Recruiting That Works: Fixing the Labor Pipeline with Matt Swatek

 In this episode of Verify In Field, host Jacob Edmond sits down with Matt Swatek, CEO of Microcap Solutions to discuss how millwork companies can future-proof their workforce through smarter recruiting, strategic HR practices, and proactive planning.  

About Our Guest 

Matt Swatek is the CEO of Microcap Solutions, a labor solutions and recruiting firm serving the millwork industry. His background includes leading HR and recruiting efforts at ISEC and USA Millwork, where he scaled teams, developed internal training processes, and built recruiting systems from scratch. Now, through Microcap, he helps millwork businesses develop smarter hiring strategies and fractional HR support tailored to their stage of growth. 

Where to Learn More 

• Matt Swatek: 
  • LinkedIn: https://www.linkedin.com/in/matt-swatek-71114983/
• Micro-Cap Solutions: 
  • LinkedIn: https://www.linkedin.com/company/micro-cap-solutions/
  • Website: https://micro-capsolutions.com/
• Slides: https://docs.google.com/presentation/d/1kD7fZ84XfrPNydWlNZHo5aqt_q1O1Z_T/edit?usp=sharing&ouid=111093157909006770221&rtpof=true&sd=true

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Transcript

Matt Swatek (2) 0:00

A high turnover rate means you're spending a lot of time, a lot of money on recruiting, on onboarding, just to get into this cycle to go out and do it again. I think additionally, on top of that, really thinking about organizational structure and design and thinking about it from a forward focusing lens.

Jacob Edmond 0:21

Welcome back everybody to Verify in Field. Today I've got a good friend of mine, Matt Swatek. He's our guest today. He is CEO of Microcap Solutions. We worked together previously at USA Millwork. He was our CHRO and I've learned a great deal from him about recruiting and placing people. And today we're uh, talking about his new venture, which is Microcap. So thanks for joining me today, Matt.

Matt Swatek (2) 0:44

Glad to be here. I'm excited we're uh, finally getting to do this.

Jacob Edmond 0:46

Yes, finally, I got you on here and I think we're gonna share some exciting information for everybody. But before we get started, I think it'd be good if you could just give everybody a little bit about your background of how you got into recruiting to begin with. And then, obviously as becoming the HR lead over at USA Millwork you've got into the millwork industry and recruiting specifically for the millwork industry, but your recruiting started before millwork, right?

Matt Swatek (2) 1:10

Correct. So I think starting way back out of undergrad, graduated from school, had absolutely no idea what I wanted to do. Moved down to Denver and ended up taking a job at Dish Network. Dish has a huge corporate headquarters in the Denver area. And it was actually as a job as a high volume recruiter recruiting for satellite technician. So if you think about the people, basically the cable guy that goes in your home and installs your tv. I had managed about 30 different offices up and down Dishes East coast. And I remember when I took that job, I was terrified. I was like, oh my God, this like young kid outta college. How am I gonna interview and um, qualify people for jobs where they go and they make their living. And really quickly I, I learned that I loved it. you know, And it was a heavy kind of call center environment type of job where I'd sit there, I'd hammer the phones every day, I'd make about 30 calls, but really just enjoyed the outreach to people, figuring out a way to solve that puzzle and help make an impact on the business as well. I did that for about a year and after about a year, I actually ended up taking a job at ISEC as an HR assistant, like an entry level HR generalist type of role. And that's really where I cut my teeth and got my education in HR. ISEC is a great place to work. I was really fortunate. I had a bunch of really good mentors there, really strong managers there, and really got a full on education of all the different functions of human resources. While also continuing to manage recruiting. Both at the corporate level as well as supporting a lot of their different regions throughout the us. I did that for about four years. Somewhere around the end of that time, someone at USA Millwork had reached out to me. And put in front of me an opportunity to join the team as a recruiting manager. Thought it was a really good opportunity, really a, a good next step in my career to come in, build something out from scratch, and grow an organization. Transitioned over to USA Millwork. Spent about four years there. I think at the time when I came on, my sole focus was really just to come in, build out and execute a recruiting program. December, 2018 ish, I think is when I joined. At that point, we had more recently acquired Cabinets by Design down in Atlanta, O'Keefe out in the Midwest. And then I think we had just brought on IBS out in Virginia. I remember spending a lot of time out in Virginia for those first couple months there. Looking back at the recruiting program, I think we were really successful. We went out, we hired over a hundred people in that first year, and that really allowed me the opportunity to learn the business. Coming from ISEC, I really had not been exposed to the manufacturing side of the business yet. Really felt more like working at a construction company to really learn the manufacturing side, how it truly funneled over to construction. I had the opportunity to work really closely with leadership management, build trust, build good relationships, and then from there, kind of transition more into being involved in strategic people decisions, organizational structure, and expanding my role into all those different functions of HR. So, ISEC really good like foundational HR type of experience. USA Millwork really expanding into more of a leadership position and more of like a startup environment. Wear a bunch of different hats, figure out whatever you need to.

Jacob Edmond 4:38

Yeah. No, that's a great overview and I think it's important to share that because. Most companies have an HR department or have somebody that runs their HR, but within the HR world, I don't think a lot of people know that there's really some different areas, right? And a lot of the HR world is more focused on your existing people and the HR functions, insurance benefits, hiring, right? But recruiting is another subset of that. It seems like there's a lot of HR professionals that kind of are stronger on one side or the other.

Matt Swatek (2) 5:07

For sure.

Jacob Edmond 5:07

Particularly in our industry, I think a lot of us have a good HR person, but their background might not be focused on recruiting, which is a whole kind of animal unto itself.

Matt Swatek (2) 5:18

Great.

Jacob Edmond 5:18

And that's where you started, starting with recruiting for a very large organization and then going to another very, large organization, I think you. It seems cut your teeth very early on, on I need to talk to a lot of people. I need to clean. It's a numbers game, right? But you're also getting exposed to a lot of backgrounds of figuring out, okay, if I'm recruiting for this role, I need to be looking for a different type of position versus what I think a lot of people see it as is lemme go find somebody that's already in this position and just hire them.

Matt Swatek (2) 5:46

For sure.

Jacob Edmond 5:48

How has that shaped your trajectory of starting with recruiting and having a very strong recruiting background, but then having to branch into, a full fledged CHRO role?

Matt Swatek (2) 5:57

Yeah, I think, I think recruiting really allows you to learn the business because you're recruiting for all of these different roles from A to Z and you're working with all the different hiring managers and leadership teams of those different kind of aspects of the millwork industry or of a company in general. And there's a lot of different functions that kind of make a company come together and work.

Jacob Edmond 6:18

That's good.

Matt Swatek (2) 6:18

so when you're out recruiting and sourcing and interviewing people for these roles, it really forces you to learn the business and how it all comes together.

Jacob Edmond 6:27

Yeah.

Matt Swatek (2) 6:28

As like a strategic HR person, being able to align the goals of what you and your team are driving and the initiatives to the goals of the business is critically important. So recruiting was a really great foundational area to learn the business, learn how it all works. And then start to expand out from there. To your comment, I think there are a lot of different functions within hr, right? So, oftentimes a lot of times in millwork shops could be a one person show HR manager that like runs everything for the shop, those people don't get as much credit as they deserve because they're wearing like a thousand different hats. So they're responsible for recruiting, for onboarding, for compliance, for employee relations issues, for benefits administration for performance reviews org structure. I mean, It's a big list of things. So that person is really a, critical element to like a good company, especially a growing company and helping bring the people pieces of the puzzle together.

Jacob Edmond 7:26

Yeah, absolutely. And I'm sure as you know, HR a lot of times gets a bad rap, and I think because in a lot of organizations, or from a lot of employees' minds, I see them when I get hired and then I only see them if I'm in trouble or something's wrong. Right.

Matt Swatek (2) 7:38

Yeah.

Jacob Edmond 7:39

And, to some extent that can be, a symptom of, hey, hey, maybe the HR is not doing everything you ideally would want them to be doing. But also there is a lot that happens behind the scenes, like you said, compliance and benefits and things like that, that HR has to deal with. And it's a lot of the stuff that really nobody else wants to deal with and nobody else knows how to deal with.

Matt Swatek (2) 7:56

Right.

Jacob Edmond 7:57

And so obviously recruiting is a big piece that we're gonna be talking about today, but there is a whole lot that fits under that bucket that you're dealing with as those HR professionals. And I think that colors the conversation we're gonna have today that most millwork companies are their HR department is maybe a one person show.

Matt Swatek (2) 8:13

Right.

Jacob Edmond 8:13

It's the owner or somebody doing that. Frankly, that is very difficult to be able to cover all the bases you need to in that function, as a single person team.

Matt Swatek (2) 8:22

Right.

Jacob Edmond 8:22

And so that's where I think we'll get to, you know, fractional HR and pulling in somebody like you that has that experience that can come alongside and help supplement even just in recruiting. Most shops might be recruiting for a project manager once a year, or might be recruiting for, a shop lead once every couple years. It's hard to build a pipeline of talent or source a large talent pool for that when you're only having to do it every year or two.

Matt Swatek (2) 8:47

Right.

Jacob Edmond 8:48

Whereas somebody like you now you're doing that all day every day.

Matt Swatek (2) 8:51

Right. Absolutely. And I'm, I'm laughing as you talk about the stereotypical HR person, I think. Someone earlier on in my career told me you guys are like lawyers. Like, we only talk to you when there's a problem or we need something. And there's like an extent of that that's true. But there's also an extent of that, that's like the product of the culture, right? So you know, really importantly, as you think about hr the high level way I'd like to think about it is like, it bridges the gap between employees and management. And I really learned that from some of my great mentors at ISEC. And I think it's really held true throughout different successes in my career too.

Jacob Edmond 9:25

Yeah, I mean, you working with you at USA Millwork, first of all, as you alluded to, USA Millwork was a very unique opportunity and experience, for guys like you and I, we came on about the same time young, in our career, in this industry generally speaking, and we were given opportunity to come in and grow and really take on some leadership roles, but get some experience doing some things that otherwise we might not of.

Matt Swatek (2) 9:46

Right.

Jacob Edmond 9:47

And at a scale that was, unheard of at the time, but you came in and you were my first experience of working with an HR leader where it was, Hey, let's build a strategy for, you need to fill this many roles in the next year within your various drafting and HR department.

Matt Swatek (2) 10:03

Right.

Jacob Edmond 10:04

Help me write what you, what are the criteria you need? And also let's, let's map out a plan. How many people can you feasibly onboard in a quarter? What's our budget for this? There was actually strategizing and coming alongside all the way through to the people I already had to, Hey let's map out performance reviews and when I had, people that, we needed to address performance issues, it was generally before working with you, my experience was, Hey, there is no process for this. What I do, I go to the owner and they say, okay, let's deal with it together. Helping equip me to be better as a manager to learn how to deal with these, what are the tools and the things I need to do to hopefully prevent those issues to onboard people successfully. Train board, train people, but then how do we resolve those? And so that is ideally what you want in your HR team is, Hey, I'm talking to you, every day, every week. And it's not just, I've got a problem. How do we deal with that now?

Matt Swatek (2) 10:58

I think it's a good point and I think simply put, it's, really taking more of a proactive approach versus a reactive approach. And I'm sure we'll touch on some of these things throughout the conversation. But starting off with interviewing really defining out the requirements of the role and what you're looking for and what's important. You really need to know what those requirements are. So A, the recruiter can help you go out and find that person, but b as their hiring manager, really being able to evaluate during the interview process if that person is gonna be the right fit for the role and those requirements. It could be something as simple as five or six bullet points. It could be something a little bit more detailed. But the key is that you take those and you translate them to some type of interview guide. Because you wanna be evaluating the person on those requirements and really finding both a qualitative and a quantitative way to make sure that you're hiring the right person. I think a big issue just within the industry, even outside of the industry in general, is when hiring managers, interview candidates, they're not always interviewing them and they end up having this conversation and they're like, you know, you go and you get feedback and you say, Hey, like, how did your interview go? And they're like, oh man, that was great. Like love, love that candidate. You know, You start to dig into it and you realize that they're really just having a conversation. They start the interview off like any other one, but then they get into this conversation and they start sharing these commonalities and they never really get around to truly interviewing and asking the right questions. And so really being more proactive strategic thinking about requirements upfront is the first important step as you think about building out a good recruiting and interviewing process. And then I think, like you said too, just more proactively hiring. Once a quarter sitting down mapping out needs to have the capacity to meet those needs for that quarter and beyond? And really starting to recruit more in advance and hire people and onboard them to align with those needs of the business versus going out, trying to hire people really quickly. Filling butts in the seat and then that quickly not working out just because there's not as much of a thoughtful approach taken to it. So

Jacob Edmond 13:06

Yes. So I think that's uh, important and, and something, you very much helped us with, but there is recruiting, right? And you can go on demand, hire a recruiter. You can do it internally and say oh shoot, we have this role to fill.

Matt Swatek (2) 13:18

Right.

Jacob Edmond 13:19

But it's a totally different thing to sit down and plan and say, okay, what are we planning on selling next year? Like you just said, do we have the capacity to complete that work? And if not, what key roles do we need to strategically think about going and sourcing now so that we have it by the time that work hits? And that is a very different type of approach to recruiting and staffing and really HR as a whole.

Matt Swatek (2) 13:42

And then even taking it a step further and really starting to track hiring metrics. So it's okay, tracking, time to fail, time to hire knowing that, hey, I'm gonna have to go hire a custom builder. And on average, I've hired 10 of'em in the last year and it's taken me 60 days to fill this role. So, you know, Hey, I'm gonna have to go out and start recruiting about two months in advance of when I need this person. So on top of that, really taking a data-driven approach to recruiting and trying to fill in some of those gaps of those unknown things so you don't have to run into the issues of, not having the labor that you need for planning and what not.

Jacob Edmond 14:19

Because that's key.'cause it's interesting'cause in an industry that we are very labor driven,

Matt Swatek (2) 14:24

right.

Jacob Edmond 14:25

Revenue is directly correlated to direct labor. But I very rarely hear, and you always hear owners and salespeople talking about hey, I know what I'm gonna sell. I know what, we're gonna earn revenue, we're gonna produce. But you rarely hear them connecting that to their staffing strategy of, okay, that means we need this many labor hours in these departments, which means we need this many heads. And what you're talking about is a holistic approach of Hey, our. Hr, our staffing strategy needs to align with and support the sales strategy and the business strategy of the overall business. And one has to inform the other. And so I'm leading you to a segue, which is obviously you've now started a company Micro Cap Solutions. And you know what it sounds like, what I think that is, is more than just a recruiting company, where, Hey, we need you to find this role. Go fill this role. You're trying to come along and bring a lot of this experience that you've learned, and how can we help the millwork industry and millwork clients, not just fill roles, but bring this holistic approach to staffing. Can you talk a little bit about just the evolution of okay, deciding to start this company and the opportunity you saw to solve a problem.

Matt Swatek (2) 15:33

Absolutely. And I think going back to your first point really labor planning in the millwork industry is complex because the industry as a whole is really complex. And I think those needs are constantly changing, whether it's weekly, monthly, quarterly. So it's difficult to spend the time to sit down and do that, and you need to do it frequently and really evolve with the business as different projects get prioritized and timelines get crunched. It's just a really complex industry where it's custom manufacturing and construction coming together into one versus say like manufacturing widgets. So there is a complexity and a time that needs to be spent to do these things and do them well. Going back to Microcap. Really has always been a dream of mine uh, to start my own search firm. Over the last few years I've been providing similar recruiting to support to Ninth Street's, different portfolio companies. About a year ago I went to Michael and Patrick, the um, managing partners at ninth Street with an idea, and we said, Hey, why don't we try all this out in the background and kind of test the hypothesis and see if there's a need for this type of solution in the market. We were really fortunate. We had a couple of people willing to give us a try. Results were overwhelmingly positive and so we of spun it into its own thing this year and Micro-Cap is about a year in business now. What we're offering to people is unique in the sense that it's really an all in one labor solutions platform. So first of all, executive search is really kind of our bread and butter, particularly retained search. So that would be focused on key hires, leadership hires both in the millwork industry as well as outside of the millwork industry. And through doing that we really learned that there was a need for more of a staffing services. Some of our clients kept asking us, Hey, we have these technician roles open, or Hey, we have these machinist roles open. Is that a type of service that you provide? And it really doesn't make sense to provide it as a service on the search side. Through partnership with you, we came up with another hypothesis that we could probably offer staffing as a solution through a partnership with Duckworks. And so that's really what we've been working on over the course of the last six months. Now, in addition to Search is offering this staffing platform services, which is an hourly rate service. Really fits the mold in a number of different scenarios. One, specifically looking at the millwork industry. It could be a small to medium sized shop that doesn't have an HR person or a recruiter, and the owner or the shop manager or someone on the management team is really managing this recruiting process. And they might be doing it well, but they're really struggling to find the time to do this throughout their normal job. And it's, taking them another 10 to 20 hours each week, they need to go out and hire someone. So that's a really good solution that we've proven out. Our solution works well in the sense that you can plug someone in from our team, they can manage your full cycle recruiting process and really help you give that time back into your day to focus on the things that you do well. Another high level scenario could be a shop that has an existing HR manager recruiter, and they're really just looking for supplemental support. So maybe recruiting isn't their bread and butter. Maybe training is, or benefits is, or one of those other HR functions. This could be a very cost effective way, non-committal way to get that resource that you need and that expertise that you need to help solve the recruiting puzzle. So there's a ton of customization to it and what it looks like, and I think it fits the need for a variety of different situations.

Jacob Edmond 19:12

Awesome. You've talked a little bit about, what you guys offer but can you talk more specifically about what sets this apart from, traditional recruiting that, there's, there's lots of recruiters in the industry and in manufacturing in general. So what you're doing and what Microcap is providing you know, is a more of a full service option and catered to them. And you talked a little bit about some of the things from having a strategy to interview and making sure that you're actually interviewing, not just having a conversation, but I imagine everything from helping to write job descriptions to talent management implementations and things. Can you talk a little bit about just what sets you guys apart? What sets Microcap apart from what else might be things your clients have interacted with in the past.

Matt Swatek (2) 19:53

Yeah, it's a good question. I think, it is really more of a consultive, strategic, long-term relationship approach versus a, transactional approach, if you will. So particularly starting on like the executive search side of things, we really focused on retain search instead of contingent search. So what retain search is upfront a client would put down basically a deposit to initiate that executive search. Retain search is typically done on an exclusive basis where a contingent search could be three or four different recruiters all working on a search at once. There's pros and cons to both of those approaches. I really like the routine search for a number of reasons. One. It really encourages a strong partnership between the recruiter and the client. So there's great communication. There's regular cadence of meetings to talk about what you're seeing in the market. You get involved in things outside of just recruiting. I have a number of clients who call me with, Hey, I have this employee issue. How can you help me think through that? Hey, um. I have a bunch of work coming up. How can we think through like org structure and how to hire for these things? So you really get more involved in being that strategic HR leader for the business outside of just, Hey, I need to go out and fill an estimator. And you get a bunch of resumes thrown at you from a bunch of different places. It also causes a little bit of chaos in the market. Sometimes when you have four different recruiters working on a role, candidates will get reached out to, from the same recruiter. Doesn't always look good on the brand. It's not always the best experience for the candidate. And so those would be just a couple of the reasons why I prefer the retained search approach. I think the staffing solution, shifting gears over to that, is a unique solution in general, particularly for the industry. Offering a service that is paid hourly. It's really just an extension of your existing team, so you have the flexibility to go out and hire someone on either a full-time or an a needed basis. It can ramp up as you ramp up. It can ramp down as you ramp down. You're bringing in outside expertise that knows how to run this process and run it well, and all the different geographies throughout the US so we can really take those best practices from, you know, the northeast. And if we're seeing things down in the southwest we say, Hey, like we had a client up here where this worked really well, and we can apply that knowledge across the board. But I think really the scalability and the flexibility of that solution is unique. Particularly compared to offerings in the industry right now.

Jacob Edmond 22:27

Yeah. Something else I would imagine that is unique is, with the staffing model is ultimately you're able to integrate and present as the brand of your client, right? You're coming alongside and it's not, Hey, we're hiring this recruiter that's operating as its own entity.

Matt Swatek (2) 22:43

Right.

Jacob Edmond 22:43

You know, as Matt's recruiting and applicants don't know who they're being recruited for until they get to that stage. You're coming alongside and saying, if we're working with Jacob's Cabinets, we are Jacob's Cabinets recruiting team. We're interviewing on behalf of Jacob's Cabinets. We are part of this organization presenting as that organization, using that organization's tools. The client maintains access to all the data. I think that just from a technical standpoint, is a very different approach. Right.

Matt Swatek (2) 23:09

Totally. It's an extension of your team. We're really looking for a long-term partnership. I also think the success of the program itself is because of that for a couple of reasons. One, as you think about the type of roles that this program or platform would support, it's generally gonna be your hourly roles. So a lot of people in the shop, a lot of people in the field kind of entry level office type of roles. And as you think about those types of candidates, they're not always as receptive or comfortable being reached out to from a recruiting firm. That's atypical for that level of position versus someone who's a little bit more senior level, who's probably had conversations with a recruiter or an executive recruiter before. So your response rate for that candidate pool is much higher because we're coming in as an extension of your team. A lot of the times we're plugged into your domain and your software, so we're able to message with you and communicate on teams. We're able to schedule interviews off your calendar and really manage that full cycle recruiting process and provide the candidate with a great experience as well.

Jacob Edmond 24:15

That's another thing that I'd like to dig into a little bit more that you alluded to that, depending on the type of role you're hiring for the recruiting tools you use and the way you, like applicants for those hour roles aren't necessarily all sitting on LinkedIn. Versus, and that's very different from recruiting for your executive roles. Right? And so your strategy, the tools you use, the way you reach out to them, even the conversations you have with them it's very different depending on what role you're hiring for.

Matt Swatek (2) 24:39

Yeah, absolutely. I think approach is key depending on the role and depending on the industry. I think specifically looking at the millwork industry, running search for a project manager or a director or some type of leadership position, likely the first place you'll go is LinkedIn or just your candidate database where you've really built out. A really strong pool of pipeline talent over time. And then on the flip side of things particularly looking at the trades, like the trades really aren't on LinkedIn. They've become more so over the years, but you need to get more creative in how you approach and find those types of candidates. Nowadays Indeed is crazy. Depending on where you're located in the country, you might post a job and get like 300, applicants in like a week, or you might post a job and get like 10 in a week. And so the approach, depending on what you receive when you go out and post a job is really critical. I think being able to source candidates when you're not able to find them, especially in the skilled trades roles, is really important as well. And that's something we have expertise in doing is knowing where to go out and find those types of candidates and help get them in front of our clients.

Jacob Edmond 25:51

Yeah. Speaking more directly to,'cause you know, there's, there's gonna be company owners and people listening that have dealt with, contingent search.

Matt Swatek (2) 25:59

Sure.

Jacob Edmond 25:59

Or dealt with recruiters in the past. And you know, I know I've spoken with a lot of people both on the applicant side that have a bad taste in their mouth with dealing with recruiters. They might have gone through a bad, uh, cycle of trying to be hired somewhere and it didn't work out. And same thing on the owner side, right? They generally talk about the fees based on it and the success rate and just their overall experience,

Matt Swatek (2) 26:18

Yeah.

Jacob Edmond 26:19

is entirely subjective to who the recruiter is, what the position is and stuff, but how do you talk through, you know, a new client that maybe has had a bad experience in the past. One, the benefits of the service you're offering and how you approach it and how a good experience should look.

Matt Swatek (2) 26:34

Yeah, it's a good question. First off, I think there's a lot of really great recruiters in the industry that have been doing this a long time. Even longer than I have in some instances, I think. One of the unique differentiators that Microcap and our services bring is actually working in the industry at some of the largest kind of best known companies between Isec, USA millwork, all the companies that fell under USA millwork. So really bringing that knowledge and experience of being a part of the company. Understanding how the candidate experience goes up through onboarding, what that's like after they're onboarded, and then how to set them up for success in their new position. I think particularly on the executive search side of things and looking at the contingent search. A couple of comments. One, The retainer. The fee is typically pretty nominal. It's not a super large fee. You know, it's a couple thousand dollars at most. And really the purpose of that, like I touched on earlier, is just to initiate engagement and partnership. I think that's really critical to run a good search for a key hire. I think the other piece of this is. We're really trying to target clients, looking for long-term partnership versus just a recruiting transactional approach. Just about all of our clients have come through repeat business after that first search is won. We've really proven out the concept that, hey, this is a good strategy. It works for the long term. It's not just a, Hey let's go out and fill this position. We'll reach out to you every once in a while when we're struggling and we're, we need to be reactive and need to hire this position.

Jacob Edmond 28:10

Talking more specifically about, you've alluded to some of your clients, will lean on you for advice, which ultimately kind of in my mind, falls into kind of fractional HR leadership

Matt Swatek (2) 28:19

Yeah.

Jacob Edmond 28:20

And, fractional leadership roles, has become a lot more popular. Maybe not in millwork, but in industry in general, right? You can hire our fractional CFO, you can hire fractional, marketing a lot of these things. And so for people in our industry, that's a pretty new concept. But can you talk about, just. This idea that of coming alongside and you're able to share your expertise with clients that maybe don't have the ability to hire a full-time CHRO or a full-time, HR executive, but they can get the benefits of, of your experience and knowledge on a fractional basis by partnering with you. It seems like that's what you're describing more of. Just rather than I'm helping you fill this role. I am coming alongside, like you said, developing a long-term partnership. Can you talk a little bit more about just that fractional HR leadership role and the partnering on, on strategy overall?

Matt Swatek (2) 29:05

Yeah, absolutely. I think it allows small to medium sized businesses who may not be able to justify the cost for such a position. The flexibility to bring in the support on an as needed basis, but also go out and get that type of expertise at a reasonable and as needed costs. So it's really a flexible approach. I think the other thing is bringing in someone that has done it before. Knowing that person has lived through it, they've lived through the situation that you're probably working through and can really advise you on the best solution or provide different options on how to move forward.

Jacob Edmond 29:43

Yeah, absolutely. No, I think that's great. And that's something that's important, you know, that everything that you're, you're offering to your clients at Microcap and helping with is based on experience, firsthand experience of work you've done yourself really at the highest level and things you've learned from that, how can you bring it and benefit with as many of your partners as possible. Looking towards the future, what are you seeing coming in? What trends do you see shaping the next decorate for? Millwork and the skilled trades as a whole. You know, Obviously we've seen a lot change in the last few decades and really even in just the last five years, it seems like with COVID and things, remote first has become a lot more of a thing that you never would've seen in our industry

Matt Swatek (2) 30:21

Right.

Jacob Edmond 30:21

But we're still a very much an in-person, manufacturing and skilled trades based industry. What do you see shaping the next decade from an HR and recruiting standpoint?

Matt Swatek (2) 30:30

I think for the last decade in general, since I've been working within the space, it really feels like the skilled trades is a dying industry in a lot of ways. If you look at a lot of the talent, or a lot of the um, candidates entering the talent pool. A lot of people have elected to go for more of a white collar office type of job instead of going into the trades itself. So really focusing on your strategy of how you go out and recruit and find and retain these people. That approach needs to be multifaceted. It needs to take place on the, local level in the sense that you need to go out and engage with trade schools and colleges and universities and local programs. And you also need to take more of a proactive, always recruiting approach on the backend as well. So consistently outreaching and talking with candidates, pipelining candidates, having this always recruiting mindset is really important so that you have candidates available. That are excited and ready to enter your workforce as you need them. I think it goes back to some of the things we spoke about earlier, just being proactive versus reactive. If you're reactive and you end up just throwing bodies at the problem, chances are it's not gonna work out really well whether they're not the right fit or you don't spend the time to get them onboarded properly. Good chance it's gonna lead to a high turnover rate. A high turnover rate means you're spending a lot of time, a lot of money on recruiting, on onboarding, just to get into this cycle to go out and do it again. I think additionally, on top of that, really thinking about organizational structure and design and thinking about it from a forward focusing lens. Where do we as a business wanna be three years from now, five years from now, 10 years from now? And really making sure as you take those steps to go out and hire and build your org structure that you're taking steps in the right direction to support those long-term goals of your organization. So tying all of those things together, really uh, just to make sure you're taking a strategic approach to recruiting versus more of a tactical reactive approach.

Jacob Edmond 32:35

Yeah, no, I think that's awesome. And from experience, that's why I've seen you work with clients and do is take them from a, Hey, we're reacting to a situation we have right now. Somebody left unexpectedly and we need to fill this role. And, attacking that first and then. Working with them to future proofing their workforce and having kind of an ongoing strategy that's, hey even when those unexpected surprises pop up, we have a talent pool. We have a partner that can help us fill that role, or we have a job description and an onboarding plan. And so that's always, I think what has been most exciting to me to see is seeing companies make that journey and how you can help them go from, hey, we're fully reactive to solving a headache now to, hey, now we have a long-term strategy and we're future proofing our workforce with constantly recruiting and having systems in place to bring people on board.

Matt Swatek (2) 33:26

Yeah, I think it's important to mention too, like you're always gonna have misses in hiring people, like you're gonna hire people, things aren't gonna work out. That doesn't mean that it was a bad candidate. That doesn't mean that, you did a bad job in evaluating and selecting that candidate. Those things are gonna happen. So it's really being able to take a step back and learn from those experiences and then apply them as you move, forward in the future. So you run into them less and less.

Jacob Edmond 33:50

Yeah. I think that's the key that a lot of people miss, probably would you say is, okay, we had a bad experience or we had an onboarding. We onboarding somebody that didn't work out. What are we learning from that to apply next time to do better.

Matt Swatek (2) 34:01

Yeah, and it happens. It's all part of it within the millworks industry, outside of the industry as well. And I think the important thing is you're, as you're evaluating a recruiting partner, whether internal or external. Is really finding someone that's gonna work with you on a long-term solution. Hey, we went out and hired this person after a short period of time. They didn't work out. That recruiting partner should be there to help you work through that problem and then find a long-term solution as well. And I think that's something we've done a really good job at Microcap is most of the time our placements are long-term solutions. In the instance they're not, we're always there to help and find a reasonable way to support that. And then the staffing services itself is really a long-term solution. So instead of paying this large lump sum fee upfront to kind of roll the dice and take a gamble on hiring more of an entry level trades type of role you're really paying as if you would, if you were to go out, hire an internal recruiter and have that type of service at a fraction of the cost.

Jacob Edmond 35:02

All right, so comparing, what microcap the, what you're talking about with is, which is retained search or a staffing service. How does that compare if I'm a business owner, I just am thinking about, why don't I just go hire somebody myself to do this full time? Can you compare, the cost basis of those.

Matt Swatek (2) 35:19

Of course. And so I put together a quick little chart here. felt like it might be easier to paper some of this instead of talk through it, but if you look up top here, we kind of have the differentiation between going out and hiring a full-time recruiter between maybe considering some. Type of fractional, outsourced recruiting service like Microcap. And we made the assumption in this instance that a full-time recruiter might come in at a base salary around$75,000. So maybe it's someone that's got a couple years of experience, they're out of school. Something to note is that unlikely that a client may find a candidate that has millwork experience. So that's another differentiator of the services that we at Microcap offer. And then from there, you're gonna pay fringe on top of that base salary. So, just a rough assumption is around 30%. That's gonna include things like benefits, a 401k match taxes, insurances. Those are all kind of some hidden costs behind the scenes that not every employee necessarily realizes, but the employer kind of burdens on their behalf. So really, really roughly the annual cost of a full-time recruiter at a$75,000 salary is gonna come in just under a hundred thousand dollars and in the mid forties per hour. If you wanna look at that at a full-time, hourly rate if we kind of flip that over and start to think about some of the costs of what one of our outsourced recruiters might look like. No fringe at all. So you're not paying for any of the insurance, you're not paying for any of the benefits. There's really none of those overhead costs that are associated with a typical full-time hire. And I would, instead of even looking at it at an annual rate rather, I would look at it strictly as an hourly rate. So hourly, this person's gonna cost you give or take$30 an hour if you wanted to look at that person on a full-time basis. The costs are gonna be about 36% less than what your full-time hire would be. But not only that, you're really gonna have the flexibility to scale this solution up. And scale the solution down as your needs change for the business. So for example, for some of our smaller clients, the ones that don't have an HR department. Can't justify the costs of going out and hiring a full-time recruiter. They've really found success in using our services in different ramp up and ramp down periods, and then minimally using them in the background to help pipeline candidates in between those ramp up periods. To really kind of take that always recruiting proactive mindset. So there may be a month where they need to go out and they need to hire two to four people in the shop and they may reach out and we engage in our services full time until we can get all those roles filled for them. And then we may ramp back down and may only be working five hours a week, 20 hours a month. Just managing some of those postings and outreach in the background to keep things going. So that when the need does come, we're ready to hit the ground running and already potentially have a couple candidates to fill those roles.

Jacob Edmond 38:13

That's another aspect that we didn't talk about before, but the difference between contingent versus retained or contingent versus with hourly model you're talking about is, I mean, ultimately a contingent search. It is entirely based on a specific role and that recruiter's only getting paid if they fill the role,

Matt Swatek (2) 38:28

Right.

Jacob Edmond 38:29

um, it's very hard with that model to justify an ongoing search that may not fill a role for anytime soon.

Matt Swatek (2) 38:35

Right.

Jacob Edmond 38:36

lot of these businesses, if you think you might always need shop roles open. You might always be hiring if there's good talent and that's something you can help with in the background on a very part-time basis of, Hey, let's just keep this role. If we get applicants, let's qualify them, and then let's only funnel the ones that are worth interviewing to your client to have an interview. But it's very difficult to do that with contingent search model. Right.

Matt Swatek (2) 38:59

Right. Absolutely. And I think part of the struggle that maybe some small to medium sized industrial millwork type companies have is just finding the time to do it well and develop that process to go out and execute on it well. And those are all things that we bring to the table for our clients at a fraction of the cost on a very flexible, scalable basis.

Jacob Edmond 39:21

Yeah, because it's also, to get the best talent you have to be responsive when those people are applying and give them a great experience as well because these people are necessarily gonna be knocking down your door But if you're not responsive to the applications somebody else might snatch them up before you get them. So I think that's another aspect to think about is if you don't have the staff or the time to be able to be dedicating and being responsive to this, the service you're getting that Matt you're offering is you guys are gonna be responsive and offering that great experience to the applicants themselves that makes the company look good and want to have them work there.

Matt Swatek (2) 39:55

Yeah, absolutely. And you know, as well as I do, Jacob, it's like a super fragmented industry, so. If you take a look in one of the major metro areas, maybe there's like four or five, six shops out there that are hiring very similar candidates. The competition for talent is fierce, especially for really good talent. And in the instance you get really lucky and receive a resume for a really skilled tenured custom builder in your shop. There's a good chance that that candidate went out and applied for roles at your competitors as well. And you need to be quick to react and to respond, to get in front of them, to sell them, to provide them with a good experience, and hopefully bring them on board yourself.

Jacob Edmond 40:35

Awesome. So, no, I think this is a great breakdown. Be able to see visually, we'll try to link this in the show notes for those that are listening and you're wondering what are we talking about? If you're watching on YouTube, you see this, but if you're listening audio, we'll have a link to this slide so you can see the visual as well. uh, If people are looking to learn more about Microcap solutions, they wanna reach out, they wanna find out more, what's the best way for them to do that.

Matt Swatek (2) 40:56

Yep, I find me on LinkedIn. I live on LinkedIn. I'm on there all the time. Love to connect with new people in the industry outside of the industry. We have a website as well, and hopefully you can drop some links in the chat here, Jacob.

Jacob Edmond 41:09

Yeah, so we'll link that in the show notes. So if you're listening to this, go down to the show notes and you'll have a link to Matt's LinkedIn profile, as well as the Microcap Solutions website. Matt, thank you so much for coming on and sharing about microcap and advice for our industry. I'm excited to see the work you do and hopefully we'll have you back on in the future and you could share a little bit more of your success.

Matt Swatek (2) 41:28

having me, Jacob, and looking forward to the partnership.

Jacob Edmond 41:31

Awesome.