdotal examples that I think mean more than uh the generality that you that you often hear um I guess what I take away from your answer is that you were much more focused on the situation of the individual business than thinking about the economy as a whole am I right about that you know it's it's interesting because um I saw on squawkbox a few weeks ago some guy got on and he said um you know people don't worry about inflation they worry about do they have enough money to buy groceries they don't say you know it's because of inflation I can't pay it they say what's in my pocket what did I get paid so when I think about it from an individual business owner's perspective is your balance sheet strong enough for you to take a risk in semi Uncharted Territory and if the answer to that is anything other than a resounding yes don't do it now I know business owners are risk-takers by Nature Lauren that's how they got to be where they're at they started they had a dream they did something even the owner of my company started with $42,000 and a car with a car door that he couldn't get in and out of it's a long time ago but he had a dream and he was going to go after it and that's what he did so I get it owners are independent business owners are Risk Takers but boy oh boy you know if if the FED starts raising rates like everyone predicts that cost of money is going to keep going up do you really want to saddle yourself with overhead on something that's not a sure bet I don't know I'd be a little hesitant fair enough all right next topic um back to the uh the labor shortage situation the great resignation last week Fortune reported on a survey of American employees that found almost 60% of them have a resignation letter already written ready to file um now this was a survey of 2,000 office work office workers I don't think it in any way suggests that more than half of the workers in America have a resignation letter already written but it does kind of suggest that the great resignation may not be be over yet any thoughts on that well first of all I don't know if that article was in Fortune but I know it was in the morning report thank you Lou you're welcome Lauren so you know when I read that article uh in the morning report it went through my mind that it's almost it's it's almost offensive that so many folks would have a res resignation letter already drafted and sitting in their draw it really was disturbing to me on the flip side I don't know who the poll was I think it was 2,000 B 2,000 people I don't know if they were pulled from Fortune companies you know Fortune 1000 companies independent companies I don't know where they were pulled from I would I I think it lean corporate so I I thought that was true also but I would bet you if there was a similar poll of Independent Business owners and their employees guys doing you know five six seven million bucks or less I would bet you more of those employees are loyal to the environment that they're in because they have a relationship with that owner on the on the Flip Flip Flip Side I think it's ownership's responsibility to create an environment where employees don't even want to consider being anywhere else and in today's day and age that revolves flexibility listening and creating opportunities which aren't always easy in today's day and age Lauren have you seen seen a real difference in the way your clients are approaching this issue um I mean there's no question I don't know about your clients but uh a lot of business owners have discovered that um what used to work doesn't work anymore and it's not just uh about what they pay there are a lot of things that employees are looking for and are able to demand now that they couldn't just a year or two ago um what are you seeing from your clients on on this front I think it's it's um sort of insanity we've had uh clients that uh key person just walks in and says next Friday is my last day out of absolute nowhere and in part it's because their families frightened over the pandemic and part it's because other people have left and started calling them in part it's because they just don't know what next month and next year is going to be in part it's because some of them got sick and they worried about their own health and their own future um so we've seen people walk out and what we try to do is we don't want you to throw money at people to stay we want you to create an environment where they want to stay and that's a little bit of a cultural phenomena for it's hard to change that on a dime well it's totally hard to change it on a dime and if you weren't working about it 10 years ago we're not going to put it in effect next month you know it's it's you know to change of culture takes time to do so and I'll give you an example and this is one thing we find in every client across the board no matter what state we're in they all moan and complain that they can't find Talent they can't hire they can't find quality people and almost none of them to a to an owner has a full-time dedicated recruiting effort what they do is what they used to do they put a posting up on Career Builders or or Monster or hot jobs whatever these things are out there I don't know what they are and they just told people come in and we learned the hard way years ago that doesn't work anymore and that we learned that before the pandemic well during the pandemic it's even 10 times worse so when I ask an owner how many people do you have dedicated strictly to recruiting and they look at you sideways and how many people go to job fairs and how many people are going to the trade schools and the high schools and how many people are going to the veterans outplacement facilities and how many people are going to and they just go oh my God oh my God my god well oh my God it's not going to help you you have to help you and that means you have to change how you do things and a lot of them don't want them you said that you figured this out at American Management Services before the pandemic what did you try that was effective for you to find the employees you were looking for I will tell you that um if you did a rewind and went back to five or six years ago if we posted a job in the Orlando Sentinel uh we would get 20 30 40 50 60 people in our lobby on a Monday morning if we posted it on a weekend for any position our lobby was bedum every Monday morning and as that changed over time and we started advertising more on you know digital on the internet you know it got a little tighter so we expanded how we do things and we've gone to Veterans groups and we've gone to you know book club meetings and we've gone to book club meetings I haven't heard that one before well we'll go we'll go to anything where there's adults or anything where there's going to be potential adults and talk to them because in my world one person can can be so instrumental he or she can generate millions of dollars a year for us is it a book are they talking about a book that involves running a business or any book club will do who it doesn't matter it doesn't matter you know you get KES that want to work 4 hours a day or every other day or something and things we wouldn't consider doing 5 six s eight years ago there's nothing off the table today that's really interesting has to be that way or everybody's going to leave you in the dust what do you think changed you you said that you used to just be able to put an ad in the Orlando Sentinel and there'd be bedum uh in your lobby what happened that changed that initially I think that to some degree Lauren you get um you as the employer get a little stale in your Marketplace so you know we moved to Orlando we we moved the company from uh right outside of Boston to Orlando in part in 2002 and then probably completely by 2005 or six something like that and you know so we were sort of like new guys in Orlando for 5 six seven eight years so whatever we posted did you know people didn't know us Orlando is sort of like the number two or three capital for time share in the world so you know we were the new guy on the Block it wasn't like you going to work in time share and over time you're just not so new anymore so we had to find new ways to communicate with people and trust me it's not easy we went from getting three or 4,000 applicants a week down to 2,000 applicants a week but we didn't go to 20 we didn't go to 20 but we work at it a lot harder than we used Stu interesting well Lou just as in the old days I could talk to you all day but unfortunately we are out of time I really appreciate you're uh taking this time to to talk this stuff through with me listen I've always um I've always respected and admired what you do whether it was back in the old magazine days to what you're doing today which I love and I encourage all my folks to sign on and and and read your your 21 hats report every morning I think it is a great quick synopsis and you you remember where to mail me my check right you you earned it today Lou thank you so much for that Lou mosa is COO of American Management Services thank you Lou and have a great week everyone you'll be well my friend you too