The Employee Benefit That Could Reduce Turnover by 50% | Larry & Cheri Salazar

[00:00:00] Welcome to The Personal Side of Business. Hi and welcome to The Personal Side of Business, where every business has a story. I'm your host Jet Bunditwong and today my guests is Larry and Cheri Salazar, a husband and wife team whose mission is bridging the gap of home ownership with an employee benefits program called Nest Steps. Welcome to the podcast. Thank you. So tell us, how did we get here? How did we get here? Well, lots of trial and error and lots of

[00:00:41] work. I mean, if you want to go into our story a little bit, I can tell you we started with homeownership's always been important to us. It's always been something that drove us a little bit, but we never really understood it to the extent that we do now. When I was, we lived in Wisconsin for a while. Larry was a news broadcaster out there and I was working with a business

[00:01:11] working at a YMCA running a gymnastics program. Very different from what we do now. But when I, one day my boss came to me and she said, so if you could have any wish that you ever wanted, what would that be? And I said, I want to own a home. Said straight out, that's, that's my dream. I want to own a home. And since then that's, that was a driving factor in our lives. It was something that we always aspired to, but we never knew how to get there, what to do.

[00:01:41] You know, it was out of reach. It always felt out of reach. Yeah. Did you, did you guys feel like there was a plan that you had in place or it was just like, Hey, we have to somehow from A to B, but there's this huge gap from A to B, right? Big gap, big gap. We had no idea. We had no idea how to get there. There was a lot of different experiences that kind of taught us along the way what needed to happen. But I don't think that even as we were going through those experiences that we were actually formulating,

[00:02:11] this idea, it came together at one point because I had experience in the health benefits market. I understood benefits and its power. I also had some experience working for a financial service company. And then Sherry had experience in real estate and we started a brokerage. But I think what happened was, you know, we were just coming up with ideas for how can we help people get into homes a little bit more easily? Yeah.

[00:02:37] And then all of a sudden, all these dots started connecting. It just, it was just one of those moments where we was like, wait a minute, here's the, here's the solution. And it comes from all the things that we've learned over the past decades, you know, you know, whether through our career or in our personal lives.

[00:02:55] But we came to this conclusion, I'd say about a year ago. But even then, after we came up with the idea, we were continuing to make adjustments, make tweaks, pivot and so forth because we were learning along the way. Now, do you guys, are you, do you have experience from either the mortgage side or the real estate side? Either one of you? I am a real estate broker. Oh, that's right. Yes, I own a RIMAX lighthouse. Oh, that's great.

[00:03:23] So that, all of our, all of our lives, the things that we wanted to aspire to drove us to that point. Homes, real estate was always interesting to me. And it was always kind of a driver of there's something better in life. And the way people can get there is through real estate. I have always believed that.

[00:03:48] So when I started my, well, I first of all started as a real estate agent. Obviously, we start there and then eventually just decided, no, I want to be able to help other agents. I want to be able to help more people. And in order to be able to reach more people, that's where we took it. I ended up starting my own brokerage. And then this idea kind of started evolving out of all of that. Now, when you guys are, you're going to employers and talking about this, do they, what's the first reaction?

[00:04:17] Or are they kind of like, what are you talking about? Like, this doesn't make any sense because this is relatively, this is like a very new idea. It is. I'm assuming, right? Yeah. If I might just jump in. So I think that when we talk to employers, they're always, wow, really? Why haven't I heard about this before? Because it's a no-brainer to them, right? Why wouldn't we want to offer something like this to employees? Because it just makes so much sense. I think that's always the first reaction.

[00:04:46] As you go a little bit deeper and so forth, a lot of times we get this pushback, you know, that says, wait a second. So we have to, we should be making contributions toward home ownership to purchase something. I don't know if we have the budget this year. We need to think about this. How do we calculate this? And the biggest problem that is, that comes out of that conversation is that, man, I think you need to have a shift in your mindset. Because what we're trying to do is provide a program that actually drives retention.

[00:05:14] And so you already have dollars that are lost through turnovers. And so when they finally understand that, when they, you know, grasp that concept, they realize, okay, so I can avoid spending money on replacing an employee and putting money towards building loyalty. That's the aha moment from almost every HR person that we speak with. Yeah.

[00:05:35] And I'm assuming if a employer has health benefits in place and they have a good work environment, this is like an added, this is amazing added bonus to a company to be able to offer to employees. Yeah, absolutely. Yeah. And if you think about it, most people, most companies offer those basics now. It's more of an expectation than people see it as an added benefit. It's okay. You better be giving me healthcare.

[00:06:04] You better be giving me 401k matching. You better be giving me my paid time off. You know, those are the things that everybody expects. So when you offer something that's unexpected, that's really going to make a difference in their lives now, it has a huge impact on how they feel about the company. And Sherry made a great point there, which is sometimes you have like different perks within a company, right? You have ping pong. Sometimes you have stock kitchens.

[00:06:31] I've seen one where they've stocked every fridge in the entire building with craft beer, but nobody ever touches the beer. Yeah, yeah. Nobody wants to be the guy who's- It's for that one guy that on Friday afternoons really wants to be like, yeah, I tell my friends that I got craft beer. But, you know. They never use it though. The point of it is you can see ping pong tables are almost always empty. There's nobody playing it most of the time, right? These are nice perks, but they don't affect change.

[00:06:59] And what really does affect change or affects loyalty are things that influence life outside of work. And so when you think about benefits, don't think about benefits that affect workplace experience. Think about benefits that affect life experiences because they take whatever they have at home to work with them. Nobody goes through stress at home and leaves it at the door when they come into work. They bring it with them.

[00:07:26] And it affects their productivity, affects their decision on whether they stay at that company or go to another company. Yeah. And I think with homeownership, like, you know, I mentioned when I introduced you that that gap is starting to get so outlandish for it. It's not, you know, being in Southern California, it's not even a Southern California thing anymore. It's like all over the country, right? Yeah.

[00:07:47] So many parts of the country where it doesn't, I don't think anyone 25 and younger is probably going to be able to get homeownership unless there is a really solid plan to figure it out while they're in their 20s. So that by the time, maybe later in their 30s and 40s, it all makes sense.

[00:08:03] But this type of plan that you guys have, it's going to kind of give, does it give a date as to when, hey, if you do this for this amount of time, put in this amount of money by this date, we should have a good plan for this. Absolutely. It does. Because we have a whole path that we set up for them. We set up their milestones, their goals. We set up exactly how long it'll take for them to get there and what that looks like for them.

[00:08:30] So the whole system works together seamlessly to elevate their opportunity for homeownership. And you're completely right about that, about being all over the world or all over the country now. When we're looking at basic statistics, 90% of renters want to own a home and say they never can. And that's sad. And the average age right now of the first-time home buyer, you know what it is? I think it's like 40, no?

[00:09:00] It's 40 years old now. Isn't that crazy? Yeah. I mean, back when we were kids, I never would have thought that it would have to be 40 years old before I could own my own house. That was like, I feel like in the 60s and 70s, you were like late 20s. You're like, I'm going to have a kid. I'm going to get a house. I'm going to have two cars. Everything's starting to work out now. It's like, if I'm lucky, that might happen in my early 40s. And then I feel like you have to also figure out where, right?

[00:09:27] Like you can't, I don't know of someone that right now, like in California, you go in there and go, oh, yeah, I can afford a $1.2 million house in a mediocre neighborhood. And then I'm going to be able to pay my bills. You'll be, you know, be upside down on that in a year or so. Now, I've kind of got a question for you.

[00:09:47] If I am an employee and I start with a company and you happen to have multiple companies in an area that are doing this program, can they move over to a different company and say, I want to work with them now. They do the program and I shift all of my, you know, my goals and everything over there. Yeah, you can absolutely port that over. Right. You certainly can.

[00:10:10] We hope that the program itself will tie you and anchor you to your current employer as much as possible. Because we've seen the case studies. There are a couple of very clear case studies where employers, large employers, in fact, offered a very narrow scope of what we're doing. And in the process of doing this, in the process of implementing the program, they were able to reduce turnover rates by more than 50% in both cases.

[00:10:37] And again, that's just a narrow scope of what we're doing today. And by that, what I mean is they were offering grants and forgivable loans and that's it. There wasn't an education program. There wasn't a guidance, one-on-one guidance with a licensed professional. There wasn't necessarily the technology. Yeah, the tutelage, the technology that helped them to improve financial behaviors. So we think that this will help them stay more anchored to their organization.

[00:11:06] But again, there are going to be a number of circumstances why somebody ultimately decides to go to another company. Right. And if they do leave that company and they end up at another company that offers that program, they would just be able to connect directly to that employer from that perspective of making sure that there's contributions or there's support from their employer in that. Yeah.

[00:11:27] And, you know, the reason why I was asking that is I was thinking in terms of, let's say there is a community of, I don't know, engineers in, let's say Salt Lake City, right? And they have programs that will elevate you to different levels from different companies. And you're like, hey, you start out here, this is a good apprenticeship program.

[00:11:48] And then you start to move up into other companies and like, well, if everyone starts to think on the same page, it gives a reason to one pull from that talent and be able to go, hey, well, we specialize in structural engineering. We specialize in civil engineering. And at least they can move around and go, but at least I'm in the same field, but I'm able to work with different companies in the same field. Now, on the flip side of that, my question to you is, as an employer, where's that money coming from? Right.

[00:12:16] So we're having, because what I understood is shared, right? So the employee puts in and the employer is putting in some money as well. Well, do you want to take it or do you want me to do it? Go for it. So the dollar is coming directly from the employer as a contribution. So let's give an example, right? We've been working with a number of different employers and having these discussions about what they want to do.

[00:12:41] One of them wanted to offer $3,000 towards purchasing of a home, right? That goes towards, I'm sorry, it's $5,000. $5,000 towards the purchase of a home. So that would go towards their down payment. Is that a lifetime of working with them for a certain, you know, I don't know, for 10 years? Or is it just like, here's $5,000, you make it past two years and we're good? Yeah, it depends on the employer. It's completely flexible, right? And they customize it to their specific needs. In this case, they wanted the tenure to be at least one year.

[00:13:09] And so that's not a very long time. But they also want to make sure that they complete the program. So do we. We want them to make sure that they go through the preparation, right? The education to understand what you need to do to prepare for home ownership and what you need to keep that home. Because one of the big problems people have ultimately is that they lose their home, right? There's a disproportionate number of foreclosures and short sales that come from people who are not financially prepared to actually stay in that home. So they have to go through all those programs.

[00:13:39] But I think that, you know, at the end of the day, the amount of money that's provided to the employee is determined by the employer how much they can afford. Now, where does it come from? Does it just come out of thin air? No. Again, I think this is a program that's designed to reduce turnovers. The cost of replacing an employee these days is somewhere between 50% and 200% of that employee's salary. It's enormous. Like trading, getting, and then you have weeks where they're not really working. They're just following someone. Absolutely.

[00:14:09] Right? They're making money. Yeah. And if you're an executive level or a director level and up, just the interview process could take a lot of time and a lot of very expensive people involved in the process. And then there's like the reduction in productivity because these teams are stretched or stressed. There's sometimes when somebody is gone, there's institutional knowledge that disappears with it. And so the cost is pretty hefty.

[00:14:35] And so if you can offset that cost or even come out positive by investing in your employees' loyalty and driving retention, why not? Yeah. And I feel like there is a culture shift in there, right? Because there's always that joke that people say, I'm making my employer rich. I'm not doing anything for me. This sort of switches it a little bit in favor of the employee now. You're like, I'm actually doing something for myself.

[00:15:03] I'm working and I'm going to get something out of it. And if a home is one of the end results of your life goals, it's a great opportunity for you to get in there, right? And also, I think keeping those people around, I think, over time makes the workplace and the company stronger, right? You get these people who are seasoned in what they're doing. They know what's going on with the company. People have built friendships, get along over time.

[00:15:30] And it's not someone new coming in every six months, like what you're saying. It's such a, I think, such a key thing to avoid turnover. But you get companies that are just about the bottom line in sales and they forget about this aspect of, like, you've got to treat your employees with some respect and have them buy in on what they're doing here, right? Yeah, absolutely.

[00:15:50] What was it that you guys, what was the spark that was the moment you're like, hey, I think we've come up with this really interesting idea that we can get companies to help employees. Do you remember that moment? You know, it was funny. Like, one day I was actually just talking to Larry and saying, you know, it would be really cool if we could get into companies, you know, find a way to do something working with companies. And it was a totally different idea. Totally different.

[00:16:20] But it was, how do we work with companies? And then we just started talking to each other. And he had worked at health equity before. So he was in benefits before in that area. And he's like, why can't we make homeownership a benefit? You know, he was like, this is what we really need to do. This is how we should be driving it. And it just kind of evolved from there.

[00:16:44] So it was just kind of started as like a dinnertime conversation that turned into this big here we are now situation. And you guys have said that the companies are usually like, oh, yeah, this is a good idea, right? Are there certain companies that you feel are, as of right now, really good fits, like in terms of maybe profits?

[00:17:11] You're saying like, okay, they make a certain amount or they have a certain amount of employees. Or is there sort of like a good profile of a company that fits for what you're doing right now? Generally, we are kind of looking at employers, for the most part, that are 50 employees or more. Just because they have enough cushion in their operating expenses and their costs to be able to make a difference. Plus, they have more people that they need to do something for.

[00:17:42] However, we've talked to smaller companies, too. And it can really work for anyone. Yeah. It just depends on what their aspirations are and the goals are and what type of employees they have, too. If you're looking at employee demographics, the employee demographics have shifted over the years. Most of these people are 20 to 40 years old that do not own homes yet. They're looking at that and going, I got to get ahead. And they never can.

[00:18:08] So what do they really want is not, well, I'm not going to downplay 401ks because I think they're very, very important and they have a vital role. But what employees want right now is something that's tangible right now, not something that's going to get them somewhere in 50 years. Especially in your 20s, right? You're trying to explain a 25-year-old about 401k. They're like, wait, when I'm, what, 60-something? You want me to invest into it?

[00:18:37] But you're like, hey, maybe in 10 years you might be able to put down payment in your home and get going, right? Right. Yeah. And the way that our program works is that hopefully that's not 10 years. Hopefully it's going to be a lot faster because the way that we accelerate their savings, it really does make a big impact. And they reach their goals a lot faster than they think they can. And you guys brought up something that was, I think it's really important about the education part of it.

[00:19:05] I think when people get into home, there is this thought that you just get into home and everything's good, right? But you have to try to maintain that. And there's a mortgage for 20, 30 years that you have to try to stay on top of. And I think people kind of lose sight of that because I've known people that have gotten into their homes and kind of lost everything. And we're like, okay, we're starting all over again. But there were signs along the way, right?

[00:19:34] Just like getting lazy with this and not doing that and getting burdened with bills that weren't needed. What are some of the steps that you guys do or the classes that go into this? Or is it like a weekly thing, a monthly thing that you guys touch base with them and go, this is where we are. Let's just go over this for like half an hour. How do we proceed with this? Yeah, we actually go into the companies and we teach six courses. Wow.

[00:20:00] And so we go in once a week or once every other week, depending on what works best for the company's dynamics, what would fit their schedules best. But we go in and we teach the six classes. They're about one hour each. Which, but they cover, this is where I'm really passionate, okay? Because in real estate, I feel like the most important thing that we need to do as real estate professionals is to educate people.

[00:20:29] Because if we're not educating them, that's where the problems come in. So the six classes were specifically designed for educating them on multiple areas. We educate them first on home ownership. What does it mean? How does it help you long term? What's your long term benefits and appreciation and different strategies you can use to grow your financial security? And then we talk to them about their personal finances.

[00:21:00] That's a really important area too. Because most people don't understand how much they're spending or where their money is actually going. So we need to change that dynamic in order for them to be able to become secure and be able to keep their homes. So that is an important area. And that's what our platform does as well, is to help them with that aspect of their finances and turns savings into an unconscious action. And then we teach them about the mortgage process.

[00:21:29] We teach them about all the different things that are going to be involved in that. And once they own a home, what are some of the maintenance costs? What are the things that you're going to have to pay attention to, budget for, plan for? Just to keep them understanding what that really means to them. Yeah, that's great. Yeah, I think that's one of the tough things afterwards is getting people to, because it feels like, you know what I feel like when you're younger and you have a home ownership?

[00:21:57] It feels like graduation in high school, right? You're like, this is the biggest thing I've done. Everything's downhill from here. And you're like, no. Like, this is just the start of everything, right? Like you're saying, you have the maintenance, you have insurance, you got to keep it up. You're like, what happens if the value goes up? Do you want to sell? Do you want to? Like, you start.

[00:22:18] I've noticed that people who just do a little bit of research into real estate after they've bought a home have become, use that leverage to either get nicer homes or move out or retire. You know, it's whatever it is. Because one of the things that popped into my mind was, so in San Diego, Southern California, or I think all of California, there is the First Time Buyer's Assistance Program. Does that work with different programs too?

[00:22:46] Like, do you guys incorporate that and go, look, this state has this. We can work with them so you can get there faster. Oh, yeah, absolutely. We can integrate what we're doing with any program. But the important part is that their financials are in order first. So that's actually the biggest problem that we see that Larry was talking about is that when we're looking at people's, when we look at their budgets and look at their finances,

[00:23:17] it's about not just getting qualified for the loan, but how do we make this a long-term asset and attribute for them. And 50% of foreclosures and short sales come from FHA and housing assistance programs. That's 50% when they're a small portion of the actual overall mortgage. Why do you think that?

[00:23:45] It's just because it's such an easy way to get in that it's not enough of the overall impact on the mortgage? Yeah. They haven't worked hard enough for it. They were given some money to get into their home, but nobody taught them how to keep their home, how to stay in their home, and how to manage their money properly so that when things come up and rainy days happen, that they're prepared.

[00:24:40] Yeah. They're prepared for that. They're prepared for that. And I think that's a lot of the things they work in the home, but they are prepared for. Yeah. So, let's say we're right back to it. But if we're an adult, we're gonna get a lot of the money too, and then we have a lot of money. So we're not going to get into it.

[00:25:06] That's not going to be able to get into it. We schedule the workshops for them. We do do them every quarter, right? We'll run those six workshops per quarter. And if you're a large company, you may have, I don't know, hundreds and hundreds of people every quarter who want to participate. Well, we'll separate them into multiple different cohorts because you don't want hundreds of people in one single class. You want to be able to have that guidance and so forth.

[00:25:33] But again, the program itself is very easy to set up. And it doesn't take a lot of administrative lift. In fact, there's very minimal. The only thing they have to worry about is just looking at the impact of the program as it relates to the retention numbers, as it relates to their turnovers. They're just monitoring it. Yeah. We do pretty much everything for them.

[00:25:58] And from setting up to implementing with their payrolls, I'm sorry, their HR, HRIS, to just doing all the education and marketing it to their employees if they want us to do it. Unless, of course, they want to do it themselves. Yeah. And for further support after the six courses, what happens then? Can they reach out to you? Like, is there some support that they can or something they reference to online?

[00:26:28] Like, what happens then? Yeah. So after the six courses, actually during the six courses, they're introduced to their advisors. Right. There's going to be a home advisor, which is a licensed realtor. And then there is also an equity architect, a licensed financial service provider. They will meet with them one-on-one and they are there throughout the entire journey. So regardless of whether or not they're in that six different workshops, even after that, they have access to these one-on-one opportunities.

[00:26:54] And that's a pretty big deal because, I mean, I don't know too many people who actually have financial service advisors available to them. This is not something that you can just get anywhere. Right. And so we provide them with that assistance throughout their entire journey. I mean, from a pulling out the lens, this is great in the other aspect that you are getting a community involved, right? Yes. You're getting all these people that are locally to support this person, essentially to get

[00:27:23] them to home ownership and then beyond. What has this been like for you guys to set this up? Now I'm curious, like, when the dynamics of, okay, we have, I have someone in Toledo, Ohio that's interested. This employee has it. We have 40 employees. We're setting this up. I'm assuming for you guys on the back end, it's to try to make sure that all these things are in place as this is being implemented. Correct? Yep. Yeah.

[00:27:51] So the way it works is we have a set of licensed real estate professionals here in Utah, but outside of the state, we license our program specifically to other realtors who go through the training with us, right? But our financial services team is in-house. They will work with everyone. They're licensed in all the states. Yeah. Yeah. And so we will actually have that model in place.

[00:28:19] And when they sign up for the program and they're entered into the system, that's where we manage everything. The system actually allows for us to assign specific individuals to specific advisors and so forth. So it's actually pretty easy for the setup and for the management thereof. It's probably a little bit harder for the licensed professionals who are working with them, right? Yeah. Making sure that they stick to their guns, stick to their routines, stick to their strategy and so forth.

[00:28:46] That's the part that really has to happen for everyone. And so we just accept that that's part of the game, right? That's part of what we need to do. That's boots on the ground, right? Yeah. To make sure that they're following on. But I would think for the licensed real estate person, wherever they are, that's that relationship over time. They upgrade the house, referrals into the program, right? They're like, you want to use so-and-so because they were great with me. So it gives incentive for everyone to really push this person to be able to get from A to B.

[00:29:16] Yeah. We don't expect them. They're not expected to actually have to go use our home advisors if they decide to purchase a home or sell a home or whatever it is. But we expect that the home advisors are there to provide the education and they'll build the relationship, the trust, right? And hopefully that employee will use them when that time comes. Yeah. And in the meantime, they're building a relationship through that whole process with them. They're the ones that are there for them.

[00:29:45] They can answer questions and get the help and the support they need. And our platform actually has a chat in it built into it where the employee can chat with any of their people. They can chat with their home advisor. They can chat with their equity architect and get the assistance they need in one-on-one time there. Yeah. This is great. So this is an amazing program. The more that I learn about this, I don't know how an employer can say no. Like I honestly don't.

[00:30:14] And what are the next steps that you see for you guys as a company? Is it to work on launching this or are there kind of things in the works to help expand this or what's going on with the business now? You want to talk about the government efforts? Yeah. So, well, we have a lot happening right now. So we're rolling it out to companies, providing the benefit that way. We are also in talk with legislation.

[00:30:44] In the state of Utah, we're working with the governor's office to try and implement a tax benefit for both the employers and the employees. Yes, that would make sense. Because honestly, we want this to be a tax-free eventually. That's the goal. We are also working with NAR, who's actually already lobbying Congress on some of the similar benefits to try and get any home contributions from an employer to be tax-free. Yeah.

[00:31:14] Wow. That's amazing. Anything else? Is that just it? I mean, that's a big deal. No, I'm kidding. We are working also with PEOs, professional employer organizations, and we're working with benefits brokers. Those organizations are actually helping us to promote NestEPS and push it out there. And our hope is that eventually this will be alongside health insurance, alongside 401k as necessities, right?

[00:31:41] This is the future we believe in home ownership, that it's not just an individual thing, that this is a team effort. It's going to consist of you, your advisors, your employers, all getting involved for your financial well-being through home ownership. Literally everyone wins in this. Yeah. Like, hold on. Good retention. Someone's getting happy. They have a goal that they can see to get home ownership. And then if you guys get the tax incentive, this is crazy. This is a lot of good stuff.

[00:32:11] So I'm excited for you guys. Thank you. Um, where can people find you guys, uh, if they want to reach out? All right. Our website is, uh, www.nestepsbenefits.com. That's nest as in bird nest. Um, they can also, uh, follow us on LinkedIn, right? We have a NestEPS page over there, or they can just reach out to us, connect with us. I mean, we're open to connecting with anybody online, right?

[00:32:37] They can connect with us on, on LinkedIn and send us an invite to Sherry Salazar, Larry Salazar. Yeah. Yeah. Facebook. We're on Instagram, Facebook, LinkedIn. All right. Okay, guys. Yeah. Well, it was a pleasure. I think there was so much good information here. I think this program is amazing. You guys, please check them out. Reach out to them. If you're an employer, go and learn about this program to see how you can help benefit your employees. Thank you, Larry and Sherry, for being on the podcast. Thank you.

[00:33:07] Thank you for having us. You guys.