Episode #565: Building Winning Teams in Fitness-Tom Johnston on Talent Optimization and Employee Engagement

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I am super excited to announce that we now have a formal

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partnership with the Prospect Wizard. And when I say

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wizard, I mean wizard. Obviously you have a website.

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This allows you to convert your website traffic visitors

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directly into leads. It's not just another chatbot and

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it's not AI but it allows a visitor to call, text or leave a

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voicemail immediately. Goes to you, your sales team or anyone else in the

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club instantly. MIT shows a study that if you contact

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the league within 10 minutes, chance of them converting goes up nine

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times that of the average. We got the Atlanta clubs

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on it. Vita Fitness, Gold's Gym, Mountainside

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City Fitness, Philly College Park. Become one

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of the next Halo companies to deploy the Wizard.

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It's easy to use. Go to the prospectwizard.com

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get a free 30 day trial. Talk to my boy Dave Gallen. He will get

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you all set up and let the leads flow based on the

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Wizard. Go get him.

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This is people on Halo Talks NYC have the pleasure of bringing a

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friend of mine for a short 20 years coming in from outside of

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Boulder, Colorado, Talent Optimizer Group. Mr.

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Optimizer, Tom Johnston, welcome back to the show. Thanks Pete.

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It's great to be back. Thanks for having me back. Awesome. Yeah, we're on, we're

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on podcast number 600 around that. So it's good to have

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you back around the horn again here. As a baseball term,

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given that we are now past opening day, which we

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thankful for the KL family for giving us

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those tickets. I'll send you the fourth row legend stadium view

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and my, my picture with Boogie in the hoodie from the

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Bronx. So. So Tom, give us an update.

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You've obviously been giving us a go on having the

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industry, the Halo sector at large, understanding that talent matters.

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Talent is a differentiator. And instead of

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thinking that you can just recruit from ZipRecruiter and hope

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that you create long term employees, there might be

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a better way to challenge yourself and actually understand the

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talent that you could get up front and figure out what positions you're

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trying to fill and what types of people if

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you're going to have a winning team. Just like in sports. Exactly. So

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far away. Yeah, you know, so talent

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optimization, I think first of all is. Let's, let's talk about what

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talent optimization is. It's actually a discipline, Pete, where

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we align a business strategy. Most organizations have a business

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strategy. They know what results they're looking to achieve, but

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in between they don't necessarily have a people strategy. So

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there's a discipline around how do we go about hiring the right people for the

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right role, how do we go about retaining talent? How do we ensure we've got

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the right people in the right seats on the team? And then, and then

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we also look at diagnosing the organization to really find out

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what taking the temperature within the organization in terms of what

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are the employees thinking. Feeling like to understand the sentiments,

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but also let's start to quantify how are we doing as an organization.

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So we put some, we really put some data and some rigor behind the

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entire props process of a people strategy,

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you know. And what would you say the percentage of

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companies in our industry were doing this three

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years ago before you started? You know, Pete,

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it's a really small percentage. And most times when I start to

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have a conversation with a leader, you know, some of

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the conversations begin with, hey, you know, you're a CEO,

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you're, you're a founder and you're building

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this brand. And in today's day and age, the reality is

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most CEOs look like you and me, but the

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reality is the workforce doesn't look like you and me. So it's really a

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matter of taking an approach to, to building

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a talent pool and building an employer brand. And I

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would say, Pete, the majority of organizations within the halo

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sector, and I think outside of the halo sector, they don't necessarily

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just look at building a, an employer brand

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and understanding how they're attracting and

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retaining talent. You know, wrote this book several

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years ago that your face is, your namesake

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is in and time to win again. There we go. Thank you, bro.

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Appreciate that. Prop.

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Yeah, know when you think about a general manager and, and all the money that

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now is flowing into sports teams at, at all levels

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and you think about the nil, you know, where you're getting paid now,

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you know, to produce and, and I was just watching this, I

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don't know if you watched it, but on Vice Hulu, there's a,

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there's a show on Rick Patino and, and Cal

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Party, you know, talking about nil. And you know,

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Patino's like, yeah, Kedari Mitchell, like we

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hired him because Seton hall couldn't pay him

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what we could. So you know, the idea of like a student

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athlete, you know, is basically non existent anymore as like a

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term to be used. He's like, yeah, better hit those shots. And we're paying him

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like he's an employee to St. John's

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basketball athletic program. And when you

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think of the talent and the scouting and the recruiting,

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you know, if you layered that on into a health Club. And you know, you

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take like Club 16 with, you know, you know, Trevor and you say,

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hey, that, that guy's a world class hockey player,

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you know, who's now trying to build a world class regional chain in Vancouver.

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You know, how does he kind of look through a lens with you

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about if I have the best players, I probably have the highest chance of,

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you know, winning a Stanley cup, you know, in, in the health club industry

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in Western Canada. So how did you kind of get him and his

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team with Carl to say, hey look, this is something that you need to

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invest in and it actually might be the highest priority thing that you have to

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do where in the past it was like, yeah, we hire people, we

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get people to work here and then they leave, then they come back, then they

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leave. Right. And we're constantly like filling that funnel.

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Yeah, I think the most. You know, let me just start here and say

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that you're speaking about Trevor Lyndon and Club 16.

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She's fit in Vancouver BC. And

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it's important for me to recognize that the conversation and share with you

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with your audience that the conversation with Club 16 actually

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began with myself and Chuck Lawson. And Chuck was the co

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founder in many ways the visionary behind Club

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16. And unfortunately Chuck passed away last year.

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But I'll take you back to our initial conversation that we had.

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And Chuck and I, we had a conversation at the

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Club Industry CEO Summit a few years ago and Chuck was,

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Chuck heard about my work. Somebody up on the stage was actually a

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client and Chuck came out into the lobby and he said, hey, where's

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this guy that he was talking about? Like I'm the guy. And so

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we struck up a conversation that took several months before.

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And I say this, Pete, you, I think you use the word is

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convincing. Right? Convincing. Chuck and Chuck didn't need

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convincing. And the work that I do is, I often say this is

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about attraction, not promotion. So I can't convince you

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necessarily to do the work. You need to be willing to want to do the

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work. And Chuck was a learner and Chuck always was looking at

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opportunities and how he went about improving his business. So

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introducing my work to then introduce

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me to Trevor and Carl. You know, we

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really started with, hey, let's, let's take the pulse of the organization and

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let's survey the organization. Let's understand where you are

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today. And really instead of us trying to figure this

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out in terms of how do we increase employee engagement, how do we hire the

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right people, do we have the right people in the right seats, do we need

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to Potentially restructure the organization. All of those things came out in an

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employee experience survey. But I will say this. You know, Chuck

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and I, we had several conversations around

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facilitating an employee experience survey. And what I ensured

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was, is that Chuck would agree to be 100% transparent

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with the results, with the entire organization. And, and he agreed to take

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action. And then the action that we were taking, we

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explained to the team what we were doing and it was super important why we

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were doing what we were doing. People want to understand the why

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and we shared the why. And through this process over the

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last couple of years, one of the things that Trevor will

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say is talk about a humble leader. Trevor

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will often say, I don't necessarily have all the answers. So what we do

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is we really pose the questions to the team and that's

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also how we help the team to feel seen, feel heard

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and feel valued.

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This is Pete Moore. I want to let you in on a little secret. There's

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this company called promotion Vault. And what they do is they give out rewards

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from retailers that allow you to incentivize your

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members without having to do zero down and one month free

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or giving away shakes or giving away T shirts. What you want to

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do is build a rewards program that lasts, that people

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value and that doesn't discount your own products and services.

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So here's the deal. There's something called Rewards Vault. The Rewards

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vault is going to allow a member to set up their own profile.

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They are going to answer questions, you are going to get those answers. You're going

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to be able to target those members and you're going to reward them inside

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your club, inside your spa, and outside of the club and

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outside of the spa to get them to become loyal, to get them

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to pay their monthly dues and to be rewarded

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properly for the actions. A lot of companies are cutting back on rewards.

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You shouldn't be Promotion Vault. Your answer, trust me, this is

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real.

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Give me some examples of how you go about that fact finding

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mission. What's the type of questions without giving us like the whole secret

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sauce of the playbook, but like what's the survey that that allows

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you to understand what's going on?

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Yeah. And the fact that you don't have to give somebody like here's like 200

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questions like, you know, just type of, you know, in depth,

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like algorithms and everything else. Like I need like 10

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questions or 5 things like give me a sense of what's going on. Yeah, great

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question. So. So first of all, I utilize a tool called

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the predictive IND and So within the predictive

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index platform, which is, which is,

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you know, there is a, you know, the whole idea of predictive analytics

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is built into the predictive index. So we're using

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AI and so I often say I've been using AI for years. But

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the questions are really around understanding

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how an individual fits to their job. What is

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their fit with their manager, which is super, super important. That

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relationship, that one on one relationship with your manager is the important

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relationship that we have at work. It's understanding fit to the team,

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understanding fit to the organization, and then also

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understanding how people are feeling about their total engagement. And

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we are able to measure each one of those, those factors.

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And then within the platform it also is making suggestions,

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recommendations that we can take in order to increase

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engagement over time. And of course we survey, we take action

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and then we come back and survey again. And you know, what we

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see is through a case study, we've actually been able

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to prove and show that we've increased our employee

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engagement across every one of those categories over

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the last year. Gotcha. And by the

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way, Pete, it's 50 questions. Sorry, it takes about less

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than 15 minutes to complete and it's completely anonymous.

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So to kind of hearken or pull this into what

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we do. You know, everyone here on the show knows that, you know, our, our

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day job is, you know, we do mergers and acquisitions, help people buy and sell

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companies. And I had a conversation with one of our

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clients the other day and we're trying to sell his business right now we've got

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a term sheet at, at five and a half times cash flow, which is basically

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for a, a multi unit chain that doesn't have new

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locations coming to market. You know, it's a strategic

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sale, like five and a half times. And the guy says to me,

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he's like, how do you value the fact that I have like

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the best team probably like within 300

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miles of my two locations? How do I get,

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how is someone paying for my team? And my

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answer was, you know, they're not, you know, they're paying for your cash

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flow, which is generated by your team. So it's kind of like

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embedded in the multiple at five and a half

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times on what your team's generating. He's like, well, I don't know if that's

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really fair. Right. Because I built this team over 10 years

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and I've got people here that started with me from day one that

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I will put up against anyone in the industry. So how

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would you respond to that? Or do you think going

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forward There might be a narrative that I could use

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that says, yeah, these clubs, you know, if these clubs were,

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if these clubs were run by a different team

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that you would have to replace, you should pay four and a half times for

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it. Or I'm bringing you a team that actually could go from 2 to 10

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and here's their background and interview them, do pull predictive index on

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them, show me where they rank as like professionals and you got to pay

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me six times or six and a half times. How would you help me respond

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to that? Yeah, part of how I would respond is help me

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understand your process. I want to understand your

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process for acquiring and retaining the talent that you have.

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What does that look like and how, how

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scalable is that? Right. Do I have a system in place

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that I can then prove, if you will, and show that.

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Here's the playbook, right? Here's my talent acquisition here and

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retention playbook. And here's how we go about build,

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here's how we've gone about building this high performance culture.

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And what I would, what I would want to do is I'd want to actually

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be able to exhib at that system and I'd want to also have the data

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to, to show to a potential suitor

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investor to say, okay, here's how we do this, right? Here's how we, here's

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how we operate our business. And oftentimes the playbook that may be

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missing on the shelf, if you will, is that, that

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playbook on how we've gone about building this high performance culture

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and then theory then how we're going to go about the ability to scale and

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replicate this. Pete, so in the article that came

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out there was kind of your case study that was, you know, put

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out across social back in December, maybe November,

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saying like, hey, we help Club 16, you know, Saver

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generate, you know, an extra $2 million, you know, in actual

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hard, you know, income statement amounts,

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right? If that was the case with my deal, right, that's an extra $2

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million times 5.5 is $11 million, which

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is double the size of the actual purchase price.

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So is there an argument or is there an idea here that as we're

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talking to say, if you're going to kind of gear up your

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company for sale, and I get this all the time saying like, hey, I don't

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have a succession plan. I'd like to optimize what I've done

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and generate material wealth for myself. And I'm not

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going to build this out, not taking in private equity. Like I've done. Which is

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a fair thing to say. You know, if you're an owner, been doing this 25

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years, you know, you should get rewarded for Guy Brockway, man.

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You say Peter Brockway. Look, I'm going to build value and when I want to

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sell, someone's going to pay me for the value that I have created. That was

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his private equity playbook. Is there an argument

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or is there like an intermixing of if you're going to go

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sell your company, why don't you take a year. I'm going to tell you XYZ

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things you need to do with your business. And what I want you to do

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is I also want you to plug in Talent Optimizer Group for this segment

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because it's going to generate X amount of potential return on investment

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on its own. And also whatever that investment return is,

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multiply by 5, 5.5 or 6 and do the math

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on your own to figure out, hey, it's going to be worth an extra million.

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2,5 in purchase price, right? Yeah.

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Well, here's the. So. So I love the fact that, you know, you wear that

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hat, Pete, because Chuck was always about having his

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finger on the pulse of the EBITDA of his organization. Like he, he

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knew that number because he was always thinking about it in terms of what's the

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value of my, my company. And

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through this process, what we look at, and oftentimes what I'll say

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is, look, if you're looking at your P and L, oftentimes the

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greatest expense, the biggest expense you have is payroll. So if we think

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about how do we go about instead of necessarily cutting payroll,

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then how do we actually maximize the payroll that we have, if you

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will, and how do we make sure that we're not. We're looking

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at the hidden cost of employee turnover costs. So we

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can actually calculate what that cost is. If we look at your

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turnover, your retention rate and we look at your turnover, we can put a

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number on that. So if we reduce the employee

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attrition and we know that we're going to, we're going to save you dollars. But

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also think about the opportunity cost that we have that

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we get out of this spiral of just constantly trying to,

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you know, we're churning employees and we're constantly looking at replacing

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constant looking at how do we go about training employees.

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I think that's the other piece, Pete, is yes, taking that pause

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and looking at it that the, the, you know, what's our

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hiring process look like, but then also understanding what does our onboarding process

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look like, and then how are we going about managing performance? So

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putting the systems in place to really look at not

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only talent, talent acquisition, but talent development.

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And then you speak to things like succession planning. So it's.

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Succession planning also means that we have a plan

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in place to train and develop the talent that we have in place

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so that we can position them for that next role.

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This is Pete Moore. Here's the last tip for you of the podcast.

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We are partnered up with a company called Higherdose.

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310
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recovery and spas end up saturating your market.

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312
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for 200 bucks per month, where they're paying 39 to

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00:19:41,640 --> 00:19:45,440
happy, healthy and sweating. And the recovery should be

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just as good as the workout.

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You know, I'm all for one for coming up with new acronyms.

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Feel like that could potentially be my day job. But there's like a return

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on talent or like a return on employees. Instead of like, ROE is like

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return on equities. Like, it's really return on employees. No one ever

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asked you that question except in the guise of like, how many employees do

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you have? And what's your. What's your retention? Or

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like average years of service. And I hearken back

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to this place that I used to go to. It's called Ponchos

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Mexican Restaurant on a quarter of Rosecrans and Highland

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in Manhattan beach, okay? And it's a great, great

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Mexican restaurant. Every employee has their name tag, okay?

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And there's not one employee that's been there less than 20 years,

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okay? And I was thinking to myself, like, they wear that

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with pride. They don't. They probably don't have a LinkedIn account, right? But

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they never update their resume, right? Because they're there and

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they've been trained and they're part of a family. But this family is

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a high performance family. There's no one that's like a B

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player, that works at this Mexican restaurant and it'll hopefully be there forever.

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So when you take a look at, you know, indicating

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to your potential buyer, like, here's how long these people

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have been here. And one, I pay them well, I treat them well.

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You know, they perform. And then the other thing is that the guy from

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Nvidia always says, like, I don't really fire employees. I just, I just

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make them better and I'm going to stick with them and they're going to stick

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with me. And if I hire them right, then I know that they have the

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ability to be amazing. Which, which kind of dovetail in

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00:21:28,300 --> 00:21:31,740
dovetails into like, if you get in with, with talent

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00:21:31,740 --> 00:21:35,340
optimizer group, give you a little commercial right now there's like an

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00:21:35,340 --> 00:21:39,140
unintended consequence of a commercial for you. Like, if I help you

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00:21:39,140 --> 00:21:42,700
hire the right people, you basically are going to have into

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00:21:42,700 --> 00:21:46,420
perpetuity to an extent, you know, the ability to grow

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faster than you ever could because you made the right decision. And it's

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00:21:50,500 --> 00:21:53,740
not from ZipRecruiter and it's not some fucking. Indeed, it's not from

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Craigslist, but, but it's actually like, figure out the players that we want on this

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team. Let's go and recruit players, right, that are franchise

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players. Let's pay them well. And actually if I pay somebody really

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00:22:04,860 --> 00:22:08,380
well, I think they probably do the job of five people. Yeah, correct,

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Pete. So thanks for the commercial, Pete. No problem. Happy to do it

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unintended. You know, I love you, but like this just came out. Thank you. I

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love you too, brother. Yeah, I think, I think the, you

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know, the comment that I'll make is, is the

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example of Club 16 is when we, when we facilitate

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Chuck, Chuck knew he needed to make some changes, he needed to make some organizational

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structure changes, but he didn't know exactly what he needed to do. And so

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when we facilitated the employee experience survey, it was very, very clear

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that the team, the employees were looking for

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greater leadership and at the, at the club level.

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And so we went about restructuring the organization, but we didn't, we looked

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at it through the lens of, hey, let's take a whiteboard and let's

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look at what are the position that we need in this

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organization. And then we were able to take the, the existing

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team looking at their behavioral profiles right through the, through

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the behavioral assessment that we've had facilitated. And we were able to position

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those people into this specific role. So it's

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important, Pete, that I want to point this out is when

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we hire and I'll Give you a quick lesson on

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talent optimization. When we're looking at the hiring component, we talk

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about hiring for the head, the heart in a briefcase. Right? The briefcase is

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typically what we would look at. The resume, the experience. Right. The cv,

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if you will. The heart is, tell me what you're passionate

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about. How does this person potentially align with our culture, our

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values? Right. Are they going to be aligned with our mission? The other thing I

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talk about is empathy or compassion.

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Is this person going to be a compassionate leader?

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And if they look at the head,

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the head is how are they wired for work? And that's really

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where we start to look at the behavioral assessment as they fit to a

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particular job target. So think about it from a sales. Sales role.

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Simple is, am I looking for a hunter? Am I looking for a farmer?

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And so they're very, very different behaviors that I might be looking for, but

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I'm looking for a salesperson. So if we can help to determine

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that, we look at that resume, that briefcase, if you

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will, and then we can kind of fit that person to the job. And I'll

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say this too, Pete. It's never red light, green light, meaning the

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behavioral assessment, because anybody can flex into any job.

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But then we also want to be able to provide coaching tools. Right.

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And. And so we're able to provide those types of tools as well through the

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platform. I would like to be considered a compassionate

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hunter, if you can give me

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that, because I'm trying to find deals, but I'm also always

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understanding what the seller needs. And we just worked

401
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on a deal, and it's. It's close to closing.

402
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I said to the private equity guy, because I became friends with him as a

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buyer, I'm like, you have to be more empathetic to what's going on here. Like,

404
00:25:00,150 --> 00:25:03,910
this guy ran his business through Covid. He's got personal debt

405
00:25:04,550 --> 00:25:08,350
on the business. He's got obligations. We have a fair deal with

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you, but when you deliver something, like, you have to deliver it

407
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more delicately, and you have to put yourself in the shoes of. Of who

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you're buying a business from. And that credibility and

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that compassion gets you over the finish line. So

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not only deals, not only business on your side of, like, hey, let's build an

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awesome team. But if you're doing a deal, you kind of have to overlay a

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lot of the definitions and, like, the philosophy that

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you're putting out there and make sure people know, like,

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what they're defined as and why they were hired. Yeah, well, you know,

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00:25:41,240 --> 00:25:44,720
the compassionate part, Pete, is You know,

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compassion is defined as empathy, empathy

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plus action, Right. So it's really understanding meeting the person

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where they are and then taking action. And the action that you take

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needs to, you know, help to help to meet that person

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where they are. Meaning that the action that you're taking needs to be meaningful. And

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if we're able to do that, then we become more likely to be a

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compassionate leader. And so becoming a compassionate leader is

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actually something that I help organizations and, and I

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teach that to organizations because compassion can be

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scaled. And interestingly enough, when we use

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the tool like the predictive index, you know, when we take that behavioral

427
00:26:25,190 --> 00:26:29,029
assessment, what we talk about is it creates self awareness at speed

428
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and scale. So the first thing I want to understand is

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myself and how do I show up as a leader? So if I'm the deal

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00:26:35,550 --> 00:26:39,390
maker, I need to really understand how I'm wired and

431
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then understanding how I'm wired. But also that's going to help me to understand how

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I might be perceived by whom, whomever I'm working with. Right.

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The, the team that I'm working with, that interaction that I'm having, and

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that's going to give me the potential opportunity to adjust

435
00:26:53,970 --> 00:26:57,810
my approach. Right. And if I really, if I also had

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under, and if I understand the team that I'm potentially working with and,

437
00:27:01,450 --> 00:27:04,970
and the group that I'm acquiring and I had those folks take that

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behavioral assessment, that's also going to help me understand do I have the

439
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right people in the right roles today and then being able to. The last thing

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I'll say about this, Pete, is create the psychological safety for people.

441
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Right. Go ahead, Pete. No, and I would say just for the

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audience, when we use the word compassionate, we're not talking about

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00:27:24,210 --> 00:27:27,850
allowing losses to happen. We're talking about winning with

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compassion, with empathy and with understanding, but

445
00:27:31,650 --> 00:27:34,810
also saying, like, this is how we're going to run the culture and this is

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going to be a winning team. So compassion is not like an angel investor

447
00:27:38,940 --> 00:27:42,300
saying yes to everything or letting things, you know, go by the wayside. Like, we're

448
00:27:42,300 --> 00:27:45,540
going to perform, we're going to execute, we're going to listen, we're going to be

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00:27:45,540 --> 00:27:49,220
compassionate, but we're going to win. Yeah. I mean, there's data out there, Pete,

450
00:27:49,220 --> 00:27:52,460
around compassionate leadership and how you actually will

451
00:27:52,460 --> 00:27:56,300
outperform over time. Whether you look at it through compassionate leadership,

452
00:27:56,700 --> 00:28:00,500
through, you know, conscious capitalism. Like there's, there's plenty

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00:28:00,500 --> 00:28:03,740
of data and there's plenty of case studies out there on

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organizations that are winning and they're and they're consistently winning

455
00:28:07,820 --> 00:28:11,660
with. With that approach as a compassionate leader. Yeah. So

456
00:28:11,660 --> 00:28:15,020
look, man, great to talk to you again. We're going to keep this to 25

457
00:28:15,020 --> 00:28:18,780
minutes, which exactly what we hit just now for our people that like to run

458
00:28:18,780 --> 00:28:21,860
or walk their dog for 25 minutes. So you've just been

459
00:28:21,860 --> 00:28:25,260
optimized talent wise. Talk to you soon, brother.

460
00:28:25,340 --> 00:28:26,060
Thanks, man.

461
00:28:33,270 --> 00:28:44,150
Sam.