Businesses Aren’t Getting What They Pay For!

[00:00:00.00] - Alice

A podcast that looks at both the financial and operational sides of success. Please welcome our hosts, Dan Paulson and Richard Veltre. Dan is the CEO of Envision Development International, and he works with leaders to increase sales and profits through great cultures with solid operations. Rich is CEO of the Veltre Group and a financial strategist working with companies to manage their money more effectively. Now on to the podcast.

[00:00:27.12] - Dan Paulson

Thank you, Alice. Welcome to Books in the Biz. I am here with my good friend Rich Veltri. Rich, how are you doing today?

[00:00:33.03] - Rich Veltre

I'm doing well. How are you, Dan?

[00:00:35.02] - Dan Paulson

I'm doing wonderfully. So today we are talking about experience or lack thereof. Maybe you want to allude as to why we're bringing up this subject.

[00:00:49.16] - Rich Veltre

I think it comes down to when you're hiring people to do a job, or should I say a project. There's an awful lot of people out there who have jumped into expanding or writing on their resume the next level. They have the experience to be the next level than what they are. And so what winds up happening is if you're a larger firm and you go and you hire someone, you don't necessarily find out very quickly that that person doesn't know what they're doing. So I think it comes down to the firm that's hiring for the project doesn't want to hire someone that they have to teach. And then they're finding out very quickly that They're in that position anyway, that they have to teach the next person to do that project, or you're paying someone for the hourly rate to have that person learning, and you just don't know that they're learning. You think they're doing what they've done in the past, but they turn out to be learning how to do it as they go. So problem is you wind up with a confidence problem. If you find it out during the project, then they don't finish it or get it to the point where you have a good quality product at the end, then you paid for something, and then you don't have the confidence that it's done right or that the number can be relied on, or the end result can be relied on.

[00:02:25.18] - Rich Veltre

So that's a good significant piece of why it's a problem, why it's becoming something we should talk about.

[00:02:36.08] - Dan Paulson

Now, I know when we talked about this in the past, I'll relate it to you a little bit more because I think when we look at, especially fractional work at sea level, it's more common to see a fractional CFO. And in our past conversations, what I've interpreted as, you have people coming in saying they're a CFO, but might be more of a bookkeeper or controller, trying to play the part of a financial strategist, more or less.

[00:03:07.01] - Rich Veltre

Yeah, you have to... If you're the hiring person, the hiring party, be careful, because I don't know if you follow Facebook, all right? But I don't do a lot on Facebook. I'm not a big Facebook guy, okay? But every time that I've gone on Facebook, there would be at least one ad that would show up in my feed that would say, are you a bookkeeper? Are you not making enough money? Then take our course for a week and you can offer CFO services. Now, I didn't take a CFO job till I was in the business for 25 years. So somebody who's a bookkeeper, fresh out of school, can take this class for a week and offer to be someone's CFO? Let's refresh. I mean, the CFO is usually like number two or number three, highest level person in the company, and they are responsible for the finances of the company, like literally responsible. So The buck stops with that person. So do you want to hire someone who took a one week course? And who knows who they took the course from? I mean, I can post that I can teach a course. I might actually be a little bit more credible, but But if I was...

[00:04:31.11] - Rich Veltre

My son could go in and push something on Facebook that says, I'm teaching a course, and someone could pay him, and he could teach it. So what is he teaching? I don't know. I would get you that he won't know because, by the way, he's 17.

[00:04:49.22] - Dan Paulson

But he's a prodigy. He knows more about finance- Very smart kid. Than most 15-year-olds. Very smart kid.

[00:04:55.20] - Rich Veltre

I have no problem saying that he's a very smart kid, But I wouldn't want to pay him to teach me CFO services or fractional CFO services or whatever you want to label it as. I think title doesn't necessarily matter. You want to hire me and don't call me the CFO? Okay. What's the task? What's the project? What is it that we're trying to accomplish? And do I have the expertise to be able to accomplish that? That should be our conversation, not, have you done CFO at work before? Yeah, at other companies that aren't yours. So let's talk about your company. Let's talk about what you need. What is the problem that you're looking for a CFO? And then we'll also look at it vice versa. And we'll say, look, you're asking for a CFO, but do you really only need a bookkeeper because you don't have enough people? Do you need a better system or automated system because you are struggling to get your numbers up, struggling willing to get reports to tell you what's going on? That might not be the CFO. The CFO might prescribe what to do, but then you might hire two other people to come in and execute.

[00:06:10.20] - Rich Veltre

So it's a longer conversation, and it becomes making make sure you're hiring who you need or what you need. Make sure you're putting in place what you need.

[00:06:23.13] - Dan Paulson

Yeah, I think that highlights the underlying topic of what this podcast is all about. We can talk about people with lack of experience, but let's talk about the bigger picture. The reason there's a lack of experience is because a lot of that experience has left the workforce and will continue to do so over the next decade. Found this article here, and I wish I have found the statistics that went with it because I found them somewhere else. And of course, I can't find them now. So what I remember from the article that mentioned the statistics is Between 2020 and 2023, I think there was a 20 or 30 % drop in executive or managerial level people that have left the workforce. So there's 20 % fewer people that have, and I put the benchmark at 20 plus years of experience. So you and I have over that 20 year mark. We're still in the workforce. But there's a lot of people that have worked in a company for an extended period of or have been in management roles for a long time. Excuse me. That's good. That's going to blow everyone's ear drums out once they hear that.

[00:07:43.04] - Dan Paulson

But that's one of the challenges that we have, is we have what I see, and this was affirmed in a meeting I had yesterday when I mentioned some of the things that we're doing, especially when it comes around fractional work. And I just said, there are fewer people in the workforce today that have the experience that most businesses need. And he didn't even hesitate to say, you are exactly right. And he understands the problem, too, that we have a generation of baby boomers and now Gen Xers who are retiring out of the workforce. We have Gen Zs and millennials who are... Millennials are still, they're in mid-stage of their career. Gen Zs are in the early stages of their career, and They just don't have the same level of experience or knowledge. I also perceive what the other problem is here is because we've grown up in a society where everything is easily accessible as far as information goes. There is an assumption that all I need to do is look it up, and I will have that experience. And you can't surpass life experience. There just is no way to do it. It's not the matrix where you can plug rod into the back of your head, and then all of a sudden, download all the infinite knowledge about any particular topic, and then become a certified expert in that.

[00:09:09.27] - Rich Veltre

Yeah. I think the big word is judgment, right? How do you make a judgment call based on what you looked up on Google.

[00:09:18.26] - Dan Paulson

Exactly.

[00:09:19.29] - Rich Veltre

Google's great. It's fabulous. I use it probably once a day to look up whatever I need to look up. And sometimes it's workwise, sometimes it's not workwise. But there's an awful lot of information out there. I have to agree with you. But I'm not making decisions based on what I read on Google. Google might help me. It might give me pieces of the facts that I can't get from whoever I'm speaking to. But someone's going to ask me to make a decision. And when I make that decision, there is a judgment that goes in there that I cannot get from Google. It's a point of, have I seen this before? Have I not seen this before? How much risk am I taking by making the decision to the left or to the right? And what's the ultimate probability that I get the answer correct? And what's the ultimate probability that I have the ability to redirect or adjust after I make decision number one? Do I have an opportunity for decision number two? Or am I going to hit a wall and there's no way I can avoid it if I make that decision? So these are things that go through my head when I'm making a call on how to do something.

[00:10:42.26] - Rich Veltre

There's no Google in there.

[00:10:45.05] - Dan Paulson

Well, add into that AI. So artificial intelligence, everyone's talking about that being the next big boom and how that's going to replace the need for human beings. And we've had a previous guest on here who talked about that. And as He admitted AI is only good as the programmer who created it. And also the belief that it's not going to replace everything. It's not going to be replacing the decision making as we are sitting here talking about it, because there's nuances within understanding data that a computer is not going to have the same wherewithal about. Can the computer make a choice based on the data that's fed into it? Most certainly. Is that choice always going to be the right choice? Definitely not. And I think the best example of this is weather. How many hurricane models do you see when there's a hurricane approaching somewhere?

[00:11:42.12] - Rich Veltre

That's a very good point.

[00:11:44.07] - Dan Paulson

They throw all the models up on the current hurricane path, and you'll see 50 different tracks of where that thing could go. Well, if the data is so good and the machine is so smart, shouldn't it only be one, maybe two? It should be pretty accurate, right? We don't have that level of accuracy within a machine that can replace that. If we did, we could be better prepared for things. We could make correct decisions on certain tasks or outcomes. We just don't have the capability to do that without real world experience. And that only comes with time. So far, we have not found a way to shortcut time, no matter how much we believe. That one week course, while that might help you in some areas, you still then have to do the job for years upon years upon years to understand what you learned actually produces the outcomes you want and what you want, and what levers you have to pull to get there. Yeah.

[00:12:49.13] - Rich Veltre

I like the analogy all the time of the water under the bridge. I mean, it's going to keep going, right? It just keeps going. So you don't always know every factor. So if you're riding on that wave of water, you have to be able to think quickly. And if you're out on the wave of water, there's no computer to even look it up. But like you said, the computer's only got what it's been fed. So if the water has always gone down this path, every time the waves have gone up, every time the level of water has gone up, it's always gone down this path. Well, what happens when it doesn't? What happens when it turns and it goes down a different path? Now the computer is going to be sitting there going, I don't know. So what do you do?

[00:13:40.12] - Dan Paulson

Yeah, there's such minuscule changes that happen. And this is true in leadership. It's real easy to black and white say, well, if X happens, do Y. Well, the problem with X happening is there's also A, B, C, and D going on at the same time, and you've got 50 people involved in it, and they're all doing different stuff. Which adjust that outcome microscopically, incrementally, if you will. And you cannot predict that with a machine. However, the human mind, because it's more observational and it can utilize past experience to determine future results. You can take that information it sees and says, oh, this is happening. I need to adjust here. I need to delegate there. We need to change something in order to get a different outcome. Is it perfect 100 % of the time? No, not even close. But you take somebody with 10, 20, 30 years of experience, they're way different than somebody has three to five, who now, as we have found out, are filling positions, I'll say in some ways above their pay grade. Because I think you even mentioned this, that there are certain people that are falling into a title, and it was good of you to bring up, it's not always the title you need, it's what level of or what skill set.

[00:15:01.16] - Dan Paulson

But people are falling into a title at a higher pay grade, but they don't have necessarily the experience that in the past it would have taken to fill that title.

[00:15:10.09] - Rich Veltre

Yeah. There's countless times that I've had that conversation where despite the CFO title, the conversations around accounting, which leads me to lean back on my CPA experience at the beginning of my career, more so than now. And people will say, well, this is the way we think we should do it. And a lot of times, I'll be the one who has to say, well, here's what's going to happen if you do that, because I can take the experiences that I've had, add them up, and say, more than likely, what's going to happen is it's going to go off to the right when you wanted it to go straight. So what are you going to do when it goes to the right? So it gives people thinking points to be able to say, okay, it's going to go this way if he's right. If he's not right, we'll get lucky and we'll go straight. But this will lean us to the right, and what will happen that we can get back on that path? Because it's fluent, right? I mean, it really has to be fluent, that things are going to happen. It's not just, well, for the next six months, it's going to be on this road, so I'm going to go sit in the pool and have a couple of margaritas because I just know at the end of that six months, it's going to be right where I said it was.

[00:16:23.27] - Rich Veltre

No, not necessarily, because you don't know all the other factors that are coming in and hitting the path, the hitting where you're trying to get to. So you're going and sitting in the pool drinking margaritas, good for you, but you better enjoy that six months, because at the end, it's going to be more likely not where you thought it was. Than where it is. So I think the fluency of it has to be a part of what is going on. You need to hire someone who's able to grasp where you're trying to get to and push things in the right direction. It's not going to be perfect. And you need somebody there that will allow for it to give a little bit. And that way, they just keep it within certain parameters, as opposed to just assuming that it's on one finite and very fine straight line. And you can apply that to anything. It doesn't have to just be numbers. That's the way I speak. So I spit out the fact that it's the numbers. Will the numbers be there? But you can do it on anything else, on a process. Eventually, any process goes off the line, then it affects me.

[00:17:43.01] - Rich Veltre

Because if it goes left or right, there's a parameter of how much extra money did it cost me because I went off the path. But I think you can apply it to just about anything.

[00:17:56.26] - Dan Paulson

Yeah, it is with pretty much any Anything in the organization. That's why as we start talking about more companies doing more fractional work, how do you know you got the right fit? How do you know this person can do the job? There's got to be a lot more metrics involved in a lot more accountability, especially for these folks who do want to sit on an island for six months and do whatever they're doing. They need to have a team around them that they can trust will do the job to the capabilities that they have plus achieve the milestones that the company is set. Some companies have that very well, other companies not so much, which is why we tend to see owners sticking around maybe longer than they should doing as much as they can just to keep the system going the way it needs to go. It just seems like that we're going to have to find a way to fill that talent gap here in the near future. And it's going to be with people who are probably retired or semi-retired that are actually, in many ways, coming back to project, managing, coach, the current levels of leadership up to get to the levels of experience that are needed in the organization.

[00:19:16.05] - Dan Paulson

Because, again, we can't replace time, but we've got to find a way to backfill that knowledge. And I think we're going to see a lot of second careers coming in where people have retired. They don't need to work full-time, but that's And at the same point, they don't want to sit at home or they can't golf every day of the week or fish every day of the week. And they're going to want something to keep their mind active. And that, to me, is really one of the only ways we're going to be able to tap into this knowledge gap that is quickly getting wider and wider.

[00:19:50.03] - Rich Veltre

Yeah, from experience, I would tell you that there are a lot of people jumping into that fractional role. As you mentioned, though, I think the ideal candidates are the ones who've been around. So the people who are younger and jumping into, well, I can work fractional. Okay. If you're thinking that fractional is just part-time or just means part-time, fractional really only works at the leadership level. You want a part-time job? Go get a part-time job. But it's a job. It's not a leadership position. If you're looking just to hire somebody part-time, it's probably not going to work out very well, because certain professions can't just be part-time. If your company operates for five days a week, maybe longer, if you have multiple shifts, then your operations and finance people can't really be just, well, I'll only be in on Mondays. The business is running for six days or seven days a week. I'm not saying you have to work all seven, but a part-time job doesn't necessarily work at that level. A part-time job who's somebody who's just working on one shift, two days a week, and then you fill the shift with a whole bunch of people doing the same job, That's a lot different than being a part-time leader.

[00:21:20.00] - Rich Veltre

So a part-time leader really winds up being someone who has the experience, who wants to be available a certain amount of time, But it doesn't necessarily mean I'm only going to be there on Mondays. It means that you might get a couple hours here, a couple hours there, a couple hours on a different day or a different week. But it adds up to you being the guy that they can call when they have an issue and they need somebody to understand the problem and lead them down that path that we're trying to keep them within the parameters.

[00:21:54.21] - Dan Paulson

Yeah, you're really paying for experience. You're not paying for tasks. And I think that's another spot where the fractional work gets itself into trouble. I've talked to a number of people in the past who have jumped into some fractional role with the idea that this was the filler gap until they find their next gig. So you've seen it. I've seen it. Either somebody gets let go from their job or they leave their job and they're like, okay, now I'm a consultant or I'm a so and so. And that lasts about six months. And then you find out they took another job. So in a lot of ways, it's just filler. And do you want somebody who's in it for the long haul or not, especially when they don't have the level of experience? And that's where, to me, again, you need to look at what experience are you bringing into the organization? And that experience then has to be delegated to the current staff you have to do those tasks. And that's what gets lost a lot of times. I think they're expecting whoever's coming in to do the tasks and not burden their employees with figuring it out.

[00:23:08.27] - Rich Veltre

And that's fine as long as that's the agreement, right? I've had it once where there was a bigger company. Maybe it was a $100 million company. They had a CFO full-time. And called me up and said, we're trying to implement a specific accounting requirement that they had to actually have in place within the next 12 months. And he didn't have any time to do it. And he didn't have people with the expertise or with the ability to get it done. So he didn't have the bandwidth. So when I got the call, it didn't matter that... I could have stopped my feet and said, well, you're not hiring a CFO, so it's not good for me. It was fine. I had free bandwidth to do a little bit of extra. He called me up, said, this is what we're trying to accomplish. And I said, we can definitely do that. It'll be a 90-day project, and we'll do three milestones, and we'll know that this one, this one, this one will go over it. And then at the end of the day, you'll have a schedule that will actually tell you exactly how to post the entries you need to post within the system.

[00:24:20.22] - Rich Veltre

And we did that. 90 days, we were done. And he had what he needed. He was able to actually follow the roadmap that I set up, and I walked away. That was it. So it was project or task-based, but that was the original agreement. He said, I'm paying for this value. I'm saying, I'm going to provide you this value. At the end of the day, he paid me. We're all good. And he got what he needed, and he didn't have to go out and hire another person or build another system. It basically became we had the knowledge, we put it together, and off We all went.

[00:25:02.17] - Dan Paulson

And that's the ideal. I think, though, there's a lot of companies that maybe don't know what they want or exactly what they need. And sometimes, again, that person that's coming in doesn't have the experience to go, oh, well, then this is what we should create. Now, I will say on the other side, sometimes, again, owners don't want to let go or they can't make up their mind, in which case then you create a lot of busy work for somebody And it seems like they're spinning their wheels when every couple of weeks you're giving them a different direction to go. So you do have to be careful with that because I think we've all experienced, we'll do this today and then two weeks from now, well, I don't want you to do that anymore. I want you to do this. Okay, well, now that requires me to shift gears and try something different. That's not the effective use of fractional work. What you said was very clear, finite project Come in, do this. You calculate how much time that should take. You're essentially taking ownership of the project at that point. Sounds like you're doing most of the work.

[00:26:10.21] - Dan Paulson

You can control the outcomes then. It gets a little bit more challenging when you have to rely on others in the organization to actually deliver on what the expectations are.

[00:26:21.03] - Rich Veltre

Yeah. I mean, so that becomes where the definition part, define the project, define the task, define the expectation, make sure that you understand what you're buying, what the value is that you're buying. Are you paying for the value? That way, everybody's on the same page. And if that's the way you approach it, then I think you can actually get to the end where everyone's happy or within reason, very happy, right? The other side of it is when you get somebody to sign on, and you have expectation that, let's say it's a little more of an interim as opposed to a fractional, what you can wind up with at that point is, did you undersell the amount of work, or should I say, did you under buy? Did you think, well, I'm going to bring one person in here and have that person fill in a gap until we find someone for the permanent gap? Right. Then make sure that you've got it laid out the right way. So if I'm the person who's hiring, and I hire one guy, but I need five days, or I need five people worth of work, and I only hire one?

[00:27:46.17] - Rich Veltre

You're going to burn that guy out because he's going to want to make you happy. And yet you don't necessarily care because you're worried about the guy that's going to come in after him. So So the guy coming in that you're not really worried about is going to burn out. And the bigger question becomes, can that guy get anything accomplished in the number of months that it takes for you to get the next guy in? If you tie his hands, he's not going to be able to do anything for you. And then you're just wasting your money. Maybe he can keep your boat afloat or keep you from falling in a rabbit hole or whatever. He can keep things moving till the the new guy comes in, then you're going to start over because you got to teach the new guy, or you have to listen to the new guy tell you all the things that he wants to change, even though the interim guy wanted to change things first. So again, it all comes down to communication and understanding, this is what I'm asking you to do. And if you can't get it done, who's to blame?

[00:28:56.28] - Rich Veltre

Is it because you underestimated it or because he overestimated his time? I know I'm making that sound really, really convolutely a little out there, but it is a little out there. And it's actually real world examples can tell you that you got to communicate it. You have to make sure that there's an equal meeting of the minds.

[00:29:19.01] - Dan Paulson

Yeah. I think that's a good way to just, as we're wrapping up here, say, you know what, if you need help figuring this out, if you know you have a gap you need to fill, you know that the current experience level of the staff that you have can't necessarily fill that gap, or you just don't have enough people to do it, reach out to us. We'd be happy to talk to you and see if there is some way that we can help you figure out what you need, how long you might need that person, what experience level you need, and ultimately, maybe even help you fill that hole. So keep that in mind. Rich, how would they get a hold of you if they need to figure all that out?

[00:29:58.26] - Rich Veltre

The best way to get a hold of me is to send me an email at rveltre@veltregroup.com.

[00:30:04.05] - Dan Paulson

And you can contact me at danpaulsonletsgo.com. And in a very short while, we're also going to be making an announcement of where you'll be able to contact both of us in one spot and also maybe get some of this information that you're looking for. So there's the teaser that we'll throw out. In the meantime, though, if you want to listen more podcasts about this subject and many others, you can go to booksinbiz. Com. That is B-O-O-K-S, letter N-B-I-Z. Com. And Rich, we will see you on the next go around.

[00:30:34.07] - Rich Veltre

Sounds good, Dan.

[00:30:35.06] - Dan Paulson

All right. Take care.

[00:30:36.22] - Rich Veltre

All right. Talk to you later.