Sunday Message From Ben: Easter Gratitude & How ProService is adapting

April 12,2020

Aloha,

Happy Easter! This year we are celebrating Easter like never before: this morning our family did a remote Easter Brunch via Facetime with relatives in different parts of the country. What fun! Also, it has been 4 weeks since we went 100% remote at ProService. The challenges of the past month have brought a number of changes for all of us, while also showing how resilient we can be. This new reality has provided a constant reminder of how important real connections are and how interdependent we all are. I look forward to when we can meet again in person.

These events have made me reflect on my journey at ProService, which began in 2005 when I acquired the Company. At the time, my only goal was to turn around a struggling business and make it successful, but over time my goals have changed and have become “purpose-driven”. Our purpose is to empower employers to succeed in Hawaii. Today, our purpose has never been more important: clients are shrinking while HR needs are rising, and our advice and service is critical for business survival and employee well-being. In this environment our challenge is clear: we must remain healthy and strong, and do a great job supporting you and your employees, even with lower revenues.

Today, I thought you may benefit from learning how we are adapting to these challenges at ProService. Below I outline the actions we have taken with the hope that you gain insights that might help your organization.

  1. Develop new leading indicators: Over the past month, payrolls for our 2,500 clients have shrunk an average of 35%. This means our economy is likely running at a 30-40% lower run rate than just a month ago. With such rapid changes in payroll and employment, we need new leading indicators for our business that tell us daily what is happening. Get accurate daily information on what is happening, graph it, and use it to forecast and plan for the future.
  2. Replace your budget with scenario planning: Throw away your budget and build new revenue and cost models of the business. Build a new “base case” from the leading indicators for what your cash flow might look like. We’ve modeled down 25%, 35%, and 45%, and then developed contingency plans for our actions in the different scenarios.
  3. Create a theme for your plan that is easy to communicate: For our contingency plans, we established the following theme: “Protect the Core and Maintain Flexibility”. For us, “Protecting the Core” means protecting our high performing staff and culture and serving our clients exceptionally well in this time of need. And “Maintain Flexibility” means taking actions while being ready to bounce back when there is new demand for services.
  4. Set a plan and be transparent: Work with your team to develop your plan, and communicate it with as much transparency as possible. We told the company we would be taking fast actions to protect the core of our business, and shared the types of cost-cutting measures we would pursue. We explained that we are not eligible for a PPP loan and answered lots of questions from staff. Everyone knows what’s going on and what is at stake. By being transparent with everyone, we maintain trust and protect the core of our high performing culture.
  5. When you know, go execute: Once we reached a clear plan, we drove speedy execution. There is no time to wait. Our execution plan was as follows:
    • Reduce non-core expenses. Tell everyone that business as usual has ended. Ask for everyone’s help. Turn off any “leaky faucet”. Examples of these expenses include travel, meals, supplies, marketing, consultants, rent, and our 401K employer match. Report progress regularly.
    • Review headcount expenses. We did a rigorous review of all staff and let go 25 people this week. These were good people and it was hard, but our process was clear and fair. At a different time we would have kept many of these folks and worked to grow them, but we don’t have that time now. It is sad, but necessary. We let these people go and then immediately informed their peers to lessen their worry. The team we have now, going forward, is the team we intend to keep.
    • Use furloughs: Furloughs are flexible – there are many ways you can implement them – and dynamic – you can adjust as you go. Furloughed employees can also benefit from the new unemployment program (CARES), in which most impacted employees will be more than made whole until July. This makes furloughs a better tool than changing pay. We intend to have staff work reduced hours, and we will flex to have staff available for periods of peak client demand. The other major benefit of furloughs is to retain your people for when your business recovers.
  6. Lead from the Front: At ProService, we believe that to Protect the Core we must role model the behaviors of our culture from the top. Before we let anyone go, I announced to the Company that I am voluntarily foregoing my salary to share in the sacrifices and demonstrate my commitment to staff and to clients. We also had many executives and staff offer to take voluntary, temporary pay reductions.

That summarizes what we’ve done to structure the business to succeed in this environment. While it has been hard, I’m proud of what we’ve done and how we executed. We’ve paired those actions with a relentless daily focus on execution for our clients. Each day we have cross-departmental huddles and a variety of short, focused meetings to drive execution against a large number of client needs – payroll, PPP loan applications, HR consultations, layoffs, furloughs, and benefit changes. We never forget that our actions are impacting peoples’ lives, and therefore the execution must be excellent. While there is always room for improvement, I’ve been pleased with our teamwork and execution. There has been incredible focus and passion for getting things right for our clients. Delivering more for our clients, despite less revenue, is how we define winning in this environment.

We wish you and your ohana a wonderful Easter Sunday. Easter is a time of gratitude and rebirth. I am grateful for ProService, for our Prohana, and for everything we’ve done over the past month to adapt to this crisis. I am grateful for my family and our health, and our virtual Easter brunch with grandparents elsewhere. I am grateful to live in Hawaii. And also, I am grateful that you have chosen ProService as your HR partner.

With gratitude and aloha,

Ben Godsey

President & CEO

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