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

Transcript note: This transcript was generated from the episode audio and lightly formatted for readability. Speakers are host Jet Bunditwong and guests Larry and Cheri Salazar.

[00:00] Welcome to The Personal Side of Business. >>

[music] >> Hi, and welcome to The Personal Side of Business where every business has a story. I'm your host Jack Bundle Wong and today my guest is Larry and Sherry Salazar, a husband and wife team whose mission is bridging the gap of home ownership with employee benefits program 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 work. Yeah. >>

[laughter] >> I mean, if you want to go into our story a little bit, um I can tell you we we started with home ownership'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. Um when I was we

[01:04] we lived in Wisconsin for a while. Um Larry was a news broadcaster out there and I was working at a YMCA running a gymnastics program. Very different from what I we do now, but um 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." I 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. That was something that we always aspired to, but we never knew how to get there, what to do. 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 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. Yeah, I think >> We had no idea how to get there. There

[02:00] 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 this idea. It came together at one point because I had experience in the health benefits market. I understood benefits and its power. And 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. 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 it's through our career or in our personal lives. But we we came to this conclusion I'd say about a year ago, but even then

[03:01] 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? Um I am a real estate broker. Yes, I own Remax Lighthouse in the >> Oh, nice. That's great. >> So, that ever all of our all of our lives, the things that we wanted to aspire to drove us to that point. Homes, um real estate was always interesting to me and it was always kind of a driver of there's something better in life and the right way people can get there is through real estate. Yeah. I have always believed that. So, when I started my well, I first of all started as a real estate agent. Obviously, we start there and then um eventually just decided, "No, I want to be able to help other agents. I want to be able to help more people." And in

[04:01] 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? Are they kind of like, "What are you talking about?" Like this doesn't make any sense because this is relatively a a this is like a very new idea. I'm assuming, right? >> Yeah. If I if Yeah. >> Can I 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. 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. Um so, we have to we we should be making contributions toward home ownership to purchase something. I don't know if we have the budget this year. We

[05:01] 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. 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 for almost every HR person that we speak with. Yeah, and I'm assuming if a 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 offered 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.

[06:02] >> Yeah. It's okay, you better be giving me health care, 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. Yeah. 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 stocked kitchens. I I've seen one where they've stocked every fridge in the entire building with craft beer. But nobody ever touches the beer, right? >> yeah, yeah, yeah,

[laughter] yeah, yeah, yeah, yeah. Nobody wants to be the guy who's >> It's for that one guy that on Friday afternoons really want to be like, "Yeah, we got I told my friends that I got craft beer." But, you know.

[laughter] And then 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. And what really

[07:00] does affect change or affects loyalty in 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 has Nobody goes through stress at home and leaves it at the door when they come into work. They bring it with them and it affects their productivity, it affects their decision on whether they stay at that company or go to another company. Yeah, and and I think with home ownership, 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 Southern California, it's not even a Southern California thing anymore. It's like all over the country, right? There's 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 home ownership 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

[08:01] 40s it'll all make sense. Yeah. 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 a good plan for this." Absolutely, it does. 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. >> Wow. So, the whole system works together seamlessly to elevate their opportunity for home ownership. 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. >> Yeah. And that's sad. And the average age right now of the first-time home buyer, you know what it is? Well, it's I think it's like 40, you know.

[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 a home. >> was like that was like I feel like in 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? Like you you can't you I don't know if 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 >> Yeah. and then I'm going to be able to be able to pay my bills." You'd be, you know, be upside down on that in in a year or so. Now, I kind of got a question for you. 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

[10:00] 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 you certainly can. We hope that the the the program itself will tie you and anchor you to your current employer as much as possible because we 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. And again, that's just a narrow scope of what we 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 um necessarily the the technology that yeah, the tutelage, the technology that helped them to improve

[11:01] financial behaviors. So, we think that this will help them stay more anchored to their organization, 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 there's contributions or or other support employer Yeah, and you know, the reason I I was asking that is I was thinking in terms of let's say there's is a a community of I don't know, engineers in in let's say Salt Lake City, right? And 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 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 pool from that talent and be able to go, hey, well, we specialize in structural engineering, we structure

[12:01] 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 is that money coming from, right? So, so we're having cuz what I I understood is 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. 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 a purchase of a home. So, that would go towards their down payment. Is that 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

[13:00] past 2 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 1 year. 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 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. Cuz 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. Um but but I think that, you know, at the end of the day, the 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 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

[14:01] employee's salary. It's enormous. >> Like training, getting a and then you have weeks where they're not really working, they're just following someone and then they're making money. Yeah, and if you're an executive level or director level and up, there's a just the interview process could take a lot of time and a lot of very expensive people involved in the process. Um and then there's like the the reduction in in productivity because these teams are stretched, they're stressed. There's sometimes when somebody's gone, there's institutional knowledge that disappears with it. And so, the cost is pretty hefty. 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, you know, that joke that people say, I I'm making my employer rich. I'm not doing anything for me. This sort of switches it a little bit in

[15:00] favor of the employee. Now, you're like, I'm actually doing something for myself. I'm I'm working and I'm going to get something out of it. And if if a home is one of the end results of your life goals, then it's it's a great opportunity for you to get in there, right? And um also, I think keeping those people around, I think over time makes the workplace and the company stronger, right? You got these people who are seasoned what they're doing, they know what's going on in the company. People have built friendships, get along over time and it's not someone new coming in every 6 months. Like what you're saying, it's it's such a I think such a key thing to avoid turnover, but you get companies that are just about the bottom line, sales and they forget about this aspect of like you got to treat your employees with some respect and have them buy in on what they're doing here, right? Absolutely. >> What what was it that you guys What was the spark that 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

[16:03] employees. Like 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 totally different idea, totally different. But it was how do we work with companies and then we just started talking to each other and he had worked it home equity before. So, he was in benefits before in that area. And he's like, why can't we make home ownership 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. So, it was just kind of started as like a dinner time conversation what that turned into this big here we are now situation. >>

[laughter] >> And and you guys have said that the the companies are usually like, oh, yeah,

[17:01] 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, you're seeing like, okay, they they make a certain amount or they have a certain amount of employees or there 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 um operating expenses and their costs to be able to make a difference. Plus, they have more people that they need to do something for. 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

[18:03] do not own homes yet. They're looking at that and going, I got to get ahead and they never can. So, what do they really want is not Well, I'm 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. Especially in your 20s, right? You're trying to explain explain to a 25-year-old about 401K, they're like, wait, when I'm what? 60-something? You want me to invest into it, but you're like, hey, maybe in 10 years you might be able to put a down payment on your home and get going, right? Right. Yeah, and our 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 makes they they reach their goals a lot faster than they think they can. And you

[19:01] guys brought up something that was I think it's really important about the education part of it. I think when people get into home, there is this thought that you just get in a 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 were like, okay, we we're starting all over again, but it was there were signs along the way, right? Just like getting lazy with this and not doing that and getting burdened with bills and that weren't needed. Um 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 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 into the companies and we teach six courses.

[20:00] >> Wow. And so, we go in once a week or once every other week, depending on what works best for the companies uh dynamics, what they what would fit their schedules best. Um but, we go in and we teach the six classes. Um they're about 1 hour each. Um but, they cover This is 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. 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 homeownership, what does it mean, how does it help you long-term, what's your um long-term benefits and appreciation and different strategies you can use to grow your financial security. And then, we talk to them about um their fin- their personal finances.

[21:00] Um that's a really important area, too, because most people don't understand how much they're spending or where their money's 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 as to help them with that aspect of finances and turns savings into an unconscious action. Um and then, we talk we teach them about the mortgage process. We teach them about all the different things they're going to be involved in that. Um 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? Um 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 after afterwards is getting people to if cuz it feels like You know what I feel like when you're younger and you have a homeownership, it feels like graduation high school.

[22:00] 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 like you're saying, you have the maintenance, you have insurance, you have to keep it up. You're like, "What happens if if the value goes up? Do you want to sell? Do you want to Like, you you start to I've I've noticed that people who just do a little bit of research into real estate after they bought a home have become um use that leverage to either get nicer homes or move out or retire. You know, it's whatever it is. Um one of the things that popped into my mind was um so, in in San Diego, Southern California or I think all of California, there is the first-time buyers assistance program. Does Does that work with different programs, too? 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 we can integrate what we're doing with any program. But, the important part is that their financials are

[23:00] in order first. So, that That's actually the biggest problem that we see um that Larry was talking about is that when we're looking at people's um when we look at their budgets and look at their finances, um 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 for 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 >> that is? Just because it's such a cuz such an easy way to get in that it's not enough of the overall impact on a mortgage? >> had they they were given some money to get into their home, but nobody

[24:00] 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. Yeah, and Larry, you know, from from the employers benefits side, do you think this is something that's easy uh implement into a system? Like, from your You've gone through it probably in other uh systems and you're like, "This is we can do this in a couple weeks." Like, how's it going? >> Yeah, we are definitely talking about weeks. I mean, at at the end of the day, the the way we design this is to implement it at any given time. You don't have to wait for like, say for instance, an enrollment period like you would in a health insurance type of program, right? It could be launched at any given time and we're talking about weeks rather than months or uh you know, however long it would normally take for some of these other major uh benefits. And and the way we do this is really we we basically uh send out an invitation to um

[25:02] the employees on who wants to participate. And once they get enrolled, our uh advisors will go in, work with them to set up their budgets, their strategies, and stuff. We schedule the 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. But again, the the the program itself is very easy to set up. Um and it doesn't take a lot of administrative uh 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 the turnovers. They're just monitoring it. Yeah. We do pretty much everything for them. And from from setting up to

[26:00] implementing with their uh their payroll system I'm sorry, their HR uh HRIS, um to just doing all the education and marketing it for to their employees if they want us to do it, unless of course they want to do themselves. Yeah. And And for further support after the six courses, what happens then? Well, can they reach out to you? Like, what what's what Is there Is there some support that they can or something they reference to online? 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. And And that's a pretty big deal because I mean, I don't know too many people who actually have uh financial service advisors available to

[27:01] the right This is not something that you can just get anywhere, right? And so, we provide them with that assistance throughout their entire journey. From a pulling out the lens, this is great in the other aspect that you are getting a community involved, right? You're getting all these people that are locally to support this person essentially to get them to homeownership and then beyond. Um What What has this been like for you guys to set this up? Now, I'm curious as like like, what when the dynamics of, "Okay, we have we're I have someone in Toledo, Ohio that's interested. This employer has it. We have 40 employees. We're setting this up." I'm assuming for you guys in 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. So, the way it works is we we have um we have a set of uh licensed real estate professionals here in Utah. But outside of the state, we license our

[28:01] 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 uh have that model in place. And when they sign up for uh the program and they're in 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 It's probably a little bit harder for the the licensed professionals who are working with them, right? Making sure that they stick to their guns, right? Stick to their their their routine, stick to their their strategy, and so forth. That's That's the part that really has to happen um for everyone. And And so, we just accept that that's part of the game, right? That's part of what we need to do. >> ground, right? To make sure that they're following. But, I would think for the licensed real estate person, wherever

[29:01] they are, that's a 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. 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. 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 um 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

[30:01] assistance they need in one-on-one time there. Wow, that's great. So, this is an amazing program. The more that I learn about this, I I don't know how an employer can say no. Like I I honestly don't. And um uh what What are the next steps that you see for you guys as a company? Is it to work on launching this or 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

[snorts] we're rolling it out to companies, providing the um benefit that way. We are also in talk with um legislation. Okay. 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 to make that happen. >> make sense. That would make sense. >> because honestly, we want this to be tax-free eventually. That's the goal. We

[31:00] are also um working with NAR, who's actually already lobbying Congress on some of the on similar benefits to try and get it home any home contributions from an employer to be tax-free. Yeah. Wow, that's amazing. Anything else? Is that Is that just it? Is that the main I mean, that's

[laughter] that's a big deal, but No, I'm kidding. I'm kidding. We We are working also with uh PEOs, uh professional employer organizations, and we're working with uh benefits brokers. Uh those will be Those organizations are actually helping us to promote NestSteps and push it out there. And our hope is that eventually, this will be uh alongside health insurance, alongside 401(k) as necessities, right? This is 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 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.

[32:01] Hold on, good retention, someone's getting happy, they have a a goal that they can see they get home ownership, and then if you guys get the tax incentive, this is this is crazy. This is a lot of good stuff. >>

[laughter] >> So, I'm I'm excited for you guys. Um where can people find you guys uh if they want to reach out? All right. Our website is uh www.neststepsbenefits.com. That's Nest as in bird nest. Um they can also uh follow us on LinkedIn, right? We have a NestSteps page over there. Or they can just reach out to us, connect with us. I mean, we're open to connecting with anybody uh online, right? They can connect with us on on LinkedIn and send us an invite to Sherry Salazar, Larry Salazar. Yeah. Facebook, we're on Instagram, Facebook, LinkedIn. All right. Okay, guys. Well, it was a pleasure. I think there was so much good information here. I think this program's amazing. You guys, please check them out. Reach out to them. If you're an employer, go and

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