‘I Had to Fire the Guy’

Introduction:

This week, Paul Downs, Jay Goltz, and Sarah Segal talk about sexual harassment and where you draw the line with employees. Is it sexual harassment for one employee to ask another for a date? Is it sexual harassment to ask twice? Does it make sense to have a policy of zero tolerance? Or is it better to leave room for discretion and judgment? The conversation was sparked by a recent situation Jay experienced with an employee who had been with the company for almost three decades, having started at the age of 17. “It was a very sad thing,” Jay tells us.

Plus: Sarah Segal asks whether it’s better to build her business on a bunch of small clients or a smaller number of large clients. And is being CEO a health risk? We begin the episode by talking about an eye-catching story the Wall Street Journal recently published noting that an increasing number of CEOs have been dying on the job, presumably because of the heightened levels of stress. I asked the three CEOs on the episode if they’ve been taking care of themselves—but they weren’t having it. Instead of thanking me for my concern, they chided me for highlighting an article they consider complete BS. Which, of course, is what we love about these guys. They call ‘em the way they see ‘em.

— Loren Feldman

Guests:

Sarah Segal is CEO of Segal Communications.

Paul Downs is CEO of Paul Downs Cabinetmakers.

Jay Goltz is CEO of The Goltz Group.

Producer:

Jess Thoubboron is founder of Blank Word.

Full Episode Transcript:

Loren Feldman:
Welcome Paul, Jay, and Sarah. It’s great to have you here. I want to start today with a Wall Street Journal story that I recently highlighted in the Morning Report. It’s about how being CEO can be hazardous to your health. In fact, more CEOs died in office in 2023 than in any year since 2010. Not surprisingly, the story focused on the stress of the job, on people working too hard, on not taking care of themselves. And right after I published it, I got an email from a regular on this podcast who said she has been really sick since Monday, she can’t walk up a flight of stairs, but she has a meeting scheduled with her biggest client. Which leads me to ask: Are you guys taking care of yourselves?

Jay Goltz:
Can we check out the article first? Because I have to tell you, what kind of journalism is it? Nineteen out of 100? Out of 10,000? Out of a million? If the average CEO is 58 years old, the odds of them dying in a year is 1 percent. So, what kind of context is that? Nineteen CEOs died?

Paul Downs:
Yeah, I was gonna say the same thing, Jay. It’s complete bullshit.

Jay Goltz:
Yeah. Thank you.

Loren Feldman:
Well, the 19 number is ridiculous. You know, all they told us is that the number went up. But that doesn’t mean that there isn’t an issue here with CEOs stressing themselves.

Jay Goltz:
No, you’re leaving out the fact that, in the last 10 years, the Baby Boomers are now getting older. And for all we know, the average age of the CEO has gotten older, and that it’s turning now.

I’m a middle Baby Boomer. I’m 67. The average age of CEOs has gone up over the last few years, and it will start to go down as the Baby Boomers are retiring. So there are so many things missing from that, so to act like this actually means something, I think, is kind of silly, because they gave us no information.

Sarah Segal:
I was also struck by the source of some of the data. It was from Chief, which is a women’s group. I mean, to me, I just looked at that and went, “Oh, they did some sort of survey so that they could get PR out of it.”

Jay Goltz:
Yes. And I don’t like using this phrase, but it sure seems like fake news.

Paul Downs:
Yeah, I mean, down at the bottom, or in the middle of it—here we go: “Most of the more than 1,600 CEOs in this study lived into their 80s—longer than average for the general population—but shorter, in some cases, than they might have lived with less stress.” Well, there you have it folks. A) My headline is not true. And B) if it is, I can’t prove it. So what kind of story is that?

Sarah Segal:
So there’s also the question: The lifespan and the career span of a CEO usually tends to be pretty short. CMOs as well. The average job duration is like 16 months to two years maybe. So how do these short-term gigs add up? Probably it’s the stress of the job. But bouncing from job to job as well provides a level of anxiety and stress for a lot of these folks.

Jay Goltz:
It’s a bad control, because the fact is, the average, quote-unquote CEO has top notch medical care, probably doesn’t smoke cigarettes—probably. So it’s just a non-controlled study that has absolutely—I don’t know how you can draw any conclusions from that.

Sarah Segal:
There was one point in the article that did sit with me a little bit, and it’s how female CEOs tend to suffer in silence a little bit more than men. I was listening to, I don’t know, some podcast or TikTok the other day, and it was talking about how women, if they indicate that they are dealing with any health or mental issues—as a leader, I feel like there’s still a double-standard, in terms of expectation. Like, “Oh, she’s weak,” as opposed to a male CEO. It would just be like, “Well, it’s a stressful job.” But that’s just my kind of novice perspective.

Loren Feldman:
So I think everything you guys are saying makes perfect sense to me. You’re raising legitimate criticisms of the story. But I doubt you’re suggesting that the whole phenomenon is wrong. I mean, there’s a lot of stress in these jobs.

Sarah Segal:
What I would say is that I think pinpointing stress and jobs to a particular title is wrong. My mother became ill and passed away, and she had a very high-stress job. And we always thought that the demands of her job and the stress that she felt impacted her physical wellbeing. And I think that that’s across the board. It doesn’t have to be a CEO. It could be a CFO, it could be the rank and file person—

Jay Goltz:
A doctor.

Sarah Segal:
A doctor, right. One hundred percent

Paul Downs:
Yeah, I think that, if you compare the stress of being a CEO to the stress of being a single mom who’s going to take a bus between three part-time jobs, where they never tell her at the beginning of the week when she’s working, I’ll take CEO any day. I just don’t think that this is a meaningful article. It’s just clickbait.

Loren Feldman:
All right, so let’s talk about—

Paul Downs:
Got anything else for us, Loren? [Laughter]

Loren Feldman:
Yes, I do!

Sarah Segal:
Poor, Loren. Sorry.

Loren Feldman:
Wait a second. Don’t apologize. This is what we’re here for. We’re here to bring reality to every situation that can affect the running of a business. So, you guys are providing a service.

All right, let’s talk about real stress. Jay, you recently had a stressful situation with an employee, a long-time employee who got in trouble and forced you to make some difficult decisions. Can you tell us a little bit about that?

Jay Goltz:
Not much—for his own privacy, but—with me 29 years, since he was 17 years old, and falls under the category of sexual harassment. And it was just a difficult situation of which there are some lessons from this. Sexual harassment, if you think that it’s not happening at your company… Maybe it isn’t, maybe it is. If you’ve got 30, 50, 100—I’ve got 130 employees—it’s a problem. And you can have all the training you want, which we do. We do the training. But it’s very difficult.

And one of the worst phrases ever made, in my mind—usually, usually—is zero tolerance, because it takes out judgment. And the fact is, things are not always black and white. Is it sexual harassment for someone to ask someone out for a date? Is it sexual harassment when they ask them twice? Is it sexual harassment when they close the door, and they grab their arm? It’s not black and white.

And anyone who goes, “Well, people should speak up.” I fully understand that, especially for a woman, it is very difficult to speak up. It’s embarrassing. They’re worried about getting in trouble. They’re worried about losing their job. It’s very complicated. And then they worry about, “Oh, the manager is tight with the owner, so they’re not going to do anything.” At the end of the day, I had to fire the guy. And it was very sad. Very sad. Very sad.

Sarah Segal:
You did the right thing. I mean, it’s a hard thing. But you have to, as the owner. I mean, it all comes down to you. If you hadn’t acted, then I think that the the risk of being held liable for something would have been—

Jay Goltz:
That’s part of it. Let me tell you the other part: What does it say to the rest of the employees? That’s a problem. It’s both the risk with the one employee, but then you’ve got to take a stand sometimes, because everybody’s watching this stuff. And it’s a problem. And I will also tell you—which is all part of why we do this podcast—did I sleep that night? Yeah. I gotta tell you. I’m a warrior.

I’ve had to fire people for all kinds of reasons over the years, and it was a very sad moment with him. And he was very upset—did not argue with it. But if you’re in business, and you’ve got a lot of employees, you’d better just toughen up, because this stuff happens. If it’s not this, it’s something else. And I haven’t had one in many years that was personal like this, where I knew the guy for a long time. But, like, whatever! I do what I gotta do, and I’m not whining about it.

Loren Feldman:
Jay, was it obvious to you that you had to take this action?

Jay Goltz:
Here’s why: This does make it black and white. This wasn’t the first time. Ten years ago, there was something else. And that’s why it wasn’t that hard, because it’s like: Okay, I’m big with second chances. I’m not big with third chances. And if it wouldn’t have happened before, maybe the outcome would have been different, but this is the second round, and, like, enough.

Sarah Segal:
I was going to ask what the timeline was on all of this. How long did this—

Jay Goltz:
Process take?

Sarah Segal:
Yeah.

Jay Goltz:
It starts—and I don’t think this is unusual—we had to fire a co-worker of hers, who just wasn’t doing the job, blah, blah, blah. And she decided to be the whistleblower. And she’s the one who made the complaint, and then revealed that he was harassing so-and-so. And that’s how we found out about it. So then we interviewed the person, and she told us the whole story. And we immediately suspended him while we were doing this investigation, and the whole thing took a couple of weeks. And I might add, my daughter-in-law is a labor attorney, and she does this for a living: investigations. I didn’t bring a lawyer in because I didn’t think it was necessary, and it wasn’t, but it took a couple of weeks. But we immediately took action.

Paul Downs:
Normally, if I have an employee who is misbehaving in some way, we’d have a procedure to tell them what the problem is, what the solution is, how we’re going to help them. But they get a second chance, in many cases.

Jay Goltz:
Sure.

Paul Downs:
And I’m curious whether sexual harassment—not like an obvious grabbing someone, but just a remark or something—whether that’s something where it’s okay to give that person a second chance, or are we in a world where you’ve basically got a get rid of them?

Jay Goltz:
No, that’s why I started out with this zero tolerance. I don’t believe that phrase. I’m sure there are some cases. I think that phrase is overused. I don’t think it’s practical. If someone makes a bad comment, yes, I absolutely believe they get one warning. It’s just not that complicated. You get one. People say stupid stuff. Men, women, it happens.

But to your point: they grab them? Okay, yeah, there’s certainly some stuff like that where yeah, that’s it. I’ve gotta tell you, somebody calls someone a racial slur, that probably would be it. I don’t know that that’s a warnable offense, because I don’t think you can undo the damage from that. So I’m not saying there aren’t things that are zero tolerance, but not many.

Sarah Segal:
What’s the complaint process for your company?

Jay Goltz:
Well, I have an HR person, which most companies don’t, because until you have 100 people—the fact of the matter is, 99 percent of small companies don’t have an HR person, because they’re not big enough to justify it. So I do have an HR person. They would either go to the HR person, or they would tell their manager. And then the manager would go to HR, and then we would do an investigation on it. It hasn’t happened a lot because we do try to keep an eye on things. Am I torturing myself on, “Oh, this was going on too long. We should have known about it”? That’s easy to say. But what’s going on in an office… I’m not going to indict my other managers, because I don’t know that they had any reason to think this was going on.

Loren Feldman:
Jay, do you have a policy about dating or not dating?

Jay Goltz:
Now, that’s interesting that you ask that, because 40 years ago, “Oh, there’s no dating here.” And like, you know what? Why don’t you make a policy that the sun can’t come up anymore because I don’t like it? It’s too bright in my eyes. I don’t know that you can have a policy that says there’s no dating at work. You can try. And I have tried. But I just don’t know if that’s practical.

And I will tell you, I’ve had five people who were dating here who got married over the last 45 years. Of the five, two were really disruptive to the company, caused major problems, and I had to fire the people. And they were married. It was a bad blow up. But there were some others where they got married. I don’t know that you can do that. You can try.

Sarah Segal:
Do companies really do that anymore? Is that normal? To prevent people from having a personal—

Jay Goltz:
I don’t think so.

Paul Downs:
How would you even do that?

Sarah Segal:
Yeah, I can remember that when I first started in my career, there were weird things. Like, I worked for a company where men were not allowed to have facial hair and women were not allowed to wear pants. [Laughter] And I don’t think you were allowed to date within the company.

Jay Goltz:
Just in a practical sense, you’re not going to stop it. Who are we kidding? You’re just not gonna stop it. I mean, that’s just ridiculous. So, the question is, do you try to put in a policy that is reasonable? Like, the boss certainly shouldn’t be dating the employee? That one is a black-and-white one.

Loren Feldman:
When you say the boss, Jay, you’re not referring just to you. You’re talking about managers.

Jay Goltz:
No, I’m talking about the manager, a supervisor. I mean, you see it on the cop shows all the time where they’re dating the other cop.

Loren Feldman:
You’re watching a lot of TV, Jay.

Jay Goltz:
Well, I know, I got to do something to get my mind off of business. So, I think you could have some policies about that. But it’s very naive to think, “Oh, I’m just gonna put in a policy—there’s no dating at work—and think that’s gonna hold.” Because no, it’s not.

Paul Downs:
I think these days, most people are kind of aware of the risk they’re taking. If somebody was dating someone farther down in the power structure, that is a risk.

Jay Goltz:
That TV show Jennifer Aniston’s in, The Morning Show? Everybody that’s in business should have to watch that because it’s extremely painful to watch what happened in the company. And Steve Carell is the big boss, and it’s extremely painful. And you realize that sometimes the boss just doesn’t understand what they’re doing.

Paul Downs:
No, that never happens, Jay.

Sarah Segal:
I love that you, like, analyze everything based on a television show.

Jay Goltz:
Well, it’s not everything on the TV show, but I certainly learn things from TV once in a while.

Loren Feldman:
Jay, back to the matter at hand for just a moment here. You said, I think, that this person had been at the company for 29 years. He’d started when he was 17. You had a personal relationship with him. Were you involved in the firing? Did you do it yourself?

Jay Goltz:
No, that’s a good question. I stayed out of it. Everybody took care of it. But I feel a responsibility, because we all—I don’t want to say we. I’m always balancing being the boss and humanity. I try to be the best human I can be, and at the same time, be a boss. There’s a balancing act going on there. I thought it would be irresponsible and cruel to just have him gone and not say something.

So I went over there. I waited for it to get done. I called him into the room by myself with him. And I said to him, “Look, I’m not mad at you”—because I know that would torture him. “I’m very sad this happened, and you made some real bad choices, but I want you to know: Pick yourself up and dust yourself off.” And I gave him a hug and he sobbed like a baby and said, “You’re like a father to me.” It was a very sad thing. But I have to tell you, compared to 20 or 30 years ago, there were no second thoughts in my head. I didn’t think, “Oh my God, what are you doing?” I knew it was the right thing. And I was sorry for him, but he screwed up twice. Like I said, if it was once, I don’t know that I would have done it.

Sarah Segal:
Do you do a soft-landing package for somebody like that?

Jay Goltz:
I’ve absolutely given lots of severance pay out in my life. Just in the last few years, I had a couple people who left after years for various reasons. But in this case, it was not appropriate to go give him months of severance. It just wasn’t. So I gave him some severance pay, but not what I would have given him if it was like, “Gee, you’re over your head,” or whatever. I mean, I’m pretty generous with severance pay, but I wasn’t in this case, because I don’t think it’s appropriate.

Loren Feldman:
Would you give him a reference?

Jay Goltz:
You know, that’s another good question. Yes, my manager gave him a very lovely: “He was here for X amount of years. He was great at this and this and this. And he left to pursue a new opportunity.” I have zero guilt about it. I feel like I owed it to him. And if somebody’s dumb enough to hire someone after 29 years who’s out of work and doesn’t think to pick up the phone, that’s their problem.

Loren Feldman:
Well, if somebody calls you, what are you going to say?

Jay Goltz:
First of all, here’s the fun part that you should know: No one’s going to call me. Trust me. Trust me. I’ve been in business for 45 years. I’ve gotten four reference calls after hundreds of employees. People don’t generally—not everybody—most companies don’t do reference calls, which is insane, as far as I’m concerned. So if somebody calls the manager, and they say, “Well, why’d he leave?” I don’t think we’re gonna go say what happened. This is part of the business game. You’re supposed to figure it out. If I had a resume from someone after 29 years, and they’re not working, and they’re looking for a job, I’d be saying, “There’s something wrong here.”

And I would interview the person to say, “I’ve gotta tell you, this doesn’t make any sense. What’s the real story?” And they usually tell me. So it’s tricky, but I felt good giving him a letter. I don’t want him to not work. He worked very hard. He was very dedicated to the company. I want him to get a job. Do I think he’ll do it again? I would hope not. I would think not. And just to be clear, it’s not like he did something horrendous. That’s another story. I’d have him arrested if that was the case. But that wasn’t the case. It was the asking out and not letting up on it thing.

Loren Feldman:
Did you feel you had to offer some explanation to other employees?

Jay Goltz:
You know what, I really wasn’t involved personally, but yeah, sure. I think that’s a controversy in the world. There are some people—and this is an opinion—who think you’ve got to keep everything private. And though I think Jack Welch—may he rest in peace—was a horrible human being, I once watched him say that he thinks you owe it to the rest of the employees to let people know what’s going on. I don’t disagree with that part. I think you owe some explanation. Otherwise, they make up their own story. And I don’t think that’s healthy.

So yeah, everyone knows what was going on, to a degree. That’s a tricky one, though. I mean, you’re trying to balance personal privacy with other people who work there thinking, like, “What do you mean so-and-so doesn’t work here? What happened?” And then somebody can make up, “Oh, I think it’s because… Remember that order last year?” I mean, everyone draws their own conclusion, and that’s not healthy for your environment.

Paul Downs:
That’s one of my rules. You always have to provide a story. Otherwise someone will make something up, and it may be way worse than what actually happened. So I haven’t had too many situations like this. But when I terminated someone, I made it clear to the rest of them that we’d done this, because I want them to know, A) there’s things you can do that will get you fired, but B) that I did it because I wanted to defend the integrity of the group. I usually fire people because I think that what they’re up to is something that the group won’t tolerate, more than I won’t tolerate.

Jay Goltz:
Do you have any women working for you?

Paul Downs:
I do now. It’s been an interesting year. The last three hires I’ve made have been women. So we now have more on the shop floor than we’ve ever had. We have another one starting on Monday. And I believe it’s going okay.

Jay Goltz:
This might give you an opportunity to have a whole new experience down the road.

Paul Downs:
Could be. We’ll see. I mean, certainly my eyes are open for issues, because I think that it’s good to have people who didn’t used to work in wood shops now be available to work in them. I’m gonna need workers. I want whoever’s out there who wants to do the job. And it’s easier to get the next hire to see what we’re all about when there’s not just a bunch of white guys out there.

Jay Goltz:
I can tell you the profound difference between me now and me at 30 years old. I’ve had to deal with some really uncomfortable sticky problems with employees. And I used to say, “Oh my God, they don’t teach this in business school. Why do I have to deal with that?” And now I understand: If you’re in business, you have employees. This is part of it. You’re dealing with human beings. They’re coming to work, and I don’t complain about it. I don’t whine about it. It is what it is. And I accept that if you’re in business, yes, you are going to have to sometimes play psychologist, and you’re going to sometimes have to play dad or mom.

There’s a limit, though, obviously. How far will you go for an employee who’s having a hard time? Paul, we’ve talked about that. I certainly cut some slack and will give it a month or two to see if we can fix it. So I do balance the humanity part with the business part. But you’ve got to make sure you’ve got that balance right. Because if you go too far with the humanity part, you’re gonna end up with a lot of pissed off customers and pissed off employees. And if you go too far to the other side, I just don’t want to live in that world. I don’t want to be Jack Welch. I mean, he was heartless.

Sarah Segal:
I have a question for you guys: How deep into people’s relationships do you get? I’ve kind of learned along the way where it’s like, I have a relationship with my staff. But I don’t get into the weeds, you know? I don’t really need to know the day-to-day, necessarily. Because I have found that in the past, that can complicate things, where there’s this assumption that because I understand something that they’re going through that I’m going to have a lot more flexibility, in terms of deliverables, because I’ve been looped into things. So I try to have a relationship with the people I work with, but still have kind of a mini wall up, in terms of, I don’t want to know too much. I don’t want to know anything about the specifics of your personal life.

Jay Goltz:
I can tell you, from my perspective of my key people, there’s no wall there. I know everything, and it’s not a problem. And it’s never been a problem, though there are certainly other people that work here who I know very little about, if nothing. It depends who the person is and their position.

And I also believe there’s work-withs and there’s work-fors. The work-withs are a gift from God, and they work with you. And there’s never an issue with that. And then there’s some people who need rules and need instructions, and you’ve got to stay on them. And you gotta know which are which, but I would never say, “Oh, you’ve got to be careful not to get too personal.” I would never make that comment, because I have people with me for 20, 30, 40 years who I’m real tight with, and it works.

Sarah Segal:
You’ve never had anybody try to take advantage of that?

Jay Goltz:
I’m thinking about that. I’m processing. I’m saying this: I don’t think I can think of an example where somebody who I knew about their issue and they expected me to just go, “Okay, I guess I’ll pay you for the next six months and don’t come in.” I’ve never had that. And I think it’s because, if you’ve got the right people, they get it. They’re not unreasonable. So no, I really can’t give you one time where I feel like someone’s taken advantage of my relationship with them.

I could give you 100 examples of weird—you know, I always say, sometimes you’ve got to fire the unwilling, the unable, or just the unexplainable. People do stuff, and you think, “Oh my God, what were they thinking when they did that?!” I certainly have had lots of weird things that have happened, but I’ve never had an employee who I had a good relationship with that I can think of, “Oh, wow, I wish I wouldn’t have gotten so friendly with them, because now I’ve got to fire them.”

Sarah Segal:
I haven’t had anything recently, but so when I was first working agency-side, I was working with a friend of mine. And she was like, she gave me the advice that I still do, or I try to do. She’s like, “Go to happy hour, but don’t stay at happy hour. Don’t try to be BFFs with the people who work for you.”

Jay Goltz:
Okay, now that I don’t disagree with. I’m not going to their parties. No, that part I absolutely agree with.

Paul Downs:
I think if you’re trying to use your employees as the basis of your social life, that’s probably a really bad idea.

Jay Goltz:
Or if you’re naive enough to think they want you there. Like, I stopped just recently. They have bowling parties, and I used to go to them. And I said, “You know what? They don’t need me. They don’t want me there. It’s okay.”

Sarah Segal:
They don’t want you there. They have to act differently in front of you.

Jay Goltz:
Right. I’m also no longer their contemporary. You’ve got to remember, I started at 22. I used to be their contemporary. Now, I’m old enough to be their father. One of them said, “You know, Jay, my grandmother’s younger than you are. And I said—

Loren Feldman:
Did you fire her?

Jay Goltz:
Well, we laughed. But her mother had her at 18. And her grandmother had her at 18. So I realized, I’m old. And I’m not even old enough to be their father anymore. I’m past their fathers. Most of their fathers are younger than I am. So I recognize that. It’s okay. I don’t get hurt feelings. I don’t get invited to weddings. It’s okay.

Paul Downs:
I try to be aware of what’s going on in my employees’ personal lives, because I do want to make accommodations if there’s trouble. And what I found is that, for valuable employees, it’s no problem. You know, it’s good to know what’s going on at home, because the pattern of my interaction with them is: 99 percent of the time, they’re great employees, and 2 percent of the time, they’re dealing with some disaster at home. That’s okay.

The ones that have been all disaster all the time, you don’t want them in your company anyway. And so I’ve noticed a correlation between sort of dicier, I-need-a-warm-body hires, and you end up finding someone who’s not all that qualified. Those people bring trouble to you constantly. And it’s because they’re a mess. You can’t really run a manufacturing organization with people who are a mess. You’ve got to get rid of those people.

Jay Goltz:
Or any business. Yeah, that’s true.

Sarah Segal:
My concern is more the snowball effect of it. This was a long time ago, but we had a nanny for our children. And the nanny started having some personal issues. And then she would tell me about her relationship issues. And then her friend got injured, and this and that. And it became, like, every conversation we had was about her personal life and her issues.

And then there were requests for accommodations. And I was trying to be flexible, but those just kept going. And then when you look at them, and you say, “Listen, you need to show up, because this is your job, and this is what you do. And I have an understanding about your personal stresses that you have right now, but I’m also paying you for a job, and you’re not delivering on that job.” And then they look at you, and they say, “Well, but you did it before.” That’s what I’m—

Paul Downs:
That’s just your classic mess of a person. That’s what it looks like. There’s just a constant drama, constant ratcheting up, and then they’re astonished when it turns out that they can’t leech off you forever.

Jay Goltz:
Wait, wait, wait, wait, let’s be fair here. You just said they’re a mess. They’re a leech. Maybe they really have a life that’s horrible, and it’s falling apart.

Sarah Segal:
He can’t fix that.

Paul Downs:
Listen, I’ve been through that. And here’s what I say to people like that. I say, “Whatever is bad about your life now, it’s gonna be way worse when I fire you. So, straighten up.” I’m happy to help someone who’s making an effort or someone who has a bad patch, but is basically a decent person.

But these people are just trying to ratchet it up. It’s like, what do they think? They’re gonna get fired. They’re used to it. I mean, in my experience, most of the people that I’ve encountered like that jump from job to job. And they do the same thing every time. They try to suck as much life out of it as possible. And then you get rid of them, and they’re not even surprised. They’ve done it before.

Jay Goltz:
There are certainly people like that out there. I’m not arguing that. I’m just suggesting whether they’re doing it because they’re irresponsible, or whether they’ve really got horrible problems, it doesn’t matter. At the end of the day—this is what I said before—I have to balance taking care of the business and being the best human I can be. And sometimes, you have to say to them, “I’m sorry you’re going through this, but I’ve gotta tell you, I need someone here at nine o’clock in the morning. If you can’t do it, I’m gonna have to fire you.”

It’s just, I’m not going to indict them with, “They’re trying to suck off me, they’re leeches.” I just need them to come to work everyday. So yeah, there is a point to where there’s no question that sometimes you’ve just got to take care of the business. And that’s unfortunate. But that is the way business is. You just can’t always be a humanitarian.

Paul Downs:
You’ve just got to learn to see it. And Sarah, it sounds like you ran into a person like this.

Sarah Segal:
We had a member of the staff who had kind of announced that she was going to go and work remotely on the other side of the world. And you know, I’m a relatively flexible person, and so I didn’t say anything about it. And I was like, “Okay, well, we’ll make it work.” And it didn’t work. It ended up really not working at all for a wide number of reasons—not just in terms of the distance.

And so I looked at the team, I was like, “I can’t do that again. That’s not gonna happen again. If you want to work remotely within the four time zones of the U.S., that’s fine.” They all looked at me, and they’re like, “No, you’re wrong. It depends on the person. And you know what? We can make it happen.” And so now I have a person on my team who’s gonna go on to the other side of the world and work for a couple of weeks. And I’m fine with it. I just was a little bit shell-shocked by a bad experience.

Jay Goltz:
I would have added just one word to that. Instead of saying, “We’ll make it work,” I would have said, “We’ll try.” That’s all. “We’ll try to make it work.” There’s nothing wrong with, “Okay, we’ll see.”

But, yeah, there is a balancing act here regularly, and it’s not black and white. And I’ve gotta tell you, I don’t have those struggles anymore, simply because I know I gotta take care of business. But oh my god, 30 years ago, I had one drama after the other. I mean, it was a weekly event. And it was largely because I wasn’t hiring properly. And I wasn’t checking references. It all starts with the hiring process.

Sarah Segal:
Do you have a red flag that’s a tell? Like, “Oh my god, we’re not going to do this.” Or somebody’s like, “Okay, that’s going to be a fit for us.” Do you have anything that you specifically look for, both of you?

Jay Goltz:
I can tell you, our success rate for hiring now is probably at 85 percent. It used to be 20. When we interview someone, the first question I ask is, “Are you working now?” “No.” “Did you get fired? Or did you quit?” “Well, it was a mutual thing.” “Really. So you came in on Thursday, and you went to quit, and the boss goes, ‘What a coincidence! I was about to fire you.’” I said, “That sounds like complete bullshit. Like, what’s the story?”

Why they left their job or why they want to leave is a critical piece of the puzzle I want to know. But my people are better at it than I am. And very seldomly do they interview someone, and they go, “Oh my god, I love this person”—very seldomly does that not work out. But it’s about setting your head to, “Yeah, we’re going to spend a lot of time interviewing people, because it’s worth the trouble.” And I tell you what a profound difference I’ve had in my company.

I’ve talked about this before. I hired a woman who was great at it. And when I interviewed her 25 years ago, I said to her, “You’re running a lighting showroom, and there’s four employees. How many did you have to hire to get to four good people?” She goes, “Just four.” And I laughed out loud. And I said, “Well, either you have lower standards than I have, or you’re a hiring savant. “She was a hiring savant.

Paul Downs:
All right, hey, I’ve got an alternate path, which doesn’t rely on finding that one genius out there. We write an ad that’s very clear about what kind of company we are and what we’re looking for—both of those things, not just, “We’re looking for something.” But we try to explain, “This is what the company you’re joining is like.”

Then I review all the resumes, bring people in for interviews. In the resume-reviewing phase, I’ve got a spreadsheet that scores. It’s got like 10 questions, and I give a point for each “yes” and a zero for each “no.” And they’re just relevant questions like, “How far is the drive?” If someone’s got to drive three hours to get to work every day, it ain’t gonna happen.

Jay Goltz:
I’m with you. Absolutely.

Paul Downs:
How fast did they respond to whatever the communication was? Does it look like they can spell? Can they write? Have they had training? Have they been in another similar job? Just a bunch of things that I think are relevant. And so, if you’re trying to evaluate a whole pile of candidates, if you put them all through one matrix, you’ll get differences in the score that’ll give you some information about who you want to bring in for an interview.

Then for the interview, it’s the same thing. We not only give a skills test, but also: Did they show up on time? Did they have a pencil? Did they dress up at all? Like, anything you think is important, go ahead and make the score. And I find that it really helps weed out people who are not going to work. Because you could be like: This is a lovely person, but they’ve had no training. They’ve never worked in the industry, blah, blah, blah. Sorry about that. And you then have to apply your soft skills to it, but just trying to systematize the hiring process and make it into something that isn’t different every time is a huge step forward in getting decent people.

Jay Goltz:
I agree 100 percent. And there are many business owners who will go, “Oh, it’s always a crapshoot.” That’s not true. That is simply not true.

Paul Downs:
Nothing’s a crapshoot. There’s no such thing as a crapshoot.

Jay Goltz:
You used a good word: You have a process. And when you have a process that makes sense, your hiring success goes from 25 percent up to—I don’t know that anybody’s got 95 percent, but maybe people who are great at it get it to 90. But what a difference that makes in your company. I mean, the amount of energy it takes to hire and fire and redo it. It starts with the hiring. And from my experience talking to business owners, most of them who I talk to put very little time into it, and they pay the price for it.

Loren Feldman:
Sarah, this is the first time you’ve been on the podcast in a little while. How are things going? How’s your year started?

Sarah Segal:
So, January, for marketing and PR, tends to be a very slow space, because most brands are figuring out their budgets for the year and just kind of starting to get out there. We went into January in a good space. We have two new part-time people who are working with us who we’re excited about. And we have a nice, fluid workflow. I have worked really hard to kind of get myself out of the weeds.

So I’ve really been focused on doing everything I can, in terms of building new biz, specifically doing a little bit more when it comes to responding to requests for proposals—which, if you have ever worked on one of them, can be like a college application. I just got one from the city of San Francisco that’s 120 pages. So, trying to create a kind of process for responding to those. And also just doing things that will make us more visible for those larger, ongoing government contracts. Specifically, we’re looking into registering ourselves as a woman-owned, woman-run business. I was told by a couple different sources that can be beneficial, just in terms of our win rate and getting in on bigger projects. We’re working on that, which is also like a college application.

Loren Feldman:
Sarah, do you think that would help in general, or specifically going after government work?

Sarah Segal:
Going after government work. So the one thing that was interesting for us is that we have applied for government work, even doing tourism or PR for a city or a town. We would respond to these pitches with a great package, and this and that, and we would get to the very end. And they’d look at us, and they’d say, “We really loved you. You were one of the last two companies that we considered, but you don’t have a dot-org. You’ve never worked on a dot-org or dot-gov.”

And so last year, by happenstance, we got pulled into working on the big APEC conference here in San Francisco. And so we ended up working with the city of San Francisco and doing a lot of work. So we got our dot-gov. And so now we have dot-gov experience. So we’re putting a little bit more work into some of these larger government contracts. And the reason why is that that money is stable. Once they allocate it, they allocate it. And it’s usually for three-year contracts.

So it would be nice bread and butter for us. And I think that would be a nice basis of revenue for the company so we can still have fun with some not-so-stable clients and still do those projects that we like to do. Like, we just did Fan Expo, which is a big Comic Con here in San Francisco. But that’s only a couple months a year that we’re preparing for that. So we need those stable clients where we know the paycheck is always coming.

Jay Goltz:
How many different organizations do you have to get quote-unquote certification from, for lack of a better word? It’s not just one, right? Is there a bunch of them: city, state, U.S. government? For women-owned status.

Paul Downs:
I would say that, in my experience, the basic one to get is the federal government designation. Once you’re in those databases, most other organizations are fine with that. Because we had to—this is not a huge lift, but—get certified as a small business to be eligible for certain federal contracts.

Sarah Segal:
Did you do it yourself? Or did you hire somebody to do that for you?

Paul Downs:
No, I did it a long time ago. And there are pitfalls, but it wasn’t impossible for a moderately dedicated person to figure it out. I wouldn’t start with a consultant for that. That’s pretty straightforward.

Sarah Segal:
Yeah, we have one issue, though. So, my company wasn’t my company for two years. I had a parent company. Sometimes they ask for financial records that we don’t have, because we’re just filing our first year of taxes back in business by ourselves. So I haven’t hit that question yet, but I’m bracing myself for it.

Paul Downs:
Well, that might be a problem. When I applied for all this stuff, it was probably 1999 or something, and I’d been in business for a couple of decades at that point. And so when they asked you for—I can’t even remember what the burden of proof was. One thing is, you might have to get state certification, because we just had to go through that.

Jay Goltz:
I don’t even know—Paul, what are you talking about? I mean, I get the woman-owned. What kind of small business certification? I haven’t even heard about such a thing.

Paul Downs:
Well, are you under $100 million a year, under 500 employees? I mean, most of us are. But that opens you up to there are a lot of contracts in the federal government that are set aside specifically for small businesses. Not micro businesses, but just small by their definition, which can be a fairly substantial business. But the other thing is that when you’re working in certain contracts, the main contractor—a Lockheed Martin, or somebody like that—is often either required or encouraged to do subcontracting with small businesses.

Sarah Segal:
There’s a percentage of the contract that has to be given to a small business. It can even be a larger marketing agency that wins a major contract, but because they’re above a size, they have to dole out some of it to smaller agencies.

Paul Downs:
Right. I mean, once you’re in the world of federal contracting, there’s all these different designations. And there are a lot of organizations that exist merely to be one of those designations, like: service-disabled, small, veteran-owned business, or whatever. And there’s just a huge ecosystem of people who have that: do nothing but identify federal contracts, and then start looking for somebody who can actually do the work.

I’m working on a job like that right now, where there’s a contractor who’s got a special designation who’s sort of got the inside track to get this work on a military base, but they don’t have any idea how to do it. So they went and found me, and it might work out. We actually get quite a few opportunities that are like that, where there’s a contract, there’s somebody who can check a lot of boxes, and then we’re the subcontractor for that.

Jay Goltz:
See, you’re in a real business. You’re in office furnishings. I’m not. I don’t think picture framing or arts—I don’t know that there’s such a thing as a big vendor they’re going to anyway.

Sarah Segal:
I don’t know. I mean, you think about a major museum, for example, like the national archive or something like that. They probably have framing services that they need. And there’s probably part of that contract that has to go to a smaller business.

Jay Goltz:
From what I know about that, they usually do it internally. And I don’t want to be dealing with $3 million pieces of art.

Paul Downs:
Well, that’s you, Jay. I mean, there, there might be somebody out there listening.

Jay Goltz:
No, I got it. That makes sense. Well, congratulations, Sarah. It sounds like you’re figuring some stuff out. And you’ve got a good plan.

Sarah Segal:
I am. It’s not a seamless process. I listen to a lot of podcasts. I read a lot of insights. I haven’t figured this out. I’m learning something new every day. I make mistakes every day. And I’m really just trying to build a business and get past the revenue number that we’ve been at for two years. You know, like, how do I do it?

And last year was terrible. I mean, last year, we had a number of clients leave because they ran out of money, and the economy wasn’t so great. And people are starting to come back, but it’s slow. And I’m also a little bit more apprehensive about diving in too deep, where you look at these big companies that say, “Oh, well, we have this money for retainer, and we can do this and that.” And then the first thing that goes is outside agencies when things get hard. So how do I staff up for a new client? I feel unsettled still.

Loren Feldman:
Sarah, what do you mean by diving in too deep? Are you referring to hiring people to take on a client like that, not knowing for sure that the work is gonna remain?

Sarah Segal:
Right. I love staff. I love having staff. I love people being on staff. I love giving them the perks and creating an environment that’s welcoming and all doing those things. But if a client comes to me and says, “Hey, I’m gonna give you this huge retainer.” I’m still going to be apprehensive about hiring people onto staff, because I’ve been impacted by retainers leaving because their business didn’t go well. Right? I’m gun shy.

Jay Goltz:
Listen, garbage pickup, talk about recurring revenue, they don’t have to worry about losing an account. In your business? You know, they thought all the stuff was gonna happen, and you’re working on it. It didn’t happen too quickly.

Sarah Segal:
And here’s the thing, Jay: You talk to so many agency owners, and they’ll be like, “Oh, well, we don’t do anything for under $10,000 a month.” To me, I find more security if I were to have 25 clients at $5,000 a month versus 10 clients at $10,000. Because one of those goes, I’m fine. But one of the big guys goes, and I’m like, “Okay, this just keeps me up at night.” So, do I build a business that’s based on smaller retainers?

Jay Goltz:
So let’s do some math on that, though. Let’s say, $5,000 a month is $60,000 a year. And let’s say that PR is a quarter of their marketing budget. So that means their marketing budget is $250,000, which means this is probably a five to $10 million company.

Sarah Segal:
Yeah, when we look for new businesses, really the minimum for us would be a $5 million company.

Jay Goltz:
Which makes perfect sense, because the person doing three is simply not going to have the resources or the—

Sarah Segal:
Well, it’s money too close to their pocket. You know, they take it personally. And they usually don’t have somebody dedicated to managing an agency.

Jay Goltz:
You’re talking to someone who has been all of them. I was the $3 million company. I was the $5 million company. And now I’m big enough that I do have a person dedicated to it. So you’re right. It makes perfect sense what you’re saying, because in the beginning when you’re doing five, it was like an idea your brother-in-law told you at dinner, “Why don’t you get a PR firm?” “Oh, yeah, we should do that.” And then they don’t know what they’re getting into. And then they’re like, “Well, wait, it’s been a month. I haven’t seen anything come in.” And it’s a tough learning curve. And so I think you’re right. I think the $10 million company that’s been around for a while, doing enough volume, probably understands the PR world a little more. And it’s probably a more stable client.

Sarah Segal:
Who’s had experience having a PR agency. Those are the ideal: the people that understand the value of PR and have worked with an agency in the past. Those are our ideal customers. That said, we work with a lot of really cool, interesting startup companies that have never had PR, but they also have great stories to tell, and so we get excited about them. And then some of them are just work out really well. And then there are others that, you know, want to be on the front page of the Wall Street Journal in the first two weeks of working with them. And we know pretty quickly that they’re not going to be a long-term client.

Jay Goltz:
Well, that’s crazy. We know take that takes four weeks or five weeks. [Laughter]

Sarah Segal:
Or five years!

Loren Feldman:
Unfortunately, we are out of time here. My thanks to Paul Downs, Jay Goltz, and Sarah Segal—and to our sponsor, the Great Game of Business, which helps businesses use an open-book management system to build healthier companies. You can learn more at greatgame.com. Thanks, everybody.