TBTW Podcast Highlight: Human Capital Management as Risk Management

We’re taking a break from the podcast this week and sharing one of our favorite episodes.

Cathi Trippe, VP of Risk Management at Phil Long Auto, has 20+ years of experience in Risk Management and knows that one of the biggest risks in business is who you hire to run that business. She was featured my book, in The Best Team Wins: Build Your Business Through Predictive Hiring, because of her innovative human capital management practices. Click below to listen to this episode and learn from Cathi.


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Adam Robinson: Hello, and welcome to this week’s episode of The Best Team Wins podcast, where we feature business leaders whose exceptional approach to talent management has lead to out-sized results. My name is Adam Robinson, and for the next twenty-five minutes, I’ll be your host as we explore how to build your business through better hiring. Today, on the program, I’m excited to welcome Cathi Trippe, Vice President of Risk Management at Phil Long Automotive, which is just outside of Colorado Springs, Colorado. Cathi, welcome to the program.


Cathi Trippe: Thank you, Adam. Thank you for having me.


Adam Robinson: It’s great to have you here. One of the reasons, Cathi, I’m so excited that you’re on the program is, for our listeners, Cathi was one of our leadership case studies that we discussed in the book, The Best Team Wins. Today, we get to dive in and talk about your experiences, Cathi, in transforming the people practices at one of the most highly regarded retail automotive groups in the United States. I am excited to do that, so thanks for being here.


Cathi Trippe: Yes. Thank you.


Adam Robinson: As is the tradition here on The Best Team Wins podcast, we always start each show off on what we call the right foot, which is the best business or personal news that’s happened to you, Cathi, in the last seven days. What’s your right foot for the last week?


Cathi Trippe: Well, last week we had a Twenty Event Club, which basically are employees that have worked here for twenty plus years, and we had eighty-six of them. We went down to the Royal Gorge, and went on a train ride, and had an Octoberfest meal, and got to see a bunch of retirees, and give out awards for people that have worked here a long time. It was a gorgeous day, and everybody had a nice time. It was fun and profound at the same time.


Adam Robinson: That’s amazing. Eighty-six folks out of how many have been with you twenty years?


Cathi Trippe: We have about a thousand employees. Eighty-six have been here for twenty years or more, and then we have thirty-six retirees that continue to join the function.


Adam Robinson: Incredible, incredible. Well, it’s stuff like that that is the reason why we think so highly of what you’re doing at Phil Long, and the reason we’re talking to you here today, so that’s pretty cool. Let’s dive right in then, and we’ll go back and start at 2008, which as you talk about in the book, the impact of the financial crisis in 2008 and in 2009 hit the retail auto business pretty hard, hit everybody pretty hard, but in particular, car dealers. The subsequent recession caused some changes that needed to be made, really forced some decisions for you at Phil Long. That year, what you shared in the book is your organization had to manage through the layoff of about half of your workforce, that’s nearly eight-hundred people. Walk our listeners through that experience. I mean, from the moment you knew that it was required through to how you approached and handled that. I know that was a tough, tough time looking back, but just share that experience with us if you could.


Cathi Trippe: Well, operationally, there’s a grid that you use trying to identify each dealership, each department, and you go through things like longevity, or the skills, or maybe a unique contribution, especially some of the sales people that have huge accounts, or have a huge following, or just have been around for so long they’re integral, and losing them would be a deficit. You kind of work off of this impersonal grid trying to figure out who stays, and who doesn’t. When you’re working on the operational piece, it’s kind of black and white. Then, when you’re left with the names, and the faces, and the people, and the human factor, it threw me, quite frankly, because I know a lot of people, and so you start to know their story, and you start to know this person just bought a house, this person just had a child, this person’s spouse has failing health – whatever it is.


Executing the plan, for me personally, was a little bit more than I could handle. I did go through with it, because it’s my job, but I have to say that professionally, that was definitely a growing pain for me. It took a lot for me to execute the separations, sitting across from somebody and telling them that through no fault of their own that they’re not going to have a place to come to work tomorrow. That was very difficult for me. I will say that looking back now, I think we were overweight with people, and we didn’t realize it because we were never forced to really examine it. The PC word is right-sizing, and there is some truth to that. We probably had too many employees to be efficient, and to be effective, and going through this process allowed us to really look at what we needed and what those people needed to bring to the table to be effective for sustaining us into the future.


Adam Robinson: Well, I appreciate you sharing that personal experience with us. What, just to say that differently, what you’re saying is the financial crises and subsequent recession, as tough as it was, really forced you in the business to figure out what level of value was required for somebody, for that position to be needed in the stores? Is that accurate?


Cathi Trippe: Yeah, and how many people it took to do it, and what those people should be good at, versus just kind of holding on to an employee count.


Adam Robinson: Sure. Well, so when you started, I know you were really focused just on risk management, but post-recession, you picked up full ownership of all human resources and people related processes and operations inside the thirteen stores that Phil Long Automotive owns. You talked in the book about seeing opportunities to make positive changes in the wake of that downsizing, and it sounds like the right number of head count for the size of the business is one of those things, but what are some of the things that you changed and implemented that had a positive impact? Looking back on this negative experience, what good came from that?


Cathi Trippe: Well, I think like a lot of organizations, we were very slow to staff back up again. Once bitten, twice shy. We were very slow, but I read in business periodicals that a lot of organizations kind of took their time to get staffed. I think that when we did it, the positive was that we got very clear on what kind of personality thrives in this industry. We kind of honed in on our interviewing practices of whether those people possessed it or not. One of them is that people who love this job love that every day is a different day, and you have an entrepreneurial spirit to be successful in your own way with very few parameters.


In contrast to that, employees that want a handbook that identifies every single thing that needs to be done, or a lot of rules and a lot of boundaries, and a script that’s top to bottom, this is how you do things, those people tend not to enjoy this. They don’t like the flexibility, they don’t thrive in a setting that allows for some art. They’re looking for more science. The other thing is, on a positive note, is that we really started creating an approval process for people that are outside of the standard, whether it’s their criminal background, or their motor vehicle report. This is the risk manager in me.


Cathi Trippe: When we said, “Hey, this is the formula for success,” we put a process in place. If you want to deviate from it, we’ll listen. It’s got to be compelling, and then in has to be signed off by people. That had a huge impact on both rehires, and also people who showed that they don’t commit, meaning that they jump jobs frequently.


Adam Robinson: I see, so what were you finding before then with managers, they knew a process existed, but they could override it if they wanted to because there was an empty seat to be filled?


Cathi Trippe: Yes, that’s exactly how I would describe it, because there was a seat to be filled, yes.


Adam Robinson: Okay. Well, so on that thread then, I mean, in an industry, in retail automotive, where, as you well know, the average turnover at the sales associate level, this past year, according to the industry workforce study, it was nearly seventy-five percent a year, in a professional role, which is quite high relative to other industries. Yet your organization has managed to reduce that number into the forties. How have you done that?


Cathi Trippe: Well, I’ve been working on it since ’09. You know Mike, our leader, one of the things that he always is, “As soon as you can measure it, you can improve it.” The measurement that we were working off of before was only known by a handful of people, so it didn’t really have any impact on people who are hungry to make a move and to improve upon it. The first thing that we did is we starting putting that number out there, and then we broke it down. Who’s leaving? How long did they work here? Which department did they work? Where are the common threads? Measuring the number is first and foremost. I think that we got a clarity, again on the skill and abilities, that we needed for the role.


To your point, instead of just filling a position because somebody left, we put more effort into fitting the position, and really following the process, being held accountable to the process, kind of making people jump through a few more hoops before they brought people on board. I will say that I think one of the other things that we did to really bring the number into the forties is that we started this process that’s called a Care Meeting. Within two weeks of hire, somebody in HR goes and meets a person, in their work environment, and asks them questions. It’s almost like a magazine interview. Like, “Hey, who showed you around? Do you understand your pay plan? Do you know where the lunch room is?” Those kind of things. What we were able to do is nip some of the little things immediately.


Adam Robinson: Like what? What are some of the little things?


Cathi Trippe: Okay, so office supplies. People don’t know where to go for office supplies, and so they would start bringing in things from their home, or they would do without, or they wouldn’t say anything. One of them is, “Do you know who to go to for office supplies and things of that nature?” If their answer is, “No,” then we put them with that person right then and there, because chances are, they didn’t order business cards, or they have other issues. Some people have problems with log-ins, which as you know, is insanely frustrating. What do they do? They use somebody else’s log-in. We were just trying to get some of the little simple barriers identified, and also introduce them to Human Resources so that they know that they’ve got an ally, they’ve got somebody they can call or talk to when the time comes that they want to transfer, or they’re interested in a promotion, or they want to know more about something. They’ve just met an HR person one on one.


Adam Robinson: It’s fascinating how the little things make all the difference in a new employee’s experience in the organization. It sounds like you’re doing a lot of things right there.


Cathi Trippe: Thank you.


Adam Robinson: You mentioned Mike before, and I know a large part of your role is working with ownership in the business to execute people strategy. Let’s talk about how you, as the leader in charge of the people side of the business, partner with your CEO, who I imagine, actually know, is all about growth, and all about progress, and all about innovation. You’re focused on good people process, and certainly you mentioned the risk manager in you, which sometimes run antithetical to an arm waving entrepreneur, speaking as one here. Talk about that. How do you partner with leadership in your organization and make this work?


Cathi Trippe: Okay, well you used the word, “Innovation,” which I love. Car people, they’re exciting. They’re exciting. They’re very much givers. They want to know what’s going on everywhere, and then they get fueled by that when they see Jay Cimino, our CEO, as an example of that. I’ve seen it in other dealer groups as well. They’re fun people, and they like to have an energy to keep them charged. The worst thing that any supporting person can do is complain about not being invited to the table when they discuss these new ideas if they’re going to the table to say no. “No,” as in N-O. If you want to be invited, then you have to be there to foster their dreams, otherwise they’re not going to ask for your input.


When I go into these, my mindset is to drink the Kool Aid, get excited about whatever it is they’re excited about, and then apply some strategy that makes them compliant. If you just go with a wet towel mentality of, “That won’t work. If you do that we’re going to get this,” they don’t want to hear that. You have to … My feeling is you have to go with a mindset of I’m going to help you get what you want, but I’m going to protect your interests at the same time. “Maybe we can go down that road but take a different detour,” or, “Maybe we can do eighty percent of it, but this other twenty we might have to tweak.” I think that they’re receptive to that because as long as you’re not squelching the energy, and coming up with some solutions that they can live with, then you’re one of the guys, and then your mindset … You’re ideas are accepted. If you go in there, “No, no, no,” they’ll just quit inviting you.


Adam Robinson: Absolutely. That is so true, Cathi. That is so true. What you’re saying is you’re going in to counter balance what would otherwise be potentially a one sided discussion about a new direction that needs some balance, and perhaps some risk mitigation, but the way to do that is not to just walk in the meeting and just throw shade on everything that gets brought up.


Cathi Trippe: Yeah. My favorite line when I’m panicking is, “Tell me more. Tell me more.” Because somewhere in there I can get to what they’re really trying to achieve, what’s really meaningful to them. Then, to your point, the process allows more … There’s more opportunity in the process. You have to let them talk long enough to get past their idea, because they’ve already packaged it, you know what I mean? Because they’ve had more time to think about it, they’re coming with this one and done, and then we’re like, “Hey, maybe we could do this and not have to hire eight people that you’re going to layoff in month?” Or, whatever. That’s a lame example, but you know what I mean.


Adam Robinson: Sure, sure.


Cathi Trippe: Give them some fodder to consider.


Adam Robinson: Yep. Well, so as we continue to talk about turnover here, what’s the one thing, you guys do so well with this, but what’s the one thing that you know needs to change in your organization, either something to be added, something to stop doing, something to do more of, for your organization to be able to drive that turnover even lower? Is there something that’s keeping it where it is right now?


Cathi Trippe: The sales people, sales managers, and most auto industry people, are highly incentivized. It’s the way the manufacturers have designed it. Everything is tied to your advertising, your output, your units sold, your gross. They’re highly incentivized. The only way that turnover is going to be considered an integral part of their management style is if it’s an integral part of their pay plan. I’m not a big fan of demerits, but if you’re working on a tier that you’re in this range, and your turnover is this, then this is where you are, because I don’t see how they will shine a light on improving their people skills until their compensation is affected.


Adam Robinson: Hit them right in the wallet?


Cathi Trippe: Yeah.


Adam Robinson: Yeah. Well, you know, what gets measured and paid out on absolutely gets done, and you bet that pay plans drive behavior. Are you seeing that? Are peers in the industry that you speak with either in your market, or around the country, implementing turnover targets into manager pay plans?


Cathi Trippe: Not that I’m aware of and I have not found a way to [do this] … I don’t know what level does the buck stop. There is a certain level where probably the ones that deal with most of the employees, the line supervisors, I’m not convinced they should be demerited, but at some level, there should be. At some level, that is what will move the needle and take us … Your question was, “What’s the one thing?” That’s the one thing that will make a huge impact, because to your point, we’ve already done a lot. I think those incremental changes have already taken their effect. To bring it to the next level it’s going to take something a little punitive.


Adam Robinson: Yep. Let’s shift then, Cathi, and talk a little bit about how you target folks. What’s the profile of the person that’s successful in your organization? The question I’ll ask you is does Phil Long hire for experience or hire for potential, and what would be behind that philosophy?


Cathi Trippe: Well, I think that we hire for experience, but your question gives me pause, and I need to explore what potential really means to me. It’s a better word, I’ll give you that. I mean, it just sounds better. When you asked me that question, my mind immediately went to experience. The reason why we like experience is because the launch is quicker, and the training is more for shaping and continuity. It’s not really training to show you the job. It’s more of showing you how Phil Long does things, how you fit in here, how we can improve your finesse, how we can make you a better closer, how we can help you with the numbers. When you get somebody experience, you tend to have a lot of the heavy lifting out of the way. I’m not sure I like that answer. I think that is the answer, but I like the word potential, so it makes me want to think on that one more.


Adam Robinson: Well, so many folks in the retail automotive industry are engaged in this argument now about, “Do you hire experience? Or do you bring somebody in out of another environment like a Starbucks, or out of a hotel, or out of a restaurant, and teach them the car business?” What do you see as just the percentage of hires? Are you bringing folks in with car experience? Maybe we should define experience a little more specifically? Is it any experience as long as it’s relevant? Or is it specifically car experience?


Cathi Trippe: Specifically car experience, let’s talk about service. If you can get somebody that has manufacturer certification, which is a huge deal right now for Ford, Chevy, Mercedes, Audi. If you can get somebody already certified, that is humongous. They can do recall work, they help your numbers, you know there’s a whole host of things that that kind of experience comes with. When you talk about hiring service industry people, yeah, we have done that, and we love those people. We love them because hospitality is hospitality. If you can get that piece of it under your belt, then now you’re just learning the details of selling, or selling service, or selling a car.


To be honest with you, we don’t do a great job of laying out the learning curve. At the beginning, maybe the first two weeks, there’s a lot of patience and focus on training. Then, there’s a big expectation that you’ve learned it, and now you should be free to fly. I guess what I’m saying is, is if you’re hiring inexperienced people from another industry, for us to do a better job, that window of learning curve has to be a whole lot longer than two weeks, but unfortunately, I think that’s when people lose the interest to keep teaching.


Adam Robinson: Okay. Well listen, Cathi, that wraps up the main part of the content here that I wanted to cover with you today, but we do have time for a closing question. This is one we ask all of our guests. Here goes, are you ready?


Cathi Trippe: Sure.


Adam Robinson: If you were to come back on this show a year from now, and report on whether or not you accomplished the most important thing that you need to do in the next year, what is that thing?


Cathi Trippe: My husband has this expression that, “The first one’s on you, the second one’s on me.” Meaning that if you make a mistake, or you fail in some way, that’s my fault, because I didn’t train you enough, or I wasn’t there to lift you up. I guess the one thing I would like to improve upon over the next year is the last ditch effort, before people leave us or before we decide that we’re not a fit. I would love to define what that last ditch effort looks like and how long it takes to make a decision. You don’t want to delay somebody who is antagonistic to the operation, but you saw something in them when you hired them, and I would just like all of our managers and coaches, if you will, to have one last ditch effort to make it a success. Then, if they leave, then you say, “Hey, you know what, at least I put everything I had into it. It just wasn’t meant to be.”


Adam Robinson: Okay, Cathi. Great goals, great advice, and thank you for sharing that with us. Ladies and gentleman, that’s Cathi Trippe, vice president of risk management at Phil Long Automotive Dealerships, right outside of Colorado Springs, Colorado. Cathi, thank you so much for being the show and sharing your experience with us today.


Cathi Trippe: Well, thank you. I’ve enjoyed it, good questions, good thought starters.


Adam Robinson: Okay, that is this week’s episode of The Best Team Wins podcast, where this week we’re featuring Cathi Trippe from Phil Long Automotive Dealerships. Stay tuned next week for our next show, we’ll see you then. Thanks everybody.