B (3:06)

So was this really hard at first when you went to executives and say, hey, I'm going to teach you how to engage with your employees better? Because a lot of executives, I think especially right now, look as employees as a cost sink and they call them human resources, right? As if we're walking automatons and now they're going to replace us with AI resources. That's kind of the mentality I see going on out there right now. Do you see the same thing or might just generalizing too much?

A (3:39)

I'm absolutely seeing the same thing. And you know what's really interesting? I, I smiled when you could ask me about that question, about what the reaction was, because when I first got into this coming out of the video game industry, I had started at the time a company which I've since sold, but was called the Game Agency. And I would go into organization. I say, well, listen, this medium is the best way to engage anybody, right? You know, you can, you can text and drive, although you shouldn't. But you can't really play a game and drive, right? Like, I mean, you have to be fully immersed. And the first question is, well, why would I even use games to engage my employees? And then I thought, you know, so we kind of have to talk through that. And it became over the 15 years that I owned that company, the conversation changed dramatically. I think people realized that they needed. That there was a shift and that people needed different innovative ways to engage their employees. But, you know, my question first was, well, how are you engaging your employees? And the answers I get would often kind of leave me baffled, thinking I don't think they really are.

B (4:37)

Yeah, well, I was going to, I was going to answer. I, I was going to say, did they not respond back with, why do

A (4:44)

I need to Sometimes.

B (4:46)

Sometimes because they're all replaceable. That's kind of the mentality of, especially corporate America, big corporate America today with, I'm going to lay off, you know, 20% of my staff and then I'm going to hire them back over the next two years because everyone's replaceable.

A (5:02)

Here's the thing, though, is that, you know, and I'm. I'm probably not telling you or your audience anything they don't know. But Mike, my response to that always is, well, what's the cost to replace them? Right? Let's think about the cost to find somebody there that certainly the lost knowledge that maybe they had over the several years that they were the organization. The time it's going to take to upskill somebody and then, by the way, will you even be able to keep that person? Right. And so when you do a calculation, at the end of the day, the cost to replace these easily replaceable people is a multiple of what it costs to actually take care of them. And so that is a lot of what I focus on, which is, you know, if you focus your business on being human centric and your employee first, ultimately the numbers pay off in volume. And there are lots of reports that talk about that.

B (5:54)

Yeah, I'm glad you brought that up. Cause I think that's an important aspect, right. Is if you, if you're not just worried about hiring people and a number, but you actually engage your employees like you were mentioning, they're going to produce more for you. They're going to stay engaged in the company as well. It's almost like in big corporations, you can easily get lost in the shuffle and basically hide. And we saw that when Elon Musk came through Twitter. We saw that when Elon Musk came through the federal government and doge happened, they got rid of people that were working other jobs and still taking a paycheck. Not engaged at all in their work because management wasn't engaged with them. They didn't, the organization didn't keep them engaged, which is different. I think a lot of corporations think, well, I'm paying you. You need to do what I tell you to do because I'm paying you. In today's society, that's not good enough. It sounds like, is that, am I hitting it on the nose or you are.

A (7:00)

There's a Gallup poll from 2025 that I'll pull two stats out from one, you know, and they, they polled thousands of employees, 39% of which say that no one cares about them as a person. 30% say that no one encourages their, their development. So if your employees are feeling that way, no doubt they're going to check out. Right? They're not going to participate. And we see that right in that same Gallup poll, you know, they say that 79% of employees worldwide are disengaged or highly disengaged. And so if only 1 in 5 of your employees is actually really engaged, you're paying a lot of money for very little return.

B (7:43)

So, so, and, and what, what are executives answers to that? Well, then I need to get rid of 20% of my staff.

A (7:50)

Right, Right. Well, they're not, they're not, they're not thinking about well, how do I redesign the system? They're thinking, how do I find better people? Right. And it all begins with the system that they're in. And, And I'll, you know, I, I'll stop throwing stats out after this, but I think this is the last one.

B (8:05)

No, I like the stats. It make. It gives us validity. Right, Good. Then I'll keep you guys complaining. Right.

A (8:12)

But the Great Places to Work study that comes out every year shows that if you look at the organizations that are people first and that really are great cultures and are focusing on how do they coach their people, how do they grow their people, how, you know, they have servant leadership as kind of a. A foundation to the way they do it. Three stats that come out of that, that study, which I love. One, they have one third the turnover. Right. So we talked earlier about the cost associated with turnover, so that that's reduced significantly. Two, they have eight times more revenue per employee than their competitors. That's incredible. Right? And three, they're outpacing the S&P by three and a half times. So to me, I always look at this and I think to myself, yeah, you could take the shortcut and you can fire people. You can take the shortcut and not coach them. You can take the shortcut and not build career plans for them, or you can invest in your people. And when you do, those are returns you get. It's undeniable. But that it pays back in volume,

B (9:25)

You know?

A (9:25)

Right.

B (9:25)

Right now, I would say you sound a lot like a millennial. Is that horrible to say? I. I mean that in the kindest way, but, like, oh, you need to feed me and take care of me and, and coddle me. But that's not what you mean, is it, Stephen?

A (9:43)

No, what I. What I mean is here. So there. There are two things that I. I'll say and I'll. I'm gonna quote two CEOs and. Or former CEOs and former chairmans. Different companies. One is a guy named Gary Ridge, who was the former CEO and chairman emeritus of WD40. And he talks certainly about the importance of taking your middle management, your co. Your managers, and turning them into coaches. And. And he certainly differentiates between management and coaching by talking about, you know, he always says in kind of a funny voice, the last thing you want to hear your first day of work is, I'm your manager, and you're going to report to me. Like, that's nothing very inspiring about that, but rather, I'm your coach. I'm here to have your back I'm going to help you succeed. I'm going to make sure that you have what you need. I'm going to make sure that you have access to whoever you need. I'm going to give you the tools and certainly the knowledge of what makes you successful here. And I'm going to be here every step of the way. That's totally different. Right. And so that's a really important distinction. And it's really important not only because it sets people up for success, but it's important because, according to Gartner research, 60% of new managers fail within two years because they have insufficient training or lack of leadership skills or inability to delegate or poor emotional intelligence. So if you focus on that middle management and you turn them into coaches and you help them be successful, everyone below them is going to be successful. So that's one. The. The. The other one I love is Bob Chapman from Barry Waymiller, which is, you know, he. He really focuses on servant leadership throughout their organization. If you're not familiar with them, they are a industrial manufacturing business, a large equipment. They have about 12,000 employees. And he talks about how every one of his employees is somebody's son or daughter, husband or wife, mother or father, brother or sister, and they're in his care for 40 hours a week. And if you flip it on the, you know, flip it on the head. Think about that. Hopefully that doesn't sound like a millennial. Hopefully that sounds like a caring parent who wants to really nurture their people and make sure that they're successful. Because when they are, they're happy and they're productive and they deliver a lot more to the organization.

B (12:13)

I like how you call it a coach more than.

A (12:18)

Than a manager.

B (12:19)

Than a manager. Because a coach can have hard conversations with you 100%. Right. I mean, I think of my. I think of my high school football coach and my track coach. They're like, I want to get the most out of you I possibly can because you have so much potential. Right. That's what. That's how I saw it. Right?

A (12:36)

Yeah. Yeah.

B (12:37)

And they yelled at me sometimes. You know, I'm not saying we need to yell at our employees, but they had hard conversations with me instead of avoiding them. Which managers?

A (12:47)

It's not all sweet talk. Right. And it's not all pampering.

B (12:49)

Yeah. That's what I want to get across.

A (12:50)

Yeah, yeah, yeah. No, no, it's. It is figuring out, how do I make you Darren, the best Darren that you can be? And how to make you Steven, the best Steven you can be, and that is going to be encouraging you. It's going to be giving you the right resources. It's going to be giving you feedback on a regular basis. One of the things that I. Not the annual write about. Say again there.

B (13:11)

Not the annual review. I haven't talked to my manager in a year and all of a sudden, oh, well, you didn't do this, this and this.

A (13:19)

It's so spot on. And that's the thing, is that, you know, when you think about millennials, when you think about, you know, anyone who's after them in the workforce.

B (13:27)

Yeah.

A (13:27)

They're used to constant feedback. So if your feedback is one time a year, that's not enough to make them feel like that anyone's caring for them, anyone's really, you know, interested in their well being. So there's nothing wrong with a good weekly check in. There's nothing wrong when you're in a meeting acknowledging when someone does something great or saying right after the meeting, hey, I noticed something you did and I think that was great. Or I noticed something you did and here's how I would tweak it to make it better in the future. Right. But that constant feedback, that's coaching, really important stuff.

B (14:01)

No, no, I agree. Okay, I'll back off the millennial coddling to millennial coaching or coaching shifting to this coaching thing, which is really not that new. I mean, Edward Deming talked about that. That's what made the Japanese economy hum was this. He had that same belief. You, as a manager, your responsibility was to make your employee the most productive by putting them in the right position, training them, changing process, whatever it took to make them the most productive human being they could be. Even if that meant finding them another job somewhere else.

A (14:43)

Well, and I think that that's really important is also thinking about what makes them unique, what makes them different, what makes them the, the, the best contributor that they can be. That maybe the person next to them might be twice as smart but can't do this thing. Right. So I, I, one of the, one of the things I talk about often is if, if you go back to the early 80s when Apple had their Think different marketing campaign, right. It was, you know, a tribute to the crazy ones who think different. Right. And had a few components which I think are so applicable to how we treat our employees. Right. Honor individuality, celebrate curiosity, question norms, encourage dissent, and expect breakthrough ideas. Right. So you are letting them be who they are and you're encouraging them to be unique and you're encouraging them to think Differently, but you're expecting something in return. Right. And I think that if we as leaders or managers can really keep that in the back of our head with each one of our employees, it makes a really big difference.

B (15:47)

So I like that last part that you said there, because that provides the yin and the yang, the balance that you need. Because I think sometimes managers, I've had managers that do this free, free reign, do whatever you feel like, but nothing gets done. And then they come back later. Well, our team's not performing well, so I gotta lay people off. Well, whose fault is that? That's the, that's the coach's fault, the team manager's fault. Right.

A (16:13)

You're. You're spot on. And, and one of the reasons I think that that happens is that when you think about what makes a company run really successfully, I think there are three components. I think the first thing is you need a purpose, a mission, a vision for everyone to kind of get around. Right. So that's, that's great. That often comes from the C suite. The next thing is you need a strategy that everyone commit to, to actually accomplish that. Okay, that's still up here. That strategy's happening up here. Then there's the execution. You need people to develop it. You know, you need people to actually make it happen. And you can't out strategy, a lack of purpose. And you can't execute either one of them, a purpose or a strategy, without great people. And once again, you need your middle management to make sure that that happens. And so there needs to be connective tissue between what's being decided in the C suite and what's being executed every day. And it is the mid management level or the mid coach level to make sure that that is successful.

B (17:22)

I agree with you wholeheartedly because in a lot of my experiences, I also see the middle management as the culture keepers. They're the ones that will slow down digital transformation. They're the ones that will accelerate digital transformation. They're really that engine that makes everything move. And I think we ignore them a lot.

A (17:44)

I think, I think that's the perfect word. They are absolutely ignored. And they're so influential and they're so important and they're so forgotten.

B (17:54)

Yeah. And I think the reason why is because the VPs are managing up. That's how they got to where they are. They manage up and, and they just send trinkles of stuff down and, and every middle manager is like, well, I want to move up to vp. So they manage up, but they're not getting. Yeah, yeah. What a mess.

A (18:15)

Yes.

B (18:15)

We need to. We need to completely reconstruct the whole system, Stephen. Let's do that right now, in the next 15 minutes. No, we can't. We got do. So how.

A (18:25)

Not with that attitude, we can't.

B (18:27)

Yeah, no, no, that's right. So how. How do I start? We. We talked about the problem. We talked about where I want to get to this coaching concept and this. How do I shift the culture? Because it's the culture of the middle managers, but also the executives and also the line workers, right. The individual contributors that are out there. Because this is going to feel awkward to them if. If their manager changes his title to coach and starts wearing a whistle around and, you know, you know, wears his athletic shorts. You know, he doesn't have to look.

A (19:07)

He or she doesn't have to look the part. They just have to think the part. Right?

B (19:10)

Yeah. Right, Right.

A (19:13)

I have done research on, and this is in my book, we looked at 30 different companies and did comparisons of who was doing each of these components remarkably well and who had certainly room for improvement. And there was a framework that we put together, the forever framework that we put together that identifies five things I think are really critical as we're thinking about both our employees and our customers. So I'll go through them. You know, the first one is identity. Right. You know, employees engage with managers and customers engage with companies who reflect who they are and who they want to become. Right. So really tapping into that. The second thing is belonging, focusing on, you know, we should always thrive to be the person or the employee or the customer. We want to make sure that they are noticed. Right. We want to make sure that they feel like they're part of this. Right. Like they're, they're. They're a partner in, In. In the process, contribution. Making sure that we are engaging people and making them feel like they matter. Once again, we saw the stats that make people feel like no one cares about them. Right. We want to make sure that whether you are an employee or a customer, you feel, once again, like you're a partner. You're not a passenger. Right. You need to be part of the process. Recognition. We talked about this as well. Focusing on human acknowledgment and in real time. And so it doesn't have to be a big thing. It doesn't have to be a big exercise. It doesn't have to be a big document. It can be just recognizing. Hey, Darren. Not even something you did, but I was just thinking about you today. I was thinking about you because, you know, you said something a few weeks ago that was just brilliant, right? Well, I'm connecting with you, and I'm making you see that I'm thinking about the stuff you're saying real time and weeks later. And the last thing is focusing on progress. And this is certainly something that, you know, I learned in my video game days, right? But, you know, people stay engaged when relationships make them feel better, make them feel more capable, make them feel more confident. That's glue, right? And so you want to make sure that you are providing micro moments of progress for your employees along the way and. And making sure that they see it and that you're recognizing it.

B (21:31)

That's a lot of work.

A (21:33)

It's a lot of work. But once again, if you want employees, if you want your employees to produce eight times more revenue than the guy down the street, a different company, or you want to be outpacing the S and P by 3 and a half times, or you want to have one third level of turnover, that work is what you got to put in,

B (21:55)

Right? So how. This is almost contrary to what we're seeing in management practices now, where they talk about spans and levels, right? Where now they're talking that, hey, a manager should be able to manage 20, 30 people. Where in the past it was like eight was. The. Eight was the perfect number. Now, you know, we're in double digits for sure. And approaching bigger is. Is. Is. Can I. Can I do this with 20 people? Can I have that deep engagement? Or is there a different structure?

A (22:30)

I don't subscribe to that. I don't subscribe to that. I. I believe that at the end of the day, you know, better to have deep engagement with. With a handful of people, eight people, which, by the way, is still a lot of work, than to have on the surface connection with 20 people. And so one of the things I talk about a lot is the difference between connection, engagement. I like in connection to Velcro, and I like an engagement to glue. And maybe I'll talk you through that a little bit. You know, Velcro sticks really fast. It's super convenient. It works until pressure is applied, and then it just peels apart. And that often happens with our people, right? They just kind of leave, and you're like, what the heck happened? Glue, on the other hand, it takes time. It requires a lot more chemistry, and glue holds when things get messy. But that patience is worth it, and that extra work is worth it because I'd rather keep an employee for 10 years versus, you know, two. I'd rather make sure that my people feel great about being there and they're checked in versus checked out. The return for any company to certainly have a smaller ratio of manager to employee is significant. It's worth the investment. It pays back in volume every time.

B (23:54)

Do you see it different at different levels? First line managers is a different span than more senior people because more senior people need to be more directed and they can handle it already by themselves. Or do you think this concept that you're talking about, this coaching, should apply at every level?

A (24:16)

I believe it applies at every level, but probably to your point, as you get higher up the food chain, you're a lot more self reliant. Right. And you know that someone either fits really well into the culture and the way that an organization works or they don't. But you know, as certainly as they get higher up, the folks who are younger, who need to be nurtured, who need to be taught, who need to be grown to hopefully be our future managers and our future leaders, they need that support. And that comes back to the servant leadership stuff that both Bob Chapman and Gary Ridge talk about. It is worth putting that investment in those people because they will be your future.

B (25:00)

It's very interesting you're talking this way because it's, it's almost contrarian to what we're seeing in management styles today. Why do you think we're seeing this reversion back to like 1950s management? Because I'm seeing it in lots of companies. Why do you think that's happening?

A (25:20)

Yeah, it's a good question. I speak from my personal experience of running two companies and my companies have always been extremely flat. So you know, they certainly have not been hierarchical. You know, as I look at other organizations out there and most of the companies I talk about in the book are large Fortune 500 brands who don't have the ability to have such a flat organization. But I'll give you example of one that is small. Menlo Innovations in Ann Arbor, Michigan, run by a guy named Rich Sheridan, who has a fantastic book by the way, called Chief Joy Officer. And you know, the whole philosophy is one, a very flat organization. He, as the founder and CEO, he sits in the front desk as you walk in. It's like that's how you see, you know, so no ego here, right? And that's, that's, I think that's important. But they have other things they do, right? Like I love some of these things that they do. They, they do computer sharing. So every computer shared by two people and all Projects are worked on by two people at all times. I love that because ultimately they're forcing people to problem solve together, communicate with each other. And by the way, they rotate those two people every five days. I mean, it's kind of crazy, but they, but it's wacky, but it works. And they have thousands of organizations that come through their office every year looking at it to see if they can apply it to their own businesses.

B (26:55)

I think that very unique culture and people. Right. You don't kind of hire people into that environment that can't work with other people effectively.

A (27:04)

That's exactly right.

B (27:06)

You don't have a lone wolf in that organization. Right. That's fascinating.

A (27:10)

Yeah. I have a lot of interest and respect for the organizations that are trying to think differently and trying to approach it with a unique mindset and build a culture where everyone feels involved. Right. I think that's also really important. So I'm not a subscriber to the hierarchical, traditional, hierarchical business model because I think it backfires in so many cases.

B (27:47)

I've been in organizations before that kind of took a plant, a thousand flowers and see which ones bloom. And sometimes we never get anything done.

A (28:02)

I will say this is that.

B (28:03)

I see where I'm going with that, Stephen, because I do.

A (28:06)

I, I do. And I think that's, that's really fair, Darren. But let's look at like a company like Microsoft. Right. I was looking at, I was doing, you know, during my analysis, I was looking at Steve Ballmer's leadership versus Satya Nadella's leadership. And under, you know, Steve Ballmer, it was a, it was a very toxic culture with a lot of competition, very slow on innovation because it was very bureaucratic and really low morale. And when Satya Nadella came in, he really focused on collaborative innovation and shared success. Right. And he basically said, look, we're going to try to innovate as much as possible, but we're going to do it together. And we're going to. And, you know, and that might, by the way, be slower in their case. It actually sped stuff up. The reason I like looking at these two is under Satya Nadella's leadership, we saw an incredible spike in revenue and in profitability. And I do believe that there's a correlation between his, his focus on collaboration, innovation and, and shared success. And, and, and it's. By the way, you know, there's, there's a few other examples of that. Home Depot certainly very similarly the difference between Bob Nardelli and Frank Blake. When Frank Blake came in, he really focused on people first and innovation and rewarding. The, the average guy on the, on the, you know, retail floor, he would, he would walk several floors, you know, a week, he'd write over a hundred thank you notes to his employees a week. I mean, like, it's just, just thinking differently. And sometimes when you basically say, look, I trust you, Darren, I think you guys, you know, I wouldn't have hired you if I didn't trust you. Go do it. Fail fast. Let's figure out what works, what doesn't, and if it doesn't, all good. We tried. That's one thing. Now we know something we didn't before, we know that doesn't work.

B (30:08)

Okay, well, and I like what you said there because you keep bringing back in accountability in this because you can't just let it roam wild, right? You need some accountability. Return and report, tell me what's going on and we can talk through things, we can try different things together. You can only do that if, if you're held accountable for what the tasks are or the, the general direction that we need to, to handle. So I, I love how you're tying this all, all together. It's because I see the big pendulum swings, right. And you've been able to tie both of those together in, in, I think a nice bow that makes things predictable and, you know, hopefully productive too.

A (30:59)

Well, and the thing is, I know we're primarily talking about employees, but we all know that when, as consumers or customers, we're engaging with someone on any company that we're buying from, when they're happy, when they're excited, when they are advocates and you can tell it's genuine, that's infectious. And by the way, when they're grumpy, when they're checked out, when they're not interested in really servicing you, it's equally infectious and it probably doesn't bring you back again. Right. So, like, it's really important to connect those two. Right. It has a big impact.

B (31:41)

Well, you know, I'm glad you brought all this up because this is where the human part of and why we need humans in our organization is going to shine is because that human connection is, what is that accelerant to that 8x revenue, that three and a half, you know, x Capex or, or not Capex, but you know, my company. Yep, that's where that comes. So AI can't replace that. AI can't replace these soft skills, these soft things that a coach can bring in more than, hey, I'm, I'm managing this automaton out there. This is where, this is where we're moving and this is where we have to move to. So, Stephen, you're right on the verge, right on the edge.

A (32:32)

Well, you and I talked about this the other day. Yeah, you and I talked about this the other day. It's certainly, it's not a replacement, but can it free up people to be, to focus on humanity? Right. So like I think one of the examples we talked about the other day is Ritz Carlton, they use AI, you know, to remember the preferences of their customers. They use it certainly for real time information as they're engaging with anybody and certainly to act on it. But what Ritz Carlton is fantastic about and they're, you know, they are certainly a high priced hotel service. But you don't go there because you want a cheap room. You go there because you want to be pampered. You go there that, you know, because you know that if something goes wrong, anybody, whether they are in the maid service team or they're, you know, in management, they're authorized to give you up to $2,000 back on anything to make sure that it's treated right. And they're doing that based off of certainly the people skills they have, but the data they have at their disposal, of which AI is playing a really big role. They're a really data driven organization and they're using AI a lot.

B (33:46)

That is so awesome. Hey Steven, if people want to find out more about your book, about you and contacting you, how do they go about doing that?

A (33:56)

So my website, Stephen Baer.com S T E P-H-E N B A E R.com My book is sold anywhere books are sold. It's called Stickology. And if you're looking for anyone to talk through this stuff with or looking for a speaker, I'd love the opportunity to chat. So thank you.

B (34:15)

Hey, thanks, Steven, for coming on the show. This has been wonderful. You opened my eyes to new things, things that I'm seeing, that you're seeing as well, that, hey, we can change the world with this stuff. So this is awesome, Stephen.

A (34:28)

We sure can. Let's have fun and let's do it with some millennials. It'll be great.

B (34:39)

Thanks for listening to Embracing Digital Transformation. If you enjoyed today's conversation, give us five stars on your favorite podcasting app or on YouTube. It really helps others discover the show. If you want to go deeper, join our exclusive community@patreon.com embracingdigital where we share bonus content. And you can always connect with other change makers like yourself. You can always find more resources@embracingdigital.org until next time, keep embracing the digital transformation.