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(uplifting instrumental music) - Welcome to "Business Forward."

I'm your host, Matt George.

Joining me tonight, good friend of mine, Austin Endress.

He is the CEO of Ledgestone, and the mind behind the employee engagement platform, Employee Insight.

Welcome, Austin.

- Appreciate it, Matt.

- Well, it's good to have you come on because there's a buzz going on in some businesses right now, and I like that.

But really, tell me what Ledgestone is, and then we're gonna get into Insight.

- Yeah, so Ledgestone is an organization, we're working really on building, what we'd say, is a new model of professional service.

We hear this word artificial intelligence or AI, and it's kind of a buzzword today.

And when we look at really what AI is doing, there's created a contentious debate, will man be eliminated by machine, right?

Will AI replace humans?

And when it comes to what we'd say are low stake situations, like what movie to watch, what song to listen to, or maybe what product to buy on Amazon, we think that yes, AI can be highly disruptive.

But in the realm of professional services, when people work with an advisor, someone that they trust, someone that they rely on to help them navigate what we would say are complex and or high stakes situations, AI has done virtually nothing.

And we point to things like your relationship with your doctor, your relationship with your attorney, or your accountant.

It probably looks very much like it did 30 years ago.

And again, while AI has driven mass change and is driving dynamic evolution in other areas, in the realm of professional services, it's done very little.

What we think is, again, we talk about a new platform, it's how artificial intelligence will not replace, but will rather augment and enhance what our professionals are able to do for their clients.

I use in reference a study done by Vanguard.

Vanguard asked their current clients about the use of a robo-advisor.

What they found are 90% of people using robo-advisors would actually prefer to have a human advisor.

90% of people could today currently using human advisors would not switch to a robo-advisor.

(coughs) When we look at it, we'd say that AI is almost perfectly suited for the idea of stock portfolio, meaning analyzing data, to make recommendations based on a risk tolerance.

However, again, what we see is that financial planning isn't done in an Excel spreadsheet.

It's not done based on probabilities.

It's a conversation you have around the kitchen table with someone that you trust, helping them navigate something that is emotionally triggering and very important to your future success.

In that case, what the advisor provides is reassurance.

He provides peace of mind, he provides comfort in helping us navigate those.

What Ledgestone is looking to do is how can we take and apply things like data analytics, things like artificial intelligence, to, again, improve what our advisors are able to do and enhance their ability to drive value.

- You make a very good point, because there isn't a day go by where I don't hear that someone's gonna be out of a job because of AI.

You hear it all the time, but I do think, like you, I think to myself, if I'm planning my future, for my family, I need a financial advisor.

I don't need an algorithm to tell me, "These are the things that you should do," and then I'm just gonna go in and do it myself.

- 100%.

- You need the experts.

- Absolutely, what you really do, and you look at expertise as well, you have to trust.

We say trust, we look at three aspects of trust.

One, do I trust you know what you're talking about?

That's that expertise componentry, right?

If my doctor, right, does he understand and have the knowledge to help me make the right recommendation for my health, right?

My accountant, the right recommendation for how we do our taxes, or my attorney, how we structure our legal contracts.

But it's beyond just, "Do you have the requisite expertise?"

It's also, do I trust you understand me as a person?

Do you understand my goals?

Do you understand what I wanna accomplish, what I value, what's important to me?

And also, do I trust that you will act in my best interest?

if I don't trust those three things, again, that you have the knowledge, that you understand me, and you will act in my best interest, your recommendation is unactionable.

It's only in building that relationship, it's only (coughs) in instilling that trust that you are able to drive performance on my behest.

- Interesting.

So when you're looking at what Employee Insight is, I know it's a platform, it's a tool, there's a survey component, but really, are you looking, when you go into businesses, are you looking at how to drive culture and employee engagement?

I mean, is that the goal?

- Yeah, it's a great question.

So we developed Employee Insight as a solution to help drive engagement in the workplace.

- So what is it, just for our viewers.

Employee engagement is.

- Yes, we would say employee engagement is a mindset.

Forbes, for example, describes it as an emotional commitment an employee has to an organization or its goals.

But really when we go to that word emotional commitment, right, there is an aspect that I have or a disposition I have towards an organization.

For example, we talk about symptoms of an engaged employee.

Someone that will go above and beyond, someone that, again, is committed, someone that's loyal, right?

When we go to someone that is disengaged in their company, they're indifferent, they're gonna do the minimum, right?

We would often say this word, presenteeism.

I'm present, but I'm not active, nor am I engaged, nor do I really care about the health or the wellness of the company or the people that it touch.

- You're just a body.

- 100%.

- And we have a lot of people that are in that mode and as a CEO, as a former CEO, I'd sit there, and you're a current CEO, you do sit there and look at your teams.

And it's not hard to know why, maybe, or to know who's not engaged.

- Yeah.

- But to figure out why is really hard sometimes.

- Yeah, no doubt.

- And so what does Insight do?

Like explain the process of what Insight does.

- Yeah, it's a great question.

We say this a lot.

You cannot improve what you cannot manage, and you cannot manage what you cannot measure.

And often we look at something like employee engagement.

Again, it's a mindset.

It's very, very hard to measure mindsets, to measure dispositions.

And so the big thing and the crux that we look at is really what drives that mindset.

And we would say it's how people feel, it's our experiences, right?

It's, generally speaking, how we interact with our coworkers, with our organization, within our role every single day.

And collectively, those experiences, again, shape this disposition, which in turn drives our actions, our behaviors, and eventually the outcomes of everyone's organization.

When we look, for example, at those feelings, we categorize those into something we call dimensions, but there are really six categories.

Things that drive satisfaction, those would be how safe do we feel, how connected do we feel, how aligned we feel.

But also there's things that motivate us.

Motivate us meaning intrinsically push us to go above and beyond what's even required of us because it's great for the organization and the people we serve.

Those things are accomplishment, value, and purpose.

And we'd say, again, when someone is highly motivated, when someone is highly satisfied, they again have a disposition of engagement.

- That's interesting because, you know, I go back to, back in my children's home days, I think about culture.

And I think what happened was, there was a time where I sat here and I said, "All right, as CEO, I need to shore up our culture."

But really we had, you know, let's say 11 different sites.

I had 11 different cultures.

And things were starting to, really, we're one team.

We're one team, right?

- Yeah.

- And then next thing you know, COVID hit, and now we're back into our separate cultures.

So for our viewers, what's the difference between employee engagement and culture?

- Yeah, that's a great question.

Again, engagement is that mindset, right?

It's me as an employee, do I have that emotional commitment to my organization?

Eventually we'd say that mindset drives our actions and our behaviors, really what we do.

Culture is just the norms that have established over time.

So again, what I do on a consistent basis, do I have a culture as an organization where my employees go above and beyond?

Do I have a culture of consideration, where again, we should demonstrate kindness to one another?

Do we have a culture of excellence where everything that we do in our organization, we push to be the best that we can be?

Those are just norms that establish, and oftentimes, we would say those cultural norms, again, those behaviors over time, are predicated, again, as to how people think.

- You were talking about really those are feelings of employees, right?

- Yeah.

- Talking about if I go to work and I don't feel like they care about me, or they don't, whatever it may be, it does affect the bottom line in a sense, because you're really getting a non-productive employee.

- Mm-hmm.

You know, Gallup did a study.

They evaluated 8,000 work groups.

What they found are top quartile engagement organizations had 22% higher profitability, 21% higher productivity, 65% lower turnover, and 10% higher engagement.

What you're getting at is what the collection of all our employees do over time, right?

Their actions, their behaviors, ultimately determine how we perform, and I'll use a very specific example to explain that.

Say you are a plumbing contractor.

It's Friday night at five o'clock, and you have a plumber who's on a job site an hour away.

He's got an hour and a half left of a long job.

The question is, if he stops, because he can, because it's the end of the week and he's tired and he's ready to go home, he could leave that job, he could drive that hour home, and the next Monday morning, what's he gonna do?

He's gonna drive back out, do an hour and a half of work, complete that job, and then have to go to the next job site.

Theoretically though, if he is willing, we'd say, if he's engaged, he would look at that calculation and say, "Yeah, I know I'm only gonna get paid the hour," right?

That's not, again, enough to motivate me to eat into my Friday night, but I know what it does for the company.

If I complete this job, I save two hours of drive time.

I create a satisfied customer and I'm able to be deployed Monday morning to a new job.

Look at that enhancement of productivity for an organization.

They're just small decisions predicated over the time that eventually drive those substantive results that we see.

- And you're not ticking off the people that you were servicing on that Friday night.

You finished the job- - 100%.

- You get customer satisfaction.

I mean, there's dominoes onto this.

So when people, I'm gonna go through the process here in a second, but when you hear in businesses when they say net promoter score, 'cause I know Insight tackles this.

- Yes.

- What exactly is net promoter score?

- Yes, so NPS, or net promoter scores as you said, is an assessment that we look at to help be, what we'd say, is a measurement tool of engagement.

It's a related metric that we'll evaluate.

And so the idea of a promoter is we would ask a question to an employee through an assessment and we would ask them, "How likely are you to recommend this place to a friend or family?"

We'd say, for example, as an employee net promoter score, it's how likely would you recommend this as a great place to work to a friend or family member?

And it measured it on a scale of one to 10.

Promoters are people who answer nine or 10.

You have to have, again, a very strong conviction that this is a great place.

- I love this place.

- Exactly.

Anyone from a six to an eight is what we call a neutral.

Someone that, again, they're not promoting the organization, but they're probably not leaving either.

Anyone that's below that though is what we call a detractor.

- Okay.

- Detractors are what you could classify as disengaged.

So we look at both, again, our engagement assessment and we can collaborate that and correlate that with an NPS score.

- Yeah, and really that NPS score, in my mind, really dictates how good or bad your culture is, too.

- Mm.

Well, we talk about turnover.

We did a compilation study.

We looked at 10 widespread studies as what is the economic cost of turnover to a business?

And what we found is it's about 57% of that exiting person's salary.

So if you take an average employee, let's say he makes $50,000 a year, it's gonna cost 57% of that, or roughly $30,000 out of your pocket.

- That is unbelievable.

- To replace them.

Now, some of them are fixed costs, right?

Some of them are costs that will show up on your P&L.

Those are gonna be things like advertising costs.

They're gonna be interview costs.

But there are, what we say, are the indirect costs that are actually more punitive to the bottom line.

That's a loss of morale.

It's a loss of productivity.

It's the opportunity cost of a customer that's not being served.

It's a lack of productivity.

- Training.

- Training, where now I take a fully productive employee, I take them away from their job to again start teaching and training someone trying to get that requisite knowledge.

It stops my business.

- You know, so Employee Insight's really for any business.

But let me give you some local stats here that are mind boggling to me.

You hear not only, well, I'll just say in all of middle Illinois, you hear 400 RN openings at hospitals, you hear 60 to 100 open positions at certain social service agencies, police departments, fire departments, all these different things.

- Yeah.

- It affects morale, it affects everything.

But really if you're just looking at it from a pure numbers standpoint, it really kills your bottom line.

And so let's say you're at about 30% turnover.

- Yep.

- Take that number you just said of 57% and look at what that does every time you tick that down 2%.

- Yeah.

- 28%, 26, 24, 22.

All of a sudden you're starting to save not just a couple thousand dollars, you're talking about saving potentially hundreds of thousands, if not millions.

- Absolutely.

- In a fiscal year.

And it's mind boggling.

So the process from, for Insight is you get a client, you conduct a survey, you take the survey results, and you dissect the results.

And a team at Ledgestone and Employee Insight will sit there, look at the results, and then decide with the business's team, whatever it may be, we'll call it just leadership team, how it ties to potential strategic initiatives that they have, also with some next steps and potentially holds your hand, Ledgestone holds the business's hand, as they work through this journey.

And then year two, they do the survey again.

- Mm-hmm.

- Is that correct?

- Yeah.

It's a good high level.

And again, it goes back to this framework, right?

How do we use analysis tools, analytics tools, and AI to be able to extract the data that we find to develop insights, again, turn insights into actionable recommendations and strategies, and then use those strategies to drive change.

At the same time, you mentioned it, culture, employee engagement, these ideas, again, they're not just about analytics.

We use a really, really simple example.

Take a nutritionist who gives you an eating plan, take a trainer who gives you a workout plan.

Does that intuitively turn you into a healthy and in shape person?

(Matt laughs) No.

- You put it on your desk just like people do with strategic plans.

- 100%, look, you could take those plans, right?

And they can be personalized to you, your body type, your BMI, everything about you.

But at the end of the day, that is not what drives change.

Yes, it's important.

Yes, we could have used a data analysis process to develop and build those strategies.

But when we really look at what we think the magic of Employee Insight is, we have a consulting team, again, that human component.

That it's not just about that robo-advisor giving you action items that you could take now on your behest and implement.

It's about giving someone who's a partner.

It's about someone who's eliciting buy-in.

It's about getting conviction around both you as an executive team, but also your mid-level management team, that engagement is something that matters.

Engagement is a lever that leaders have to be able to drive change throughout their organizations and communities, and again, how do you do that?

If you change how your people feel, you will change how they think, behave, and ultimately how your organization performs.

You will become more productive as an organization.

You'll produce more value for society and you can drive change.

Leadership is a responsibility.

It's also a gift.

It's a way that you, again, through just your actions, the way that you interact, whether it's a small team or a big team, can make massive change in your world.

- Yeah, the thing that I find interesting is because I've seen it with other businesses is, Ledgestone, as a third party, comes in and holds your hand.

And I say that because what happens is you need someone to hold you accountable.

Because a lot of times, surveys are done.

I've seen pulse surveys, four questions being sent out.

I've seen big surveys, 100 questions being sent out.

And then a CEO or whoever will get the data and they don't do anything with the data.

And then they wanna know why they're not filling out the survey next time.

- 100%.

- 'Cause you didn't do anything.

- Yeah.

- You took the info, wasted their time, and if you're not gonna take action as a leader in a business, whether it's for-profit, non-profit, doesn't matter, right?

- Yeah, research would actually say that if you do an assessment and you do nothing about it, it is actually more detrimental to your organization and to the idea of engagement than if you had never done it at all.

What you really demonstrated in asking people to give their feedback is you have an opportunity to make their voice be heard.

You have an opportunity to show them at the very least, that you can take into consideration what you say.

Again, as a leader, you're gonna have to filter through that information.

You're gonna have to figure out which things you're gonna prioritize and which things you're gonna build action plans around.

I think employees have a general understanding and adaptability to say, "Yes, we get that," but it's, do you care what I have to say?

- Right.

- Are you listening to what I have to say?

Do you at least take the time to put out an olive branch and make my voice be heard?

If you, again, do that assessment, you do nothing with it, what you say is my voice doesn't matter.

And you've done the exact opposite of the intent.

- It's pretty cool.

So that's Employee Insight.

You started off though, you had a safety company, too.

You have a safety company.

So there's Safety Insight, right?

- Yes.

- And so go into a 30 second of what that is.

- Yeah, so Safety Insight, again, the same thing, we have an analytics platform, we'll boil in data, and it's really focused on helping businesses manage what we'd say is safety compliance.

What's interesting is the reason we have Employee Insight today is because of safety.

The core of our business started and was founded as a commercial insurance brokerage.

What we find is commercial insurance brokerage is highly commoditized.

- Yeah.

- Meaning it's very, very hard to drive differentiation.

We'd say the number one greatest differentiator in the business is the relationship.

Well, that's not scalable.

And unless you can drive something that, again, offers the client value, different than what they can get from their current provider, there's really no reason for them to switch.

When we looked at an idea of how could we drive value, we came to this idea of safety.

Safety is directly related to insurance performance.

Meaning if we could reduce the frequency and the severity of accidents, workplace accidents and injuries, then as a byproduct we could actually sustainably reduce work comp premiums.

And so we went around, we asked our clients, we found again there was an appetite and a demand.

And so we started a third party safety company.

At the time, we wouldn't say it was safety compliance, we would say it was safety performance.

We did everything from set up occupational health networks to develop job fitness testing.

We had quarterly meetings.

We had, let's say, our safety best practices.

And we developed a plan we felt like we could roll out consistently to businesses.

What was interesting is if you fast forward about two years, what we had is two different groups of organizations.

Note, they were doing the same exact thing, the same training schedules.

Again, all using occupational health networks, all doing things like physicals and job fitness testing and drug testing.

The problem was, they were getting dramatically different results.

Einstein defines insanity as doing the same thing over and over and expecting different results.

And eventually, if we're realizing that the amount of training we do, again, all these different best practices, these measures aren't working, then potentially it's broken.

And what we realized is to drive safety in a company, it comes back to this idea of engagement.

It's not about compliance.

We talked to one organization, for example, that said, "We have and provide safety glasses to everybody.

When management walks in, everyone puts their safety glasses on.

When management walks out, everyone takes their safety glasses off."

The idea of safety is it's driven not through compliance, but commitment.

Really what we came to is about, you mentioned this word, culture.

We have a culture of safety.

And again, how is culture predicated?

Culture's predicated by commitment, an emotional commitment an employee has to their organization.

- Well, to tell you how much Safety Insight's needed is, I think I'm right on this, Illinois and California have the highest work comp rates.

And so when you're looking at, I think New York's up there too, but when you're looking at that safety piece, there's so much savings in just being the obvious, I wanna be a safer company.

- Yeah.

You should want that anyway.

- No doubt.

- But if you are, you save a lot of money on the backend.

- A ton of money.

You know what, and I'll reference one more stat.

This was really a stat that helped galvanize our efforts to actually create this engagement product.

They found that top quartile engagement organizations have five times fewer safety incidences and actually seven times fewer what we call lost time incidences, or those that are just more severe injuries.

The idea is they're directly connected.

- That's unbelievable.

So then Customer Insight's a different one, that's more of the bigger companies.

- Yeah, so Customer Insight, we would say really that (coughs) Employee Insight is what we'd say, it's built on a framework called customer value analysis.

It's a customer value analysis of engagement.

So there was an individual named Bradley Gale.

He had developed this framework called CVA, or customer value analysis.

And what it was really predicated on is that the best way to drive value for your clients is to actually understand what they value as customers, the decisions criteria that they evaluate when making purchases and how much those things matter.

So for example, take any product, take for example, a piece of equipment, an excavator, right?

If I am a contractor, I buy an excavator.

And if I am a manufacturer of excavators, what I really want to know is what do you evaluate when looking to make a purchase?

So the first thing that CVA would predicate is we go out and we evaluate those criteria.

Some of 'em are gonna be things like reliability, right?

Reliability matters, especially on something as important as that.

But also we say there's non-product attributes.

Things like dealer support, parts availability, service and support.

- Service.

Cost.

- 100%.

All these things.

Now, what's interesting that he did in his framework is a lot of times when people are evaluating, again, buying criteria, they just include price as one of them.

What we'd say though is it actually creates an offset.

And what we mean as an offset is you need to evaluate performance relative to price.

So take for example, an iPhone.

Let's say that the iPhone was the only smartphone that existed.

My guess is Apple could charge even more than what they charge today, upwards of maybe five, $10,000, because can you imagine living without a smartphone.

- Right.

- Imagine if Chevy was the only company that made cars today with as dependent as our society is on vehicular transportation.

- Well, real quick, we're almost out of time.

Give the quote on Henry Ford real quick.

- Yeah, so Henry Ford.

- I love this quote.

- It's funny, when he was building these Model Ts and he looked for, again, how to drive price efficiency, a woman asked him, "Mr. Ford, what color can I get your model T in" And he said, "Ma'am, you can have any color as long as it's black."

- (laughs) I love that.

Well, thank you Austin for coming on.

Employee Insight, very enlightening.

I loved it.

I'm Matt George, and this is another episode of "Business Forward."

(uplifting instrumental music) (uplifting instrumental music continues) (uplifting instrumental music continues) (uplifting instrumental music continues) - Thanks for tuning into "Business Forward," brought to you by PNC.

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