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#86 - Timothy Tolino | Global Director of Benefits, Mobility, and Wellness @ Hunter Douglas
119 Plays4 months ago
00:00 - Intro & Context
07:22 - Beschreibung der Tätigkeit im Bereich M&A und erforderliche Eigenschaften
09:14 - Der Wertbeitrag der Tätigkeit zum Geschäftsabschluss
13:43 - Auswirkungen von Sozialleistungen auf die Unternehmensbewertung und Due Diligence
Guest Linkedin: https://www.linkedin.com/in/ttolino/
Thomas Linkedin: https://www.linkedin.com/in/thomas-kohler-pplwise/
Thomas e-mail: [email protected]
pplwise: https://pplwise.com/
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Transcript
Pitching the Value of Employee Benefits
00:00:00
Speaker
Today's guest Tim Tolino, how you internally pitch the value of employee benefits to the executive board to free up that budget.
00:00:13
Speaker
You know, it's funny, we we had a training yesterday about problem solving and they had a really good KPI tree and it was, you know, kind of tailored to our organization, but obviously it starts with EBITDA and then goes down through various operational things, operational expenses, supply chain, what have you, all the way down at the end. The bottom of the KPI tree is wages and benefits, right? So for me, I found that personally very impactful because costs are going to be variant.
00:00:43
Speaker
It's less about finding savings. We can ticky tack and find savings every year, right? But it's more about maintenance of the plan. And then also, again, the employee experience. For me, when I think about what I get to control, right, which is, you know, not the CEO, I'm not in charge of EBITDA, I'm in charge of employee benefits. When I think about that, and when I think about creating a program, what I get to impact,
00:01:07
Speaker
It impacts people's health, well-being, not only theirs, but their families as well, right? So it affects everyone in such a different way, but it's impactful in a different way. And I take that, you know, pretty seriously. So for me, when I go into those meetings, I say it's a lot about employee health. It's a lot about employee well-being. Do we want to reduce absenteeism? Do we want to reduce turnover?
Challenges in Quantifying Benefits
00:01:32
Speaker
Or people leaving to go get better things somewhere else, right? Do we have the right benefits? Do we have the right conditions in whatever warehouse? What have you? Do we have the right onsite benefits? Are we providing the right onsite services to these individuals that they want to come to work?
00:01:48
Speaker
and make the best damn window shades blinds that the world's ever seen, right? So a lot of it is, and it's difficult to quantize because, you know, you look at something that has such quantized from a financial perspective because you look at something that has such variance, number one, but also year over year we're dealing with 10% increase And that's just the cost of doctors being, you know, providing services, right? So, it's unfortunately one of those things that's going to go up on an annual basis. So, again, it's about plan maintenance. um Do we have the right programs in place for our employee base so that they are healthy and the claims remain as constant as possible? But then, you know, it's all about, again, the employee experience. Do they like coming to work here?
00:02:33
Speaker
Do they feel taken care of? Do they feel like this is a place where they can grow? And I have an, I get to have an impact on that. So I take that route. It's sometimes it can be difficult for executives and CFOs to look at it with anything other than dollars tied to it. But really when you boil it down, it's again, it's about making the most excellent employee experience that I can based on the parameters that have been provided to me by the organization. And again, driving retention.
Tim Tolino's Professional Journey
00:03:02
Speaker
to for these individuals to again, work as best as they can to their ability and grow within the organization. Cool. Do you have a model for that? um So most of it is based on external and internal benchmarking.
00:03:17
Speaker
Right? And a lot of internal surveys are, how are we doing? And then also external benchmarking is really kind of the biggest piece about it as well because client costs are going to fluctuate. We know that that's just a part of the industry and what I do, but are we doing the things that our competitors are doing or are we excelling or exceeding, excuse me, against, you know, what our competitors are offering, offering to again, retain and hire the best talent. So a lot of it is again,
00:03:47
Speaker
It seems anecdotal, but it is based in reality on you know what our competitors are doing.
00:03:56
Speaker
We talked about M&A and pre-benefits. He's currently taking care of 23,000 people across plus hundred countries and rolling out a benefits package catch concept um model. And previously he was in an account executive role selling benefits plus benchmarking companies. So I really like the view of an external that is now taking on an internal director role for a global organization, high complexity and to solve the global benefits problem. Listen to it.
00:04:33
Speaker
Then you can build trust and then you can spend less time communicating and more time just getting shit done. Then I went home and and thought about this sentence. We basically put it on the table. Hiring takes time. People are trained. How to objectively judge certain situations. It's very, very, very, very hard to change things. That was the learning. Entrepreneurs with empathy. To the people
Impact of Employee Benefits on M&A
00:04:50
Speaker
side. Hi, Tim. Great. we We spoke on LinkedIn and I really like what you're doing. um And then I just reached out. We had a chat. Now we're doing a podcast looking forward to it. Maybe we start with a short intro about yourself.
00:05:02
Speaker
Yeah, absolutely. I'm happy to be here. I appreciate you reaching out. I'm glad that we connected. Yeah, so I'm Tim Tallino. I am the Global Director of Benefits Mobility and Wellness at Hunter Douglas. Just started that role, so I'm brand new. This marks my 10th day here, so still getting my feet under me there. But in my previous role, which is you know when you and I connected,
00:05:26
Speaker
I was running human capital M and&A due diligence processes ah for buy side investors. So I mostly worked with private equity firms and completed buy side due diligence on behalf of them ah for targets, not only in the US, but also globally as well. Nice. How did you get into it?
00:05:46
Speaker
So my background prior to getting into M and&A was in US employee benefits consulting. So I worked for, you know, your Gallagher, Mercer aons of the world, and I consulted companies anywhere 500 to 5000 employee count on just their annual renewals, the day-to-day maintenance of the US employee benefit cycle. And then, gosh, this was back in 2021. I had someone from Aion reach out. I was living in London at the time, so I interviewed there actually, which was which was pretty funny because of the time difference. And and yeah, you know I had the recruiter reach out. He said, hey, have you ever thought about doing mergers and acquisitions work? and
00:06:30
Speaker
I said, I haven't, but send me over the job description. I'll take a look at it. I read the job description and I i looked at you know the five key pillars of it and I was like, I do one of those things very well. and I have no exposure to things like retirement, incentive compensation, you know purchases purchase agreements, and you know general HR practices. and i was I reached back out to him and I said, hey, listen.
00:06:54
Speaker
I'm not sure that this is the right fit for me. I appreciate you reaching out. But you know I don't
Global Differences in Employee Benefits
00:06:59
Speaker
think that I have the skill set to do this. And he was like, just hop on the phone with me. Give me 10 minutes. We'll talk through it. And that 10-minute conversation turned into an hour. And then I you know went through the interview process with Aeon and jumped on board shortly after. Cool. And um how would you describe the M and&A job you're doing? And what are the attributes you see? How would you categorize it?
00:07:23
Speaker
Yeah, so for me, it's it's really just project management and you know time management, right? And it's I think you can say all that about a lot of jobs, but M and&A in particular and the M and&A process with due diligence. you know It's project management, but my focus happens to be employee benefits, retirement, and the employee experience. So um that's what I'm really passionate about. It just happens to you know intersect really well with M and&A.
00:07:51
Speaker
And I did that for for three years, and I'm really grateful for that. And you know within my new role, I'm going to have an impact on you know our overall global M and&A strategy at Hunter Douglas as well. um we just I've been here 10 days, and I haven't had the chance to you know make my impact there yet.
00:08:08
Speaker
And and what what was your focus in terms of acquisitions? Did you focus on a certain category? No, I didn't actually, which is something that I really liked about the job. It was you know industry agnostic, right? So I got exposure to everything from a 20 person you know small mom and shop company from you know the southern part of the United States to you know your large global carve out experiences of tech companies or moving from you know public to private and things of that nature too. So I liked that I basically got a new shiny toy every time and I got to learn something new about a new industry, about how that company operates and also how you know they invest and treat their employees, which is again, something I'm very passionate about.
Benefits and Company Valuation
00:08:55
Speaker
And ah based on your role and job description, let's say, what would be the value contribution to a deal? So what what what was the purpose of your job? Yeah, so basically ran through and provided assessments on the employee benefits package.
00:09:13
Speaker
Um, so that I'll just speak from the United States, right? Because that's the, that's where, you know, my my bread and butter is personally, but also, um, it's probably the most volatile because we don't have a lot of statutory benefits like a lot of other countries around the world. Right? So companies themselves are taking on and responsible.
00:09:31
Speaker
for providing you know health insurance, life insurance, dental, and things of that nature. So it's really twofold. It's what are the cost of those, which is, you know as a buyer, you're like, all right, great. Is this what I should be paying for this? Or do I need to make some sort of adjustment to the valuation of this company? And then are the benefits market value? So based on the industry that i my company is in, so say tech, manufacturing, what have you,
00:10:00
Speaker
do they meet market value and are they competitive? right So benefits within the United States in particular help attract and retain top talent. They do around the world, but even more so in the US just again, because we don't have statutory benefits like a socialized healthcare system or statutory leave. right So PTO plays a part of that. Parental leave, you're starting to see a lot of movement there and a lot of companies roll out much more generous parental leave policies.
Global Challenges in Benefits Management
00:10:27
Speaker
And then in certain states, you're also starting to see mandatory medical leave, mandatory parental leave policies be rolled out as well. So we're moving and inching in that direction, but it's still really on the onus of the employer to provide those benefits. And it has been that way since, you know, the end of World War II. Well, and so in ah in a big company, this then really has impact on devaluation, depending on what
00:10:56
Speaker
What benefits companies offer? Exactly. And then, you know, there's also different types of funding variances as well. So I'll speak from medical insurance, right? So there's fully insured benefits, which is you're paying a fixed premium every month and the insurance company is paying out the claims that are coming in, or if you get large enough, then it makes sense to financially move away from that model and for the company to self-insure themselves. So they are paying the claims that the employees are incurring up to a certain level. Typically, you'll have stop-loss insurance that protects your company from catastrophic claims and things of that nature. but
00:11:35
Speaker
those types of fluctuations really do affect the bottom line on a month over month basis. So, you know, one of the things that you you talked about was, you know, talking about some potential stories and why due diligence is important, right? So one of the largest projects that I worked on over at Aion, we really struggled getting data. And this was a pretty large self-insured company. And they went through and basically did the
00:12:03
Speaker
basically did the financials without any data from a benefits perspective. So I didn't have any sort of claims data. I didn't know how many people were enrolled. I just basically said, for a company of this size in this industry, this is about what it should cost. We use a lot of internal benchmarking data from a pricing perspective. And based on the benefits that they have as well, I worked with our actuarial team to say, what around what should these cost?
00:12:27
Speaker
Well, we got down that and it turns out that they have some high claimants, right? Two of the individuals on the plan or a few of the individuals on the plan ended up costing the plan another $2 million dollars that we didn't account for because we didn't have the data. So it really does have an impact. And that's why due diligence specifically around employee benefits in the United States is very important. And the data gathering is very important because, you know,
00:12:53
Speaker
Shit in, shit out. It's true, right? I've heard that many times on this podcast, but it's completely true within my industry as well. And you know if you don't get visibility into that types of those types of things, then as a buyer, you really are taking on a variance of risk.
00:13:10
Speaker
ah Definitely. And do you also know or can maybe model in a certain way of what the impact in terms of valuation is? Let's say an example manufacturing company is bought by and let's say 400 million um and then good benefits versus bad ah benefits. What would be the impact on the price? um Well, mostly it it really depends on what the buyer is trying to do. It probably won't have that large of an impact, like no nope no deal is gonna explode because of employee benefits, right? Like ideally, unless they're doing something illegal. So that's really kind of on the back end as far as, you know, what they do. But I mean, it it could be very realistic that, you know, the seller or the buyer says, hey, you know, you're not offering the benefits that you should, or they're not in market class, or, you know, we're looking to roll them into another portco.
00:14:09
Speaker
If we're doing an add-on, then that could be a valuation thing as well, just because, okay, great, we're moving you to say better or you know vice versa, worse benefits. This is going to have an impact on the overall purchase price. and Then the other thing that we typical we used to take a look at as well would be things like changing control agreements, you know the acceleration of those, you know those have an impact, who's going to pay for them. um like That's all all part of the negotiation point.
00:14:39
Speaker
In case you like my show, please subscribe. I would really appreciate it. And when you look at companies um to just due to due diligence, do you see difference in terms of the US versus Europe um or other countries or areas? Yeah, you do. And a lot of it has to do with.
00:15:02
Speaker
like data privacy as well. you know Within certain countries outside of the United States, we're not able to get as much data when it comes down to you know personal information, where people are, and then assessing you know the human capital risk. But again, because those benefits are statutory and the company isn't taking on the risk, it doesn't become as crucial as it say it would United States. I'm just speaking as far as like medical insurance goes.
00:15:30
Speaker
And then as far as a lot of the, a lot of the focus there is more so on the supplemental benefits that are provided. So say in the UK, if you have a separate defined contribution plan on top of the statutory defined benefit plan, right? So it's pricing that out and understanding how much that's going to cost and the risk to the company on a financial basis on an annual when you and annualize it. And then on top of that, what are other competitors doing to attract and retain talent? Because everyone has to offer the same statutory benefits, how are you going to differentiate yourself, right? So it's, are those companies doing the best that they can to differentiate themselves to hire and attract, and then also retain the top talent that they have to be a top employer? It's important that um this is also considered in a due diligence, because I think a lot of
00:16:20
Speaker
um I saw some transactions being maybe failed or not doing so efficiently where because the the human side um was not considered um enough. yeah Then maybe on a commercial side, it really makes sense. you may You're on the way to 100 million revenue. You make 50. You buy a company that is doing 10. The company that has already 50 million in revenue has a higher multiple than the 10 million, so you you generate money or value, right? So that makes sense from a commercial side. But what does it mean from an integration side? um do they operate ah Do they operate separately? Is it just you have one
00:16:59
Speaker
P and&L or maybe one revenue number that you can get the multi-block or do you fully integrate and even make one out of one three, right? Which is always or often the idea and I think that when you integrate and start integrating I think the whole human side and the most obvious or maybe even non-obvious things because they're so simple and straightforward are the make or break um attributes. Do you see certain, do you have a so ah story where it went but maybe well and and not so well and why?
00:17:28
Speaker
um Yeah, I think just while like generally speaking, it's it's something that a lot of organizations are now starting to talk about during the diligence or acquisition process. It's, okay, great. From a company culture standpoint or when we come together, what do we want to be as a company? How do we want to treat our employees, how do we want to go back about attracting and retaining talent, and what are we going to be as this new organization? Or are you going to you know run separately? And that's just how things are going to be. Everyone's going to have their separate P&Ls. You can have separate benefits. You can have separate retirement programs, what have you. But a lot of those questions are starting to be asked upfront now, because we have seen a lot of failed
00:18:16
Speaker
Mergers and acquisitions particularly out of you know the gold rush of twenty twenty twenty twenty one low interest rate environment and everyone was you know buying something that was making them money and the diligence process was sped up and accelerated because companies were hot then and it was easy to borrow borrow money because interest rates were.
00:18:36
Speaker
zero or near zero. And so everyone, it was just basically a giant bidding war and it's who could, who could do this the quickest, right? So they didn't go through the actual cultural diligence. They didn't go through, they didn't go through the consideration of, great, this company has these benefits, but actually they're going to be losing a lot.
00:18:55
Speaker
by you know us buying them and potentially trying to integrate. and There were a lot of companies that potentially forced integration, where they should have been a bit more methodical about it. I haven't had a whole lot of exposure to that through my integration work. A lot of it has been more methodical, especially as the approach to employee benefits goes.
00:19:18
Speaker
um just because we were taking two or three different companies and then creating a new benefit plan, right? You have to have those conversations in this point. It's, okay, great. As a new leadership or ownership group, where do we want to be, right? And then it's our job to figure out how to get us there in the most cost-effective manner. And um now what is your new job about? What's the purpose of it?
00:19:45
Speaker
Yeah, so in my new job, I'm the Global Director of Benefits Mobility and Wellness at Hunter Douglas. So not only the US in all the 100 and a couple of countries that we're in, I'm responsible for our employee benefits programs and the maintenance of them. And then the mobility piece is tied to immigration and mobility. So we will be moving people around and around as business you know requires it. So that's going to be a piece of it. And then overall wellness I think fits in with just the benefits philosophy as well. So um we're just going through our US renewal right now. So it's a peak season for that. I was thinking about taking some time off in between the last job and this one, but then I realized what time of year it was. And I knew that that would be coming out right now. So I figured it'd be a good time to get to work.
00:20:35
Speaker
what What does that mean, the peak season for you? but So yeah so so the the US employee benefits renewal cycle, we are expecting to do all of our annual planning for 2025 this time of year. So that happens generally from like June until the end of August. We have to get all the information, set the budget, talk with finance, get everything approved from an executive level down.
00:21:02
Speaker
And then the implementation for that enrollment period will start sometime in September. We'll have open enrollment in end of October, early November, and then the plan year starts January 1st. So it is really this is really the busy time to get stuff done within within the industry.
00:21:22
Speaker
I remember back then when we scaled some people in HR teams that at some point you hire a director of rebar and then maybe the whole benefits piece go under them. And then once it's going multi country, it's getting chaos. And then depending on how many people headcount which units and what's the purpose of a certain regional country, um it depends on what benefits you need to offer. And then I think there is a um set of global benefits that are just true on a holistic level and yeah these are company-wide and then there are some regional benefits which are determined by a company's legal entity and the legal entity is derived from the country the company is operating in, right? Because in the country you have certain legal frameworks and then additionally there is also another framework
00:22:17
Speaker
um you need to consider in terms of the job group right yeah versus an engineer or a seller. So yeah how do you deal with 100 countries from a benefit side? Yeah, so i'm I'm figuring that out right now. So it's really it is really just getting introduced to everyone as well and understanding what is the current state and where they want to go as well. And do we currently have any you know glaring retention issues? Are people leaving because there are more attractive, say, time off policies or maybe this other you know manufacturing plant has something on site that you know we don't, right? So it really just dials down to me getting up to speed and meeting all of the
00:23:05
Speaker
those key folks who are on the ground from an HR perspective and understanding, doing my best job to understand their business unit right now and some of the challenges that they're dealing with from a people factor aspect. What's the global headcount? Global headcount is 23,000.
00:23:23
Speaker
So yeah, it's sizable. Yeah. This role was was built out of necessity. So my boss sits in Total Rewards. So she's the global head of Total Rewards. And her and her team were doing this. And it was exactly what you said. It got to a place where they were like, wow, we need someone who does this. And so you know that was part of the interview process as well.
00:23:50
Speaker
and And yeah, so you know it's been it's been really good. I definitely feel very welcomed, but it is kind of like chasing down and it is doing a lot of a lot of just anecdotal, tell me tell me what's going on and in your location right now. In case you have any feedback or anything you want to share with me, please send me an email on thomas at peoplewise.com or hit me up on LinkedIn. And in case you really enjoyed the show, please subscribe. I would really appreciate it.
00:24:19
Speaker
And in parallel, I have your LinkedIn open and I think it totally makes sense from an executive um recruiting angle to hire somebody like you were in that role because you have been in but very different internal and external roles and has have I think you have a few um that not a lot of people have and then in-depth view and expert view, but also um an understanding of what does work in certain environments. And now you need to find a solution or a strategy or a plan for exactly that situation. And if you're not a specialized generalist, then I think you're maybe not able to solve that.
00:25:00
Speaker
Yeah, no, I appreciate you saying that. Thank you very much. Yeah, I think that I think that they got to the point where, again, they realize that they needed to bring a subject matter expert in house. We have a great broker partner, but that only goes so far. And also, you know, they stop, right, you know, the job of myself. And one of the things that one of the reasons why I wanted to move in houses from my consulting side, i you know, I got to do the work. I got to talk about it. It was really meaningful, but I never got to so like truly implement or like see the employee impact. Right. And at this point in my career and at this point in my life, um, I started thinking about it earlier this year and I went, wow, you know, that sounds really fulfilling to me. And so I started to kind of explore those conversations and then went through the interview process here and I went, wow, that's definitely going to be a challenge for sure. But it's definitely going to going to be something that I find fulfilling and and I already have.
00:25:53
Speaker
um For me, it really is about the relationships and the people factor. um Obviously, I can crunch numbers in Excel, right? and And I think that everyone who's our age, you know, can do that, right? You know, we're all good with computers and technology and people at our level ah at the organization can certainly do that. But for me, it really does come down to the relationships and, you know, the the human experience, right? And then I'm really passionate about making the best one possible for our employees.
00:26:21
Speaker
And you know what I like maybe most is that you have been an account executive for employee benefits um quite for some time, because I think then you really understand how to build a case, why employee benefits matter and why it matters to take some money and invest it into it, right? So maybe can you talk us?
00:26:45
Speaker
as a final question to your framework on how you internally pitch the value of and employee benefits to the executive board to free up that budget. You know, it's funny. We we had a training um yesterday about problem solving. And they had a really good KPI tree. And it was you know kind of tailored to our organization. But obviously, it starts with EBITDA and then goes down through various operational things, operational expenses, supply chain, what have you.
00:27:14
Speaker
all the way down at the end. The bottom of the KPI tree is wages and benefits, right? So for me, I found that personally very impactful because costs are gonna be varying. It's less about finding savings. We can ticky tack and find savings every year, right? But it's more about maintenance of the plan. And then also, again, the employee experience. For me, when I think about what I get to control, right which is not the CEO, I'm not in charge of EBITDA, I'm in charge of employee benefits. When I think about that, and when I think about creating a program, what I get to impact, it impacts people's health.
00:27:51
Speaker
well-being. Not only theirs, but their families as well, right? So it affects everyone in such a different way, but it's impactful in a different way. And I take that, you know, pretty seriously. So for me, when I go into those meetings, I say it's a lot about employee health. It's a lot about employee well-being. Do we want to reduce absenteeism? Do we want to reduce turnover?
00:28:14
Speaker
Or people leaving to go get better things somewhere else, right? Do we have the right benefits? Do we have the right conditions in whatever warehouse? What have you? Do we have the right onsite benefits? so Are we providing the right onsite services to these individuals that they want to come to work?
00:28:31
Speaker
and make the best damn window shades blinds that the world's ever seen. Right. So a lot of it is and it is difficult to quantize because you know you look at something that has such quantized from a financial perspective because you look at something that has such variance number one but also year over year, we're dealing with 10 percent increase. And that's just the cost of doctors being, you know, providing services. Right. So it's unfortunately one of those things that's going to go up on an annual basis. So, again, it's about plan maintenance. um Do we have the right programs in place for our employee base so that they are healthy and the claims remain as constant as possible? But then, you know, it's all about, again, the employee experience. Do they like coming to work here?
00:29:15
Speaker
Do they feel taken care of? Do they feel like this is a place where they can grow? And I have and i get to have an impact on that. So I take that route. it's Sometimes it can be difficult for executives and CFOs to look at it with anything other than dollars tied to it. But really when you boil it down, it's again, it's about making the most excellent employee experience that I can based on the parameters that have been provided to me by the organization. And again, driving retention.
00:29:45
Speaker
so for these individuals to, again, work as best as they can to their ability and grow within the organization. Cool. Do you have a model for that? um So most of it is based on external and internal benchmarking, right? And a lot of internal surveys are, how are we doing? And then also external benchmarking is really kind of the biggest piece about it as well, because client costs are going to fluctuate. We know that that's just a part of the industry and what I do. But are we doing the things that our competitors are doing or are we excelling?
00:30:18
Speaker
or exceeding, excuse me, against, you know, what our competitors are offing offering to, again, retain and hire the best talent. So a lot of it is, again, it seems anecdotal, but it is based in reality on, you know, what our competitors are doing. Nice. Thanks. I really enjoyed the conversation. Thank you so much for your time and then enjoy your weekend. Thanks so much for having me. Take care.
00:30:48
Speaker
you