 Think Tech Hawaii. Civil engagement lives here. And welcome to Business in Hawaii with Reg Baker. We're a show that broadcasts live every Thursday at 2 o'clock from 2 to 2.30 in the downtown studios of Think Tech Hawaii. We focus our guests in our theme of the show is about success stories in Hawaii. We talk about how companies have made it work here. We've heard about all the challenges. It's not easy and we do have issues, but there are companies that are successful. They make it work and we want to learn their secrets and what they've done to get over these challenges or work around these challenges. So today I have Sanji Michigodani who is the managing director of Talent HR Solutions. It's a PEO and we'll explain what that is in a minute. But it's a very competitive industry. There's some big players. They're very aggressive, but there are some companies that have made it work here and they've done a good job. And Sanji is one of those people. Welcome to the show Sanji. It's good to have you here. Thank you. You too. Now you've been in Hawaii for a little while. Can you give us just a little bit of a background on how you got here and what you've been doing for the last 10, 15 years? Sure. I'm a local boy, born and raised here in Hawaii. I graduated from Kalani High School. Kalani High School. Okay, good. After high school I wanted to go to college on the mainland, so I ended up going to Southern Oregon College in Ashland, Oregon. Wow. That's cold country. Very cold. But also I've heard very beautiful. It's got some good mountains and they actually have some beaches too, don't they? Yeah. Actually the beaches we call lakes. Lakes. So after Oregon... What did you major in? Did you finish school there or did you finish school somewhere else? I finished school in Oregon, so I did my undergraduate there and earned my degree in general business management. Good. All right. That's good experience to have, good education to have to get into business. All right. And then did you come back to Hawaii right after that or did you stay in the mainland a little while? Actually, after I graduated it was so interesting. Back then we didn't have Google. There was Yahoo. I remember sitting in our computer lab and I wanted to... I didn't want to come back to Hawaii. I wanted to go somewhere where it had warm weather. So I put in warm weather, tropical climate, and San Diego, California showed up. So I was like, wow, this is where I'm going to go. You know, I have actually heard and you can confirm this, but San Diego probably has some of the most predictable weather in the world. Their variation in temperature during the year is one of the most narrowest in the country. Is that true? Yep. That is true. Yeah. It's an amazing place. And you were there for a while? I was there for almost seven years. Wow. What did you do there? So when I first relocated there, my initial career goal was to get into retail management. And the economy was just turning them. Turning for the better? Turning for the better. Yeah. It took me a while to find a job. And the first job I took, it was interesting. It was selling boots. Boots. Yeah. Boot world. Well, that was the name of the store? Boot world. Okay. Yeah. So you're an expert on boots? Just for three months. And prior to that, I was rapid firing resumes to, you know, at that time it was, you know, as I said, the economy was turning. So I was just trying to get anything I could. And a company called me. And one of the first things they said was, do you want to get paid for helping somebody find a job? And I was like, this is pretty interesting because here I'm finding, I'm trying to look for a job and they're asking me if I want to get paid. So I said, yes. So they got you hooked? Got me hooked. And then what, you went in there? Well, can you tell us the name of the company? Yeah. So the name of the company, the name of the company was called Aerotech. Okay. Very good company. They had one of the best training for like recruiting. So basically Aerotech was a large national employment agency. Did they specialize in anything in particular? They covered everything from, you know, administrative to medical to defense. It was just very broad. San Diego is definitely a place for defense. Yep. Yeah. As is Hawaii. Very good. Yeah. And you were there for how long? I was there for about two years at Aerotech. Very good. And then, but you were in San Diego for about seven years. Yeah. And so did you do something after Aerotech? Yeah. So after Aerotech, as you know, the dot coms were happening then. So, you know, there was an opportunity to work for a technology solutions provider and I was hired as a recruiter. So that makes sense. Yeah. Okay. So you switched right over into recruiting in a corporate world. Yep. And how long did you do that? I was there for about three and a half to four years. Yeah. That's a good experience. Very good. Yeah. It was fun. And so what brought you back to Hawaii? So what brought me back to Hawaii was I used to be an avid swing dancer in San Diego. Really? Yeah. And like a lot of people think that I don't swing. I only dance with my wife at home. But while I was on vacation, I met somebody and I ended up, you know, I asked my current boss. I had a remote job back then and they were able to let me work remotely from Hawaii. So nice. That was pretty neat. So you were able to stay in this corporate HR type of role, even though you weren't there, you started remote working from Hawaii. Yeah. Wow. Perfect. I bet a lot of people would like to be able to do something like that. Yes. Yep. And so you did that for how long? So I did that for about a year. And because of the time difference, they always gave preference to the recruiters that were in like their time zone. So Hawaii was about two to five hours behind. So they could only keep me busy for about 40 weeks out of the year. So I was like, wow, you know, in Hawaii, it's a very expensive place. And I have to find a supplemental income. So I started a recruiting company in 2002. Okay. 2002. And did you, this recruiting company, did it specialize in anything? So we started off in retail. And it kind of, we branched out to other areas like banking, real estate, just a variety of different industries. Yeah. Very good. And how long did you do that? So we had the recruiting company for about seven years. And we grew pretty quickly. We had three locations. We grew to San Diego, and then also to Las Vegas. But we kept it boticos, about five people per location. Now, was this the kind of the foundation or the core of today's talent HR solutions? So it sort of led up to that. So in 2007, you recall, we had the big financial crisis. And the collapse. Yeah, the collapse. And you know, for seven years, I thought that this was it. I could make a living placing people. And it was fun. And we enjoyed building relationships with people that were seeking employment. But the financial crisis, unfortunately, it wiped out. It changed things. Yeah. The job market got, it was damaged severely. So that was the time where we were thinking about other businesses. We already had our payroll setup. We had a lot of things set up to do HR and payroll. We just weren't proactively talking to potential clients about it. So that was actually very lucky of you to have set up some of these different types of operations that could easily switch into generating some revenue for you. So that wasn't brilliant strategy. It was just something that you kind of set up along the way. And then all of a sudden it happened. And that's sometimes being lucky can be just as good as being smart. Yeah. And a lot of it too is a risk too. Because I remember in that financial crisis, we had rents to pay. And it was just really bad. So it got to the point where I was like, I'm all in. I'm going to cash out my 401k, pay 40% taxes or what not to start up our PEO, which is talent HR solutions. See, a lot of people don't realize when owners of companies, small business owners really have to go all in like that. And they take a huge risk in putting all their chips on the table to make it work. And sometimes it does work. Sometimes it doesn't. But that's what small business people are all about. That's what they do. And you're a good example of that. And so you went all in, you set this all up, and then you started kind of re-shifting the focus of what you were doing into more of the payroll and the HR support. Yeah. And after the financial crisis, companies were really trying to economize and save money. So the outsourced HR benefits, it was a good model to help a lot of small companies, small and medium-sized companies, to reduce their costs. Right. And that's one of the keys that we're going to try to talk a little bit about today. And we'll talk more about the firm later, but one of the reasons why your firm caught on and is still existing today is because you really help that small, mid-sized business in their back office functions and their operations, particularly payroll and HR. Can you just explain a little bit what the benefits are? Well, first of all, why don't you explain what a PEO is for people who don't understand that or haven't heard that term before? And why it's so valuable. Okay. So the acronym PEO stands for Professional Employer Organization. Essentially, we are an HR department for hundreds of small companies. And so business owners can basically just focus on what they do best. They run their business. For example, a doctor will fix a human being, and I will help them with their HR and payroll and process. So you take the headache of all the compliance issues related to payroll. And if you're a small business, you can appreciate how voluminous that can be. I mean, there's a lot of payroll issues that have to be dealt with. It's not just writing and signing a check. I mean, there's a lot more involved. And so you take over that and you do that for these people. Yes. And you could also offer some benefits to the employees that maybe they couldn't get at that employer. How does that work? So because of our critical mass, we've been able to partner with a lot of different clients and offer lifestyle benefits. For example, like gym memberships, credit union benefits, movie theater discounts. The list just goes on and on and on. Also in addition to the standard health care that they need and the workers comp and the TDI and all this stuff. I mean, everybody's entitled to that. And you've got some leverage because you've got so many employees you represent. You can actually get some very competitive pricing, maybe even better than what people can do on their own. Absolutely. Yeah. It's very good. And for somebody who wanted to take advantage of this, I guess there's a website they can go to to find out more information. Yeah. So they can go to talenthrsolutions.com. And that's all spelt out. Yep. All right, talenthrsolutions.com. Yep. All right. And then when they get there, they can poke around, they can find out some of the different services you provide and other information that might be there. Now, we're coming up on a break. And so what I'd like to be able to do is go on that break. And we'll be gone for about 60 seconds. When we come back, I want to dive into the details a little bit more about your firm and the PEO concept and how that model can really benefit some people out there that's got their small and sized businesses. But this is Reg Baker. This is the Business in Hawaii show. We're going to be going on a 60-second break and we'll be right back. Welcome back. This is Business in Hawaii with Reg Baker. We're here today talking with Sanji, who's the managing director of a company called TalentHR Solutions, which is a PEO that's been in Hawaii for more than 10 years, which is a real accomplishment because it's a very competitive market. And there's some big players in there that can be very aggressive. But Sanji has made it work primarily by providing some good quality customer service at a very competitive price. And so Sanji, welcome back. The PEO market really is a professional employer organization. Basically, it's where a company can go that may have a few employees, maybe 20 or 30, up to a higher number even. But they don't want to handle all the back office and they want to be able to get some competitive benefits for them and what so they can come to you. You can plug them into your system. You can offer the employees all these additional benefits. And you can provide all of this back office support, including all of the payroll compliance issues for sometimes less than what they're currently paying for if they've got in-house staff doing it for them. But can you elaborate a little bit on that? I mean, that was my executive summary of it, but I'm sure there's much more to it. So how do you do what you do? What are you looking for in a customer and how does it work? Okay. So typically, when we meet a prospective client, we like to create a personal feel. So instead of just referring them to our website, we like to talk to them over the phone, see if they're a good fit. That's a good practice. And we're selective in the people that we want to work with. We want to work with people that generally are, they see a benefit in outsourcing all of these core functions like payroll, workers' comp, medical, employee relations, etc. And so once somebody is interested in exploring this option and to talk to you about it, I guess they can go to a website and find out some more information, but they really need to talk to you. You really need to sit down with them and explain all the positives and what works, how it works. And I guess they just need to be fully aware that there's going to be a transition period. But overall, it's going to be positive in a couple different ways. One is that they're going to be relieved of a lot of this responsibility of taking care of this themselves. But at the same time, there may be some economies of scale that you offer that could actually save them a few bucks. So what is the perfect type of client that you're looking for? What is that model? The perfect type of client is a client that has low attrition, two employees to about 20 employees. So two to 20 is that sweet spot? Yeah. There's a lot of small businesses like that. Yeah. All right. And so somebody that has got a company that's been around for a little while and they've got two to 20 employees and they seem to be doing well, but they're frustrated because there's so much of this HR and payroll stuff they got to deal with, that they can talk to you. And then once they talk to you, kind of walk us through what happens. Yeah. So once I meet with them, I collect some basic information from them. And then I put together a cost analysis and I show them exactly what they're paying in house versus outsourcing it. And a lot of times it's a good exercise for the small businesses. And I find out a lot that small businesses, sometimes they don't know exactly what their overall cost is. So a lot of times they're like, wow, it's this is great, great information that I needed to know. Yeah. It's eye opening. Eye opening. Yeah. It's pretty. And sometimes the owner, who is so focused on taking care of the customers and taking care of the product delivery, they're not always as on top of that back office piece as maybe they used to be when they first started. And it's amazing how it can get bigger and have a lot of different moving parts to it to kind of add up. Yep. Absolutely. And so you can come in, analyze that, look at that, do a cost comparison. And then let's assume that, okay, costs, even if the costs are about the same, freeing the owner up to be able to focus more strategically on building the business and taking care of other things and not back office. There's a value there too, right? Absolutely. And you know, we like to say that HR is, it's not a revenue generating department for a small business. So the benefits, they love it. They enjoy the fact that they're relieved of the burden and you know, the cost to also because of the fact that we have a lot of clients that have a low turnover, our unemployment rate is very competitive. One of the most competitive than all other PEOs. So they tend to save a lot of money on unemployment insurance. Well, and also in retraining. Yep. You know, I think, you know, one of the biggest challenges in any small business is finding the right people. Once you can find the right people and you've got them working for you, you don't want to let them go. You want to keep things happy and keep it, you know, fun to come to work and be productive. And I think, you know, providing a lot of the different benefits that, you know, a larger PEO like yourself would have, you know, some good health insurance, some good life insurance, some other benefits that the lifestyle benefits that you're talking about all provide some comfort to the employee. But also it brings an element of maybe professionalism to the process too, because now all of a sudden you can start looking at things like job descriptions and, you know, maybe even some incentive programs, you know, that might fit in for that company. And so those, that's the type of talent that you have that you can share with these employees and employers to make sure that that environment is really positive for the employees. Do you have examples of that? Have you done that for others before too? Yeah, actually, actually, yes. Yeah, and the benefits have been always very positive, right? Very, very positive. Morale goes up, productivity goes up. You know, it's amazing what some attention to the employees can do to make things better for them. Absolutely. You know, have you got any success stories that you might be able to share? I mean, did a company come to you at some point and just had a real mess and you were able to step in and really just kind of help them out? Yeah, so we've had a lot of success stories and part of being successful is my staff. I got one of the best staff, I mean, our employees are what makes our company and it's a very personalized service and we care so much about what we do. But an example, like about six months ago, there was a company that they were paying all of their people in cash and the labor department was circling them. I'm sure they had quite a lot of attention. Yeah, I did. Yeah, so they were really scared and they reached out to us and we were able to get them compliant and get them job descriptions, set up their workers comp, get their medical insurance set up and yeah. Do you have employee manuals that you can work with too or templates with those? Absolutely. Yeah, because that's a big, that's an important part too. Yes. And so you were able to really bring in some good structure and compliance to that mess that came to you. That's a great accomplishment and let's just touch on some of the issues that they might encounter for non-compliance because that's part of where some of the, I guess the chaos is created is because sometimes if you don't know what you're doing, you can kind of get yourself in a little bit of hot water but payroll is a very compliance focused process. I mean basically when you're processing payroll, you're taking a chunk of their pay in a form of taxes and you're supposed to be paying this on to the federal and state tax organizations. What happens if cash is tight a little bit and you don't quite have that money to do that? You get some compliance issues there, don't you? Yep. Yeah, and some of the penalties, are you familiar with the penalties that they might get? Oh my gosh, yeah, I mean some of the penalties can be as much as a thousand dollars a day and when they hear that it's really scary. I mean like sometimes these small businesses, they can go on under the radar for a while and paying people cash but it can eventually catch up and it's not not paying those taxes. Actually the Internal Revenue Service can come back to the employer and say you know you've got five or six years of not paying any of these payroll taxes and you know what, we don't want to chase those employees, that's not going to be our job. We're going to charge you for all those back taxes and we're going to take that money from you. You got to go after the employees and get it. You know that's pretty scary, that can basically wipe out a company. Yep, absolutely. You know so it's important to stay on top of this and make sure that you stay compliant with all those different rules and regulations and you've got people that really know that really well don't you? Definitely, yep. So if anybody that's watching the show out there has any concerns at all then they should probably go to your website and reach out and make contact with you and you can help them out a little bit. Yeah, we have a really nice introductory video that's personalized and kind of tells a little bit about what we do and just a little bit about our staff and some client testimonials as well. And what is that website address again? It's talenthrsolutions.com. All right, so that's all spelt out and you'll go there and I've been there a few times you know in kind of preparation for the show and it's got like you said some videos and some good background information. It's got a lot of useful information and then there's also a phone number on there too right? Yep. And that phone number will find its way to you eventually. Absolutely, yep, 3540498. All right and one more time? 3540498. Very good, so if anybody has any type of concerns and maybe nobody has reached out to them yet but if they've got any concerns about whether they're compliant with payroll or they're uncomfortable with how things are going or they just want to take a look and explore maybe a better way of doing it they can reach out to you either telephonically or through the website and I've heard rumors that you even answer your own phone. Yeah, absolutely. That's good. Yeah, one of the I just want to touch on this briefly but you know sometimes the way people or companies end up getting into a little bit of trouble it's not because well a disgruntled employee basically you know and so they could have a great company they can be chunking along real well and doing what they're supposed to be doing but maybe they're not totally compliant or maybe they decided well you know we're going to pay this person on a contractor basis versus an employee basis and then something could happen and that person could end up getting hurt and file for workers comp or maybe they don't have a job anymore there's no more work to give them and so they go file for unemployment or maybe they just get upset and go complain but that's usually the way department of labor or department taxation or the IRS finds out about things it's because of a an employee that does something that brings attention to the employer and the best way to avoid that is to make sure that you're doing it according to the rules. Yep and in Hawaii they call that deep kimchi right? Yeah and that actually that kimchi can get pretty deep and pretty hot too you know because it's the penalties I mean the employer penalties for a responsible person can occasionally reach 100% of the taxes due so not only do you have to pay all of the taxes maybe for several years but then the penalty on top of that could be another 100%. Oh my gosh yeah and for not covering the employees on medical insurance and workers comp it just adds up really quick yeah it's amazing that the you know the the stick that you could get whacked with or the kimchi you can fall into you know if you're not compliant so we're going to wrap up we've got maybe about 20 or 30 seconds left here any final words of wisdom you want to leave with the audience today about you know reaching out and talking to you I mean you're a friendly guy right yeah you're welcome to come out and talk to them anytime yeah absolutely if anybody has any questions or concerns I definitely would you know come by and do a complimentary human resource cost analysis and just the most important the favorite thing I like is just learning about what the you know what they're gonna what kind of business they're in and what their mission is it's really interesting to learn about that very good Sanjay well thank you for joining me on the show today we appreciate it we've learned a lot about the PEO and how we can keep people out of trouble look forward to having you back again someday in the future thank you all right this is business in Hawaii with Reg Breaker we broadcast live every Thursday from two to two thirty and we cover topics that are helping small businesses survive in a state that can be challenging at times so until next Thursday aloha