The Owner’s Mindset: How HR Leaders Drive Results and Culture

Mo: [00:00:00] Welcome to today's episode of People and Strategy. I'm your host, Mo Fathelbab, president of International Facilitators Organization, People and Strategy is the podcast from the SHRM Executive Network, the premier network of executives in the field of human resources. Each week we bring you in-depth conversations with the country's top HR executives and thought leaders.

For today's conversation, I'm excited to be joined by John Bernatovicz, founder of Willory, an HR tech consultancy. Today we'll be discussing how to view HR as a business. Welcome

John Bernatovicz : John. Wow Mo, a professional facilitator and such a wonderful introduction. I am blessed to be here. Thank you for your time as well, and I look forward to the conversation.

Let's have some fun.

Mo: Let's do it. We're blessed to have you, John. So John, let's start with your career journey. Tell us [00:01:00] how you landed in the field of HR consulting space.

John Bernatovicz : First off, started my career working for a large outsource payroll payroll service provider, A DPI. Actually, I know Mo, we have an admiration for golf.

I thought for a hot minute about being a professional golfer. I played competitive golf since I was seven years old. Played on a division one scholarship at Kent State University, go flashes. And for about a week I thought about being a professional golfer, but. Thought better of it for a wide array of reasons.

I do still love the game and many of my friends that took a career path in golf no longer play golf, and I think that I made the right choice. I decided to take a career path in the business climate sold for a DP for almost nine years. In the midst of that process of working there, I started what. At the time, they would probably call now the cool kids would call it a side hustle.

I started a reverse osmosis water vending business, and I got [00:02:00] hooked on the idea of small business ownership and entrepreneurialism, and as a result. In a few years after that and nine years after being with a DPI left Corporate America and joined a boutique executive search firm. And then in that four year period of time, my wife and I had our two kids, will and Mallory and I decided in 2010 to make the bold move of starting a 100% virtual company.

This is 10 years before COVID. I did not know COVID was coming. Mo don't ask me that question 'cause I've been asked that before. That was weird. And as a result of that experience, I working at a DP in executive search. I founded a virtual firm named Willie. I have a son named Will and a daughter named Mallory.

And I thought it'd be a great way to continue on a legacy for them and pour my heart into supporting the HR and payroll community. And we focus on technology, People, and Strategy, and we're [00:03:00] all about empowering human resources. Payroll professionals.

Mo: What a beautiful story. Thank you for sharing that. And just, uh, I see the threat of, of the family from your mom all the way down to your children with the name of your company.

So inspiring. Uh, so John, you've discussed the importance of viewing HR as a business. Uh, first of all, tell us

John Bernatovicz : what that means. I think first and foremost, that. Human resource professionals are one of the most incredibly selfless, caring, hardworking, dedicated group of business professionals I've ever met in my life as a group as a whole.

At the same time, we are relegated to party planning. We're relegated to. Hires and fires, and we at times are not seen as valuable resources inside of an organization by others that don't understand all the dynamics that go into human resources. And I've had this thought process for about a decade, and it was really based upon my [00:04:00] years of experience of meeting different HR.

Professionals and getting to know them personally, as well as seeing the impact of the ones that were really amazingly awesome on the culture and the bottom lines of their business, as well as observing the ones that maybe didn't have the right mindset about how they can be a business leader that can impact bottom lines of businesses, communities of people, and also their employees.

And as a result of that, I've been on this mission to encourage HR professionals to look at their job as a business leader first. It just so happens to practice in the field of human resources and we're on this mission to transform how people feel at work through the power of HR. And if we do so, we can change the lives of our employees, we can drive bottom line results and at the same time, we can make a profound impact in our communities.

And I truly feel like Mo, it is simply a mind shift change. It doesn't mean you. Are not gonna get away from the [00:05:00] necessary blocking and tackling activities that we must do as HR professionals to hire people, to pay people to retain them, and all those tactical activities. But what our businesses need from us, what our business executives need, and our non-HR colleagues are looking for us to be.

Business professionals that understand the company, understand the industry that we serve, understand the financial viability of our organization.

Mo: So what does true ownership look like for an HR leader?

John Bernatovicz : I think first and foremost, it's an immense knowledge of the business. What I've heard from other business leaders that are not in human resources, that talk about great experiences with HR, they use a phrase that's pretty consistent.

They're unlike any other HR leader I've worked with before, and I ask them why, and they suggest that they understand the business. They know all the elements they get, how. We [00:06:00] generate revenue. They've helped us align people strategy with organizational strategy. They understand how our cost of goods can change with things like tariffs or unique challenges in inflation, that we have to then as an organization, figure out how our people can drive down those costs of goods sold so we can have an appropriate.

Gross margin percentage, and then probably the easiest place for HR professionals to drive that kind of impact is in indirect expenses. That's where employees salaries are. That's where hrs budget sits. That's where these rising cost of healthcare and all the other fringe benefits that come into that.

It's really up to human resource professionals to gain a broad understanding of your business. Of your industry, of the people that work within it and how you do or do not make money. And I don't give a pass ever whatsoever to MO to some HR professional. 'cause I've heard this once. I've heard it a thousand times.

I got into HR [00:07:00] 'cause I like people and I'm not a numbers person, so I'm not diving into my profit and loss or any sort of other complex. Financial reporting that is no longer an excuse for us. Our businesses demand human resource professionals to understand their organization, and your financial statements are a way of telling the story from a numbers perspective that can be profoundly impact in how you.

Are able to support shareholders, how you're able to drive growth, how you're able to increase profitability and shareholder value. I just think that we as a profession need to elevate our game outside of the fundamentals of human resources.

SHRM VO: Smart leadership means smart investments. Equip your team with the future-focused strategies they need at SHRM Talent 26 in Dallas, April 19th through the 22nd and save $200 on every ticket when you register by December 19th.

[00:08:00] You can learn more at SHRM dot org slash Talent 26 podcast.

Mo: So John, to get to know you a little better, we're gonna do a segment called Agree to Disagree. Here's how it works. I'm gonna say a statement about leadership and ask if you agree or disagree. Hold up the sign to the screen to let the audience know whether you agree or disagree, and then we'll have you share your reasoning.

You ready? Am I ready? Agree. Good. Off to a good start. Alright. Accountability starts and ends with the leader. Agree or disagree? Disagree. Okay. What's your reasoning?

John Bernatovicz : Well, I think the reason why I said disagree is that I'm assuming Mo, that you meant the leader of the organization, the stature of the boss or the CEO or the executive.

I look at every single. Business professional as a leader, whether they're a fresh intern still in [00:09:00] college, all the way to CEO, and in my opinion, accountability is a two-way street. I just had a conversation with one of the best feedback coaches in the world and talked about accountability being. A dual responsibility for manager and subordinate, and it just can't be a leadership skill to create accountability and have effective feedback and dialogue around challenges or successes or opportunities.

That's why I disagree.

Mo: I like it. Okay, next one. A clear vision is more important than flexibility. Agree or disagree? Agree.

John Bernatovicz : And your reasoning. How do we know where we're going without a vision statement, Mo? And if we're driving around in a car, how many of us drive around in a car aimlessly without using our ways or our Google app or whatever the case is?

It's pretty rare. We need a vision. We need a direction that we're heading. I not dissing on flexibility or adaptability, but [00:10:00] we need that first and foremost vision. I'm a big vision, purpose, mission, values kind of guy.

Mo: Love it. Next one. Good leaders sometimes bend the rules. Agree or disagree?

John Bernatovicz : Agree in your reasoning?

I think sometimes rules are meant to be broken, and I think the most effective leaders are ones that are innovative and they create distinct. Differentiators for their organization. And sometimes the right thing to do is not in a playbook. And I think a leader has the ability to manage through the gray of very difficult decisions.

It's not always black and white. There is that gray, and that is a place that we and human resources spend a lot of time. Good

Mo: stuff. Next one, A leader's primary job is to remove obstacles for their team. Agree or disagree?

Ooh, I see both agree and disagree. Is that fair? All right. Let's hear what you're thinking.

John Bernatovicz : I think that [00:11:00] we must, as leaders be able to have flexibility, right? I think you gotta be able to, to go down that path, but when you're dealing with people. There's always an anomaly. There's always a uniqueness.

There's always a story to it. And sometimes, like I said previously, we gotta, we gotta bend the rules, we gotta be flexible. We gotta look at it from a different angle than maybe our own. I think one of the greatest attributes we as human resource professionals can develop and to be people, leaders, and strategists at the same time as being empathetic and curious, acting like you're a consultant or a business owner instead of.

Sparking out the orders of what we said we should do. Let's be curious to find out why exactly this happened and that will help you become a better business leader and also more curious in understanding the business.

Mo: All right, I like it. Next one. Anyone can be a leader regardless of their title. Agree or disagree?

Agree. [00:12:00]

John Bernatovicz : And your reasoning. I gave a prelude to that. To the first. Answer you gave me about leaders are only the ones that can, that can lead in essence or do that, but I really feel like every single individual person that's on the face of this earth has the potential to be a leader. And I truly believe the most effective leadership or executive professionals are the ones that get that.

The frontline workers are the people with the most insight that can change and shift. The trajectory of a business. That's why there's popular TV shows where they follow around disguised CEOs that are working on the front line, and they learn all these fascinating stories from people that are making $20 an hour, who are actually more profoundly impactful than someone in the C-suite who isn't connected or can relate to the day-to-day operations of the business.

Mo: Great show. Alright, last question. Great. Leaders put their teams' [00:13:00] needs before their own. Agree, disagree,

agree, and your reasoning.

John Bernatovicz : I was gonna put a caveat next to it if I could like an asterisk, because I truly do feel that the most effective leaders, they give the glory to their team when there is success and when something goes awry or isn't. Meeting an objective or a goal that leader takes full responsibility.

Mo: Walk us through a specific example where you've seen an organization's HR function completely transform in a positive way. After new leadership joined, uh, what were be the before and after markers that made the difference undeniably, uh, beneficial to the business?

John Bernatovicz : I'll share a story. I won't mention the individual's name because it's, it's, it's a little personal, but.

The gentleman was a client of mine. He and I had dialogue. We were supporting them with some services in my firm, and then all of a sudden they got acquired by [00:14:00] a private equity firm, which I'm sure many of you can relate to that, that are in the audience right now. And there was fear and trepidation, the reputation of a private equity firm and what it's gonna mean, slashing costs, and making changes and consolidation.

And what this leader decided to do was to take. That opportunity to get ahead of it as opposed to behind it. And ran, ran a bunch of metric based numbers, orientated reports and insights. Created a slide deck and demonstrated to the organization which employees should we keep. Which employees are on the fence and which employees are likely a duplication of a role inside of another organization presented to the CEO with the mindset of if we make these changes in a proactive and careful way, meaning if for those that aren't gonna be with us anymore, we need to treat them right on their exit because everyone's paying [00:15:00] attention to that.

Ultimately, as the CPO, the chief people officer. He was responsible for the culture. He was responsible for the people strategy, and he was responsible for bottom line results because now as a private equity owned or backed company, he was now an owner, which also was a major shift to him. That physical aspect of no longer just being an employee of a company, but owning it, changed the way that he looked at his job and his responsibility, and that's one of the key recommendations that I make.

To non-owners that are in HR to look at your job like you own that business, that you are a shareholder, and it is your responsibility to drive bottom line results. One of my favorite employees in my business is a comp. As an employee I call net income. We literally call net income as an employee because we wanna treat that part of our business healthily and pay them regularly.

Like we do our employees, and when we don't, [00:16:00] we have to give care and attention to net income in the sense that we would the same way if an employee got shorted pay anyway, as a result of that exercise, he drastically changed hrs view in that private equity firm because of how he was progressive and while he was assertive and took a a.

More, I'm gonna get in front of this, as opposed to waiting for what you're gonna say. He was able to create some of the narrative build into some of his programs, and as a result, the people they retained felt like it was the right decision to make. They were communicated effectively and they had a longstanding success.

Eventually, the business businesses, a lot of private equity firms do sold about four years later, and he was giving a, he was given a signi, a significant amount of credit. For where the business was because their culture and employee reputation and low turnover percentage compared to the industry [00:17:00] made them a more valuable asset to another company to purchase.

Mo: Great story. On the flip side, what's a story where you've seen a new leader have a negative impact, and what changes would you have advised them to make for success?

John Bernatovicz : To me, simply put all issues that relate to a business have to do with your leadership team. If there is a challenge inside of your company, whether your marketing department is struggling, whether your sales are down, whether you're not able to drive profitability the way that you want to, all again, non HR specific activities, you must look at the person that's responsible for that function because nine times outta 10, if not more, it has to do with them.

In my opinion. If you get a great leader. You have great success in most cases. If you have a poor leader, you have the opposite. I think of my hometown Cleveland Cavaliers when we had [00:18:00] LeBron James on our team from Akron, Ohio, and we had great talent. We were better than everyone else in the league because he was better than everyone else in the league.

And then he left. And guess what happened, Mo? We were bad because our talent was low. To surmise that if you have any issue in your business as an HR professional, go directly to the leader that is running that function and identify what's going on and see if they're capable of leading that organ, leading that particular department to the success that expected of them.

Mo: I like it, John. Thank you. Thank you. So, thinking about the macro level of business, many HR teams are being asked to cut budgets while still delivering impact. Uh, can you tell us a story about a leader who, uh, was able to drag down budgets while hitting their goals?

John Bernatovicz : If it's okay, I'm gonna point you to my own podcast, the HR, like a Boss podcast.

We had an episode last year where we interviewed a CHRO. They were part of [00:19:00] a large staffing industry, and I was so impressed by the story she told, and it was very difficult and heartfelt for her. When she was hired, she was asked to reduce their HR budget by 25%, and that was part of her initiative. And she went through the exercise of evaluating all their systems, their processes and technology, and in that reduction she had to let go of a few key team members.

I could tell while she was telling the story how heartfelt it was. In the end, she treated those employees in that transition with dignity and respect and still maintained relationships with some of them, which is marvelous in my opinion, not always the case. She also drove down some of their technology, created some innovations and ways to streamline processes.

The most interesting part of that MO is that she forces herself every single year to look at a, a minimum of a 5% reduction in her HR budget year over [00:20:00] year. And she's being proactive in that mindset of thinking, how can I find ways to reduce. My cost in my HR function, because I know my CEO is thinking like that themselves, and I must get ahead of the curve.

A theme here, be proactive about these business decisions that you make. You'll never get, in my opinion, scolded or told not to do. A better thing for the business that drives improved results, reduces cost, and drives up revenue. And we as human resource professionals probably don't have enough time in our day to think about that all the time, but we must carve out time to think about it some of the time in order to support the business leaders to do the things that I mentioned.

Mo: I think that's great, and yet it makes me wonder about the tension between budgets and impact. So what advice do you have for HR leaders navigating that tension?

John Bernatovicz : Run toward it, drive it, [00:21:00] learn it. Understand it. Don't be afraid of it. If you don't know about it, reach out to someone that does in your network.

I encourage every single HR professional to work with all of their managers and leaders on an emphatic, rehire exercise, which basically means this. Go through the roster of every single department's team members and ask yourself this question specifically to the manager. Would you emphatically rehire?

A, B, C, D, E, F, and G employee. Then give that manager the tools where you rate that employee on cultural fit. Are they supporting in regards to the ability of doing their job productively? And then are they driving bottom line results? Which means are they increasing revenue? Are they driving down costs of goods sold?

Are they driving out indirect expenses? And have a dialogue about every single one of your employees, and you will be fascinated. By the issues that come out, as well as the tremendous opportunities that come out for [00:22:00] your top performing employees. And if you go through that emphatic, rehiring exercise, you'll be shocked at the impact that you can have in driving really important conversations about your people with your leaders in a fact-based manner that you can then create accountability, which is.

Coaching up those that are successful as well as evaluating those that may not fit. And again, treating them with dignity as you try to coach them up, or if you need to coach them out of the company.

Mo: I love that question. Would you hire them again emphatically rehire them? Mo emphatically. Great, great, great.

Can you give us a concrete example of how an HR leader with strong business acumen approaches a challenge differently than one without it?

John Bernatovicz : I'll start with one word with that mo, which is relationships. I think the most effective, capable business leaders have great relationships inside and outside of their organization.

Mo: So John, what's the most surprising [00:23:00] capability you've seen HR teams possess? That leadership completely overlooked

John Bernatovicz : empathy. I truly feel like a lot of business leaders, they cannot, for whatever reason, create empathy. For another human being and they look at their job as an executive to simply drive shareholder value and to do the things that they feel like they have to do in their role.

And I think the most effective HR leaders and non non-HR professionals that are savants in being great people managers is that they're empathetic.

Mo: Good stuff, John. Good stuff. Uh, John, given your client work, what other challenges are you seeing? HR leaders face in the current business environment.

John Bernatovicz : The primary thing that I hear from HR professionals, they have too many things to do, too many items on their plate, and it's gotten progressively worse with COVID, and it's gotten progressively worse as organizations are [00:24:00] reducing headcount.

And as a result of that, HR professionals, the ratio that. I know we're shooting for is one to a hundred. That ratio is growing, one to 1 50, 1 to 200, one to 250, and as a result, their ability to serve those employees is diminishing. My primary recommendation to that is to synthesize what's most important.

Let's figure out, as a business leader, what I need to do to effectively create culture, to drive bottom line results, to ensure my employees are being productive and have purpose at work, and that we're making an impact in our communities.

Mo: So in this fast changing, uh, world that we're living in, what should HR leaders be preparing for in the next two years?

John Bernatovicz : I think ultimately in that sense. This idea of being a business leader is getting momentum. I also feel like one of the most unique and great opportunities we as HR professionals have is to create purpose inside of our business. Make that [00:25:00] purpose abundantly clear to our people, to our executive leaders, because human beings are looking to have their job be more than a means to an end.

They're looking for something to connect with at work, and we're working so much. We're working 40 hours a week over a 40 year career, that's almost 80,000 hours. Oh my gosh. When I do that math, it makes my mind hurt a little bit and we gotta give people something to connect to and hold onto. And I think ultimately there is a significant shift as we have a, a demographic change, as we have a generational change to where the Gen Zs and the millennials are looking for getting something more out of work than just a paycheck.

At the same time, we need to evaluate the fact that we as human resource professionals must become better business leaders in driving results for our organization while we take care of the fundamental aspects of human resources.

Mo: And our closing question to you, John, is [00:26:00] what one piece of advice has shaped your work or personal life?

John Bernatovicz : Alright, I'll give you a few. My dad reminded me when I got into business to surround yourself. With incredibly smart people, ones that are way smarter than you ones that'll maybe make you look bad because they work so hard and they're so great, and I've tried my best to do the same thing. Next. I truly believe that growth comes in any challenging time.

Any moment that we find a hardship or an experience or a loss, that's where we as individuals grow. I cannot encourage you enough to put yourself out there to be uncomfortable, because as a result of that, you're gonna become a better business leader. And the last thing I'll end with Mo on that is I'm a huge, huge fan of Maya Angel's quote.

I always use it in my keynotes and I share it. Every single time I get a chance. It's not necessarily how, it's not necessarily what we say, it's not necessarily what we do, but it's how [00:27:00] we make people feel. And I'll ask the audience this question, how are you being intentional about how you're making people?

You work with that are in your life, how do you make them feel? Simple as that,

Mo: and that's where we'll end it for this episode of People and Strategy. A huge thanks to John for your valuable insights. Thanks for tuning in. You could follow the People and Strategy podcast wherever you get your podcast.

Also podcast reviews have a real impact on podcast visibility. So if you enjoyed today's episode, leave a review to help others find the show. Finally, you could find all our episodes on our website at SHRM dot org slash podcasts. And while you're there, sign up for our weekly newsletter. Thanks for joining us, and have a great day.