Transcript

Eric Edelson: Anything, I come away from this year going like, okay, that was cool. They were amazing. How do we make it better for them?

Didi D’Errico: POPS! The People Ops podcast from Zenefits. The only show dedicated to small businesses and sharing their stories of pivotal people, moments. I’m your host, Didi D’Errico or, D2 for short on today’s episode. Eric Edelson joins me to talk about his relentless quest to do better today than he did yesterday as the CEO of B Corp certified business Fireclay Tile, which includes doing better for the local community, doing better for the environment, and doing better for his workforce.

You caught the last part, right? Yep. Treating your team. Well, it’s a key theme in people operations, and we’ll be unpacking that today. Indeed doing good is helping fire clay tile do well since Eric joined the company, it’s grown from 30 to 155 people. In fact, as you’ll hear Eric got the team to 120 people without any HR support, Eric says, in retrospect, he got that wrong.

Before I take you into the conversation. I want to illustrate the uniqueness of what fire clay does through its tile artisanship. Listen in as Eric shares a recent project, one that hopefully you’ll one day, get to see for yourself. 

Eric Edelson: So at a high level, we helped with, I think it’s terminal B at LaGuardia, one of their new terminals, the transit authority there they’re investing like $10 billion to help improve LaGuardia.

And so that set up this, what was basically a 14-month journey of producing what an Emerald has become. One of the Laurel’s largest tile mosaics. It’s about 30,000 square feet. The end result is, is incredible. It’s, it’s definitely a project where we’re most proud of. Uh, it definitely put the full test of our capabilities at work.

It was about 140 colors, 40 of which were custom. Across several different sizes. No, two square feet out of, out of roughly 20 of the 30,000 were alike. So, you know, a lot of like customization and uniqueness really pushed our team to its full 

Didi D’Errico: extent. What I hope you heard here is the approach to the opportunity itself, both for his customers and for his team.

Eric thinks a lot about in-depth customization. And what could be a commoditized, manufacturing business, delivering that kind of care. It takes a certain type of leader. So I was curious, what is it that motivates Eric? 

Eric Edelson: I think just like the pursuit of excellence, I’m just never really satisfied. And I always wanted to under-promise and over-deliver.

I always want to, I want to surprise and delight. And what drives me is I think it’s just. You’re trying to leave the world better today than it was yesterday.

Didi D’Errico: Let’s talk about convention wisdom. So you, 12 years ago, you started at fire clay as the CEO. What do you think about HR at the time that you joined? 

Eric Edelson: Frankly, I had it wrong, you know, I think that I felt like HR was. Back office administration. I felt like if we had an HR person or team, it would be kind of the place that people would go to gripe or frustrations with.

And so, you know, I, I really, for a long time just felt like I could automate it. I felt like I could, you know, use systems. I tried to, you know, initially build those on my own and then, and then found Zenefits and great technology to support it. But I, that was, I’d say my first impression, and that was my wrong bias.

Didi D’Errico: HR, what you just learned from just by 

Eric Edelson: observation, sometimes as a leader, you can assume that other people have the same background, understanding, experience opportunities that you have, or that they think the same. And so I think for me, you know, I felt like, Hey, it’s important to. You know, share feedback with people.

I felt like it was important to, you can do with people and to manage people. I guess I had the assumption that like, you know, other people would behave that same way and you know, it was just classically wrong in that regard. And so. Yeah, I think over time we just, we had so many people and really had no one to help managers or others.

And so when it came to, you know, hiring or firing or developing, you know, we just really lacked support. And so for many years it caused a lot of frustration. And again, I, you know, I thought, you know, we had good tools, we had good technology, but I think we lack the support. You know, I’m talking, going from, you know, 30 people to 120, without anyone in that role that really was, was unsuccessful for us.

Didi D’Errico: And what did staff programs look like at that point? What were your priorities as you came into this up to 120 people before you started to think differently? 

Eric Edelson: I say compliance, right? I mean, it was really like just, you know, making sure that we had the right documentation that divides, you know, good onboarding.

And, you know, when I say onboarding that list, like filling out their paperwork correctly, that was not like training and development and onboarding, you know, that we had, you know, good systems for wage and hour. For PTO tracking benefits management, all of the administrative stuff was where I was trying to solve the pain point.

And so that’s where I was leaning in hard for technology and tools, but it was all the soft side and the development and the training and the. You know, continued support and, and supporting managers with tough decisions or, you know, helping them with difficult conversations like that was where we really failed and didn’t provide the support and tools early enough, and so that, that hurt us a lot. Years ago, trying to get over that hump. 

Didi D’Errico: when you say, when you say it hurts, you, you, you talk about in terms of retention, in terms of growth, what are some of the, what are some of the things you look back at?

Eric Edelson: I’d say, I mean, retention, certainly, you know, hiring the right people onboarding.

So, you know, when we would get them in. Did they have the right training, the right tools to be most successful in their job? You know, definitely, we got, we got hurt with some compliance stuff as well. You know, tools are great, but you know, garbage in, garbage out. If you don’t manage the information going incorrectly, then, then it doesn’t matter.

So certainly in some of those areas, but, but yeah, I think it took us a while to, you know, recognize the importance of, you know, and I don’t call it like HR, you know, start people department and the opportunity that, that ha we have for our organization. And so we had the right tools. We had the right systems, but of course, if people have the right behaviors, that managers, we were a big organization focused on developing from within and promoting from within.

So you got all these people who are a practitioner one day and a manager the next, and they have no idea what to do and that’s not their fault. That’s our fault. So not giving people the right. The quickness and training and onboarding as they move through the organization. You know? So those were, were failings all throughout those, those times and still, you know, we’re still messing it up too, so we’re not perfect.

Didi D’Errico: So one of the things I love about you, Eric, is that you are a tireless advocate for your team and for your people, anybody who doesn’t follow you on LinkedIn ought to because there are often really great learning lessons there. And I noticed recently you had posted a video about a little bit about your people’s story, and you talked about the idea that.

It was when you went through the B Corp process that you actually recognize that your efforts to support your people weren’t enough. Can you maybe talk about a couple of the things you learned there and where you learned them? 

Eric Edelson: Yeah. So, you know, for those who may not be familiar with the idea of a B Corp or benefit corporation, it’s a, it’s a certification, it’s a, both a legal status as a, as an actual legal entity, a benefit corporation, but also as a certification administered through the lab, which is a nonprofit out of Philadelphia, that certifies.

So they’re a nonprofit who certified for-profit organizations. As certified benefit corporation. So big names that are B Corp’s are brands like Patagonia or Ben and Jerry’s, uh, or, or subsidiaries of denote Athleta. The gap owns a brand, uh, and there’s about 3,800 across the world. So, so fire clay is a certified B Corp.

We became one at the end of 2014 after having first taken the assessment in 2011 and failing multiple times on our path to getting there. And you know what I would best describe it as is. You know, this idea of moving from shareholder capitalism to stakeholder capitalism and this idea that, you know, as an organization over here simply to make money for our investors and our owners, or are we here to make sure that, you know, all of our stakeholders are our vendors, the environment, our community, our team members are all winning and thriving and, and making sure that there’s.

Accountability and measurement in the same way that you measure your financial goals and are audited by an outside CPA for your you’re audited against your benefit where you’re good. Yeah. I mean, I think it was, it was a stark make-up of yes. Okay. Here we are. We’re, we’re employing people, we’re giving them some health care.

And I thought that that was like, we’re doing great for a small business. And we were at the time, I don’t know, a million, $1.8 million for every, so it was super tiny. And at the same time, you go through this assessment and you’re like, wow, there’s, there’s so much more to do. There’s so much more opportunity.

And so. Yeah, that’s an off, you know, a series of events and learnings and small changes, you know, all along the way to eventually become a certified B Corp. And we’ve since used that assessment to do more and more and more and more. And I think in business, you know, there are so many tools out there to acquire more customers or to manage your inventory or to, you know, you name it, it’s out there. And so this idea of like managing your business around, you know, the whole, whole kind of stakeholder philosophy, that’s unique and there are so many ways and tools to measure your financial performance. What about your performance as it relates to your environmental stewardship or community involvement?

And that’s really where, you know, I, I love, I love the core of, I love that. I love the assessment and it’s really, I think helped us. Give us a path for continuous improvement as it relates to benefit all of these stakeholders. So, so that’s been, that’s been the journey and it’s, it’s definitely a journey where we’re really proud of where we are today.

Didi D’Errico: A lot of people have been holding their breath saying that turn to the calendar. Hopefully, the world will be a lot better place. But at the beginning of the pandemic, your business was super forthright with a, I think it was a weekly or bi-weekly note to partners about some of the things you were trying, as you were trying to respond to having a manufacturing location, as well as a design and consulting location.

How do you keep your people working? How do you keep your business going? Maybe give some 

Eric Edelson: examples. Yeah. There are so many reflections I have, and there’s, there’s so many, like, you know, my, my emotional and physical, like. Presence and feeling this entire year has seen more highs and lows than ever before.

One of the, I think I shared this with you DiDi and is. I really lean hard on this book. The obstacle is the way by Ryan holiday early on. And that really helped me to just kind of have that mindset of like, Hey, this, this is super crazy. And I can’t, I have no idea what’s going on, but like, maybe there’s an opportunity in here and maybe there’s something different.

I think that as a B Corp, you know, it’s. It’s one of those things where, you know, we have outside investors, we have a really intense business as a manufacturer. We’re here in California. We were at the epicenter of, of the COVID outbreak. And so it was, it was really scary. And we closed our factory for a couple of weeks early on, which is, that’s like our that’s our heart.

That’s where the blood pulses. And it, literally felt like we were dead. I mean, it felt like we were in the ICU as an organization. And like, we didn’t know when we were going to get out. And so we created these three guiding principles of like, you know, Karen. Health and wellness of our team first and foremost, second, you know, just taking care of our clients and making sure that business continuity is there and then three practicing, no discrimination, harassment.

And, and so those are the principles that like really, really grounded us. And I think that we had a bunch of levers in place to make change real quick for our people. And so, you know, it was like one of the things that we did really early was. We created a childcare fund. And so we wanted to make sure that team members could come to work, but all of a sudden schools were shut down.

And so we ended up spending tens of thousands of dollars to support those people who had kids who also couldn’t go to school. Um, with childcare, we, we quickly instituted, you know, kind of attendance, bonuses and things like that. And we’re doing that again right now, actually in December. Like, we’re kind of in another one of these crazy States of affairs right now, that’s really scary and tenuous.

And then I think that we’ve really leaned into benefit opportunities and programs. We, this year we created hardship relief funds, which we’re really excited about for our team, but probably the biggest thing that we did this year was really focused on ownership. I said we ended up early this year coming to an agreement with the gentleman I partnered with on our fire clay to basically go through a, almost like wealth redistribution and kind of solidify his financial future for his family and instructor, a long-term buyout of him, and be able to redistribute his ownership to our current team members. So that over time as we continue to grow, that they would have long-term financial opportunity and success. And so I think again, in that vein of like, this is a crazy time and there are all kinds of crazy stuff happening, you know, we try to lean into our team and lean into our people and say, Oh, my God like this, this whole thing is based on, on you.

And if you can show up and do a great job, we will have tremendous success. And so I’m blown away at how incredible our team reacted during this time. And I feel really guilty cause I’ve been sitting in this room for like all of it, like looking at this screen while so many people are just doing incredible things.

So it’s giving me just a lot of. Fire and inspiration to do more for the better. It’s just been an incredible year. But I think that like the foundation that we had as a B Corp and that focus on people really helped guide us and give us not just the philosophical, like, yeah, we want to be a good employer.

We want to get rid of people, but like really the tangible, like we can do this. We can devote dollars. We can devote resources. We can devote ownership to, to making a difference, not just today, but, but in the future as well. 

Didi D’Errico: That’s so incredibly powerful. It’s not about living in the moment. It’s about living in the long-term and investing in your people is such a, in such a giant way in the long-term.

Was this something you guys were on course for? Is it something that pandemic accelerated or it’s inverse of kind of what the common thinking is right now, I guess? And I’m just curious. 

Eric Edelson: You know, we had, uh, we had a good year, but in a completely different way than we would have ever imagined. And I just go back to like that mindset of like the obstacles away.

I’ve just like it kind of this idea of like, what is the plan? I mean, I think that we’ve been very. Communicative and vocal and collaborative. And so I think we’ve been really adapting to plans and changing plans in real-time. That has been a really foundational year for us. I think it’s a year that none of us will ever forget, not just because of the pandemic, but because of how much we accomplished.

Like we actually did more. Faster than ever before. I mean, we had like huge wins literally in every team that, you know, I would have, I had like on the roadmap for two years from now. And so like that, that like was never anticipated. And I just think that. Yeah. When all of a sudden, like the focus, is so extreme and you just forget all the other garbage, that doesn’t matter.

You’re all of a sudden like you just allow your team to do so much more. So that’s been, that’s been really fun to see. And I think if anything, it’s certainly given me more focus on people and then like, just thinking more about how we can like operationally the focus more on people and what more we can do for our people.

So if anything, I come away from this year going like, okay, that was cool. They were amazing. How do we make it better for them? How do 

Didi D’Errico: you measure the impact of what you’re doing with your people? 

Eric Edelson: We’re on this quest to measure employee engagement. And it’s one of our three goals for next year is improved from play engagement.

We don’t actually know what that means. So I try to be qualitative and quantitative. So I think for so many people, it’s about careers. It’s about development, but it’s also, it’s about money. It’s about compensation. It’s about pay. And I think that you know, we’re looking at starting wages, we’re looking at overall compensation.

Um, bonus opportunity, certainly ownership. And then, and then things like pay equity. Um, so we do pay equity studies, you know, just to make sure that from a gender perspective, from an ethnicity perspective, uh, tenure, that, that we’re, we’re doing a good job and we have a small headcount, hundreds of Tibet people.

So it’s. Hard to say that we’re statistically significant, but we do the work and we have big models built on and we look at it and share with our board. So I think, I think compensation really matters. And I think benefits are really another place where you can be super tactical. And so I’m really inspired by PayPal and PayPal studio.

And he has this idea of discretionary income, you know, which is like after you get paid, how much you pay for taxes and rent and basic needs, how much more money you have leftover for discretionary purposes? And so I’m really inspired by that. I, um, PayPal has this public website where you can just like, see all the benefits of the offer.

And of course, you know, PayPal couldn’t be more different than FireCloud. But I looked at that and I said, FAPE, Paul can do so we launched FireCloud benefits.com. Anyone can look at it. And it’s basically just a way to like, show everything that we give our people and then like doing more with that. So again, I mentioned, we launched a teammate relief fund.

You don’t want just a charitable matching opportunity for people this year. Um, we went, we went deeper in a couple of other areas. So really making sure that people have a clear sense of their benefits and then get into the details and measure the data. So those are some of the, like the super quantitative things that I think are imperative to do for people.

And then on the qualitative, we’ve got a great people team and we are very focused on development and retention. So we do have a whole talent development plan in place for people we’re focused on great onboarding we’re focused on. Know, training managers. And, and so we’ve got a plan in place to help make sure that as people are coming along, that we’re developing them and improving them.

And so we’re trying to be more quantitative about that. We’re certainly measuring things like training hours for people. Again, it’s, we’re in a fortunate position that we have the revenue and we can afford a full-time person in a training and development role. But I think we’re trying to take that quantitative and qualitative perspective as we think about how to enhance our teammates’ experience at FireClay.

Didi D’Errico: So in, in wrapping this up, I know that you talk a lot to other small businesses, to other business leaders, to other folks that are running people, operations. I’m curious where you would guide them in terms of starting to make that change from just getting rid of the administration to doing something more, to enable your people and empower your people.

Eric Edelson: I think one thing that can help business owners because every business owner, like a hostel, like thinking about numbers and ratios and math and accounting. And so I think sometimes doing the work to like, actually like, look at your percent of investment in people as a percent of revenue, or as you think about, I invest so much in people in headcount and what more am I doing to enhance them?

Or, you know, you’re looking at benefits and you say, okay, I’m investing in health care, which is a lot of money, but what about the rest of the stuff? And what percent of those things do those things cost as a percent of revenue or a percent of your investment in healthcare, or as a percent of your total people investment to start kind of just like having a sense of like, is it really a dollar thing that is scary to you?

Or is it. It’s actually like a very small percentage. And so it makes it worthwhile. Sometimes the number like $20,000 could be a lot of money, but if it’s 0.01%, like all sudden, like, wow, that’s not that much as a percent of the overall. And I think for a lot of people, any of these things didn’t really seem very expensive and really intimidating.

But when you, when you kind of peel back and you say, you know, incrementally, how much more is that thing on top of the investment of already making in people. You always, probably not that much more, but that incremental variable investment can really go a long way for people. And then the second thing I would do is, just talk to your team.

You know, one of the things I’m doing right now is like 20 minutes with almost everyone in the company, just like in quick one-on-one it’s just like, how are you? What can I do better for you? Ask them this question. If you were me, what would you do different? I tried to do that most years. And I find a lot of learnings in there.

And usually, it’s like really small things to do that. Like, don’t cost a lot of money that have the most impact. 

Didi D’Errico: Can you talk about what leaving your people better than the day before? How does that true-up in your mind to people operations? 

Eric Edelson: I’ll leave you with this metaphor. We have a seven, six-person maintenance team that takes care of all of our machinery.

And we have like 110 motors at the fire clinic for all our different pieces of equipment. And it’s, it’s sad, but I feel like we know more about our motors than we do our people. And we have more people making sure our motors are functioning well than we do and making sure that our people are functioning well.

And so our main, it seems highly process-oriented, you know, all about preventative maintenance. They have clear plans. They have all the tools. Big shops like lots of tools and lots of toys, and they get to go at it and have fun making new stuff but also making sure that the machines are running and that uptime matters.

And so it haunts me in terms of like, how do I figure out how to do that same thing for people. And not that people are machines, but people need maintenance and they need help and they need support and they need tools and training. And so. Know, how do we allocate that same mentality to our people? Like we do.

We do our motors.

Didi D’Errico: Eric gave us a lot to think about, especially with the core theme about doing better for our people here to help us break down a few key insights with some practical application is Tracy.  the chief people officer at Zenefits. 

Tracy Cote: I sort of distilled Eric’s comments into three main areas. Uh, all of which are driven obviously by his personal philosophy, which I think are also broadly applicable as well.

So the first is to prioritize your people, listen, communicate, focus on their needs. Eric demonstrates how he does this in a number of ways, including one-on-ones his new guiding principles to focus on his people’s needs first and a continued focus on learning and development. Uh, to keep his people engaged.

The second is to strive to do good. So for your business, for your people, for your community, the lessons that our clay tile learned along the way to becoming a B Corp involved, practical things like becoming more energy-efficient, but they also included a lot of people related items like working closely at your compensation and benefits.

Thinking more broadly in this way provides your people with a mission that benefits your customers, your team, and your community and purposes. A clear contributor to employee engagement and is very relevant to customer satisfaction. The third is to consider your people and investment. Don’t just measure your financial performance, measure your investment in people. I love this perspective. His example about how they know more about the engines that literally power their business than they do about their people was a great analogy. How true is that for most organizations, we should all be looking at the percentage of our investment in people not as an overhead or as an expense, but as a percent of revenue or profit or whatever metric we want to measure, and consider it a line item investment in our business. 

Rob: So Rob here with some of Rob’s observations on today’s program, the interview with Eric Adelson left me feeling both confused and inspired. I’m confused because I can’t figure out how such a wonderful, genuine human being like Eric managed to cheat his way through the sociopath portion of the CEO test.

Eric. I don’t know how you dodged that Kobayashi Maru scenario, but I’m glad you pulled it off. I’m also inspired because of hearing about B Corp’s for the very first time who wouldn’t be inspired by a company-type that puts employee wellbeing right. In the charter, instead of just the standard boilerplate ripped off from that Conan movie.

It got me thinking though, B Corp sounded like an absolutely great idea for fostering employee engagement and empowerment, but isn’t there more that we can do? What if we could create something. Call it an I-Corps where all the management positions were actually elected. Let’s say your boss had to come up for reelection every year or so, either running against a challenger nominated from within the team or a write-in candidate from the outside.

Don’t you think she might be more inclined to cut back a bit on those late-night, last-minute, weekend assignments? If she was trailing by 3% in the polls for the CEO position, we’d need to come up with something time tested. Foolproof and uncontroversial, would it work or would the whole thing devolve into an even more political environment than what we’re already stuck with?

Maybe you should run it past your CEO and see what they think. Let me know how it goes. I’d do it with mine, but I got to run. I’m late for a meeting

Didi D’Errico: That’s Rob I’m Didi, and this was PIVOT. If you have questions, you want us to answer on our show, check out the link in the show notes below and we’ll get it covered.

Thank you for joining and be sure to subscribe on Google, Apple, Spotify, or anywhere you get your podcasts.