Even though human resources is a vital department in any business or organization, it is often seen as a cost center rather than a profit center. Therefore, it usually becomes disconnected from the rest despite its huge role. Kevyn Rustici, Human Capital Management Consultant at ADP, aims to change this workplace culture by empowering HR’s contribution to ROI. Sitting down with Ben Baker, he explains how this department can monitor and analyze business data and statistics to determine where they are losing and earning money in terms of hiring, training, and retaining members of the workforce. Kevyn also emphasizes the importance of proper communication in uncovering financial problems that need solving, not only with the employees but also the company’s top brass.
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Kevyn Rustici: How Human Resources Can Actively Contribute To Profit Growth
Thank you for coming back week after week. You are an amazing audience. I love that you share, connect and read. Thank you for being such an amazing audience. I’ve got yet another treat for you. I’ve got Kevyn Rustici. We’re going to talk about helping organizations flip their HR departments from a cost center to a profit center by leveraging technology, data, and strategy. Welcome to the show. I’m looking forward to this conversation.
It’s an absolute pleasure to be speaking with you and your group of followers that are avid readers of your awesome blog that you have. I’m excited because this is a topic that gets me excited.
Let’s find out the story of you. Where did Kevyn come from? What brought you to where you are now? After that, let’s get into HR because this is something that as we move business way beyond COVID, it is so vital that we take a look and say, “Where are we coming from? Where are we and where are we going?”You never know what you can learn from just one person. Click To Tweet
That’s such an important point. I’m excited to get to that. I’ve worked in HR for a few years. Before that, I started with my degree in Biology. I’ve always looked at science and the scientific method and utilizing that to my advantage in the role that I’m in now. I played soccer in college, so I understood what teamwork was like. I understood that putting the best team on the field was even more important. You had to understand what strengths were on the team but also what weaknesses as well and where you can make improvements.
When I first graduated college, my first job was at a country club shining rich people’s shoes. That was not what my guidance counselor had promised me. I don’t recall that coming up in conversation. It was an opportunity for me to learn about what was important and what I wanted. I quickly learned that your network was your net worth. It wasn’t about where you went to college or what you knew. It was more about who you knew. I started my career in sales at Toshiba Business Solutions after formulating a relationship with one of the members and he opened that door. I found it fascinating. I graduated in 2012, so we’re talking about 2014. These entry–level positions still required 2 to 3 years of experience. I was like, “How do I get 2 to 3 years’ experience for an entry-level position?”
We’re starting to see some of those things come back to life now. I love the world of HR. I love people. I love helping others. That’s why my initial career path was going to be healthcare but God had another plan for me. I think he wanted to help me craft this crooked mile if you will. That’s where I’m at now. I get to bring in all the things that I learned through all those different experiences and apply them to help organizations thrive in this new normal.
The expression that keeps coming into the back of my mind is, “Man plans and God laughs.” We have this crooked path to our lives. I’ve interviewed about 265 people on this show. I’ve been on countless numbers of podcasts myself. I’ve talked to thousands of people in my life. I have very few people that I know that knew at age eight, “This is what I’m going to do,” and are still doing it at age 50. There are so many people that may have started off in a career, may have had the greatest intention to do that, but we all reached that fork in the road. We all sit there and go, “The world has changed. Our mentality has changed. Our opportunity has changed. What if?”
It’s people that can sit there and take that what if and say, “Why not?” and move forward. What was the number one thing you learned from shining shoes at a golf club? Besides making that introduction to that member that happened to work for Toshiba, I’m guessing, or at least had relationships with the Toshiba that got you out of shining shoes into your career at Toshiba. What was the one thing that you can take away from that experience? Something that made you go, “I am so glad I learned that.” Even it was a terrible thing while you were doing it, what was the one thing that you learned?
If I had to pick one, I would say that at the end of the day, you never know what you can learn from one person. I say that because when you’re talking about a country club, a lot of affluent people, a lot of business leaders and owners. You could quickly see how they treated others, whether they mattered in business or whether they were just shining your shoes like myself. That told me a lot about the character of the individual and what I wanted to see in a leader. They saw everybody as equal. I would say that was one of my biggest takeaways because I didn’t know anything, I didn’t know anyone. Some people were very gracious enough to have conversations with you and ask you how your day was going while others treated you like you were the attendant to shine their shoes. It’s very interesting. All people are the same. You never know what walks of life, what their story is, what their history is, and what they could teach you.
I worked as a caddy at a fairly exclusive club as a kid. You could sit there and say there were people there that were comfortable enough in their own skin that they treated everybody humanly and humanely. They were gracious and wonderful people. There were people that treated you like staff, and then there are people that treat you like less than staff. A lot of it came down to what type of people they were. Were they the pretenders? Were they the people that are comfortable in their own skin? Were they the people that were leaders?
There’s a lot to be learned from that lesson because we’re all going to run into those types of people, whether we’re on the golf course, basketball court or the soccer pitch. Anywhere in life, we’re going to run into people that are gracious, human, humane, true leaders, and people that are into their own self-interest. That’s an amazing insight and that’s interesting, but let’s get into the meat of the matter. I love this thing about helping organizations flip their HR departments from a cost center to a profit center. Most HR people that I know don’t even realize that this is an opportunity, let alone how to do it. I want to know your thoughts.
I would have to agree with you. I think a lot of HR professionals, especially the ones that are lifers in HR, the role have gone through a real evolution in and of itself. We’ve seen the same for other areas of the business. CIOs and CTOs were never a thing 40, 50 years ago. The same evolution we’re starting to see in HR and it’s based on the real validity of the role as to how the leader sees HR and what the role of HR truly is. During the pandemic, these leaders relied heavily on their HR department to, unfortunately, deliver a lot of the bad news. They had to have a lot of conversations with those individuals. They weren’t in the boardroom.
A lot of financial executives as well as leaders, when you’re looking at numbers on a page, it doesn’t stand out that, “That could be Betty, that’s John, that’s Jim,” and they have a family of four at home or whoever it might be. HR has to shoulder a lot of that burden. HR is at the precipitous of an opportunity to switch from tactical reactionary practices of the past and flip to more strategic, innovative, outside of the box thinking to help their organizations move forward in this challenging time. A lot of it starts with the relationship with the CEO.
I use this line all the time, it’s one of my favorites and I can tell a lot about an organization and how they view their employees is, “Are you an employer that feels like employees are so lucky to work for you or that your employees are so lucky to work for your organization?” It tells you a lot that it’s how they view their staff. It’s how they view their employees. “Are they people, are they individuals, or are they a number on the page?” It’s HR’s opportunity to raise their business acumen, to understand, share, and co–author a lot of these things with finance to show what their positive impact could be by focusing on their people first.
I always say, “Put people before profits and people will take care of your profits thereafter.” If you’re treating people like they’re worth $200,000, you might not have to give them that compensation of $200,000. Not everything needs to be money–driven, but it is an opportunity for HR to start to show how they can have a positive impact on the bottom line and the organization because frankly, CFOs are just not there. That’s why I’m helping organizations, especially HR leaders, raise their business acumen, understand how the business is making money, where they’re spending their money, and where there are potentially profit gaps.
At the end of the day, it all comes down to we need to find that international language of numbers and get comfortable with numbers. That’s why I think that workforce analytics is truly the future of HR because it can help them take more precise action and know specifically where they can have an impact. Some HR leaders, if they’re accustomed to be in more of that tactical role and treat it as the red-headed ugly stepchild, might be scared to see what the numbers show. It might show that they’re not having an impact on the bottom line when they should be.
The first thing I’m thinking of is the expression I use it’s, “People plus purpose equals profit.” It’s that triple bottom line. We need to sit there and go, “Without our people, we’re nothing.” Let’s unpack everything that you talked about because it’s fascinating. The first thing that comes to mind is that HR traditionally has not had a seat at the table. They are a reactionary workforce that puts duct tape on Band-Aids in situations and tries to fix things that have blown up in other areas. That’s a challenge.
The fact that most organizations do not have a CHRO, a Chief Human Resources Officer or vice president of HR that truly has the ear of the chief financial officer, CEO or the COO. Someone that can sit there and talk strategically about the benefits of human resources within the organization and what the costs are to the organization when you have unhappy, disenfranchised, disengaged and disempowered people.
That’s a language that critically needs to be created, learned, and utilized by HR people if they want to be taken seriously. What I see is people sit there and say, “I need another $100,000 for this program.” Instead of, “We need $100,000 for this program because this is the ROI and this is how it’s going to benefit the organization. This is how it dovetails with our mission vision values. This is how it’s going to help our people and our customers succeed.” You’re a valued member of ADP, it’s an enormous organization. How do you help organizations understand the value of HR, what HR can bring to the table, and how HR can provide ROI instead of just being that cost center?Put people before profits, and they will take care of your profits thereafter. Click To Tweet
A multitude of ways. That’s a very open-ended question. You could go on for hours on just that topic. I would say HR would be beneficial to raise their business acumen. To understand and talk in the same language as finance and the executives. We see finance continue to shell out money in areas that they view of the importance to the organization like sales, marketing and operations. Those institutions within the organization, as a whole, understand how they provide value back to the company, the number of views back to the website and the number of closed sales within a given month. Operations are always looking for operational efficiencies and protecting them from a compliance perspective. In my opinion, the reason that HR has not gotten that seat is that they do not have that same business acumen.
We have a lot of certification programs like SHRM, NHRA or any other HR–affiliated certification. The challenge is that those do a poor job of telling HR how they can add value. If HR knew specifically how the organization is making money and where it’s losing money and how they’re spending it, they’re going to focus a little bit more on the KPIs related to the individuals of the organization by the department. From there, start to show how they can provide value to the organization’s bottom line.
I would say the low–hanging fruit typically is your labor costs when it comes to overtime expense and showing managers like, “If we had smarter scheduling practices or these are the people that we should be scheduling over these people that the managers tend to like, more so they’ll continue to give them hours.” The challenge is that HR isn’t in a real predicament because they feel like they are the owners of culture and we know that’s not the case. They also are the owners of turnover, involuntary and voluntary. They shoulder a lot of the weight of things that should be more of shared responsibility by the entire organization.
Until finance holds managers and senior leaders accountable for their turnover, the culture and performance of their particular business unit, and tie that up to their compensation or bonus structure, I don’t know if you’re going to get any of that change. It’s an opportunity for HR. HR and the CEO should report to each other. We see a lot of hierarchy where it’s CEO and CFO on the same page, but then HR, payroll, and everybody else reports up to finance. That tells you right there where the CEO sees the value of HR if they’re reporting into finance. It requires everybody to be on an equal playing field and understand business challenges as a whole and start to see where the business and where the CEO specifically wants to take that organization in the next 2 to 3 years. Right now, that disconnect is costing businesses more money than they realize.
The statistic that I’ve heard is that every employee that you lose cost you over $100,000 to replace. If it’s a senior–level person, it can be 2, 3, 4 times that amount. The expression I use is, “Your brand is only as valuable as your unhappiest employee on their worst day.” The trick is getting HR people to be able to communicate in that language. Why aren’t universities that have HR departments and HR training, SHRM, and other organizations focusing on these things when they realize that this is a deficiency within most organizations?
Why are HR professionals allowing themselves either deliberately or by just not knowing what they don’t know? To become that reactionary force within the organization instead of being able to sit there and say, “I need to upgrade my business acumen. I need to be able to understand numbers. I need to be able to understand how this company works from a 50,000-foot macro point of view and be able to talk about that intelligently. Why are we not training our people? How can we convince the new generation of HR professionals how critical this is to be able to move forward?” People get into HR thinking, “I don’t want to be in business. I want to be an HR person.” That’s the mindset challenge that I see.
At least here in the United States, we’ve seen a growing title of HR business partner. They understand what’s trending in that direction. I see the missing piece being analytics and data. I think the opportunity to co-author with finance executives on the cost of turnover so they feel it’s not just a made–up number pulled from some Deloitte study that they can get down to a granular level and understand at each position what’s the cost and the time to hire. Most organizations don’t even know how long it takes them to hire those. We’ve come to the point because this war on talent is picked up so feverish here in the United States that it’s a spray and pray method.
There’s no thought process behind what job boards we’re going to go to for each particular position. Frankly, more people are showing up money towards the executive recruiting firms to find this talent for them. If businesses in HR want to be that true profit center, HR needs to focus on how to develop and train these individuals to build a talent bench or talent pipeline. That will, in turn, save the organization thousands, if not hundreds of thousands of dollars in recruiting fees, overall benefits, and tax implications. It’s their opportunity to see and ask the managers how they’re doing, “Do you feel like your employees are caught up?”
A lot of things start with the recruiting process. If you’re making HR paint an ugly pig or put lipstick on a pig, and they’re going out and selling your company as some grand venture, “Culture’s great. We’re going to be growing year over year. We need you, and we want you,” but then seemingly when they accept that job offer, that red carpet gets rolled back and then they’re fed to the wolves. It’s the real inherent disconnect and HR has the opportunity. They’re focused on the people but they also have to understand what the business impacts can be.
Let’s face it, if they don’t get the buy–in from finance, finance has all power now to squash any and all opportunities for them to grow. If they don’t have finance’s ear and buy-in, then they can’t have these impacts and show how they can impact. Take me from the biology side case studies, I want to read case studies. It might surprise you that only 22% of businesses actually leveraged data and science to make business decisions. When I heard that, I was like, “Holy cow.” We’re just trusting our gut, intuition and our on-the-job experience. Just like they say, “A dead clock is right twice a day.” If that’s how you want to operate, and that’s how you want to go about your business, so be it.
Unfortunately, the ways of, “We’ve always done it this way.” I tell people all the time, it’s relatively a death sentence because you need to be innovative. You need to think outside the box and at the end of the day, we’re all human. In Darwin’s Theory, we adapt. Those that don’t adapt, survival of the fittest, that’s how it’s going to play out. HR, if they truly want that bigger seat at the executive table, data and workforce analytics tied to metrics and performance is the key to move forward from that cost center to a profit center.
Let’s talk about data. Data is huge. I look at data all day long. You crunch numbers. As I tell people, data on its own is 1s and 0s. That’s all it is. Without insight, data is nothing. Without that insight, action is impossible. It’s a matter of not only understanding what the data is but how to interpret it. It’s also, first of all, making sure you’re getting the right data at the beginning. There are so many corporations out there that have no idea what data they’re collecting. Why they’re collecting it, what they’re trying to get out of that data or if they had that data, how to mine it in a way that they’re going to be able to make a semblance of it.
How can HR work with the CFO, CTO, sales and marketing in order to be able to build out this data set through utilizing the CRM, Contact Relational Management System, KPIs, Key Performance Indicators? To be able to sit there and not only be able to make intelligent decisions but understand that we’re looking at the right data sets first to allow them to be able to make those decisions moving forward. What do we need to train HR people to do in order to help them help themselves?
Two things. One is, you’re 100% right. The single source of truth is of the utmost importance when you’re talking about data. That true single source of truth where it’s clean and accessible. The challenges in organizations without respect and understanding for managers like the CTO, let’s say. They might never give access to HR or might begrudgingly do so because they don’t understand how that data is going to be used communication from HR specifically. Not only to those individuals in those various other areas of the business but also the managers.
If they are kept aware of how they’re going to leverage this data to empower them to make better decisions, instead of forcing it down their throats. It’s like, “Here’s some food for thought or here’s a little more proof in the pudding,” any kind of saying just so they understand the importance of data integrity. HR cannot be the sole responsibility of good data in and good data out. That’s the same as garbage in garbage out. It needs to be a shared responsibility across the entire organization. That has to come from the executive level. It has to come from the leader. If the leader is committed to good clean data, that’s a huge win.
If finance understands that data and how it’s going to be used to impact them and add more money into their pockets, potentially or less waste, find areas of inefficiencies or where profit leaks tend to be. I can talk to part two in my area specifically, it’s definitely finding the technology. Full disclosure, I work for ADP and they have some unbelievable technology. The whole idea of what ADP has tried to deliver to the market is creating that true ecosystem. From benefits enrollment to performance, compensation, retirement, open enrollment and applicant tracking.
If our system, that ADP has crafted and designed, does not meet the needs of the organization because they are truly unique. We have created a marketplace of applications that are very industry–specific, but the key is, as businesses continue to make more investments in technology, especially going through this pandemic is that, “What additional work are you creating for yourself on the backend?” If these systems do not talk to each other through secured API integrations, what’s the point? You’re adding another bottleneck to that process. More human interaction. Technology should replace those roadblocks and prevent those human errors. I would tell you that getting the right foundation is getting the right technology in place that is encompassing all the areas of the organization. Once you create that single source of truth, you can start running more predictive insights, gathering the metrics, those KPIs that you referred to, stacking and seeing how we stack up against those KPIs that we’ve set up for ourselves.
Most organizations say they leverage their data, and all it is is just a report from their systems. They can’t do anything with it. They can’t learn from it. I’m taking the metrics, and moving forward, I would say most businesses to get into predictive analytics is going to be a challenge. That’s a lion’s share feat, but to start to see metrics in real–time and see where interactions can take place before it becomes a bigger issue is help in and of itself, instead of when it’s almost too late.The single source of truth is of the utmost importance when you're talking about data. Click To Tweet
I agree with everything that you said, but it comes back to garbage in garbage out. Unless everybody within the organization understands not what they’re entering but why they’re entering it and how it helps them succeed, they’re not going to do it. Sales, for example. Salespeople, I love them because I’m one of them and I’ve been with you for years. Most salespeople will put the absolute minimum of information that they can within the CRM because they don’t want it to come back and bite them.
They sit there and say, “If I enter the data in, I’m giving big brother the opportunity to come back and bite me in the butt.” Instead, if the salespeople sit there and say, “If you enter in this information, you have the ability to access greater insights into your customer. How to train them, how to teach them, how to give them more value, how to sell to them better, and how to sell to them more sophisticated,” and be able to do that.
If you could teach salespeople, not just, “You need to enter the information into the CRM,” but why and how they can glean information out of it because they’ve put the right information in, they will, and has to go through the whole organization. What I want to get back to with that is communication. It comes down to not only sharing what we’re doing, but why we’re doing it, how we’re doing it, and what the benefit is. That comes back to a lot of what we do with creating an internal podcast for companies. What we do is develop podcasts that help with purpose and culture, change management, new product development and product launches to give people a repository of best practices within the organization.
Let the left hand know what the right hand is doing and why they’re doing it, what’s coming up, what we should be thinking of, different departments, different cities, different countries. The more we can communicate as an organization, we can break down these silos and we can get better insights about what different departments are doing, how they’re doing it, and what the successes of those departments are, the more buy-in we can get from the C-Suite.
You may not be able to get a meeting with a CEO every week, but if they’re listening to a podcast and they hear about this work that you are doing and why you’re doing it, all of a sudden that’s on their radar. When they’re having a C-Suite meeting, they can sit there going, “We need to be thinking about this and allocate that into the budget.” The more we can communicate, the more we can provide opportunities for everybody within the organization to understand why we’re rowing towards the sun, they will.
Most mission–critical top-down. If it’s important to C-Suite and it’s important to their direct managers and indirect managers, then it’s important to them. Onboarding, the training, and the development aspect, a lot of people just want to get the salesperson out there to your point. They want to get the salesperson out there and they wanted them to contribute, to make up for the base salary that they might have them on. The shortcomings are that these are things that are important in that employee’s life cycle. They need to be told why. “This is why it’s important to our organization. This is how we use the data.” To your point, clear communication and setting off the right expectations upfront and almost pitching it as a shared responsibility for the improvement and betterment of the company moving forward. If you have the right people in the right positions, they’re also going to put more of a focus or an onus on that data themselves. You’re right, communication is the number one mission–critical piece.
If you were having a conversation with people senior people in HR to put them on the right path, to allow them to be able to gain their own seat at the table, what’s the one piece of advice you would give them that would elevate the stature of their department within the organization?
If they could listen to the key business challenges that are being discussed at the executive board level, and the conversations that CFOs and CEOs are having back and forth, stick themselves into those opportunities of listening to what the real business challenges are. Also, how they specifically could have a positive impact on them. They have to be willing to take their shot. Shooters shoot. You have to take your shot and you have to stick yourself in there to show the value that you possibly can. A lot of times, when those conversations happen, they’re not in the room, but you should talk to the CEO, “Where do you see us in 2 to 3 years?” If you make it more of a priority to ask these more forward-thinking questions, then you can start to work backward as to how you can have a particular impact on that challenge or the strategy for the future as well.
A follow-up to that is, how would you get that HR leader to communicate to their staff to help them change their mindset?
It’s another opportunity for them to communicate to say that, “We are no longer that ugly red-headed stepchild. We want to be viewed as we’re providing value to this business and this organization. It’s our opportunity to garner that larger seat at the table and finally show finance as to why we need more of a budget.” A lot of these HR departments come down to a shoestring budget that they try to operate on and it’s very limiting on what they can do. If you say, “Do you remember those great ideas that you shared?” Create that safe space for even within the HR team where they can share their ideas or best practices of even what they learned from other companies. Create that type of culture and that openness, they’ll understand that they too can have that same impact and they want to have the impact. Otherwise, they wouldn’t be a part of the organization. If they want the organization to succeed, they need to crap or get off the pot.
One thing that I think is mission–critical for organizations to understand is, people can find a budget for things if there’s ROI. People have told me, “There’s no budget for this.” I have the right conversation with the right people, all of a sudden, $100,000, $250,000, $500,000, and $1 million can show up. The reason is that they sit there and say, “If we spend this money, we’re going to get 5X, 10X, 15X, 20X on our money by investing here.” If you can justify that and show that, if you can use the data analytics to be able to prove theoretically how this is going to work and how you’re going to be able to achieve it, then you can get a bigger piece of the pie. You can get a better seat at the table because what you’re doing is you’re saying, “I’m not just a cost center. By doing this, we’re going to be able to make you money because we’re saving you money by you not having to do this.”
Back to the technology piece, CFOs are so protective of the business. They’re reactionary in nature. My father is a CFO, full disclosure. I have seen what it takes for him to make business decisions and it needs to be in numbers and it needs to be as black and white as possible. By co-authoring that return on investment from finance and getting real hard dollars from finance that they feel like they’re a part of that project, without it and with HR trying to do things on their own, it’s very challenging. There are some people that believe heavily in ROI and there are a lot of doubters that believe in ROI too because they’ve been sold and told a lot of different things when it comes to a return on investment.
When I sit down with my partners, I focus on both hard dollar costs, “What are you already spending, but what are the soft cost offsets as well? Are there tax opportunities that you’re not leveraging?” A lot of organizations here in the United States don’t even know that they could leverage research and development tax credits, but those are ways that HR can say, “We are doing this already. I know you’re the finance person, the money person, but there have been some compliance and regulatory updates that we can actually take and put money back into our pockets here at this organization.” If they start having those types of conversations with people then, that makes HR very different. It’s not just about the people and the, “Don’t come near my office. If you do, I know I’m in trouble.” That says, “I care about this business. I know how we make money. I want to make sure we protect our profits.”
You go from being that police officer that says, “You’re in trouble,” to being, “Let me help you solve problems.” I love it. Here’s the question I ask everybody as they walk out the door. When you leave a meeting and you get in your car and drive away, what’s the one thing you want people to think about you when you’re not in the room?
That I was genuinely there to help them and I was a genuine individual.
That’s important because people who sit there and go, “This person helped me see the ROI.” They see it as an investment and that‘s where the money comes from.
That’s the best business.
Thank you for being such an amazing guest. Thank you for all your insights. I love the conversation. I’m looking forward to more conversations with you.
Ben, thanks again. Nice to meet everybody. Thanks so much for this opportunity.
About Kevyn Rustici
I work as an HR and Technology Consultant helping organizations thrive instead of just thrive in the new world of work. Specialize in helping organizations flip their HR departments from a cost center to a profit center, by leveraging technology, data, and strategy.
Giving companies a definitive competitive edge in this war on talent, empowering HR to shift from the tactical reactionary function of old to a strategic data-driven enabled business partner for proactive workforce planning from hire to retire.
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