Brad Johnson: Welcome back to another episode of Do Business. Do Life. Excited to have Tom Healy here with us today. Welcome to the show, Tom.
Tom Healy: Great to be here.
Brad Johnson: Well, today, we’re going to get into something that I know a lot of advisors, especially as you start to have some success, can become a frustration if not done right, and that’s just how do you grow, how do you scale the team and not do it without all the chaos that’s sometimes involved along the way. So, I know you’ve got quite the history dealing with people, dealing with culture, dealing with HR. And you’ve done it at a very high level, written five books, worked with the US Navy, worked with Harvard Medical School, and so I’m really excited to learn some of the lessons that you’ve seen from some of the organizations. You’ve really helped scale the right way.
So, if you were to just kick it off and say, what are some themes that you tend to see when it kind of goes from a small business where it’s like one guy, one girl, kind of a solo entrepreneur, the solo founder? As they start to reap those inflection points of scale, kind of as they truly start to step into small business owner, what are some of the things that start to get in the way there?
Tom Healy: Yeah. There’s a lot as you can imagine. First few things that come to mind, first of all is really being crystal clear on who you want on your team. So, the solo practitioner gets really busy and they go, geez, I need someone to do administrative work. I need someone to be another producer. I need someone to work with my C and D clients. And you go out and you find a warm body.
It is so important to really be crystal clear on exactly what you need, not just, oh, I need an office manager. Oh, I need a producer. But who specifically do you need? How are they raised? How are they hardwired? What’s their work ethic? What are their personal and professional values? What’s their experience? Not just what’s on a resume. What have they really done? Have you vetted them? Have you asked them the tough questions? Have you been crystal clear what your expectations are? And we could go on and on.
But the point is that, as you can probably imagine, Brad, rarely does that happen. So, as we scale and we reach that point where we do need to bring people on, we’re in such a race to scale and to grow that we don’t take our time, slow down to really get specific on who we’re looking for, and then vet those people. And think about it, Brad, so you’re in a rush because you really need someone to help you grow the business. Typically, what I find is people hear what they want to hear.
So, I’m interviewing you. And hey, you’re this hot shot young producer, and I can start kicking some of my C and D clients to you and I can start putting you on some of those discovery calls of people that I probably don’t want to work with because they’re not worth my time. I’m hearing what I want to hear. I’m ignoring what I don’t want to know. I’m throwing you into that role, and then I’m shocked that it didn’t work out. Well, it didn’t work out because I didn’t ask you the tough questions. That wasn’t crystal clear on what I wanted. So, that’s an important part.
The other thing I’ll say is really being able to transfer knowledge. So, again, same scenario. I’m now growing. I’m hiring my first person. I’m hiring my first few people. Well, how do we do things around here? Does it matter? Do we treat our clients a certain way? Do we answer the phone a certain way? Do we go through a discovery process a certain way? Do we do an annual review a certain way? Are there processes? Are there procedures? Is there a culture? Is there a way of treating people? And the answer probably is yes.
Now, how well have we communicated that to the person? Meaning have we really brought them up to speed? And so, often I see, okay, well, I need someone to be an office manager, and this person has been an office manager for 20 years. So, clearly, I can just put them into that role. Well, maybe they were an office manager in a practice that you have no respect for, treats their clients horribly, and they’re bringing all of those practices and processes over to your business. Well, you’re not going to be very happy with how they perform.
So, there’s a lot there. And I get it, like, as an entrepreneur, we want to move fast, we want to grow, go, go, go. One of the things I’ve been trying to work on so far this year is just slowing down a bit, and we can move fast, but it’s like if it’s a key hire, if it’s the first hire, if it’s the first revenue producer you’re bringing into your practice, let’s slow down to make sure we get this right.
Brad Johnson: Yeah. Well, there’s a lot there, Tom. And I was thinking as you were sharing that, because by the way, a lot of those mistakes you just talked about, Triad made a lot of those. I mean, we’re five years old now. We’ve scaled from 0 to 100 team members. And we did a lot of that wrong. I mean, I remember an early hire, no job description. Very talented individual. But very talented individuals who are not sure what they should do on the daily, it just doesn’t work. And I see that theme continue over and over and over with a lot of the very successful financial advisors out there. Is it possible to do it right without messing it up? I feel like you almost have to mess it up and feel some pain, so then you’re like, okay, I’ve got to do it differently now. Have you ever seen businesses just get it?
Tom Healy: So, it’s such a great question because of my belief on this, and I don’t know if I’m right or not, but I’ll just say in my personal experience, it is very hard to learn something without it being experiential. Meaning you can read all the books you want on entrepreneurship and recruiting and hiring the right people and building culture. You can read books and listen to podcasts till you’re blue in the face. But then guess what? Typically, the entrepreneurs I know, myself included, still make that mistake. We still make that higher. We still don’t ask the tough questions. We still don’t figure out if they’re a strong alignment to culture.
So, I do believe that in so many cases, we have to have our heart broken. We have to learn the tough lesson because it happens to us. We have to screw up closing a few times to figure out how to be better closer. We have to get our teeth knocked in a few times before we learn those sales lessons, those business development lessons, those client maintenance lessons, whatever they might be. That being said, I think I’ll ask myself the next question, which is, well, Tom, if we don’t want to fail to learn, what do we do?
And I believe in small businesses, it’s so important to outsource. Outsource everything. Outsource hiring, outsource bookkeeping, outsource marketing, outsource coaching and mentorship. Find experts in these areas. And so often, I’ll pick on older people a little bit and say that I think there’s a little bit of an old school mentality of, Brad, I need someone in my business to do something. That means I have to hire someone full-time W2 and that means that I need to see that person’s butt in their seat outside my window. And if I can’t see it and they’re not full-time, then how do I trust that that work’s going to get done?
Well, as you know, between the gig economy, the fractional economy, there are so many incredible people out there that you can leverage to do these things. Now, when you get to 100, when you get to 150, should you bring some of these disciplines in-house? Absolutely. But if I had a 10-person firm or a 25-person firm, I wouldn’t be trying to hire because part of the issue is, you say, okay, well based on our revenue with a 10-employee practice, we can really only afford to pay a marketing person $50,000 a year.
Well, you know what you get for $50,000? You get a $50,000 person. And there’s nothing wrong with those people. But when you’re saying, I need you to operate as a chief marketing officer, I need you to be the head of marketing for my firm. Our leads, our growth is going to depend on you. Oh, but we’re small. We can only afford to pay this position $50,000.
Well, you’re not getting a CMO. You’re getting a marketing coordinator. Well, they need to coordinate stuff, but they don’t know what to coordinate. So, why not just take $4,000 a month, find a fractional marketing expert, and have them just kick butt for you? And oh, by the way, find someone that’s very familiar with working with financial advising practices or working with small service businesses in your community, but find someone that can really leverage their talents to help you out.
But that’s another big mistake that I see is we have to hire. And typically, we can’t afford to pay for the talent we want or those people aren’t available. So, outsource, outsource, outsource all of this stuff.
Brad Johnson: It took me back to year one of Triad. Bookkeeping, outsourced. Legal, outsourced. HR, outsourced. And number one, like had we hired them in-house, we wouldn’t have even known how to write their job description, hold them accountable to the job they were supposed to do because we’re like, we’re a startup. We are just figuring out how does this structure need to work. So, I think you know…
Tom Healy: And remember, and here, I want to make a really important point here because, so you’re exactly right. So, you hire that marketing person, you hire that HR person, and because of what you’re paying them, they’re coming in, going where’s my job description? Where’s my role and responsibilities? Where’s all the SOPs on how to do this? What software do you use? And you’re looking at them going, you figure it out. That’s what I hired you to do.
Well, here’s where the disconnect is, you hired someone to implement, you didn’t hire an entrepreneur that already had done this at a high level. And so, that’s where this breaks so often in small businesses is the leader, the owner of the organization, they’re hiring someone to do something, but the person they’re hiring has never done that before. They’ve operated within a structure, they’ve done what was already built, but you’re asking someone to come in and build your HR infrastructure from scratch, your marketing infrastructure from scratch. They don’t know how to do that.
So, what you did was smart. You said, just give me someone that already does this. You tell me what software to use. You tell me what our processes are. And I don’t want to think about this. I just want to cut you a check every month to manage this for me. And then eventually, we may get to a point, and I’m sure you did, where you said, okay, time to bring this in-house. Time to hire a COO. Time to hire some managers to handle this stuff. But they were coming in, operating on a winning system as opposed to creating something from scratch.
Brad Johnson: Yeah. Kind of the tipping point was, you look at outsourced HR. Typically and obviously, this is your world, not mine, but it’s almost like a cost per headcount thing, right? It’s like, okay, if these team members, it’s this monthly cost to facilitate the HR services per team member. Well, number one, to your point, when you start, not a lot of revenue coming in, so it’s a smaller cost, a fractional cost. But as your team grows, there is a tipping point where it’s like, wait, it’s time to bring this in-house. We can actually hire the professional we need to build this thing out internally. And all you have to do is kind of look at that P&L.
And when that tipping point starts to hit, okay, time to actually take this from outsource to in-house. And that’s kind of what we did on each of those roles as we grew to where we finally had a team with divisions. And it’s not that simple, but the concept high level makes a lot of sense.
Tom Healy: No, but I was going to say, there’s typically headcounts to this, right? And I always like to use the analogy of you’re playing a different sport, right? So, when you get to 10, you’re playing a different sport. When you get to 50, you’re playing a different sport. When you get to 100, you’re playing a– I mean, there’s these tipping points dependent on industry. I’m probably not too off on those numbers in your industry, but yeah, you get to 50 plus, hey, let’s start looking at bringing someone in full-time to do some of these things.
Brad Johnson: Yeah. Well, I want to run something by you. I heard this one time as a startup and it wasn’t that long ago, five years that there were five of us when we kind of opened the door is November 1st of 2020. And I heard it said, those early hires, if you think about them, almost like co-founders. So, that early, the first 5 or 10, because if you think about it, it’s myself and a co-founder here, Shawn, so there were two of us. But that team of five, that’s kind of what it was like. There was the two co-founders and then there were the three team members next to us as we got this thing off the ground.
And those early hires are so important just because you are kind of doing everything. It’s like all-team meetings, you’re all in one room. And I think a lot of the advisors that listen and watch to this show, that technically they might not be a startup by age, but they’re almost a startup by size. There’s a lot of 3, 4, 5, 10-person teams in finance. So, what are some ways you would start to think about those small teams? You’re having some good success on revenue. And how do you need to start to think about culture, structure, those kind of inflection points you were just talking about?
Tom Healy: Yeah. There’s probably eight questions in there and I’m going to try to hit all these because they’re very, very important. So, the ownership thing, the co-founder thing, that’s a two-way street. So, yes, those first three people, you should absolutely, five people, you should absolutely treat them like owners. And that’s everything from profit share to some transparency, maybe not full open book transparency. You should value the heck out of them, treat them incredibly well, build deep personal and professional relationships, make them feel included in everything.
But you also need people that can operate that way too, meaning you could treat someone that way. But if they’re a C player and they don’t take ownership, they don’t look for things to do, they don’t want to add value in every area of the organization, then it’s a bad culture fit, right? It’s not what you need. So, to me, those first three to five people, if the floor needs swept, they do it. If a marketing email needs to go out, they do it. They’re not sitting there going, well, Brad, that’s not my job description. Or, oh, it’s five o’clock, I got to go.
So, you have to find those people. And that’s where we talked about at the beginning, but from a job description standpoint, from an interview standpoint, I mean, I’m not interviewing you to do a job. I’m interviewing you to be an owner of this company, to have that ownership mentality. So, I’m hitting them hard with those questions and I’m asking them for examples of going above and beyond. I want to understand if they’re that type of person. So, I think that’s really important.
In terms of culture, especially at a smaller organization, you are the culture. So, you, the founder, the principal, the owner, the co-founders, you are the culture. Everything you do is the culture, your work ethic, the way you treat people, the way you treat your clients, the way you treat your vendors, everything. I mean, it matters so much. The car you drive, being strategic of, well, if I drive something too nice, they may think I’m fat and happy and making so much money that they shouldn’t have to work as hard. I mean, every little thing matters. And of course, actions speak louder than words. And so, that’s a really important part.
And the last piece I’ll address here, and I think this is really important, is when you’re smaller and you’re scaling and I know this will resonate with you, you have no margin for error, okay? You can’t afford to be wrong. Look, at 100 people, if you have some poor performers in there, it’s not going to make much of a difference. I mean, you don’t want that. It’s not ideal, but it’s not going to break you.
But if you have a co-founder in your first three hires, and one of them is a really poor performer that’s toxic, that’s a bad culture fit, it mucks everything up. You’re wasting time. You’re wasting energy. Clients aren’t happy. You’re not growing fast enough. The other two full-time hires that you have don’t like that person and they’re speaking behind their back and you’re doing this all in 1500 square feet. I mean, it’s a horrible situation. So, you can’t afford to get those first few wrong. It’ll crush you.
Brad Johnson: Yeah. So, let’s talk about that because those inflection points you just hit. Yeah, I’m going back down memory lane. Some of them amazing, some of them not. And when that team is so small, in fact, we made the mistake. In those early days, it feels like a family. It’s like, hey, this is the Triad fam, right? And what you realize is the words you use, how much they matter, because I don’t know about you, but if a family member isn’t working out, you can’t just fire them, right? Like, hey, sorry, we got to walk you out the door.
A team though, hey, if you want to be on this team, you have to be on the same mission we’re on. You have to work together. You have to collaborate. You have to treat others with respect. And I can think of some early team members. We just couldn’t get them on board. Not that they’re bad people, they just were not aligned with the mission.
And let’s talk through this because I’ve seen this over and over in our space. The whole slow to hire, quick to fire, it’s typically the exact other way around where you know they’re not going to work. You drag your feet. You avoid the tough conversation. The team’s rolling their eyes in meetings. What advice would you give small business owners where you know somebody’s got to go, but you almost feel held hostage by them because maybe they’re the only person in that division? Is there a strategy, like hire, cross train, then let go so the business isn’t upside down? Like, what are your thoughts around that?
Tom Healy: Well, it’s a great question and it’s what happens all the time. I mean, I’ve been working with business owners and been one myself for almost 20 years now. And so, you see this all the time. So, in a small organization, Mary is in charge of certain things. She holds all that information and all those passwords and all that knowledge hostage. She knows she has leverage over you because if you get rid of her, all of that walks out the door. And so, you keep her, you put up with her BS, you don’t get rid of her. And it’s a horrible situation and it happens all the time.
So, what do you do? Well, you have to be slow to hire. So, you have to make sure that you have a pretty good chance of being right. And then you need to make sure that you have a playbook for your business. And that’s something that we do for our clients, is we make sure that all of their training, their SOPs, how everything moves through the organization is all in a centralized proprietary knowledge center, so that no one can ever hold you hostage.
And if someone was to leave or get hit by a bus or whatever, you fire them. That we can put someone new into that position and say, here is your roles/responsibilities. Now, on day one, when you have your first couple hires, is that going to look like a Fortune 500 learning and development platform? Absolutely not, but the basics are there. These are the logins. This is how you do everything. This is how we hold you accountable. It’s all organized. So, once you do that, nobody can ever hold you hostage.
The other thing that I’ll tell you is, different people become business owners, right? So, some people grew up and they watch Shark Tank and they want to be an entrepreneur and they have that entrepreneurial knack, and maybe their parents own a small business. But then you also get people that are the reluctant entrepreneurs or the never thought they’d be an entrepreneur. So, I was a high producing financial advisor and our firm got sold to private equity and it was horrible. So, I guess I’m going to go out on my own. Or I had a falling out with our firm and I think I’m going to go or I move to a new city, whatever happens, right?
So, one of the things that sometimes entrepreneurs early on in their journey, especially if they were reluctant entrepreneurs struggle with, is they don’t understand how effing fast you have to make decisions, and you have to make those decisions without all the information, without all the data. So, to your point about the person, hey, this person’s not a culture fit. They’re holding me hostage. You got to act fast. Okay? Because what happens is people take the easy road out. They kick the can down the road. They hope Mary will magically get better. They hope that she quits instead of them having to have a difficult conversation.
And I’m sorry, but if you want to be a high performing entrepreneur, you have to make quick decisions. You have to trust your gut. You have to do that with not all the information there. You have to have difficult conversations. So, you have to make a decision. Am I going to allow this person to hold my business, the business that pays my mortgage, that puts food on the table for my family? Am I going to allow this office manager to hold me hostage or am I going to get her the heck out of my business?
Brad Johnson: Yeah. Well, and it’s easy to riff on here. It is hard, especially like when you first step into that, there’s a ton of emotions. There’s the guessing game, there’s the waking up at two in the morning. What should I do? But I will say you’re right because delaying it just makes it exponentially worse. And I think you– is it your term? You call that like having a terrorist in your business because they’re holding you hostage?
Tom Healy: Yeah.
Brad Johnson: Did I get that from you?
Tom Healy: And generally, a terrorist is someone that’s actually a decent performer, but they’re a horrible culture fit. So, yeah, you know this person does a pretty good job. They have industry experience. Our clients seem to like them, but they’re horrible to deal with. They come and go as they please. They’re rude to people internally. You never know if you’re going to catch them in a good mood or bad mood. And we’re doing this all in a five-person office. So, that person is an absolute terrorist inside your business.
Brad Johnson: Yeah. So, let’s kind of strategize here. Let’s just say, I think you mentioned Mary in this analogy. So, Mary, let’s say she’s running your new business team, your paperwork, and let’s say externally, she’s great. She’s great with clients, but internally kind of hoarding information. I’ve seen this theme where sometimes, there’s people that are great when you’ve got a team of two or three, but as soon as you add additional team members, it’s almost like this is my sandbox. Get away.
Tom Healy: They feel threatened.
Brad Johnson: And they can’t collaborate. What’s that?
Tom Healy: They feel threatened.
Brad Johnson: Threatened, yeah.
Tom Healy: People get very territorial of their space, their job. Other people are going to harm my ability to earn an income. I don’t want to learn new technology because then maybe I’m not going to have a job here. So, people are very, very protective of their turf.
Brad Johnson: So, let’s say that’s going down and let’s say Mary is your only paperwork processor person. So, she is the one, literally, when you convert a prospect to a client that you don’t get paid if that paperwork doesn’t get done. You’re not bringing on clients if that person isn’t there. So, let’s say Mary’s got to go, what would be your strategy on a five-person team?
Tom Healy: Yep. So, I would figure out, do we have everything that Mary does, documented, listed out? Step-by-step process, we know what software she uses for certain things. We know the order of operations. We know how she interfaces with other people in the firm. Either we have a project management software to do that, we have our workflows dialed in or not. If we don’t and it’s like literally, we give Mary the file, we give her some case notes, and she knows what to do. We have no idea what she does. It just gets done. Then I would say we need to get that memorialized as quickly as possible.
Now, if we go to Mary and say, hey, I need you to write down everything you do, is she going to be threatened by that and feel like you’re getting rid of her? Probably. So, that’s where we have to be a little creative in how we present this. And we probably need to say something like, hey, we’re now putting everything in an internal knowledge center for our organization. And so, all of us, myself included, have to start organizing everything we do on a day-to-day basis, how it gets done step by step, who else on the team we interact with, et cetera, et cetera.
Now, if that person says, I’m not doing that, that’s where, to your point earlier, this is not a family, right? Like, you are doing it. That’s, I’m asking you as the owner of the business to do this. So, I mean, you have to be assertive with people. But I need to get all that information out of her head, and that’s a good practice, regardless of whether it’s a terrorist or a high performer. We need to have that, but we need to get that taken care of and then we need to figure out, okay, is she saveable, right? Can I have a difficult one-on-one conversation with Mary about her behavior? Explain what I need from her. And get buy-in that she’s actually going to commit to that.
So, let me, maybe I can fix this, but I need to recognize whether or not that’s happening and pretty quickly, hey, it’s been 30 days. It absolutely has not gotten better. I’ve talked to the other teammates and it has not gotten better. We have everything she does in our internal knowledge center, so now it’s time to make a change. And oh, by the way, I thought this was possible. So, I’ve actually been sending out some feelers to my broker-dealer or to my peers in the community or to someone that I worked with at another firm years ago.
But I’m starting to build that bench of people that may be interested in filling that role. And oh, by the way, I also took some time to figure out if that’s something I could outsource. Is there someone on a fractional basis, maybe it’s a stay-at-home mom. Maybe it’s someone that’s semi-retired that would love to do this work. And just one more thing and again, you know your industry a lot better than I do, but I’d also be thinking, gosh, if I had two or three people fractionally processing paperwork for us and one of them is having a baby, one of them is going on vacation, one of them quits, they’re all cross-trained, they’re all doing the work. So, now, I’m not reliant on that one person.
So, again, there’s your public service announcement for outsourcing. When I have two or three fractional people that can do something, I have far more leverage. No one can hold me hostage. So, I’d take, let me just give you round numbers and say, Mary’s costing us $6,000 a month. Could I find three people at $2,000 a month, spread out that work, have them all in our Slack channel internal communications? It’s just a thought. But in terms of us strategizing, that’s some real world stuff that I think you could be thinking about.
Brad Johnson: Yeah. Well, I think the biggest thing is you grow a business that this point, and we’ve dealt with it multiple times at Triad, and I think any business owner that’s been doing it for a while has dealt with it, that being held hostage by one individual, the hit by bus test, whatever you want to call it, that is so painful because you’re like, there’s already enough stuff to do on the daily in business when you’re actually trying to focus on external and competition, and then when it feels like this internal, just like sideways energy, I guess is the best way I can put it, where it’s like, man, we got to get this thing going.
So, let’s go back to, okay, I love that strategy. This person’s not going to work out. Let’s turn this into a system. Pull that knowledge out of their brain. Document it. I feel like with AI, that’s a lot easier these days. You could probably speak it into AI and it’s actually at least going to come out with a rough draft. Let’s go back to making sure you get the right people in the first place. Oftentimes I see most entrepreneurs when they start, you mentioned it, hey, I’m just trying to hire the cheapest person possible, marketing 50k, and they’re kind of getting the person that doesn’t have a job, right? They’re like on Indeed, not the person that’s already excelling in a role like that somewhere else.
What are your thoughts on pay ranges if you want to attract A-plus talent? What are some thoughts there on like, how do I write the job description? What’s the benefits package? What’s the pay structure need to look like to actually find great people to add to your organization?
Tom Healy: Look, in all of my experience and everything I’ve ever seen, the best strategy out there is overpay for really, really, really good people. And you do that because, to your point, the people that are available, the people that are in between jobs, the people that bounce around to different jobs, you might be able to get them cheaper, but typically, there’s a reason for that, right? I mean, at some point, you can only blame your previous employers so many times before potentially the problem is you, not each of those firms that you work for.
And so, I believe you find high performing people that are a great culture fit and you pay them above industry average. You treat them incredibly well. They will operate like owners. They will run through a wall for you and they probably will never leave you. And if you look at successful service companies of all types – accounting firms, financial advisor firms, insurance agencies, just thinking of some different examples there, how often do you see really good companies where it’s been here 10 years, been here 20 years, been here 15 years, been here 9 years?
And it’s like, well, how does that happen? What happens, not because they collected a bunch of lost puppies that they picked up at the pound and underpaid them, it’s that they found these high performing people. They treat them incredibly well. They pay them really, really well. They treat them like owners. They probably have a profit share. They’re probably very transparent. They probably keep the team informed on a quarterly, monthly basis as to what’s going on. And then these people never leave.
So, I want low turnover of the right people staying forever and is it going to cost me 10% or 20% more? Maybe. But Brad, what’s the alternative? The alternative is the owner of the firm firefighting, putting out all these personality issues and bad attitudes and nonculture fits because we tried to put together this ragtag team for 20% under market average. I mean, the reality is people are very expensive now. I’ll take HR as an example. I can’t believe how expensive a director of HR, a VP HR, a Chief People Officer is. They’re incredibly expensive.
So, either outsource it or spend a lot of money to find a really, really good person. But the middle is what kills you. The middle is all right, let’s throw someone in here. Let’s pay them whatever, Indeed tells us we should pay them. Let’s go after people that are currently unemployed and you’re rarely going to find what you want, but if you do find someone, then pay them more without them even having to ask, hey, I know you’ve only been here six months, but you’re doing such a good job. You’re such a great fit for us. We’re going to pay you a little bit more. We’re going to give you some more responsibility. And I just appreciate having you here.
Brad Johnson: Yeah. The way I kind of frame that in my head, it’s almost like it’s an insurance policy for your business because I get it, you’re trying to, as a business owner, balance cash flow with personnel and scaling. But if you’re like, hey, if I paid 10% more, that’s an insurance policy that this person’s going to feel the love. They’re going to stay here, they’re going to be happy, and you’re going to get the cream of the crop. It just makes sense. It’s not rocket science when you think about it.
Tom Healy: It’s golden handcuffs. Like, even if they wanted to go somewhere else, they’re not going to find it better than they have it here. Not that you want to throw that in their face, but the reality is, if you’re paying them really well, you’re treating them well, you’re giving them flexibility, you’re not, oh, you can only have 10 days’ vacation and better not call in sick. I mean, if you treat people really, really well, why would they ever leave you?
And the other piece of this that I think is really important too, is play it out. So, I’m going to save some money. I’m going to pay a little bit less. Well, then what’s the cost of turnover? If you’re turning that position over every few years, if you have to onboard someone new, if you have to recruit them, there’s a cost to that. And cost of turnover, there’s estimates out there. It’s one time salary, it’s three, whatever it is. It’s expensive. We know it’s expensive.
And then we got to hope that that person ultimately works out, which as we know, they often don’t. So, let’s pay a little bit more. Let’s find really good people. If we can’t afford someone really good, let’s consider outsourcing. And then yes, to your point, let’s put some golden handcuffs on them so they don’t leave.
Brad Johnson: All right. I want to run something by you. Get your take on it. So, I think it was Steve Jobs. We have a saying at Triad, A players only. To your point, to everything we’re just talking about here, and I think it was Steve Jobs that said, like he had this story about the original team that built the Macintosh that was just A players, like just really getting the best out of each other.
And then he said the largest company he had ever personally experienced that was A players only was Pixar when he originally first invested in them. So, I’m curious because I’ve heard the saying, A players hire A players, B players hire C players because it’s kind of like, oh, I want to make sure I’ve got a leg up on the next one I’m bringing in. Do you believe that to be true? Is there a cap on a firm and size where you can keep that A player only status in your opinion?
Tom Healy: There is no cap on it. And so, the pushback I get on this, so I’ll do a workshop for a group of CEOs and they’ll say, hey, Tom, it’s unrealistic that everyone can be an A player. And the problem is there’s a misconception of what an A player is. And people think, oh, an A player works 50 hours a week. They check their Slack on weekends. They want to move up the corporate ladder, blah, blah, blah. That’s not what an A player is.
An A player is someone that’s really, really good at the role that they’re in. Okay? Meaning an A player can be someone that has no aspirations to move up the New York chart. They’re perfectly content being your office manager, but they’re going to be a damn good one. They could be someone that says, look, I just love paperwork. I want to do paperwork all day. I don’t want to talk to clients. I don’t want to be in team meetings. I want to sit here and do paperwork all day, and that’s all I want to do until I retire.
Well, if they’re great at it, then isn’t that an A player? So, I think that people don’t understand what an A player actually is. So, by my example, can everyone in your organization be damn good at what they do? Sure. And should we tolerate less than that? I don’t think so.
Brad Johnson: I like your take. I agree.
Tom Healy: And here’s the thing. And so, give me 30 seconds here. So, someone listening could say, oh, Tom, it’s easy for you to say this stuff. Well, okay, so how do you actually make sure everyone’s an A player? You have roles, you have responsibilities, you’ve key performance metrics that you track for every single person, and you hold them accountable to it. This is what you’re responsible for. This is what constitutes an A player.
And every single week, we’re going to review your metrics. We’re going to review your job performance. We’re going to make sure that you’re addressing all issues head on. We’re going to make sure that you’re not kicking the can down the road. We’re not going to let you hide out. We’re not going to let you go months and months or years and years without being held accountable to anything.
So, this is not hard to do, but it falls apart because I could point out someone on your org chart and go, what makes her great at her job? And you go, uh, okay, well then how do you hold someone accountable if you don’t know how you’re holding them accountable? So, it all just comes down to accountability. And let’s use a sports analogy here. So, we have nine guys playing in a baseball game. What are your expectations for them? What should their batting average be? How many home runs should they hit? How many errors should they hit? What should their slugging percentage be?
They’re either meeting or exceeding those expectations or they’re not. And if they’re not, what happens? Hey, you need to sit on the bench. You are going to get let go. You’re going to get sent down to the minors. So, we have expectations for everyone. And oh, by the way, how did we create those expectations? Well, we have a salary cap. So, I’m paying you $40 million a year. My expectations for you are different than someone I’m paying league minimum to. And so, that’s where we have expectations for people. Based on their role. they’re the cleanup hitter making $40 million. They’re hitting eighth in the lineup, and they’re making the league minimum. What are our expectations? How are we holding them accountable? How are we coaching them to get better? And how long are we going to tolerate that for? Do we want to be the New York Yankees or do we want to be, I’ll pick on my own team, the Pittsburgh Pirates?
Brad Johnson: Now, you’ve got Paul Skenes. You got that going for you, right?
Tom Healy: The future’s bright. We’ll see if we spend some money.
Brad Johnson: There we go. Okay, so I love that. We’ve got KPIs, hold people accountable to them. Back to the accountability part because early business owner, you’re just running around with your hair on fire. You’re leasing a printer, like just stuff to get the thing off the ground. What is your rules of the road when it comes to some sort of check-in, weekly check-in, biweekly check-in, leadership? What’s the max you should have reporting up to you? What are your kind of rules to the road there?
Tom Healy: So, of everything people operations related, this is the part that blows my mind. How often companies of all sizes do not have a way for everyone in the company to receive weekly one-on-one coaching, management, mentorship, accountability? Okay? So, if I have five people in my firm every week for a minimum of 30 minutes, I am meeting with every single one of them. Brad, what do you need from me? How can I help make your life easier? What am I not aware of that I should be aware of?
You said you were going to do these three things last week. Did you do them or not? Let’s pull up your numbers and take a look at the metrics or the metrics of the firm, if that’s what you’re being held accountable to. It takes me 30 minutes, but if there’s any lever I have as a leader in an organization to drive performance, it’s to have really, really good weekly one-to-ones with everyone that reports to me, 30 minutes, 60 minutes, whatever that cadence should be. You have time for them. Oh, I don’t have time. Sure, you do. Make time for them because the hour that you spend with that person will drive a lot more performance than ignoring them for weeks on end and having no idea what’s going on.
So, that should always occur, whether we have a hundred people or we have five people. Now, as you scale, does the principle of the practice meet with everyone? Of course not. Then you start to build out an org chart. So, I have four people on my leadership team. I meet with each of them for an hour a week. I stack them all on Monday mornings, do them back to back. I know what’s going on. We focus on having a great week, and then we move on to the next thing.
Now, those four people each have three or five people underneath them that they’re supervising. I’ve modeled the way on how to have a great coaching session. I’ve told them exactly what I expect them to do with everyone on their team. Then they’re going down and doing that to their team, asking the same questions, structuring it the same way. They don’t have to be a world-class executive coach. They just need to have an agenda to follow.
And if we do that, it will absolutely drive performance and people are held accountable and they can’t hide because Brad, so often what happens in companies of all sizes is poor performers hide and I call it stealing a paycheck, but they’re essentially getting paid more than the value they’re providing. And nobody knows, nobody cares, nobody pays attention to it. And that goes on for months or years. You can’t hide if every single week, you’re being held accountable, and we all need that. I’m sure you work with coaches and have peers and people to push you.
Brad Johnson: Yeah. I mean, here’s the thing, like played a lot of sports growing up, played sports in college, yet everybody needs coaching. Like coaching is pouring into people, holding them accountable, showing them their blind spots. Hey, did you try this way instead? I found that’s an easier way to get there. Like, whether it’s business, whether it’s life, A players I’ve found actually desire that. They don’t resist it.
Tom Healy: Yes.
Brad Johnson: Now, if you resist it, then you’re probably a B or C player from my experience.
Tom Healy: Yes. And there are case studies out there. There’s one that was done by the Harvard Business Review in particular on forcing employees to have coaching. And it told you all the obvious stuff that when everyone has coaching in an organization, the organization performs much better. When someone is resistant to coaching and says, I don’t want it, I don’t need it, they’re almost always a B or C player. They are not a high performing person. They shouldn’t be in your organization if they’re not willing to grow and they aren’t open to feedback and they don’t want to be held accountable.
The other thing that’s really important here is, let’s not overthink this. Great management in 2026 is not managing. It’s coaching. Okay? Younger generations especially, they don’t want a boss, they don’t want to be managed, they don’t want someone to yell and scream at them. What they want is someone to sit, imagine you and I sitting next to each other, as opposed to looking at each other. So, they want someone to sit next to them and say, hey, when you shoot that next free throw, bring your elbow in a little bit and see if that helps. That’s me coaching you.
That’s not me saying, Brad, you better make more effing free throws around here or you’re fired. Okay? It’s me coaching you. Let’s try this. How can we do this? How can I help you hit your performance numbers? How can I help you get your bonus for the year? I’m sitting next to you. I’m coaching you. I’m caring about you and your family and your personal life, and we’re building a strong relationship. I mean, don’t overthink this.
Your best gymnastics coach, your best basketball coach, what did you love about them? That’s what you need to be as a manager in this day and age. And the people that still try to manage, like it’s 1985, and we yell and scream and threaten people, it doesn’t work.
Brad Johnson: No Bobby Knight.
Tom Healy: And it doesn’t work when you– Bobby Knight would not work anymore. I love Bobby Knight. I met him in an airport. He’s a terrifying person. I asked him for a picture. His wife took the picture. She was pissed at me. He was pissed I asked for the picture. I couldn’t get out of there fast enough. And it was the day he came back to Indiana for the first time in like 30 years or whatever it was. So, it was probably not good timing on my part at the Indianapolis Airport.
Brad Johnson: Well, hey, at least, he was true to who he showed up as.
Tom Healy: He is a very authentic person. What you saw is what you got with him. But that style would not play with today’s 18 year olds. Okay? It just wouldn’t, and that’s nothing against him. So, again, that’s what we need our managers to be is this coach. But we should have coaching occurring in our organization every day. I mean, if I want my firm to succeed, I want to look around and I want to feel like everyone’s getting coaching. I want to see people coaching each other and helping each other.
Brad Johnson: What is the max direct reports you think you should have in a business?
Tom Healy: Rule of thumb is somewhere between 5 to 10. You start getting above six or seven direct reports. It’s really hard. But I know people, I mean, I see people that have 10 direct reports, 15 direct reports, and it’s really tough. So, what is sacrifice, right? So, are they not meeting with them one-on-one? It’s just really tough. Now, again, different industries, different use cases. I’d say for the sake of this audience, you start getting above five or six. Are you really able to pour your heart and soul into them? Are you really able to get to know them on a personal and professional level? It starts to become tough and it starts to become a situation where all that manager’s doing is meeting with people, right? It’s a pretty substantial amount of their job. So, that’s the general rule of thumb.
Brad Johnson: Yeah. Okay, last concept. I know we’re getting towards the finish line here. So, one of the things we talk about internally at Triad, and it goes back to those tough conversations. We’re all over coaching here. I completely align with your philosophy and I will say in my early days leading this company, and I would guess if Shawn, my co-founder, was on here, he would agree he was similar.
We talk about giving feedback from a place of truth in one hand, loving the other. And we were way heavy on the love. Now, part of it is you feel like a family. There’s five of you. You’re like, hey, guys, we got this. Oh, you can’t show up to work today till 10. Okay, no worries. Just come in tomorrow. Oh, you didn’t get that thing done. You said you’d do two weeks ago. Oh, it’s okay.
And so, we were heavy on the love, but what would start to slip was the production, the accountability. And we had to start cranking up the truth because we sure couldn’t run this business if people aren’t showing up and doing their job. So, when it does come to that point, you’ve got to sit down, you’ve got to have a tough conversation. Some people call it a performance improvement plan. What is your approach? What’s your philosophy? Is there a structure that you like to follow?
Tom Healy: Well, couple thoughts here. First of all, blindly loving someone is a recipe for disaster. Hey, I was so blinded I didn’t realize that they’ve been cheating on me for the past year now. I love this employee so much that I didn’t really care to notice that they show up late, they leave early, and they’re not performing at a high level. So, too much love in any relationship, right? Without any truth in any view of reality can be hard. Okay? And we could spend hours on that. But you get my point there. In terms of how do we give people the truth, how do we hold them accountable, this is the commercial for having key performance metrics for every single role inside your organization. Why? Because what happens is we go to someone that we love and they show up late, leave early, and are not performing, if that person, let’s say I’m managing that person, if that person does not have performance metrics assigned to them, what tools do I have as a manager? Well, Bob, you’re not performing. Yes, I am.
Bob, you’re slipping. No, I’m not. Wait, what am I supposed to do, right? Like, we’re just having this very subjective conversation where that person is defensive. They disagree with me. I can’t prove my point. So, the opposite of that is, Bob, we need to talk about your performance. You know that the expectation here is everyone is here at 8 a.m. and I’ve noticed over the past two weeks you’ve been late, 8 of the past 10 days. That’s objective. I mean, how do you disagree with that? You can make excuses, you can lie, but it’s indefensible. Okay?
Bob, the other thing, as you know, that’s really important is new clients and the expectation for everyone, myself included as a producer is that we’re bringing in an average of one new client per week, and I’m just making up numbers, so ignore it if I’m way off there, okay? But one new client per week, and over the past 12 weeks, you’ve brought in two clients and they haven’t been heavy hitters. And that’s a problem. And we’ve got to fix that problem. We’ve got to talk about how to do that.
So, you see now I’m leaning into data. Now I’m leaning into very objective points versus you’re not bringing in enough clients. Yes, I am. And so, what happens is you create a situation where your managers are completely SOL because now, they’re in an argument with somebody where now it gets emotional. Oh, well, the reason that Tom doesn’t like me is because I’m too young or I’m too old or I’m the opposite sex. And now, it’s chaotic. Now, people are talking behind each other’s backs, and now you’re dragged in as the owner of the firm all because managers didn’t have metrics to discuss with the people on their team. So, it all goes back to being able to look at everyone, black and white, objectively, and say, Brad’s an A player because he’s bringing in an average of 1.3 clients per week. He’s bringing in this much, under management, or he’s doing this much paperwork, or it’s getting done at this speed, however you measure people.
Brad Johnson: Yeah. Makes sense. I mean, back to the baseball analogy you made earlier, it’s like, you’re batting 150, we can’t put you in the game. So, we’re either going to do some batting practice on the side, get you leveled up, put you back in the game, or we’re sending you down to the minor leagues, AKA you got to go. So, I love it.
All right, my man. I know we’re at the close here. I’ve got one final question for you, Tom. This has been a great conversation. It’s been rapid fire. So, appreciate all the knowledge you’ve dropped. At Triad, one of our core missions is we want to help our members build businesses that bless their life, don’t become their life. It’s kind of that work-life integration. I’d love to hear your definition, what’s that look like for you?
Tom Healy: For me, it means being able to be present when I need to be present. I have two young kids, I’m married. I have some very, very good friends that I speak to on a daily basis. I have family members that I love dearly. When I’m with them, I need to be able to be with them. And if my business runs my life, if I’m tethered to my phone and work on my phone 24/7, if I can’t take a vacation, if I can’t get my head out of work and focus on my son’s soccer game, do I really own a business? Am I really in charge of anything? Do I really have the freedom that I want as an entrepreneur? I don’t feel like I do.
So, I think it’s so important that, again, you’re able to flip the switch. Now, I know it all blends together. Work-life balance is kind of a myth, but you need to be able to be present when you need to be present.
Brad Johnson: And hey, we talked about it today. Building the structure properly is what is going to allow for that to happen, so…
Tom Healy: Its operations, its structure…
Brad Johnson: Love it. Really enjoyed the conversations, Tom.
Tom Healy: Yeah, its operations, its structure, it’s all those boring things, but they’re not boring when you realize that they are the key to you being able to take a vacation.
Brad Johnson: 100%. All right, my man, I will let you run. If you’re ever in Kansas, or I guess if I’m ever up in Pirates’ country, I’ll have to look you up. We’ll go watch a game.
Tom Healy: All right. Enjoyed it. It’s a fun conversation.
Brad Johnson: Till next time.
