How In-Person Excellence Is Delivered By Hybrid Teams – David Peckinpaugh | S2E002

Hello, everyone, and welcome to this episode of the remote leadership podcast. As the workplace continues evolving to more hybrid models, I've been focused recently on identifying the skills, behaviors and techniques that successful leaders are playing in the hybrid workspace. My guest today has led his organization through a significant workplace transition, and will share with us his insights about leaders who are most effective in terms of engagement, motivation, retention, and satisfaction of their teams in this new work environment. I'm delighted to welcome David Peckinpaugh president and CEO of merits, a global incentive rewards and events firm that delivers multiple and innovative solutions for clients across all markets. So thanks for joining me today, David, and welcome.

Hey, Debra, thank you very much, I appreciate the invitation.

So tell us a little bit just in the way of background, how merits has evolved and kind of where you are where you were a little bit of pre COVID and where you are now. And then we can get into challenges. And you know, what's really going well, and what you see in terms of the really good leaders and how they're

happy to and just hearing the word COVID sort of sends me into shivers. So I think I have PTSD about that experience. So merits is approaching its 100 and 30th anniversary. So we're in the fourth generation of merits family ownership. I was appointed the CEO about about 18 months ago, and first non family CEO so no pressure. And, and it's it's been an interesting company as it's evolved over those generations. You know, traditionally, we were very centered around our physical offices. And I would say that was true as early as 10 years ago, or as recently as 10 years ago, we started to see a significant shift in our recruiting efforts, as well as just pressures from a financial point of view of all these physical offices that we had. And I think we had 12 across the country, at one point. And with the headquarters being in St. Louis, as we started to reduce our physical footprint, as it made sense, then the pandemic, and the pandemic was obviously a significant milestone and tipping point, if you will, I think around the whole workplace experience, physical workplace, hybrid workplace, etc. And that was the big shift for us. So we, we took advantage of it right? You don't want to waste a good crisis. And that crisis hit us hit us hard. Yeah. Because we have one big part of our businesses in the events business. And we were basically outlawed, you couldn't gather people 50 or more, pretty much around the world. So that really shifted everything for us. So where we couldn't, when leases were coming up, we didn't renew those leases. So our physical footprint really fell off considerably. And appropriately. We're a big real estate holder in St. Louis, from an ownership perspective, but we lease for the most part everywhere else. So we started to reduce that footprint, and really changed our talent acquisition efforts. So instead of being so centered around, let's say, St. Louis, and Chicago, Detroit, and DC and California, we now could recruit from anywhere. And at a recent town hall, I showed a heat map of where our employee base was 10 years ago, and where it is today. And the spread of those dots on that heat map is incredible. So we have people now from the northwest, to the southeast, and everywhere in between. And so it's been a it's been a shift. We've obviously had virtual employees and hybrid employees for many, many years. But the significant shift to a more welcoming environment around the hybrid workplace, and virtual employment has been certainly front and center over the last few years.

So he's really we're thinking about this pre COVID In terms of do we really need all this real estate? Do we need really need to have people in these locations? And was it talent acquisition that really drove that initially? And I think,

you know, it was cost. I mean, that's let's face it, I mean, part of it is cost and utilization, you start making sure you have the right ROI do we do we need those salespeople in particular, you know, headquartered out of an office when they're never in the office, right? They're if they're doing their job, they're out seeing customers and not sitting in their office. So and we have a lot of those sorts of remote and regional situations that for sales in particular, our clients started changing, right? We had clients that let's say a Toyota let says that was based in Southern California, and they moved to Texas. So there's a big shift, and all of a sudden all of our team is there in Southern California. But now everyone's gone to Plano from that account. And so what do you do? So there was a mixture of different pressures. But let's face it, you know, the pandemic is what really was the tipping point there.

Yeah, yeah. I mean, gave you the bigger incentive. Absolutely. While you were doing no events, you had time to think about these things, right?

Yeah, unfortunately, that in survival.

Exactly. Exactly. So how did you make it through the pandemic? If we could just like, you know, go back to that painful time for a minute? I'm just curious because of the nature of your business.

Yeah, the nice thing is, we are a Holdings Company. So we had, obviously, our what we not we call business events, part of the business was the one that was primarily affected. We have a big automotive practice that works with automotive manufacturers and dealer networks to maximize that relationship. And then our loyalty rewards channel partner, part of the business did not really suffer. So the benefit of having that portfolio really helped insulate the company overall. And we were able to get through it, we weren't eligible for any of the PPP, dollars, we're too big for that. So we really had to bootstrap ourselves through it. And we've got great owners, and we had a business model that was sustainable. And that that really made a huge difference.

So you did some belt tightening and refocused on some things. So just curious, before we get into some of the leadership things. So did you drink that COVID time? Did you start to shift to virtual events, since your face to face event business shut down? And was that new for the company as well?

Yeah, we had done some of that. But obviously, like so many of our business, within 60 days, you had to make that pivot. And so we then spun up a very strong digital practice that supported the non in person face to face events, I would say that did really well for about a 12 month period. And then you could just it's like a reverse hockey stick, right? It just started falling off the face. As soon as we can start traveling again, which started in the spring of 21. We really started events coming back. And by that fall, they had really started coming back even with the the new wave of COVID that hit that fall, we were still saw an industry that was committed to getting back together face to face. So and then now that practice is down to virtually nothing. So we fortunately had the ability to spin it up and then ramp it down based on client demand.

So aside from how you've met client needs, how have you all internally, with more dispersion and people not in offices working remotely from home? Or I assume you don't have a lot of settle a small satellite offices? How have you kept your team connected? And how have you manage culture? For example, it's always a big driving concern.

Yeah, you know, it's it's a huge issue. And, you know, my personal point of view is everyone tell if anyone tells you they haven't figured out then they're lying, because we're all still scrambling to figure out this whole mess of it. It's still a mystery, because you know, it's there are big issues, right? Talent Acquisition, talent, retention, career, pathing, career development, you know, work life balance, all these things really come into play, I would say there are a number of things that we did one is we eliminated some offices. But in many other locations, we just significantly downsized. So we might have had a 30,000 square foot facility in Twinsburg. Ohio, we reduced that down to about an 8000 square foot office in Beachwood Ohio, just because we no longer had the demand. And even that is proven to be too big, you know, based on on monitoring utilization, did the same thing in our Frederick, Maryland office, Washington, DC, Southern California, you know, so many examples. So we've been wise, I think around, first of all, surveying our workforce, what were their needs, really trying to get a pulse of what would they use if it was there. And what we found is even based on that, people were still overly optimistic about their use of office space. And we probably still have some offices that are still too big. So the physical layout was important, then the technology in those physical locations we needed to make sure met the standard. So you know, depending on what technology we're on Zoom, as a company, we're Microsoft companies. So we use teams. So we started installing teams rooms, which were really the most current technology so that when we did gather, we gathered effectively, right? You weren't messing around with all the technology. We also found when we downsize, we found office space in buildings that had large meeting rooms, and meeting space when we wanted to bring the team together. We could do that. And that's been our head of real estate has done a fantastic job of doing that. So we'll find offices that have theaters have ballrooms. So we can bring our people because we still have a good concentration of people in different physical locations around the country. But we don't have to have that every day, right? We can,

even if they wanted to hold come in on the same day and said, You can't accommodate that

can accommodate it. But we do want to keep that culture alive at team meetings, we do happy hours, we do picnics, we either use that space that's available there, or we'll go off site. But we don't we don't have to have that permanent 30,000 square foot footprint, where we can get away with something smaller and use more flexible meeting and gathering environments. And that's worked really well. Yeah, the whole thing around culture is front and center. So we kicked off really in the midst of of the pandemic, a cultural initiative, because we took a big hit. I mean, we, I'm sure, right, well, we had to furlough and layoff a significant number of employees. And that has a big effect, especially when your core value is first taking care of each other, he tend, but you know, the the number one thing we need to do to show care is to have a business for people to come back to. And and that was you know, rule number one is survival. And then two is how do you how do you come out of this better and as a veteran stronger company? And then how do you rebuild that culture. And so we appointed ahead of that. She formed workgroups across the company have six different areas of concentration, everything from you know, cultural norms to meeting, meeting environments and meeting culture, to mental health and mental health care. And those teams then from a grassroots effort helped lead the rebuild of the culture. So how do we want to relook at our core values? How do we want to look at our purpose? How do we want to look at those six different areas? And make that reflect the realities of the new workforce? Yeah,

that word just came to my mind as you were talking. So COVID wasn't a crisis for you so much as an opportunity of reps.

Yeah, I mean, you we looked at it as if we looked at it as a crisis than your heads in the bunker. Yeah, yeah. And, and I always looked, the, you know, you got to keep your head, looking forward to the front windshield, not in the rearview mirror. And so we, we really spun up, like our innovation practice, we kept all the focus on that, so that we kept coming to the market with new products and services. But that people were front and center, we're a professional services firm. And so are our assets walk in and out of our doors are in and out of their homes or apartments, each and every day. And so that's what we needed to zero in on. So that and then, to me, one of the essence is of that was all around communication. So we then put a significant amount of effort into a communication strategy that not only went all the way through the pandemic, but then it has evolved over time coming out of that, so that if nothing else are people can say that at least we let them know what was going on. And we communicated and to me that builds a foundation of trust, foundation of transparency, that leads to then that rebuilding of culture. And I think that's been critically important for us.

So during COVID You ramped up communication?

We did we actually did that for I think about a nine month period. We had a weekly townhall every Friday. You were involved I let I let everyone okay. Yeah, that's why I bought that nice microphone because we had so money and we hired a company in St. Louis to help us with the production of that so it was good quality. Yep. And that allowed us to tell people this is what's going on because you know, early days we thought it would be over in 60 or 90 days well you know a year and a half later you're still dealing with it so well you know

I keep my often remind people first of all sidebar pitch for Yeti microphones you and I are both using decorate and you know when we first we kind of forget when we first all went home we were we were under the impression it was going to be a three week adventure remember? Oh yeah, like okay well as soon as this is over we get back salespeople just took a little break but they were waiting till they could get back to showing up to see people and then you know, it was months so yes, talk about years shift and then you know, I've talked with a lot of salespeople that had to learn how to sell by zoom because you could not sell during that time. Correct? Okay, so you haven't continued weekly?

No, no, then we went every other week then we went to once a month and now we're two three a year. Yeah. All company town halls but I then added a monthly video series Okay, couple minutes minutes and that allows me to record a video every month that I share with the whole company I'm here's some key things you know, something maybe came out of a board meeting or compensation rule Latest issues are strategic issues, we use that and then we have our intranet, which is called my merits. And we put a lot of effort and energy into making sure that that content was current, accurate and updated on a regular basis. And we steer all of our people to that, that's where all the information is stored. So you know, to me, it's, it's a mix, right? It's that mix of communication. Everyone learns differently, some may listen to the video, some may go to the my merits, some may read a newsletter, or attend a town hall. So we've just got to hit them from every different direction. To really reinforce

one of the shifts that's occurred in all of this is the notion of organizations becoming remote. First, I'm just curious, if you, if you know, in the screen that you go through, and you're thinking, if you all kind of if you think of your organization is, you know, we're primarily a remote organization, therefore, everything has to process in a way, all these things you just rattled off or to make information accessible, you might not use that language, but it sounds like you do think like and operate like a remote first organization,

we do, we're it's a unique position for us, because a huge part of our business is in person face to face events. And yeah, and so to go to that, like remote first mentality would almost be counterintuitive. So we have to embrace it. But at the end of the day, we feel and we, we our whole company is based on a really deep understanding of behavioral science and neuroscience and human behavior. And people want to gather, we've seen that right, you see that in the travel rebound, you see that in the rebound of our events, industry, people want to be together. And so we still firmly believe that we still firmly we're better when we're together than when when we're apart, we've just got to make sure that the time when we're together is worth the investment of our colleagues time to come into the office, go through a commute, whatever it might be, and, and our businesses are all different, right? We have one business that 99% of the people are all in St. Louis, our events, businesses, 70% of the people are distributed, and another business that's in between. So we really can't have an office mandate, because so many of our people remote, but if you're there, we really encourage you to come in, it's better for career advancement. It's better for culture, it's better for your mental health, I firmly believe, right? So we we are our word is not taken a virtual mindset is a flexible mindset.

Yeah. And the trick is to make as you said, the time that you do have people together, make that meaningful and valuable, and use that time well, and then how to replicate and simulate that together time when people can't be together. So make those those team meetings really good. And you and I've talked offline about investing in the technology to make your teams meetings, so everybody can hear effectively, it's stunning to me, that, you know, we have people flying around in the space station, and we still have trouble connecting people. And meetings. I mean, it should be past that by now. So

right and being able to see faces, right?

Exactly, exactly. We are innately social beings, you must recognize that must be a little schizophrenic. Sometimes you're needing to gather people, and that's what people pay you to help them have really great face to face events and still being so distributed as an organization. So yeah, so that's part one. Why I wanted to talk with you because you're kind of you got a foot in both sides of

those. Yeah, we're, we're the probably the perfect petri dish for what's going on. Yeah,

exactly. So talk to me a little bit about how your leaders have made their way through this, particularly those that have been around and, you know, we all know, we all, you know, kind of all grew up working in offices. And here we are. Yeah. So what have you seen, the kind of the essence of what you've seen about those leaders that really have pivoted, adapted, embrace this doing well, versus those that are struggling?

You know, I and I usually never think in the terms of generation, we usually think of terms more around personas than we do. Age. Yeah. But I will say this is one where I've seen a distinct difference between generations. Okay. And we've got a generation that is, to your point was traditional, much more used to the in person in the office five days a week, you know, whatever the hours were, mindset, and it's really tough for them to break out of that. Because there's a, I think, a bias around productivity. If they can't see it, even though if you're on in person, you're not monitoring somebody in an hour by hour basis. But there's a sense of you get a sense that they're in the office and they're being productive. Well, they struggle Go with having the the trust. And the faith in that is actually going on with the employee that is, you know, hybrid or fully virtual. I've always had a much different I put my first Virtual Employee in 1994. I was in a hotel in California and put someone in Indiana. So I've always believed at the end of the day, it's getting the job done, setting the right expectations and the right metrics. And then measuring performance. And that's usually the 10 people work differently. You know, and I think that's the reality. So I think we've struggled, some of our leaders have struggled a lot more than others. But we've always had a leadership team that's also been distributed my head of HR. I'm headquartered in St. Louis. She's, she's in Columbus, Ohio, one of our other leaders in Detroit, we have another leader in California, and another one in southern Florida. So you know, we've been used to that.

Yeah. So your direct reports, your very your direct reports of distributed as well.

Absolutely. Yeah.

So so you're

one in Europe? I mean, I have one in The Hague. Yep.

It's the modern age. And you make a really good point. And I've said for a long time, even before all this remote stuff was even very popular. It really comes down to being clear about what your expectations are of people, and making sure they're clear about that and supporting them, you know, because we used to think if we saw them, I've always said, you know, if they were sitting in their office, they had their eyes open, they appeared to have a blood pressure, they must be working on the right things. Oh, yeah. Right. It might be they're working, but how would how would we know less, we had really good communication based on strong performance management. And I know you're not a big advocate of like, when we say performance management, I'd really appreciate if you'd clarify, we're not talking about the annual review.

Correct? Oh, we're a big believer in performance management and building really spending a lot of time building a performance management culture. Yeah. But that's different than some processes that are in place, they got to share with you the other day that the 12 years ago, I got rid of the annual employee review, because to me, it never worked, never worked for me and never worked for my employees, this idea that you spend one time a year together, and you hit them with all the things either doing right or doing wrong. And that's supposed to make a difference. Never made sense to me. And this, you know, the numeric measurement that then was tied into compensation. So we really blew all that up, we went to what we call an aspirational coaching model, which is manager employee on a monthly basis, we developed a model we trained, it's been very effective. And, you know, you never should have a surprise with an employee. Right? They should know exactly what the expectations are, how they're performing against that. And, and that 360 feedback mechanism, and not only for them, but also for their manager, right, it helps their manager be better. Right? So that's a whole another topic, but that that's proven to be very successful for

us. Yeah, yeah. And, you know, it's also knowing when they're struggling, and they're, you know, they, they're, they fallen off the rails, and it's a matter of having the right coaching for them at the right time, as opposed to at the end of the year. We know.

And imagine imagine now with generative AI doing an employee review, you could go in and say, let's say you're my employee, I go give me a review of, you know, a meets expectation review for Deborah here are key carriers and responsibility, and someone's going to spit out a review that is probably fairly accurate, but isn't meaningful, does it impact the employee? Is it face to face is, is a personal? You know, I it's gonna be really interesting to see how that evolves, with companies that are still in that model.

Oh, right. Right. Right. Yeah, that's, that's another whole podcast. So your leaders that are like really nailing this, how are they handling the communication and the coaching? And I mean, the ones that you that you don't have to think about because they're, they're doing it really well?

Yeah. I think, you know, the, what we just talked about the aspirational coaching is a great way for them to interact with their manager, management team, and then that trickles down, right, that goes to the whole organization. I think we communication, as I mentioned early on, is key. So we have a lot of departmental or small group, town halls, okay, where those teams get together that are in this sort of the same area, whether it's operations, finance, it, you know, InfoSec, whatever that area is, they have their own town halls on a regular ongoing basis. So that that community of like responsibilities is sharing. And then we have a variety of different initiatives, initiatives with alliances. And a part of our DNI effort is around employee resource groups. And and they get together and they have events for people that want to get involved in, in the five different args that we have. And so all that helps managers do a better job of managing helps employees feel part of the company and helps build culture. And, and again, it comes down to regular communication. It prevents that gray zone of people filling in their own answers. And I think long term builds trust and leadership.

Yep, don't give them information they make it up.

They will absolutely make it up. Right. Right.

So what keeps you awake at night, David?

People, talent. Okay, yeah, that's an absolute number one

Finding more of the right people,

finding the right people retaining the right people being able to afford the right people, obviously, inflation has had an impact on all businesses, but the inflation of the employee base in the workforce is obviously huge for a professional services firm like ours. So that's where I spend a lot of my time and energy is working with our people and development team, focusing on our culture, working on how we recruit who we recruit, we hit the brakes with COVID, we went from 100 to zero, almost overnight, and then we went from zero to 100. And like 60 days, so soon as it turned around. Yeah, I don't know of any, any businesses that have ever had to go through that. And there's so many of us out there, many of your listeners, I'm sure have experienced the same thing. So put so many pressures on and we have so many new people now, we got the people back that we could, but I think 65% of our workforce is new. And so they don't have the long term history of the company and the culture. And so you got to rebuild all that. So Right. It's, it takes a lot of time and energy, and it takes discipline.

Yeah. And there's, you know, some benefit to new people with new ideas up. So looking at things but you know, in terms of, you know, the culture and the some of the institutional knowledge, not even memory, because sometimes institutional memory is, well, we don't do

it that way here. It'll do it that way. So we have a lot of that,

how have you handled onboarding since you've had so many new people, then you've had to do that fast. It sounds

like I don't do it fast. And it's still a work in progress. But we again, our culture team, one of the big initiatives they had it was the onboarding experience. And we're an experienced design company. So hopefully, we know how to design experiences and events. And so we really have gone through that entire process of what's the orientation look like? How does it happen? That happens many instances virtually? How do you get someone to feel a part of the organization? A lot of things I do I write a personal note to every new employee that comes in the company. You know, I things that I do birthday cards to every single employee, and we're 2400 employees, and we've hired 1400 people over the last 18 months. So it's my I get some writer cramp. But that was your hand tire, David. But it's, it's the right thing to do. And yes, and then we send them a welcome package. Now new employees. And it's like, as it's like a surprise box of low logoed items. And then we have a really robust ongoing onboarding process that they do virtually. But we have a training team that, that walks them through that, and it differs based on the role in the department. But we get very positive feedback and reviews that they immediately feel a part of the family, they get a sense of the culture. But you're only going to build that over time.

Yeah. So you don't want them to in any way feel isolated, disconnected, confused?

Correct. And when technology is one of the big things, you know, we've really worked hard with our tech team to say, what's that new employee need? You don't want someone starting and then waiting three weeks for a computer, right? So and we had some of those issues early on, because we're having so many people come on board. But our technology team and our support teams have been fantastic. So now there's a whole process around getting somebody set up in their home office and getting their technology up and running and help desk support. And, you know, the list goes on and on and on and all those things that they need.

Yeah, so you've systematized a lot of those things. So they just happened as much as

I can. And I don't want to look, we're not perfect, right. We, we still have our our challenges awards. But I think you know, where we were 18 months ago to where we are now is night and day.

Yeah. As we wrap up, I'm just curious about if you were talking to and you are talking to other leaders here, what would be the kind of the one message you would give to them have what they need to think about now. And as you look to the future, the challenge that you see, so we've come a long way, but there's still going to be more, there's more changes. And and it's still, it's not like it's discrete, and we all know exactly what we're working with here. So what message would you leave for leaders to think about?

Yeah, for me, I think, you know, we're a purpose driven company. I haven't spoken too much about that. And I belong to an organization that is made up of CEOs of purpose driven organizations. And so from a leadership perspective, finding your tribe, if you will, that can be a sounding board and an opportunity for learning, I think is really critical. So just as a leader, you know, taking care of yourself, making sure that you're in the right place as a leader, I think is, is front and center. And then when it comes to the business itself, you know, we're we're a triple bottom line, bottom line company, right financial people and sustainability. We focus on all three of those pillars. But for me, the in professional services, it's all about the people. And so I put culture, the development nurturing of that culture as my number one job. Everything aside, I think my owner would support that I think the board would support that, as long as, as long as we're delivering on the other side. But yeah. But at the end of the day, it's where our core value is, first take care of each other because and we that's tosses a four stakeholder model, right? It's not just our employees, it's our clients, our partners, and our communities. And, but to me, it's, it's all about the people. And that's what I focus on. I think that's what got us through the tough times and will get us through the really good times that we know are ahead.

Yeah, is a great way to wrap up. And the image that came to mind is the reminder that we all get every time we get on airplanes, which you and I both know are packed full right now. And that is, you know, you need to put on your own oxygen mask before you help others. So leaders tend to can get so wrapped up in what keeps them awake at night, and lose sight of taking care of themselves as well. And making sure they're there together and strong enough to be strong for others. Yep. So great, great way to wrap up that and appreciate your time. And absolutely, you know, wishing you continued good luck and success in everything that you're doing. And and thank you for sharing your thoughts with us today.

Thanks, Debra. I hope it was useful for someone out there listening. So have

So have a great day have that no concerns about that. So thank you, David.

All right. Take care.