Episode 71 – How a Learning and Development Firm Retains Key Employees – Member Case with Renee Safrata

renee safrata

There is a direct correlation between employee loyalty and the valuation of a professional services firm. In this episode, we interview Renée Safrata, CEO & Founder of Vivo Team, to discuss employee loyalty and the invisible balance sheet.


Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. Collective 54 is the first mastermind community to help you grow, scale, and exit your firm bigger and faster. I’m Greg Alexander, founder, and today I’ll be your host. And on this episode, I’m going to talk to Renee Safrata, and we’re going to talk about employee loyalty. So, Renee, it’s nice to see you today. Welcome. 

Renee Safrata [00:00:43] Thanks, Greg. Nice to see you as well. 

Greg Alexander [00:00:45] Renee, you’re one of the more interesting members that I’ve come into contact with. I understand we’re speaking to you, and you’re in Barbados. Is that correct? 

Renee Safrata [00:00:53] That’s correct. I am in Barbados. I am doing a digital nomad trial, and I don’t know if I’ll go back to Canada, but I probably won’t go back home. But I will go back to Canada at some point. 

Greg Alexander [00:01:03] Wow. So are you one of the folks that when COVID hit you decided to make changes? Is that how it came about? 

Renee Safrata [00:01:11] No. You know, it’s actually a bit different. We’ve been doing digital for ten years. Everything digital. My husband and I were always thinking of a digital nomad lifestyle. We were probably planning on doing this just before COVID hit, which, by the way, isn’t it odd? It’s almost like two years exactly this week, right when we all got thrown into lockdown? 

It’s crazy, but we got thrown into lockdown, and so we thought, OK, let’s take that. We’re here; we’re at home. Let’s take the opportunity to clear out our home. So we cleared it out down to two laptop bags and two carry-on bags. And we left Canada, and we don’t want to go home. We’re very happy here. 

It’s fantastic. And you know what? I thought, Greg, I thought we’d meet a lot of retired people, but we’re just meeting people doing the same thing. And so it’s really exciting. 

Greg Alexander [00:02:02] It is exciting. It’s a new world we’re living in. Good for you. Taking advantage of this new world and doing exciting things. OK, so let’s jump into this concept of employee loyalty. And I’d like to start by maybe having you explain to the audience a little bit about your firm and what you do. 

Member Case Study: Who are the Vivo Team?

Renee Safrata [00:02:19] Yeah, sure. So first of all, we create just winning companies and we do that by inspiring leaders. So our mission is to help increase competence, motivation, and collaboration in the pursuit of outstanding results. That’s what we do at Vivo Team. 

We have been doing it digitally for ten years because twelve years ago, we took two years to research the workplace of 2020, and we didn’t expect a pandemic. But we did understand that teams would be coming in from distributed teams from all over across multiple time zones and that leaders wouldn’t be necessarily in contact every day, all day with their teams. 

So we recognized that the learning and development space was not going to participate in that because gone would be the days of going into a classroom, face to face learning, and development. So what we do in Vivo Team is we use behavioral science to understand and diagnose how leaders are connected to their teams against the six key indicators of highly functioning teams. What’s the gap between the leaders and the teams? 

And as well, what we do is what we call space learning. So it’s in the flow of the day. It’s an on trend learning style one hour per week so that you learn something, you take it away, and you apply it. You come back, you learn something more, you take it away, and apply it. 

So what we’re doing is we’re actually selling learning development paths for leaders and teams. And what we’re doing is we’re providing to the C-suite a measure of evidence-based performance, which is really exciting as well. 

Greg Alexander [00:03:54] Okay, fantastic. Appreciate the introduction. Okay. So when I talk about employee loyalty, I think about it through the lens of an investor, which is my day job at Capital 54. And if I’m doing diligence on a pro serv firm, I’m always asking about employee turnover. 

The reason why that is is because when you buy a professional services firm, the assets are the people. And if they’re turning over, then there’s not a lot of assets. And unfortunately, at the time of this call with you today, we’re dealing with the Great Resignation and turnover has spiked, which is devastating when that happens. 

So the work that you do with clients, does any of it address this specific issue of employee turnover? 

How to Address Employee Loyalty and Turnover as a Professional Services Firm?

Renee Safrata [00:04:37] Absolutely, absolutely. And I’m going to be perhaps a bit provocative and say that maybe we need to shift the word of employee loyalty into really looking at what does the employee want? Because you’re right, the pandemic has created this paradigm shift where that invisible balance sheet, the assets of the people, they have more choice now. 

And just like you said in the introduction, I’m working from Barbados. I have more choice. So does employee loyalty actually exist? Or should we actually be focusing as investors, as you’re saying, on the intellectual capital of the knowledge workers and how tight our invisible balance sheet is? 

I think a lot of employers recognized that they were using only the traditional balance sheet and that their invisible balance sheet was extremely weak going into covid and it started to fragment and employees now have way more choice. So they are going to be the ones who are determining what’s going on. So unless you figure out what they want, it’s going to be tough. I’ll stop there. 

Greg Alexander [00:05:45] I love the idea of the invisible balance sheet. I’m going to blatantly steal that and I’ll give you attribution, I promise. But that’s a great way to think about it. If I think about your firm in particular and the digital nomad lifestyle that you’re living in, I’m assuming that your employees are living something similar to that. How do you retain your key staff? 

Employee Loyalty: How Does the Vivo Team Retain Key Employees?

Renee Safrata [00:06:09] Yeah, it’s a great question. And you know what, again, it hasn’t just happened in the last couple of years. Again, we’re Canadian, so our employees have been right from the East Coast to the West Coast in British Columbia, Ontario, and Nova Scotia, Halifax for ten years. 

We have attracted great employees because of our values, our vision, and their desire to be better,to contribute, and to bring innovation to the table. So good people can work anywhere. They also want to be held to account. So if they have good leaders and managers that are connected with them tightly around their accountabilities, now we’ve started to get a great equation. 

And by the way, Greg, you’re not stealing anything from me because the invisible balance sheet started in 1988 in Sweden, so it’s not my thing. We just talk about it a lot. Yeah. 

Greg Alexander [00:07:07] You know, you just talked about your mission, the vision, the values. That’s something that I advocate for. And I think those three things in particular: mission, vision, and values — that’s what makes up the employee value proposition. 

My belief is that each boutique needs two value propositions: a value proposition for clients (why they should buy from you, and why they should hire you), and a value proposition for your employees. You know why they should work for you. Because you’re right, they can work anywhere. They’re making a choice to work for you. 

So let’s start with the first one mission. So what is the mission of your firm? 

What is Vivo Team’s Mission?

Renee Safrata [00:07:45] Yeah, the mission of our firm is really to develop competence, motivation, and collaboration in the pursuit of outstanding results. So I always think of the mission. You’re right be for what’s external to my customers. But I also want my employees to be able to achieve that as well in their day-to-day and in their career achievement with us. 

Greg Alexander [00:08:07] So you were able to answer that question very succinctly and immediately, which tells me it’s real. And you’ve given some thought to this. So how did you develop that mission statement? 

What is Vivo Team’s Mission Statement?

Renee Safrata [00:08:18] With our team. So our team has participated in all of the core values, the vision, and the mission. And what I say to our team on a regular basis is the Vivo team is the vehicle for your career. Get on the bus. Be with us as long as you feel like you’re contributing, and you can be held to account, and you can get great career achievement. But get off it and go somewhere else when you’re ready for that. 

So again, to the beginning of this conversation, I think that kind of disrupts employee loyalty. But if we can think about that invisible balance sheet as people bring their innovation and their contributions to work and wanting to be here, what we as leaders and companies really need to understand is the platinum rule. 

What do they want? Like, what are they looking for in their career? And if we can connect to that and by the way, the leaders and the managers are really the front lines for that, aren’t they? They’re the people that are connecting with their people every day, and they have to understand those nuances of what is important. The soft skills, essentially, because hopefully they’ve got hard skills. What are the soft skills of how that intellectual capital is going to keep growing? 

Greg Alexander [00:09:37] So what we’re learning from Renee is that the mission is real. It’s not some academic exercise that nobody pays attention to. It’s created with the employees. It’s lived every day so that employees jump out of bed every morning and they can’t wait to go to work. 

And when you have a mission like that, a compelling reason to work at a firm, then you’re going to have, you know, very strong employee engagement. And I would say lots of employee loyalty, although it sounds like maybe that’s a little outdated concept, but it will keep retention where it needs to be, which is obviously very important. 

OK, let’s move to the vision side of things, and I think your vision is a picture of the future, something inspiring that says, you know, this is the goal that we’re shooting for. You know, if we’re successful, this is what it’s going to look like for everybody. So have you codified your vision as well as you have your mission now? 

What is Vivo Team’s Vision For the Future?

Renee Safrata [00:10:26] Very simply, we want to create winning companies and inspiring leaders. And if we can do that around the globe, we’re happy. 

Greg Alexander [00:10:33] OK. Sometimes when I hear vision statements and I love that and that is inspiring, there is numbers associated with it. You know, we want this much revenue of this many employees or this many clients, et cetera. And it sounds like you chose not to include that. Was that a deliberate choice? 

Renee Safrata [00:10:50] Yeah. I think of those sitting in our strategies and in our objectives for the years. Making smart, strong strategic decisions and smart tactical decisions. Smart meaning, Specific, Measurable, yadda yadda yadda. 

When I think of vision and mission, I think and I try to get all of our people to think of it like this as well. Your vision when you go to sleep at night is something you want to dream about. Your mission when you’re in the shower in the morning, that’s something that you want to think about doing every day. 

Greg Alexander [00:11:21] Yeah, that’s a good way to think about it. Ok, kind of the third pillar here is the values. And you mentioned that earlier that you’ve thought about this and the way that I think about values for what it’s worth is, how am I going to behave? What are your firm’s values and how were they developed? 

What Are Vivo Team’s Company Values?

Renee Safrata [00:11:42] Yeah. So I’ll start with how they were developed. They were developed online with all of our team together in a brainstorming session. We use storyboard. We thought about what are the behaviors that we demonstrate on a regular basis and what is of high value to us. 

We prioritize those. We had discussions around them, came up with a series of words that represented those core values. And then we essentially curated it down to three: we’re creators, we’re leaders, and we’re champions. 

And again, Greg, I’m going to say that what’s important for me about that as leader of the company is I want to make sure that everybody — going back to employee loyalty, employee engagement, and the intellectual capital of our organization — everybody can embrace that, that I too want to be a creator. I want to be a leader. I want to be a champion. And if they can have that excitment. Again, we’ve got something to build on. The vehicle gets more exciting. 

Greg Alexander [00:12:48] You know, members at Collective 54 are professional services firms and boutiques that are growing. Some of them have hit the scale stage and some have grown so much and scaled so much that they’re at the exit stage. And I often ask them this question, which I just asked you which you answered with the three values. “What are they?” And then I say, “how are they used?” 

And I hear sometimes that they’re used to make hiring decisions. They’re used in employee evaluations. They’re used to determine promotions when they’re available. And unfortunately, sometimes when people aren’t living the values, they’re used as a reason to separate from an employee. 

Do you believe in that concept of using values in that way? Or do you have a different perspective on things? 

Renee Safrata [00:13:30] Absolutely. Absolutely. And what I would say, in addition to that, is that I’m sure a lot of the companies that we’re talking to are utilizing Slack. That Vivo, what we do weekly is we speak to what are the behaviors that I or others demonstrated in alignment with those values. 

So we have a Slack channel that comes every week and at the end of the week, if you haven’t done it by Friday, it comes up and it says, “Hey, where have you seen creators, leaders and champions this week?” 

And so we’re activating that peer-to-peer feedback, which is as well important. I think you mentioned in your chapter about annual performance reviews. Well, that’s too long these days. It is too long. We got to have this as a regular feedback and feed forward have to be a regular thing across our organization. 

Greg Alexander [00:14:25] So that’s a brilliant strategy. You’re reinforcing the values every week through a modern communication channel like Slack and its peer-to-peer, which means it’s believable. You know, it’s not artificial, it’s bottoms-up. Organic, authentic. That’s a brilliant idea. I love that very much. 

Renee Safrata [00:14:42] And it’s behavioral-based, right? We ask this question all the time, “how can I make sure on a regular basis that I am behaving in behaviors that demonstrate what we have articulated as our values?” 

This, by the way, Greg is really, really easy then when we give this idea to leaders and managers and they look at behaviors, they can give people feedback on the behaviors that they notice that are not in alignment with getting great project results or finishing great, you know, great tactics and great strategies in the company. 

Greg Alexander [00:15:20] If members are listening to this, if they want some help and they want to talk to you about it, how do they find you? 

Renee Safrata [00:15:27] Easy. Renee with two e’s. R-E-N-E-E at vivoteam.com or on WhatsApp. 

Greg Alexander [00:15:36] OK, fantastic. Well, Renee, on behalf of the membership, thank you so much for being here today. It was wonderful. You really do an exceptional job in this particular area. And we’re lucky to have you in the membership. So thank you very much. 

Renee Safrata [00:15:48] Greg, can I say one thing about what I really appreciate about this whole membership? 

Greg Alexander [00:15:53] Sure. 

Renee Safrata [00:15:54] I appreciate from the beginning of reading your book to every day you show up online. You have a positive spin that all of us can do this. That’s exciting. Thank you. 

Greg Alexander [00:16:09] Well, thank you for saying that. That’s inspirational because I do believe we can all do this. And that’s another way to make me happier than to see our members reach their goals by, you know, employing some of these concepts. So thanks for saying that. 

Renee Safrata [00:16:21] Thanks, Greg. Greg Alexander [00:16:22] OK. So for those that want to learn more about this topic and others, you can find our book, The Boutique: How to Start, Scale, and Sell a Professional Services Firm on Amazon. If you’re interested in joining the community, you can go to Collective54.com. And with that, we’ll wrap it up and we’ll see you on the next episode. Thanks, everybody.

Episode 9: The Boutique: A Little Known Secret: How Employee Loyalty Drives Up Valuation

You compete in two markets. The market for clients. And the market for employees. As much effort needs to be put into employees as into clients. Owners of boutiques work for the employees, not the other way around. Would you want to work for you?

The Boutique with Capital 54-Episode 9.mp3
Various Speakers [00:00:01] You can avoid these landmines. It’s a buy versus build
conversation. What’s the root cause of that mistake? Very moved by your story. Dive all in
on the next chapter of your life.
Sean Magennis [00:00:16] Welcome to the Boutique with Capital 54, a podcast for owners
of professional services firms. My goal with this show is to help you grow scale and sell
your firm at the right time for the right price and on the right terms. I’m Sean Magennis,
CEO of Capital 54 and your host. On this episode, I will make the case there is a direct
correlation between your employee loyalty and your firm’s valuation. I’ll try to prove this
theory by interviewing Greg Alexander, Capital 54’s chief investment officer. Greg has
developed a proprietary approach to measure the employee loyalty of a professional
services firm. Greg, to begin, can you help the audience connect employee loyalty to firm
Greg Alexander [00:01:12] Sure. So traditionally, investors have shied away from
investing in pro serve firms. When asked why, they are fond of saying, quote, all the
assets of a pro serve firm walk out the door each night, end quote. And this is meant to
illustrate that assets of a firm are its employees. And if the employees or assets can walk
out the door, the business has no value. Therefore, if you can demonstrate that the assets
your employees stick around, the business does have real value in the best way to prove
the assets do stick around, it’s demonstrating outstanding employee loyalty. High loyalty
equates to high valuation.
Sean Magennis [00:01:52] I see. Excellent employee loyalty can then de-risk an
acquisition for an investor. So how can an owner of a firm prove excellent employee
Greg Alexander [00:02:04] There are several ways. Let me share just a few that the
listeners can try immediately.
Greg Alexander [00:02:11] So the obvious one is employee turnover rate and that’s an
excellent metric to prove employee loyalty. The average turnover rate across all pro serve
firms is approximately 30 percent. Best in class is about 15 percent. If an owner has a low
turnover rate and he can prove high employee loyalty. So that’s a easy one to go after.
The next one would be tenure. And employee tenure is another excellent proof point. The
listeners should challenge themselves to have average employee tenure of, let’s say,
greater than five years. This would prove to investor that the employees do indeed stick
around. And one of my favorite ways to de-risk an investment, and prove employee loyalty
is to show how many positions get filled internally. You see, boutiques are growth
businesses and growth creates lots of promotion opportunities for employees. If these
promotions are filled internally, this suggests outstanding employee loyalty. In fact, a well-
run firm should fill all of its promotions with homegrown talent.
Sean Magennis [00:03:16] So 15 percent employee turnover, five years or more of
employee tenure and to the extent possible, 100 percent of promotions filled internally.
These are three excellent goals to shoot for. Are there any other ways a listener could
prove to an investor that his or her firm is worth more due to his outstanding employee

Greg Alexander [00:03:41] There are a few more. Here are a few others to think about.
One of my favorites is Discretionary Effort. So what is discretionary effort? Discretionary
effort are the hours an employee puts in above and beyond the job requirements. So, for
example, let’s say the job calls for 40 hours per week on the submitted time sheet and
most employees log 44 hours not because they are asked to, but because they want to.
This is a 10 percent discretionary effort. Some like to say, quote, My people give it 100,
110 percent effort, end quote. And this is what they mean when they say this. An investor
who sees this when reviewing the timesheets during diligence will determine you have
high employee loyalty and will likely pay more for your firm. And here’s one more to just
get the juices flowing. What are former employee is going to say about your firm when they
are contacted? If they say they loved working at the firm and for the owner, investors will
be very pleased. If, however, former employees say they hated working for the firm and
even worse, hated working for you, the owner, the investor will run away. That’s a major
red flag. You know, it cracks me up. But boutique owners think that they can hide their
skeletons when you try to sell your firm. Investors are going to find all the skeletons. That’s
their job. If the former employees do not have nice things to say, the valuation of your firm
is going down.
Sean Magennis [00:05:06] So discretionary effort and the former employee reference
checks are key. This makes sense, Greg. And when added to employee turnover, tenure
and promotion fill rate. This makes for an excellent list for our readers.
Sean Magennis [00:05:23] And now a word from our sponsor. Collective 54, Collective 54
is a membership organization for owners of professional services firms. Members join to
work with their industry peers to grow scale and someday sell their firms at the right time
for the right price and on the right terms. Let us meet one of the collective 54 members.
Irit Elzips [00:05:50] Hello, my name is Irit Elzips I own CSM Practice, a customer
success strategy consulting firm. We serve technology and services organizations from
around the world. These clients turn to us to accelerate their profitable growth rate by
improving their customer retention, increasing their up sell and cross-sell revenues, and
creating a strong differentiation in their market through a better customer experience and
maximizing values for their clients. We achieve these kind of results by designing an
optimal customer success strategy. We then develop processes, protocols and policies to
ensure that our strategy recommendations are adopted and we implement those in a
scalable manner using both training and technologies. If you need help with accelerating
your profitable growth and increasing revenues from your existing customer, install base or
reach out to me at csmpractice.com.
Sean Magennis [00:07:00] If you are trying to grow scale or sell your firm and feel you
would benefit from being a part of a community of peers, visit Collective54.com.
Sean Magennis [00:07:16] So this takes us to the end of this episode and as is
customary, we end with a ten question, yes, no checklist. We do this to reward you, our
listeners with some immediate take home value. Ask yourself these 10 questions. If you
answer yes to eight or more of these questions, you can prove you have loyal employees.
If you answer no too many times, you have an employee loyalty problem and this is going
to hurt you when you try to sell your firm.
Sean Magennis [00:07:45] Question number one. Is your turnover rate fifteen percent or
lower? Number two, is the average tenure of your employees greater than five years?
Number three, do most of your promotions get filled internally? Number four, do you get

rewarded by your employees with lots of discretionary effort? Number five, will your former
employees sing your praises when contacted? Number six, does your firm have a purpose
that the employees believe in? Number seven, does your boutique have a vision of the
future that employees want to be a part of? Number eight, does your firm have a set of
values and are they actually lived by? Number nine, are you paying your employees what
they are worth? And number 10, do you have an in-house recruiting engine that provides
you with a stream of quality people?
Greg Alexander [00:09:04] Just one quick thing on number nine, are you paying your
employees what they’re worth? You know, sometimes small business owners, owners of
boutique professional services firms, because labor is their biggest expense, they try to
underpay because they’re trying to contain costs. That’s an example of being, as they say,
penny wise and pound foolish, because if you’re underpaying and as a result of that, your
turnover is, let’s say, 30 percent instead of 50 percent, you’re actually hurting yourself
there. Just pay a little bit more. Keep the turnover rate down and you’ll benefit not only in
the short term, but someday when you go to sell your firm, it’ll be easier to do so.
Sean Magennis [00:09:39] It’s a great example, Greg. So in summary, remember, you
compete in two markets, the market for clients and the market for employees. As much
effort needs to be put into employees as into clients. Owners of boutiques work for their
employees, not the other way round. Consider this question. Would you want to work for
Greg Alexander [00:10:04] That’s a tough one to answer.
Sean Magennis [00:10:07] If you enjoyed the show and want to learn more, pick up a
copy of Greg Alexander’s book titled The Boutique How to Start Scale and Sell a
Professional Services Firm. I’m Sean Magennis. Thank you for listening.