The Financial ROI of Culture

50:50

SUMMARY KEYWORDS

people, ripple, managers, annual review, data, employees, culture, organization, damon, talking, company, person, personality traits, big, year, numbers, clients, review, business, roi

SPEAKERS

Damon Pistulka, Noah Pusey

 

Damon Pistulka  00:00

All right, everyone, welcome once again the faces of business. I am Damon Pistulka, your host, and I am excited for our guests today because we have no up Jose here today, talking about the financial ROI of culture, Noah with ripple analytics. Welcome. Welcome.

 

Noah Pusey  00:21

Thanks, Damon. It’s great to be here. Thanks for having me on your show.

 

Damon Pistulka  00:25

Man, I am excited, because as we were talking about beforehand, the very thing that you do happen to align with a client I was talking with today. So it’s gonna be awesome talking about that, it’s gonna be talking, we’re gonna talk a bit about employee engagement, feedback on on the culture work that you’re trying to do in your organization. And those dreaded annual performance reviews.

So no, let’s start back a few years. Talk about your background, you went to school, and became a lawyer, and then you ended up I want to start a company that’s helping businesses understand their employees better.

 

Noah Pusey  01:09

Tell us in a nutshell, in a nutshell, I practice law for I still practice law on the side a little bit, just keep the brain sharp. But I practice law up until about 2014, one of my best friends Derrick hedges had been diagnosed with terminal cancer stage four. And he really was looking to identify a way of, of leaving an imprint on on business, he got his MBA from Michigan, he worked at a fortune 500 company up in Boston. And so we started spitballing. And we started talking about the things people like about being employed and things people don’t like, at the time I was managing my own law firm.

He was he had a bunch of people directly reporting to him. And we had both gone through the cycle of annual reviews at the end of 2013, beginning of 2014. And so we started doing some research. And we found that most people found the annual review both both management side and labor side executives, managers, owners, and the people that come and punch the clock didn’t like the annual review, it was anxiety ridden, it wasn’t particularly productive. It was largely a compliance exercise, meaning, you know, check the box every year, you got to do it. I worked for a couple big firms out of law school.

And I readily identified with the research, we felt we arrived at meaning, you know, you get your 20 minutes a year to talk with your boss. Now, maybe that works, maybe in 1950 possibly could maybe work in 1960. But if you fast forward to 2014 at the time, and certainly now 2023. And you’re implementing a communication based process where you speak with your direct reports, 20 minutes a year of meaningful conversation.

I shouldn’t have to convince anyone that that’s a broken model, with the you know, with the influence of technology today, with the instant feedback, certainly millennials, Gen Zers get on it on a minute to minute basis. If you look at what what when we were cutting our teeth with emails right back in back in the 90s, and 2000s. Now you’ve got Instagram, you got to tick tock, you’ve got this instant message instant fulfillment society.

Well, if I’m a 51 year old manager, and I’m telling my 26 year old employees, listen, I’m going to talk to you next December about everything that happened over the last 12 months. They’re going to look like they’re gonna look at me cross-eyed. And they’re gonna say, Well, what do you mean, the human brain, and we were talking about your client in terms of the psychologists involved, the human brain only remembers things accurately for six to eight weeks.

So then again, again, you know, these these points, these factual, information, tidbits, if I tell you that your brain only really remembers things accurately for six to eight weeks. And then on the next sentence, I say, and by the way, you’re going to review your people based on the last 12 months at how do you marry those two components up?

You can’t. And so what we did is we worked with an IO psychologist, Dr. Frank shipper. I spoke with him earlier today, great guy. And we said how do we how do we make something more effective? How do we make something that is actionable provides actionable information that and ripple was born? We spit balled, we said you know, is it is it better to to do it quarterly every six months. And we found that it was it was on a monthly frequency that you really want your feedback to be shared.

And we in working with Dr. shipper, the interconnected feedback loop is what ripples all about. We’re a team based model. And everyone on your team gives and receives feedback from everybody else. So it’s not the hierarchy hierarchical approach of 1015 years ago, where the manager, you know, reviews his or her their direct reports, its I want to give information to Damon Damon wants to give information to Susan, Susan wants good information to Linda Linda wants to give information to me.

And oh, yeah, our managers also in the loop, so that the manager gets and receives and gives feedback about the people that they interact with, and that they’re managing. And what we really wanted to do the goal of ripple was to empower managers to be better, you know, you’ve heard this stat, everyone listening is heard the stat 80% of people that quit, their jobs are quitting their managers. So it’s not 5%. It’s not 7%. It’s 80%.

That’s an incredible number. So what are organizations doing to make their managers better to make their managers better managers. And so ripple offers the data ripple gives information that managers can use in making data driven decisions. And that’s, you know, we’re all about data, obviously. And if you don’t have some component of your business operations focused on data analytics, then you’re probably missing opportunities to grow and to scale.

 

Damon Pistulka  06:09

Yeah, and honestly, in our work with client work, in the analytics is where a lot of people still struggle. They have some, you know, they got the financial data yet. Yeah, people get that because they gotta balance checkbook and all that good stuff at the end of the day, or get their investor reports, right. But it the analytics around, and especially around people, culture, I mean, are we hiring the right people that blend in with us? I mean, I got, I got so many questions that we’re going to start because it’s gonna be more, or

 

Noah Pusey  06:44

are you hiring enough people with diverse experiences enough to make your teams more dynamic? You’re not Yeah, you’re not just hiring clones, you’re not just hiring, you know, one size fits all. And that’s 2023. Again, not to beat a dead horse. But in 1950, maybe you can do that in 1960, maybe, but now.

And by the way, when I say maybe you can do it, maybe you can get away with it in 1950 1960, doesn’t mean it was ever right. Yeah. You know, unfortunately, managers have learned from poor managers who’ve learned from poor managers over multiple decades, if not forever, what we’re trying to really do is disrupt that whole concept of using data to make better decisions.

And by the way, it takes away, one of the biggest concerns that employees have with the annual review is that there’s an incorporation of unintentional bias. And it’s very important, that first word is very important. It’s unintentional. It doesn’t mean you know, we’re all human beings. So we all have likes and dislikes based on stuff that have nothing to do with the day to day operations of a business.

And if we’re the same sport, we were talking about the Seattle Seahawks earlier if I was a Seahawks fan, we’d be talking a lot longer about it. I’m a football fan, so we can talk a little about it. But then if I if I review you versus reviewing Dan, and Dan doesn’t like sports, he doesn’t play sports, or what does that matter at all? If I’m running a a firm that provides a service to clients, it should not matter that Dan’s not a sports fan. And yet, unintentionally, it might. So we’re trying to remove all of that we’re trying to, or at least the very least limited.

 

Damon Pistulka  08:25

Yeah, yeah. That’s good stuff. That’s good stuff. So as as we talk about this, and you you are going. So the impetus to start ripple was really to overhaul the way that we really. And I don’t even like to use word assess people or how we’re dealing what what was the real impetus behind it all?

 

Noah Pusey  08:55

It was the time and effort it took to do something that both Derek and I knew wasn’t effective. Yeah, it was basically, what are we wasting our time and by the way you research it. If you look at some of the bigger companies in in America, Accenture, right, 200,000 plus employees in 2016, they got rid of their annual review, because the President CEO of Accenture, said, why are we doing it?

And no one could give him an answer that made any sense. And with 200,000 plus employees, you’re talking about hundreds of 1000s of people hours invested in a process. So when the President says what are we doing it for?

You can’t you know, show him a report, show him the data, show him some sort of ROI on why you’re doing this exercise that again, probably include I’d have to estimate that a company like Accenture has hundreds of people in their HR department. Yeah. You know, constantly trying to gather this information, call it together. And by the way, it’s a completely flawed system in most organizations because, you know, if you have the 360 where you’re actually getting and giving Any information from your coworkers, any any big organization is prone to encounter some form of gamification for those types of processes.

I know a person that’s been in big pharma for 20 plus years, and he shared with me when I was sharing him, what we were doing ripple is, yeah, every year, I just changed the name on my 360 report and send it in, it’s changed the data in the name. So he’s got the same description of, of how they’re interacting with that person, the same description of how that person helped them, same description of some of the critiques for seven, eight people on their team.

And, and it’s telling on two fronts. One, the person, I know the employee doesn’t really care enough to give genuine feedback to his or her co workers. But also, if he’s working at this company for 567 years, and the manager doesn’t realize that all of his 360 reports are identical except for name and date. That means the managers not looking at the reports the main that means they’re just checking the box, and they’re moving on.

So if you’re doing that, then why do it at all, Goldman Sachs got rid of their traditional annual review process, GE got rid of their traditional annual review process. And largely, the argument against the annual the traditional annual review process was, show me the ROI, show me what this does to move the needle? And when you can’t, when you can answer that question, then you either replace it with something that’s more dynamic, or you just get rid of it altogether until you find that dynamic replacement.

 

Damon Pistulka  11:31

That was a lot and it was awesome. Just out to say I’m writing feverishly here, because we’ve got a lot of questions. Sure. I’ve got a lot of questions, because that, hey, these companies obviously, didn’t just wake up one day and go up, we’re throwing this out the door because it’s too big a decision, too big decision. So and you make a great point, about the 360 reviews and the copy, paste.

And even I would come back to say even if if I’m managing and it’s the old traditional, I write a review you write it, you know, yourself review, doing the same damn thing. In a lot of cases, even you because you’re going back and look at looking at it anyway. And while you’re still need to work on that still and think

 

Noah Pusey  12:18

and think about the process. Think about because you know, when I worked for a big firm out of law school it was have you done it yet? Have you done it yet? Have you done it yet? HR emails? Have you done it yet? Have you? So finally, it’s like, you know what, I haven’t done Damien’s review, but I’m gonna get rid of it. I’m gonna get through it Friday afternoon.

Well, and I just put something on the paper, and I hit send, and HR is off my back for 11 and a half months. Yep. So the incentive is to stop getting obnoxious emails, reminder emails from HR versus the incentive of, you know, what I really liked and enjoyed working with them. And we worked on a couple of projects together, and I think he’s got this skill set. That’s great. And this skill set, that’s great. Maybe you could work on this, maybe you could work on that.

Instead of you know, just basically allowing coworkers to share anonymously, by the way ripples on anonymous platforms. Yeah, you can be thinking about that. Yeah, you can be completely upfront about how you feel. And also just just to have some productive measure for going through the exercise. And, you know, I mean, it’s like any process in in HR, not any, but a lot of the processes in HR, it’s checking the box, making sure that you’re you’re complying with what you need to comply with.

 

Damon Pistulka  13:31

Yeah, yeah. So let’s dive in a little bit into ripple. Because I tell you what I am, I am amazed. I’m not amazed. I’m very interested in the background. So you, you know, explain what ripple is a little bit. And then why you kind of do it the way you do it. And then I’ve got some questions I want to ask around that.

 

Noah Pusey  13:56

Sure. So ripple is a feedback platform that allows companies, managers, owners, executives to gather and crunch data to show where their people are stronger, where they might have some blind spots and could be in could be a strong candidate for some developmental coaching.

Ripple also identifies self awareness, self awareness, is arrived at by gathering two sets of data points, one, through your service, your self survey, so every year, you complete a 50 question self survey. And those questions are the questions that your colleagues are answering about you, but you’re answering them about yourself, and then the colleague dataset.

And when you compare those two datasets together, the closer those numbers are, we’re a one to five scale. So let’s say you’re a 4.2 and conscientiousness. That’s what you give yourself and your people, your co workers think you’re a 4.1. Then you’re you’re self aware when it comes to conscientiousness.

Why is that important? It might not be The job function or job role doesn’t require high levels of conscientiousness. However, if your job role does, then you marry up the title, the job responsibilities with those personality traits ripple gathers data along five core personality traits to call the Big Five in IO psychology, and they are the most important human human, not employee, human personality traits that we all exhibit 24/7.

And at the heart of ripple, is to make sure that Noah from nine to five, Monday through Friday, is the same Noah from 501 to 859, Monday through Sunday, meaning Am I my real self in the workplace? Yeah. Do you get upset? Do you get happy? Do you make sure you have you’ve every personality has ebbs and flows. But am I a consistent person? When it comes to who I am? Can my people expect me to be fairly level when it comes to my level various personalities.

And that doesn’t mean you have to be a five out of five for all the personality traits. In fact, it’s almost impossible. Yeah, but one of one of our personality traits is curiosity. So I always use the example of curiosity, if you have a self aware person when it comes to curiosity, and they got a high score. So let’s say it’s a four and a half. If you’re looking at a person who’s in the accounting department, probably not that important to have high levels of curiosity.

But if you’re looking to promote within your marketing team, you’re going to look at curiosity and say those are that’s an important personality trait with respect to the job function. So let’s look at the data a little deeper. So ripple is administered on a frequency of monthly, we have done quarterly, we’ve done weekly, the the last thing you want when you’re a survey analytics tool is to get to have your users encounter. That’s called survey fatigue. So we generally look at 567 people on a team tops.

So if you have 20 people on a team, you just split that into three different teams. So that when the person is completing their fifth sixth or seventh survey, they’re giving accurate, genuine information. And then it’s completely customizable. So we have those five big five personality traits. But then we also know that in various industries and various spaces, you you might have KPIs that you want to follow data along.

So we help you build out those surveys to make the language you know, effective in terms of gathering accurate information and, and working with you so that you can, you know, it’s I think you called it the performance review at one point early earlier in our discussion, possibly before we started, yeah, performance is always going to be this this concept that is very easily measured in certain capacities, right?

You have a sales team, sales team performance would appear to be easy, right? Damien sold 140%. Over gold, Noah sold 90% of gold. So he was 10%. Lower, Damon was 40% over. So if I’m a traditional manager of a sales team, I say Damien’s a better salesperson, and no one’s got issues, we got to talk to him, he’s got to get at least a goal.

That’s the whole point of having that goal, right. However, if you dig deeper, and you find out the Damon would walk over his mom to close the deal, and stab anybody in the back to close the deal, and that’s why he’s at 140. Meanwhile, Noah is a mentor to the younger salespeople, he helps his doors always open.

The clients love him, you got to look at other components. Because if you just look at the p&l, if you just look at the financials behind it, then it’s an easy decision. But maybe it’s not. And when you look at the four or five people that quit the team because they couldn’t work with Daymond anymore, then what is the net impact?

What is the ripple effect? That’s our scoring system of Damon within the organization compared to no us? And it doesn’t mean that you? It certainly does not mean having run a few businesses that there’s not importance with 140% of goal, right? Yeah. But and I’ve used this example, last couple years, look at the look at the data. And maybe if Damien’s a negative, and I don’t mean to be picking on you, obviously.

But if Damon is a negative influence or toxic, co employee, go hybrid, go remote, tell him to work from home, get him give him $500 stipend to get a co workspace, get him out of the office and go do your 140% of goal. But I’m not gonna let you influence negatively the people in our office. And that way just to get back to the whole data driven decision making, the manager can sit and tell them and listen, we obviously loved 140% of goal, great job, but you see your data.

By the way, every user of ripple sees their own data, they have access to their own dashboard. So there’s no surprise I’m sure if you have a career like me, you had those annual reviews where you’d be giving them or receiving them. And you’d have the person that sits down and they think they’re a rockstar. Meanwhile, you know, if you could fire them, you would, but you just can’t and, and they’re expecting a 10% raise and a $50,000 bonus, and you’re sitting there like, what do you?

 

Damon Pistulka  20:11

What are you gonna think? Yeah, who do you work you limited,

 

Noah Pusey  20:14

you looked at ripple and you saw your dashboard and you saw your numbers and you realize going into that, you know, annual compensation discussion, that’s, that’s the point of supplementing the annual review of real data, then that person knows that his his expectation should be muted at best. And, and it also empowers that person, to seek advisement direction, go to their manager, say, you know, I’m just not sure how to become more cooperative.

You know, we, we have a stable of consultants that we have relationships with, that when you have a person that you believe in, but they’re coming short on a couple things, you can have that that consultant come in and work with that employee, it’s a lot easier. Unless the employee has a train wreck, it’s a lot easier to help that employee progress within your organization than getting rid of that employee. Yeah. And hiring a replacement.

 

Damon Pistulka  21:10

One, especially with the difficulty in hiring over the last couple of years, it’s your competitions even worse. So this is awesome. So first of all, actionable data, I mean, this is really something that most performance reviews, annual reviews, whatever give little to know actionable data. And to have the, because I’m a big, I’m a KPI freak, right. And the one thing that you really can’t measure is how well people are fitting with an organization in a succinct KPI manner. And that is that is like to me, that’s the third leg of the stool, because you can have an organization that appears to be performing pretty well.

But you might have a lot and you do with probably and you don’t even know it, you’ve got several could be cultural terrorists in your and I call them that I know I made the other people use that word. But I do because the people that culturally wreck your organization worse than anyone else, are so good at it that you don’t even know half the time. But when you can get anonymous feedback, I got to believe you can spot that.

 

Noah Pusey  22:27

It’s interesting. The I mean, the data analytics space, so Gallup comes out with their engagement numbers every year. Yeah. And in 2022, the numbers were interesting. The numbers for engagement actually fell for the first time in a decade. So that’s concerning. Because what happens when you talk about the cultural terrorists, we’ll call them cultural, negative influencers, right? People sabotage, sabotage, yeah, Central, right. 17% of American employees are actively disengaged.

So one out of five essentially, are actively disengaged, not just disengaged, ho hum, kind of going along, not really driving themselves actively participating in being disengaged, they want to be disengaged, active disengagement, I love it. So you only have 32% of engaged employees. And that number was at 34 to 36. For the last five, six years, the first two years of COVID. It didn’t even go down, which was kind of which was kind of cool from you know, you’re either engaged or you’re not essentially, it was what the data showed, but for the first time in over a decade, the the Engage number went down.

And that should concern organizations because it’s showing that the negative, those toxic influencers, they’re having an impact. I mean, went down two points in one year from 2021 numbers. And at that, again, we’re not talking about you know, 10s of points of percentage points. We’re talking about numbers. 2%, that’s a that’s a big number.

 

Damon Pistulka  24:06

And how many total? You said it was 30? Some percent of total, we’re engaged 3232 One out of 332. But it went down to 30. No, it was 30. It will hovered between 34 and 36 for the last decade. Okay. 34 and 36. And it went down to 32. Well, that’s, that’s that’s a lot as a percentage percent drops to 10%. Drop. Right. And I grew up Yeah, exactly. Yeah. So it’s like if 10% of your employees are not engaged that were before that. That’s you, you know, just count across how many employees you got it. 1000 employees, I got 100 employees that are now not engaged that were before how big a deal is that?

 

Noah Pusey  24:46

And if this trend, if it’s trending that way, how do you stop it? Yeah. How do you stop it from being another 10% next year and another 10%? The Yeah, one of the one of the key I love, I love facts, FAS CTS I don’t particularly use faxes anymore. But and the biggest fact that I’ve used over the last couple of years is in disengagement costs American companies over $500 billion a year.

Wow. I mean, with a be it. American companies spend billions of dollars to avoid corporate theft, meaning people leaving with a ream of paper stapler, a laptop, every now and then corporate theft domestically accounts to about $21 billion in losses. So 21 billion, everyone’s got retinal scanners and Id scanners and, you know, the little turnstiles at the elevator, all that stuff. But when I show you that disengagement cost those same companies $500 billion,

 

Damon Pistulka  25:48

yeah.

 

Noah Pusey  25:49

What are you doing about it? And if you’re not doing anything about it, then stop with the retinal scan has stopped with the ID passes, because it’s a small fraction of the amount of money you’re losing to disengagement to corporate theft. For sure. And again, those are not small numbers we’re not talking about, we aren’t talking about small numbers, we’re talking about huge, organizationally impactful numbers.

 

Damon Pistulka  26:13

Yeah. Yeah. So you know, you’ve you’ve had ripple for eight years now you’ve had people that are using this for a while. So what are some of the things that you see? When When people first start when they’ve used this a while? And then when they’re mature and with the product?

 

Noah Pusey  26:33

Yeah. So we have first, it’s, it’s interesting, because we’ve had clients, not many, but we’ve had some clients that don’t like the data, that question the algorithms. Yeah, because I’ve been working with Damon for 20 years, he couldn’t certainly this data can’t be accurate. And I say to them, I don’t know Damon, I’ve never worked with him. But this is what his coworkers think about him.

This is the data that you know, and we are not, we do not promote, run ripple for a month, and then start firing people. It’s a, it’s a, it’s an organic exercise, it grows within an organization so that you can gather the data utilize the data over time, you need statistically relevant data, in order to do anything.

So the first step is gathering enough data to make sure you can take steps with those individual employees. And when when it comes to kind of the aha moments there, it’s not like you got 80% of your employees are going to shock you, you’re gonna see the data as managers, owners, executives, you’re gonna say, Oh, interesting, you know, maybe 10 15% of the time, you’ll say, Oh, I didn’t know that about No, that’s, that’s, you know, that’s good to know.

Or, I didn’t know about that about No, maybe we should consider getting him help. One of the one of the biggest things we try to instill in our, in our, in our clients is, you know, most human beings, their personality traits are largely in place by the time they’re 10 to 12 years old.

So when you’re talking to a 45 year old, or certainly a 25 year old or a 63 year old, you’re talking with somebody whose personality traits are going to have largely been developed. So when you look at his or her, or the data on, you know, consistency, that’s one of the personality traits we track. Yeah, well, if you’re just not naturally consistent, at 4563, even 32, the chances of you becoming naturally consistent are very small. However, the chances of realizing why it’s important to be consistent, even if you’re not. And the importance of a manager saying okay, no, is not consistent.

Let’s not put him in a job role that stresses consistency, consistency, or cooperation, or conscientiousness, or any of the other personality traits, so that when I know I’m not naturally curious, right? And you constantly put me in charge of redesigning the website, or Yeah, working with the marketing team or advertising. And if that stresses me out, because I know I’m not naturally curious, and now managers and the employees are armed with this information, where a manager can say, oh, you know what, I should actually talk to Susan, her curiosity.

Numbers are great. And Noah breathes a sigh of relief, because he knows they revamped the website every 18 months, and he doesn’t he knows that he’s done it the last three times. But he hates it. Yeah, I can’t tell my manager I hate it. Because that old you know, traditional approach to management is if I complain, then I’m a problem. Versus if I offer suggestions is what we really should be asking for as managers. How can I make How can I make the team better?

And that doesn’t mean the manager follows everything. It doesn’t mean the manager is required to do anything. But wouldn’t it be great if managers acted more on objective data than subjective opinions? And you know, you One of our one of our clients used ripple data with respect to a management change a few years ago, that’s what we want to see, we want to see, you know, positively changing their workplace environment based on data and decisions that rose arose out of that data.

 

Damon Pistulka  30:19

Yeah, and I got this, your, your, again, I just think you’re putting numerical data, or even just comments in and things around that’s meaningful, rather than once a year, we sat down and go, What can I remember, write it down,

 

Noah Pusey  30:40

get Jim, if nothing else, if nothing else, you know, and we do talk, we’re not big fans of the annual review for all the reasons I’ve set forth. But if you’re going to do the annual review, it will at least give the manager give that team leader information that’s been gathered throughout the year, it takes a very dynamic manager to to take notes throughout that 12 month period, accurate notes, not notes after they just got off a heated call with a client.

So those notes might be you know, influenced negatively about that. But actual, accurate genuine notes, it takes a very dynamic, very few of them do it. So at the very least, the ripple dashboard with commentary we offer commentary, users can offer to interpret the five characters of comments for each question.

But you can you can see the global last 12 months, and you can see it on your dashboard. And when you go into that meeting with your 678 people on your team, you can have a meaningful discussion, because the discussion will largely be already on on the screen. I mean, the person going into that meeting who’s looked at his or her data, and the manager who’s having that meeting with that person has looked at his or her data, it’s going to be much more meaningful and arguably, faster conversation.

 

Damon Pistulka  31:56

Yes. So you mentioned this and now now the the whole reasoning behind ripple is is because the annual reviews aren’t productive. How does it look when you’re using ripple? Because I just as you’re saying this, I’m like, Okay, now we don’t have an annual review. What do we do? What what what do using ripple? How does this work?

 

Noah Pusey  32:17

So we’ve always champion and we fully support the concept of an annual compensation discussion. The compensation discussion cannot happen every month, it would, you know, be financially reckless to even think about doing that. What we say is ripple is an annual review. It’s just done monthly. It does exactly what the annual review what the annual review is supposed to do. But it just does it monthly, so that it’s more timely, more actionable, more genuine.

So, you know, we’re not saying you shouldn’t assess your people, you’re we’re saying that you should assess your people, your people should assess your people. And and you get a bigger, you know, more meaningful picture of how everyone’s interacting and how everyone’s benefiting from that interaction. And by the way, we we know that some teams are great, and some teams aren’t. And some teams are, you know, kind of flying in the middle. It’s okay.

We’re we’re not suggesting that ripple is going to show you that 100% of your employees are great, but whatever. Great meet Yeah, because we aren’t, we aren’t accountants, I’m a lawyer. But you know, we aren’t medical practice owners, we aren’t financial service firm owners were people analytics, we are human being we you know, we know the psychology of the employees that work in an organization, the industry specific stuff, we lead to the owners of those of those businesses.

 

Damon Pistulka  33:43

Yeah, so you’re doing those reviews monthly and still a lot but that allows you to do that annual compensation conversation much more productively because it’s not like you said it’s not a surprise if you come in and and your your monthly reviews have been so so Damien’s an okay, person. Okay, overall, but not stellar to come in and expect a stellar performance review or not stellar. annual increase comparatively? If you haven’t seen that your stellar. Stellar performing in a stellar stellar fashion throughout the year. I’m trying to choose my words, because yeah,

 

Noah Pusey  34:26

I mean, I think I think what what is interesting about the component of the performance of an employee, is to get back to a point I made earlier when you’re talking about a sales team, you can at least have a even if it’s a sketch, you have a picture of what that person has meant from a financial component to the office.

When you have law firms are the same thing right law firms, the Almighty billable hour, so if I bill 2200 hours in a year and the and the requirement is 2000, I’m a rock Start, they don’t care if I’m horrible if I’m great if I like working with my co workers, if I scream at clients, all that stuff if I build 200 hours extra, because it’s a calculator exercise, right?

Yeah, for $50 An hour or 525 an hour times 200. The firm’s like, yeah, people don’t like him, but he just made us X numbers of 1000s. of dollars. Yeah, in a lot of companies, that’s not the case, a lot of companies, there aren’t those metrics that are so obvious. And so when you talk about the net impact, again, you know, our scoring system is called the ripple effect score.

Everything you do during your interaction with fellow coworkers, has an impact on those people, good, bad or otherwise. And if you understand that, and you can appreciate that, you know, how you do things is as important as what you’re doing. You know, I was, I was reading a book, Love as a business model. And it was basically saying that, and it sounds a lot, not corny, but it sounds a lot more emotional. The concept is, be nice to people. Yeah, understand that. What you do and how you do it is important.

And even if it’s something that’s tough to do, understand that that person is a human being, and they’re gonna, you know, one of the, one of the goals Derek and I had when we were mapping out ripple was, let’s try to make people’s lives better. And if they’re happier in work, if they’re more self aware about their impact in the workplace, they’re going to take it home with them. If I have a Good Friday, have a good weekend. I mean, if I have a crappy Friday, it’s probably not going to be the greatest weekend because I’m going to be thinking about why Friday didn’t go so great.

Yeah. And I firmly believe most of the people I’ve met in my professional and personal life, are want to be happy. And it’s a question of giving, providing tools that perpetuates that desire to be happy. And I mean, I say it all the time. And I’ve been on a few podcasts. So I’m sure some of the listeners maybe have heard.

Culture is not beanbags. Culture is not foosball tables. Yeah, culture is not happy hour mandatory. I love this. And maybe we’ve talked about this mandatory happy hours on Thursdays How do ya mandatory happy hour, you know, that’s not a culture, that’s those are all results of good culture. If I want to play ping pong with you after a long day’s work, that means I like you, and that, you know, we can kind of, you know, talk about the day talk about the week playing ping pong, that’s great.

But if I don’t like you, I don’t care what you have in the lunch room. I’m not I’m not playing foosball, ping pong, I’m not not doing anything. I’m running out of the door. And so what we want to do is we want to show companies to bring it full circle. And the title of our discussion, is the ROI of culture, the ROI of using data to figure out, do you have engagement?

And if you don’t, how do we? How do we engage our employees? How do we get them? How do we get them to the promised land of wanting to give, receive feedback, utilize that feedback, and make the office place a better place to work? You know that the we’re not utopia ik in thinking that people are going to skip down the sidewalk, going to work, but we are what we are driven by is providing a workplace. And you know, over the last three years, obviously, defining a workplace has become trickier and trickier.

But providing a workplace where people can enjoy what they do with people, they don’t mind being around. Yeah. And that’s, that’s culture, if you if you work with people that you want to see succeed. And, you know, Damon’s working on that project, that if I help him for a couple hours, he’ll be able to get out of here earlier. And I’m going to do that. That’s culture. And that’s what we want to do. We want to provide the information, the data to managers and owners to really appreciate whether they have that and if he don’t adopting measures to try to get there.

 

Damon Pistulka  38:58

Yeah, and with what you’re doing, you’re giving them and the people a way to see if the changes, the things they’re trying to help with are making positive effect and you’re measuring it consistently enough to know, are we doing it because you wait for a year, you wasted a year and you really don’t know if whatever we’re trying to do is helping but with what you’re saying, Say Damon Damon’s that salesperson that needs to be out, working out in the field by himself, right?

Working on islands, working on an island, great on that island, not good in the office. You make that change? You’re gonna see what that looks like in a month or two. Yep. 100% and the rest everybody else got Oh, David’s, he’s a lot nicer personnel. Oh, is that so?

 

Noah Pusey  39:45

So when David when demons in the office three days a month, instead of five days a week? People are gonna like, oh, you know, maybe there’s a different side to them. And Damon’s gonna realize, you know, maybe I’m not a nine to five in the office type of person. Yeah. Whereas some of the other data might suggest that you know, If I’m if my numbers in consistency are all over the place, right, we charted out so you can see it visually you can see the data.

Well, and I go to my manager, I say I want to work from home, my managers can say no, check out your data on consistency, you know, you’re all over the place, you know, you can’t work from home, you need the structure of coming to the office nine to five, Monday through Friday. It’s nothing personal. It’s not because our kids aren’t on the same soccer team or because I like skiing, and you don’t like skiing, or I like the Seahawks.

You don’t like the Seahawks, nothing personal look at the data. And when I say Oh, I know that managers letting Damon work from home, because that manager likes Daymond more, I looked at the data, I’m like, Okay, it’s hard to argue with the position of the manager in that situation, you know, not 93% of organizational leaders think culture is a top three item. Top three item. Yeah, 16% of those same leaders think their culture is where they want it.

So that gap is enormous. So what are you doing about it? If you know you’re not there? If you acknowledge that you’re not there, are you doing the same thing to try to get there? Because it’s not working? It’s not you know, and, and one of the most important things that we preach in terms of getting receiving and crunching the feedback is do something with it.

Because there’s nothing worse in terms of data analytics, engagement, feedback, to tell your people we care, we want to hear what you’re saying, you know, complete these surveys, let’s see the data. And then you sit on it. Yeah. And you sit on it, because all the people are like, wow, you know, they finally are asking us about what we think about our co workers, our workplace, all these things.

And then they sit and they wait, and they look for the initiatives, and they look for the solutions and nothing happens. Yeah, well, they jumped to conclusions. And then they think, well, the data must have been not that great. I worked. I was prospecting a huge international cosmetics company. And the President of domestic operations had about 20, some odd 1000 people under his watch. And I had three or four conversations with him about ripple, and he loved it.

He was retiring, unfortunately, six months after I first met him, but they had hired a big consulting firm to come in and measure their the level of their culture. And essentially, it boiled down to the following question, would you refer a friend or family member, come work at this company? Because if you do, that’s it’s a very common question in terms of trying to gauge culture, because if you do, then chances are you like where you work.

So they surveyed everybody. They surveyed the executives, and they surveyed the employees, the employees that 22 It was anonymous, supposedly, it was 22% said yes. And the executives thought that was going to be 81 or 82%. So it’s not the it’s not the fact that they are off, it’s how far they were. Yeah, the disconnect, you know, the 93% of the organization leaders, knowing that culture is one of the top three, but only 16% think that their culture is where it needs to be. What are you doing about it?

 

Damon Pistulka  43:01

Yeah. What are you doing about it? Yeah, and it’s just, it’s just, it blows me away with the cultural challenges we have. The fact blows me away, that that is that far, you know, the 90 whatever percent, top three and, and 16. Because just the difficulty in keeping or finding and retaining good employees, the, the cost of that turnover is, you know, billions of dollars, trillions, maybe on an annual basis for companies in and it is not easy to do, but it’s not that expensive or difficult to do if you really want to do it.

 

Noah Pusey  43:45

So one last stat about those organizational leaders. 69% of those leaders of those executives don’t think they invest enough in achieving culture, strong culture, and they’re organized. Yeah, yeah. So 70% You know, they’re not investing enough. And yet 93% say it’s a top three item, there’s, there’s such a disconnect when it comes to those statistics. It’s it’s it’s mind numbing to me, I should you know, ripple should be all over the place.

People should be you know, beaten down my door or and I say this unabashedly, if not ripples, something else, and it’s one of our competitors, something because if you’re doing the same thing you’ve done for the last 10 years and your culture still is misaligned. And, and one one stat I love using when I speak with business valuation geeks, cultural alignment in terms of the value of an organization.

So if you have a smaller company, or even a bigger company closely held, and you want to get your maximum sales price, your maximum valuation, if you have culturally misaligned people 50% of potential acquirers will walk away. Yep from that deal. And then another 23% will reduce the value of that business acquisition by 22%. So if you’re selling for 10 million, you’re suddenly you’re at selling for eight.

Yeah. And what what I, what, what blows me away is the millennials want it, they expect it. Gen Z wants it, they expect it. They want the feedback. They need the feedback. So it’s not like you’re I’m not I’m not going to Baby Boomers saying you’ve got to do this. You’re going as the leaders of an organization, you’re going to your younger generational workforce saying I know you want it. Here you go.

 

Damon Pistulka  45:38

Yeah. And I’ll go one better on that, too. But it’s because I think the Gen Xers and the baby boomers would have liked it all along and would love it if it’s there. But they never even knew it was a potential because they got stuck with the junk for so long. You know, it’s just this, I mean, yeah, it’s awesome. And you’re right with value, because I can tell you we have had clients in the past that the culture was not so great over the past decade.

And, and you will have people, I think it’s more even more drastic, when you come back and come if a buyer comes in, you can feel the culture, you can feel the culture. And when you feel that culture is bad, that’s enough for most of them to turn around. Yep, they’ll turn around, it’s just good, because they are investing too many millions of dollars to have, and they know the importance of people and how you can they will make or break your company, they will just walk away.

 

Noah Pusey  46:39

And the risk, right the risk of of a if you have a good company and you acquire another company and there’s there’s a toxicity to those people that you’re acquiring, whether they whether they’re voluntarily being toxic, or whether they’ve just kind of developed over the years, the the impact number, the actively disengaged numbers, engaged numbers, the numbers for active disengagement are going up and engagement is going down.

So you take the risk, as company a buying company B Company has great culture great people, I love them. I just want to expand you know, growth by acquisition, whatever your model is, and I acquire 50% of new people are toxic. Yeah, well, the impact on my great people is it’s real. And the risk of it is real. Yeah. And maybe your people went out in the end.

But what if you lose 20% of them? Yeah, 25% of them. That’s a huge thing. It’s a huge thing. And it does have I mean, the ROI is not just I want Damon to come to work and be smiling. There’s a financial reason that culture is important. And you touched on it with retention. You know, some of these companies, the attrition rates are just ridiculous, they can cripple you, because you’re, you’re hiring people. You’re not doing what your firm is supposed to be doing. You’re in the process of, of hiring replacements.

 

Damon Pistulka  47:58

Yeah, and that’s that, I think, is the is a negative consequence. But when you get the culture right, when you get the culture war, right, is the because because there’s a lot of people that know how to do things, right. And you can do things and you can do them well. But when you want to do it at an elite level, doesn’t matter what you’re doing Kobe law could be making something Kobe plan sports, the difference is not in does Damon technically know how or no one technically know how to do it?

It’s Are they really invested in doing it? The best they possibly can not just good, but the best they possibly can. And that’s what allows companies to dominate and take over markets and do things that people just go, how the hell did they do that. And it’s all these things working together.

And that culture is like a, just like a killshot. That is just so. And it’s because people are having fun. They might be they might be solving the world’s problems. And it can be hard as hell, and they were working like mad to do it. But if the culture is right, they’re really engaged in there. Everybody’s in it together. It’s a beautiful thing that you just can’t even when you’re in one of those or get him multiple times in your life.

Those are the ones that people look back over their career and they go, that was something special. And we could do special things. And whether like I said, it’s just in this culture, the negative yeah, there’s negative there. But the positive for these these owners of businesses, or the investors, whatever it is far beyond, I believe any you know, the negative effects of culture is bad and that can put you out of business, but the other way you can go is pretty dramatic as well.

 

Noah Pusey  49:50

Agreed. 100%.

 

Damon Pistulka  49:52

Yeah, good stuff. Well, no, it’s been awesome talking to you, man. I just, this is such a great conversation. And I know we had we had James James here we had a HOD has been on with us. And thanks everyone else from listening today. We know we got I can see the listeners on there. Thanks for being here. Thank you so much for sharing this. Again, we got Noah up was a with ripple analytics.

We’re talking about the financial ROI ROI of culture and if you didn’t listen this whole thing you need to rewind, go back rewatch and listen to it because you are going to be able to ditch that annual review and turn it into something that’s more actionable and more timely with your people and have a great time. Thanks for being here. No,

 

Noah Pusey  50:41

Daman. Thanks for having me.

 

Damon Pistulka  50:42

All right, man. hang out for a moment. We’ll talk but everyone else we will be back again. Thanks so much.

 

Noah Pusey  50:48

Thanks.