What Nobody Tells You About M&A: Kathy Woods, Head of HR, Seven Miles Coffee

Hi, and good morning. Welcome back to another episode of the HR Community Podcast. This morning I am joined with Kathy Woods. Kathy is the head of people, culture, and impact at Seven Miles Coffee Company.

Good morning, Kathy. Morning, Shane. Lovely to be here. Thank you for the invite.

Thank you. Thank you for joining us. Kathy has got an amazing background within HR and a lot of companies that are very close to home. Food, coffee, hospitality, Guzman Gomez, Starbucks.

So really keen to sort of unpack your journey in a moment. For those listening, tell us a little bit about you, Kathy Wood, your role, and tell us a little bit about Seven Miles Coffee Club. Yeah, I'm English, but been in Australia for like 20 odd years now, so I feel very Australian. I've always worked in hospitality service-based businesses.

I just love the pace and the customer focus, and it's you know just been what I enjoy for a long time. Right now I work at the Seven Miles Coffee Company, so a group of different coffee businesses across Australia. It's great because I get free coffee every day as much as I want. You're caffeinated for this morning, then.

You know, it's a great industry because everyone's really passionate about what they do and everybody loves coffee, right? So it's a lovely environment to work in from that point of view. You know, similarly, I do have an accent and uh traveled here many, many years ago and traveled many countries around the world, and I've yet to meet a country like Australia that is so obsessed with their coffee. And now I've started to become a bit of a coffee snub as well.

You know, when I when I travel, I'm constantly comparing. But uh I do have to admit, I've I've struggled to find a better coffee and a good strong coffee like they do here in Australia. Seven Miles Coffee Company. I've seen you guys everywhere.

I think I'd read you've you're you're being brewed now to like 700 and something cafes around. Is that Australia or New South Wales alone? Seven Miles Coffee Company has three companies underneath it. Seven Miles Coffee Roast has been one of them.

We've got a thousand wholesale cafes all around Australia, so we sell into other cafes. We also sell online direct to customer and have a couple of our own cafes. And then we also have Padre Coffee, which is more of that speciality end of coffee. And they also have wholesale and retail cafes and online.

And then we have a coffee equipment business that sells automated coffee equipment into companies like 7-Eleven and you know, really big companies across Australia. So lots of different companies, but all really passionate about coffee, which is kind of amazing. Now, talk to us a little bit about your journey because, like I touched on earlier, with some of the companies that you worked at, Kathy, it looks like you're attracted to that real fast-paced hospitality and food sector.

So tell us a little bit about that. What attracted you to some of those brands and sectors and talk to us a little bit about your uh your career. So literally, I actually started my background was in operations. Uh I worked in Maccas in the UK for many years, finished up as an operations consultant in London running eight stores.

The reason I got into people and culture is because I got really frustrated that they couldn't do their jobs because I didn't understand they were coaching me to try and get me to kind of make decisions rather than tell me what to do. And I used to be like, why don't they just say what the outcome is, right? Yeah. But I also got really passionate about people and the difference that having great people could make to a business, right?

So, and actually developing those people and helping them grow. And so that's why I got into people and culture or HR. And so because my heartline started in customer-facing, you know, uh food businesses, it just was natural to kind of go into that world when I started in the people and culture business department, and I I've kind of continued that. And I think it there's often really down-to-earth and engaged team who just want to do well.

And and often you find in in in a lot of businesses people don't invest in in the people in those types of businesses. And I think when you actually do the difference you can make in things like turnover or development in the business, it's actually massive. And I just get really excited about you know doing those kind of things and and really making a positive impact on people's lives by doing that. Yeah, and it's it's such a cool sector as well, because I guess from a workforce perspective, and you touched on it as well with your back is days, is you know, you're essentially supporting the early career workforce school leaves, some people maybe even in school, it's a part-time role, right through to the to the lifers who've been there and and continue to work in these sectors throughout their career.

So I think that's that's really cool. It'd be very silly of me not to talk a little bit about MA and private equity as well, not to sort of throw a bit of a curveball from our side, and I feel like over the last couple of years, private equity has just seemed to have gotten more and more aggressive with with MA across all sectors, but in particular some of the sectors that you've operated in. By the time we get the the news article or the announcement in the media, I'm sure there's months and maybe even years of work that goes on behind the scenes with some of these some of these deals.

And even behind all that, I know that there is a lot of hours and HR power that goes into getting a lot of these deals done. So I guess talk to us a little bit about that, Kathy. I know you've been on the MA side quite a bit working in companies that have been acquired by P or or or whatnot. So yeah, talk to us a little bit about that background.

There's the P acquisitions and the due diligence that comes with that, but and also then mergers and acquisitions when you bring in a couple of companies together or you're acquiring a company, obviously quite a different approach. But I think the things that I'm really passionate about in those kind of environments is a culture fit. So, you know, you do see businesses trying to merge or acquire businesses that have such different cultures, and obviously the assumption usually with any kind of merger or acquisition is that there's some level of integration required, whether that's for integration end-to-end all departments or it's back-end functions, right?

But either of those options actually involves those teams working together, right? And so it can be a real challenge when you've got completely different cultures, completely different value sets, and you haven't really thought about that before you've actually brought the businesses together. I think on the second side, you've got compliance. So due diligence from a compliance point of view is really important, particularly where you're buying small businesses that maybe have flown in the radar, you know, maybe aren't compliant from a wages point of view, and then you make assumptions around the EBITDA or potential savings or future earnings that you're gonna get from that business without really understanding that you're actually gonna have to lift wages.

And then obviously it's always a hard path, particularly in a private equity environment where you've made an assumption of where you're gonna get to, and then you you realize that's wrong after the path. Then, you know, I think the other thing is is that that mix between, you know, is it really a merger or is it an acquisition, right? Because if it's a merger, you really need to approach it post-sale in that way, right? Look at both businesses and how you do things in both businesses and pick the best option rather than just having one business that's imposing change on the other, because fundamentally the second one there is an acquisition, it's not emerging.

And that really affects culture, right? Because if you're literally going in and taking over the business and changing everything, then you're disengaging a whole team of people. We need to do that, right? So how you make those changes in the right way, considering both businesses, bringing everyone on the journey is really, really important to get to the point that you're trying to do with a with a really combined business to whatever level you're intending to do that for.

And you talked a little bit about there, I guess, about what goes on behind the scenes and the different streams, I suppose, that that are important. From your experience, Kathy, what have you seen go wrong, or where do you see some of these MAs go wrong? So usually it's either on culture or due diligence. I think due diligence, sometimes without intent, isn't necessarily wrong without with involving the people and culture team.

And so the people who are running it don't necessarily kind of detail that sits behind awards and rates, penalties, and and obviously some industries are really heavy in that. So just involving people and culture early to do that analysis and make sure you you know you've really understood the value and the cost of the business is is essential. So I've seen that done well and I've seen it not done well. Yeah.

For best intent on both sides, but it's just an awareness thing more than anything. Yeah, 100%. And even on that, we'll say, for example, in an organization that's going through change, you know, whether it's on the merger side or the acquisition side or the divestment side, I'm like, I would assume that in an organization that's been told, hey, we're about to be taken over, you're probably going to see more of this specific risk. But um, how do you actually retain talent in those kind of processes?

Because I'd imagine it creates a lot of uncertainty, and that can be a big trigger to people to look at alternative opportunities. People may hang on for redundancies too, I guess. But uh yeah, talk to us a little bit about that. I think the important thing is obviously once it's out there and people know, because as you mentioned earlier, a lot happens before behind the scenes, then it's it's getting out there and spending time and having FaceTime with the team, right?

Understanding who the key talent are and obviously spending a bit more time there, but under taking the time to understand the business from the team's point of view, listening to what their concerns are and answering as many as you can as soon as you can, and just being available and present because it's all unknown. And people get scared by change, right? Like uh, they may not need to be if you just understand what's happening in the background on day one, right? And that's the really the key, building relationships like anything.

Once you have the relationship, they can ask the question and you can answer it and hopefully fix the problem. 100%. Yeah. I mean, we see it all the time across all facets of HR, but you know, whether it is an MA or whether it's you know purely an organization restructure, the communication side of things is is always quite interesting and how organizations approach this.

I mean, I know we've seen or heard in the media, like what's happening in some of these big tech companies, these big global US tech companies, where you know, you you get you simply get an email or a text message to let you know that your job's done, thanks to you for the last 10 years, and off you pop. But then you you you hear of it done really well in other organizations where there is that trust built with the business and HR and the workforce so that when it does get announced, there is a bit of a a playbook to follow when everyone feels like they're they're involved and they're communicated with.

Obviously, not an easy thing to go through, but you know, if you're if the communication is right and you know what's ahead and and how to plan for it, I think that definitely helps. What's one thing every CEO should think about before signing the on the dotted line, Kathy? And again, I'm sort of asking you to put on your MA HR hat here. Have they asked the right questions?

Have they involved the right people in the decision? And have they realized the time and effort and potentially money they need to invest in the short term to really make the merger or acquisition successful to get the outcomes they want for the long term. You touched on it quite a bit in the earlier part of this chat around culture, which I know you're a huge advocate for, and rightly so. Talk to us a little bit about that.

So, you know, let's just continue to use maybe the the MA examples that we're we're touching on at the moment. A business is acquired, you know, you're brought on, or you're already there as say the head of HO or the CPO, because obviously that business, in most cases, they're looking to grow and scale. How do you actually protect the culture and continue to build the right culture in that kind of environment? I think the first thing is to understand the business, the culture of the people, right?

Because a lot of, you know, if you're in a bigger company, you've got values or you've got many VP and you've got you've got all the things that tell you fundamentally what sits behind the culture of that business. In a small business, you often you often don't have that, but you do have a culture, right? So you've got to listen to the team, you've got to listen to the business, understand what it's about, and understand, you know, what their culture is and what's important to them.

And then, you know, where you've got a couple of different businesses with different cultures and values, you've got to understand what's the common ground, right? Where does it connect? How can we talk to that and help build comfort between the businesses to see that there are consistencies and things that you know are the same across both. I think then it's about understanding, well, what's land from here?

What are we trying to do? What's the strategy of the business? What's the strategy of the PE company towards exit usually, and their their expectations, and then look at how that aligns with the culture in the business and where it clashes, right? Discuss it with the ELT, discuss it with the private equity, and if there are classic misalignments that are really going to cause issues, be really open about those, be open about the risks of those, the potential costs of those, and try and get to a point where you can get alignment, which isn't going to break the culture, right?

Once you've got that, then understanding whatever changes you want to make, do it in the right way. Like I said, listen to what you know is done in one business, what's done in the other best outcome, and let it be seen that you're not always choosing one or the other. You're really kind of going to what's the best outcome for everybody. And when you want to roll it out, engage keep the influencers in the businesses to do it with you, right?

Like so that you're doing it well. And the most important thing is don't overcomplicate things, right? You know, you don't need to go full corporate like policies. It's about what do you need at this stage and what are you going to need at the next stage, and how you're working on that in in the right, you know, at the right speed to be able to come on the journey.

I will ask for a number of reasons, but it's also in your job title, so I have to ask. Head of people, culture, and impact. Talk to us a little bit about that whole culture piece and more when it came to you know, seven miles. Obviously, you've come into this business and you've made an impact, but what yeah, I guess what does that look like from a P and C perspective?

Well, well, technically the impact in my title actually covers engagement sustainability, so things like carbon assessment, modern slavery, all those kind of things. It's been kind of cool. I've not done that before. So it's been very cool.

You know, if you look at what is it, four and a half years I've been here, I think it's really been about bringing three businesses that were completely different together under some sort of common framework of culture and values, really, you know, looking at where we sit from the engagement point of view, you know, helping everyone understand, you know, what we can gain from having a truly engaged team or aligned and on the journey, and then working through, you know, clear action plans to actually drive engagement across the business fundamentally.

It's funny because you people talk about engagement and they get really excited about these really funky things, these benefits programs they're going to bring in. But often it's less about that. It's more about understanding what the key frustrations are in the business and removing those. Yeah.

Why would I want to do this? Because this is too hard. And so you kind of start in the people and culture space, but you end up in like all the different departments and what the system problems are, the process issues are, right? Like that are actually just disengaging people and working with the leaders of the business to actually change that and making it easier to find a job.

Interesting is when we talk about the engagement side of things. So many organizations that I've spoken to over the years from a HR perspective or even business leaders, like, talk about engagement, and they just go straight into surveys, surveys, surveys. We'll do another survey, we'll do another survey. And I'm just like, stop what the surveys.

I think you know, the surveys do help 110%. They give you a bit of a gauge on the business. But um, it's like you were saying earlier, just like speak to your people and understand their pains, understand what challenges they're they're dealing with on a day-to-day basis to actually enable them to perform more, to be more engaged and satisfied in their work. And then you look at how you address that.

It's it it does fascinate me sometimes how some organizations they roll out all these big fancy campaigns and programs and benefits and surveys, and they don't address the low-hanging fruit that employees are basically shoving in their face, like this is what we want changed. Like you say, I mean, we do surveys, right? We do that. That gives you a broader view of what everyone's thinking, right?

But it's helping everyone understand that engagement and and the culture of the business actually is owned by everybody, and everybody's responsibility is to share when there's a problem. And then the leaders in the business, their responsibility is to actually listen, do something about it, or be honest if it's something that can't be fixed, and why, right? And so, you know, creating this open environment where people actually, you know, bring things up, the business addresses it, and then that creates trust, right?

And people want to work in a business where they feel hurt, right? That's it, exactly. Tell us maybe one thing, one takeaway, Kathy, for growing organizations essentially, what should they implement earlier than a lot do? Bringing the team on the journey of what you do and what that potentially means for them.

Because, you know, sometimes if you're in a growing organization, you know, things are changing all the time. And get a little uncomfortable with that, right? So if they don't understand what I call the with them, the what's in it for me piece, like if they don't understand that, then it's like, why am I doing this? This is hard, right?

Whereas if they can see, well, the business is growing and this is going to create opportunities for me and other people in the business, this can be an environment where I can stay long term because I love it or I love the team, but I can also grow, because a lot of people say think to grow they need to leave and go get another job and another business. But if you can show them how it's mutual benefit, so that you might do a little bit more effort, but this is where you can go on that journey as we grow, like you can create a really, really good environment.

You look at the flip side, right? If you're in a business that's not growing or the business the results are really not great from a financial, it can't be demoralizing, right? Because you're still working hard and you're never going anywhere, right? So if you if you do the growth in a nice way and bring people and get them excited about what you're doing, then that's really important early.

Yeah. I mean, obviously, it's also important in a small business as you're growing that you everyone's pulling away, right? So if you have performance issues, you address them quickly because it's impacting the business, but it's also impacting everybody else there that you know you want to stay. And just on that as well, I've even been thinking addressing any issues in performance earlier for sure.

I'd imagine recruiting people then that would also be a very unique assessment because I'd imagine when you're recruiting people, you're I guess you're not just recruiting what every other organization in your sector will recruit for, like an ops manager or or a or a you know manufacturing production manager, whatever, that you're actually looking at a bit more of a commercial lens, or maybe even I've spoken to some organizations in that space where they've gone, Shane, I I want someone who also thinks like an entrepreneur, because it's that kind of environment here.

It's you know, you're managing different things, not everything is set up and perfect, so you just have to move and pivot. You're the ideas person one day, you're executing it the next. So I guess my my question really is what does all that look like from a recruitment perspective in those growing businesses? You've got to recruit someone who's excited by change, who's excited by growth, right?

You know, I always say there's two types of people, the ones who really just enjoy doing the same thing every day and doing it really. Well, there's people who get excited by growth. But I think you also need to find somebody. I mean, the the perfect mix I think is, you know, someone who's had some experience in the corporate world, they've seen what structure looks like, but is also not expecting to walk in and get structure because there isn't structure and you've got to build it yourself.

So excited about that opportunity to make a difference and do that. And they've got to be commercial, I mean, particularly in the PE world, right? You've got to be able to think financially, right? Like otherwise it really won't fly.

100%. When you talk about that commercial piece, more specifically, I guess, for you and and the HR profession, what do you mean by that when you say need to be more commercial, particularly in the the the PE and sector? Well, I think that you know, you you see it more across every sector, right? The frustration of HR, right?

That they don't feel like they get a seat at the table and don't feel like they can ever get things across the ground that will drive the culture of the business, right? But fundamentally, I think as a HR person or a people or culture person, A, you've really got to understand the business because you can't really effectively do your job unless you understand how the whole operation of the business works, right? And you've got to be able to talk financially, obviously, even more so in the business world, right?

Because if you can't translate what you want to do into how it will drive efficiency, productivity, deliver return on investment, you won't get a buy-in of CFO and you won't get a buy-in of CEO in in most uh instances, right? But if you can translate, and you definitely won't get a buy-in of PE or the board, right? But if you can translate the thing that you know you need to do from a culture point of view into a financial number, then you know people will go, oh, well, actually then that makes sense, right?

Like we're gonna do the thing, right? I think that does apply to some level in every business, right? The other thing is you actually want to have a seat at the table and making decisions for the whole business as part of the ELT rather than just talking about your function, right? Because culture and people comes into everything.

But to do that, you've got to understand the business and you've got to understand numbers. You've got to be able to talk EBITDA and P ⁇ L, right? You've got to know what's in every PL line and really just understand that and be able to talk what everybody else is talking in all the other departments. Yeah, it was actually quite interesting.

In one of our recent surveys, we surveyed 1,500 HR and tenant leaders across the globe. And what a large proportion came back with was that they felt that their HR function was still viewed by the executive team as a cost center. It was there to essentially save costs. You know, you speak to the organizations of the HR.

Leaders where their function is seen as a revenue generator and a performance generator. It is that. It's actually that commercial piece where they understand the business strategy. It's not just the HR strategy and the metrics, it's they understand the business strategy where the business needs to go and how that financially impacts what they do from a P and C perspective.

And yeah, once you can kind of simplify that, you know, from a HR perspective to your leaders, I think there's definitely a bit more buy-and I think sometimes we fall into a trap of talking the HR language that we're used to talking about, you know, the terminology that we understand, but doesn't mean, you know, F all to the CEO or the CFO who's just trying to look at the PL. That's very true. And and look, I mean, obviously some CEOs are more people focused on, but I think you can you just have to be able to translate into the right language for the right person, right?

I think there's some beautiful stories that, you know, in some of the businesses I've worked in, right, it's great because you have all these multi-site locations. So it's a restaurant or it's a cafe, right? And then you can build this whole story that shows where you've got stability of management, where you've got high performing management, where you've got engaged teams, and marry that up with the financial results of those locations versus the ones where you've got turnover or low engagement.

And and it builds a really great story. It's obviously harder to do that in other industries, but it really shows in numbers form what that's delivering. And then you get buy-in from everyone to go, well, wow, why wouldn't we do that, right? Similarly, maybe even on that or a part two to that is like, why do you or do you well, hey, do you feel?

And if you do, why do you feel some HR teams maybe struggle to influence business decisions? You know, the finance bit is interesting. This isn't only apply to HR teams, it applies to new managers, right? Like it's it's kind of seen as this space over the head, I just don't really understand it.

And I'm never given an opportunity to understand it. You know, uh some of the courses that I've run, you know, around basic financial understanding and PL understanding for the businesses has been the ones where people have come and gone, oh my God, you've just like kind of shown me through the curtain. I really understand how this kind of thing works, right? And but nobody takes the time to go, okay, we need to teach the HR team about PL system financial.

Like, and so in some ways you've got to go in and go, Well, what I want to know, right? So, how am I going to get that information? How am I going to be able to translate? Because it's a little bit scary when you don't understand and how you can make that work.

And so I think it's a two-way street. The business needs to own getting the HR teams across it, but the HR teams need to own their own careers too, with like saying, Well, how do I get this information? And sometimes going and doing an external course is just on the basics of the question. I'd agree with that.

Like it's quite interesting, especially in the more executive search processes that we run when you're speaking with CEO and maybe even you know the border involved, often they'll they'll throw in those buzzwords, the commerciality piece, the influencing piece. But it is, it's all around that like understanding exactly what the business are are looking for, and then you know, having that sort of financial case behind what you're doing or what you're saving or why you're doing.

Going out and and getting qualified is is one area. I think the more traditional route, which maybe you're coming from, which maybe you agree, maybe not, is because you've worked in the operations side of things and you've worked in PE companies, and you know, you've worked in these kind of environments where you've had to be commercial. I think in today's age, AI has just been an absolute game changer. I mean, I know nothing about SEO and digital marketing, but because I've just spent the last couple of years upskilling more and more and more in AI, I still don't really understand SEO.

But I understand it enough to know what I need to do as a business. Whereas before we would just completely outsource it. Now we've been able to manage it all in-house. And the reason I use that example is because I feel like as an aspiring HR leader now, you can just really leverage AI if you're using it the right way to upscale in the more financial side or the more commercial side of how HR works in a business.

The basics are out there, like on the internet before you can get to AI, and AI takes to another level, right? Like I think the information is there, it's just how how do you get it quickly in the easiest way, right? Like I think, but it is so important to understand it and to be able to translate. I can't I can't emphasize that enough.

And I think certainly for me, yes, I came from operations, right? And I, you know, ran the PLs, like, you know, million-dollar PLs. But it was I already knew it before I came in. And I have to say I'm I'm I'm a fan of, you know, looking at HR people who who have had an experience of working in a business and another department too.

I think, you know, you it helps you more naturally kind of build the relationships with the other departments, but also be comfortable to go out and actually work out there because the comments in big companies are often done to give people that experience and it can be really, really useful. But you can do it otherwise. You can literally just just get out there and make sure you spend time in the departments and you understand that to to do that. That's right.

Yeah, you can do it formally by moving into a completely different role in the operations, or you can do it informally by just getting down to the front line more and more and more, or uh out to the operations. We've got a floor, right? Like, you know, nothing's up on you, yeah. Yeah.

I mean, we've got an organization that we've been recruiting for for a long time, and they're a global business. And often they'll favor someone with, I guess, a more diverse, rounded operations and HR background over a traditional HR background. They've just felt that that worked best in their business because of the stakeholders that they operate in. They're a franchise business.

So, you know, a lot of the stakeholders tend to be business owners and and business leaders who've come from the ground up. So that that sometimes works works quite well. One sort of question for you, Kathy, just before I move on to the next couple of questions, is I guess from a one-metric perspective, what would be one business metric every HR professional should know? Clearly, engagement, because in people think engagement is driven by people in culture.

It absolutely is not. It's driven by the leadership of the business and everybody in it, right? So if you don't know how engaged your team are, then you're not gonna do anything about it, right? Other than that, turnover.

Yeah. Because turnover, you know, there's a certain industries where people just accept it as normal. And it costs a business a hell of a lot of money without people realizing it. Which is interesting because I was gonna ask you a little bit about that side as well.

Hospitality is a sector, you know, I I feel like there's been a lot of challenge in the sector over the years, but you know, and I'm telling you stuff you already know, but we've gone through COVID, lockdowns, and pandemics, and you know, now we're going through wage increases and other complexities in the economy. You know, why do you feel like hospitality continues to have a little bit more turnover than other sectors? Like, why do you think businesses are losing some of their good people?

There's a couple of key obvious ones, which is obviously the low-paid sector. So people kind of you know looking to grow their wages and everybody is these days with their cost of living, right? Like, so people tend to move in different into different industries to see a career path in hospitality. Which is kind of hard if you're in a small business to to offer them, but definitely you can in a bigger business.

I think the other thing is it's just accepted as normal. Um and people don't believe they can change it, right? Which I fundamentally disagree with, and they don't understand the cost of it and therefore why they would want to change it. So you kind of have to start with helping people understand what it's costing them in time and money, and then showing them that it is possible to change it.

And and like I said earlier, in in these big businesses, you can show that, right? Because you can say, well, this location has this turnover and this location has this turnover. So clearly it's not a requirement to have that level of turnover, right? And then understand a little bit around, you know, well, what what do they do versus what do they do?

And so what's what's different, right? What's driving it, right? But it also can be as simple as like, you know, are you just hiring the wrong person in the first place? Because if you're hiring someone who's maybe got great technical and customer service skills, but they just are never planning to stay long term because they're on a work in holiday visa and they're here for three months, or you know, you're hiring someone because you wanted them to do 38 hours a week, but they're actually a student and they'll never be able to do more than 20 consistently, right?

You know, those kind of things, if if if you do that, you you're always going to have people turning over, right? Yeah. Whereas if you can get someone, I always say in the hospitality world, if you can get someone who's a uni student who's just starting their degree, if the location's convenient and they enjoy being there, why wouldn't they stay the whole time they're there? You can get three, four years at them, right?

That's such stability. Yeah. Or, you know, maybe your busy period is lunch times and you're really close to residential areas where maybe you've got mums who are looking for like uh school hours, right? Again, if they get something that works for them that's close to home, why wouldn't they stay long term, right?

100%. So it's about understanding that and and and then working out where you find those people and then creating a great environment for them to work in and and you know, win-win. Love that. Do you find, I mean, I'd found, you know, going to restaurants, cafes, bars, whatever, when the service is really good and you can kind of build that instant rapport with with the employees, with the staff, it almost makes you want to, well, it does make you want to go back there again.

Do you feel like business owners in those kind of hospital businesses, uh are they aware of the impact that that that has, I guess, from a positive perspective, but also a negative perspective? And you know, do they care? That's one of the costs of tenant, but they don't always get, right? Because I mean, obviously the product is important, right?

And people go for the product, whether it's the coffee or the meal or whatever, but they definitely go for the connection as well, right? So, particularly with baristas. So, you know, having that regular person that you just have a chat with every morning, right? You know, particularly you look at all these people who live alone, and that's like their their first interaction of the morning, right?

Like, and you know, it's so valuable in keeping and retaining customers. And when you have high turnover, you you lose that, right? And it's directly impacting your revenue. Never mind the productivity side of it, right?

So I think that connection is essential and to finding people who enjoy that and are going to stay long term, make a massive impact on the business. Yeah, 100%. I'm gonna put the hospitality business owner, had on you down, Kathy. If you're opening up a business tomorrow, a cafe, a restaurant, a bar, you name it, what would be the first, I suppose, retention initiative that you might introduce into the business?

You know, people get excited by the fancy things, as I said earlier, right? But it's the basics. It's it's you know, understand, you know, hire the right people who really want to be there and enjoy what they do, not people who are doing it just because they want the money. It's you know, create an environment where they enjoy coming to work, you know, say thank you when they do a good job, right?

Like listen to what they need from a number of hours a week, etc. And try and give them some consistency, right? You know, care about them, genuinely care about them, not as somebody who's just a number on your PL, right? Yeah.

And you know, get to know them a little bit outside of work as well as inside work, right? You know, just it's the simple things that people actually care about and make them want to come to work every day. Yeah, yeah, love that. You've worked in the sector for a while across different businesses and different products and service lines.

Looking into the future, I mean, not so much a prediction, I'll I'll keep you accountable too, Kathy. So don't worry. It's not like we're recording or anything. If if you could have a crystal ball, I mean, what what do you see the sector looking like in the next 18 months, two years sort of time frame?

And uh first question. Second question is really how do you see HR operate within the sector in in the same sort of time frame? You know, you mentioned a few times that you know the cost pressures within this industry and and and they're really high. And uh so I definitely see more automation coming, right?

Because you know, that we're short of people, um, costs are high, and so if we can save costs and actually deal with the issue of not having enough people, then particularly the cafe sector, I see more automated machines and allowing still that personal connection, but less people needed to do that. But there's a lot of that already, whether it's automated milk machines, automated coffee machines, you know, and I see more of that coming. I'm sure the same would apply across restaurants and and where that's possible, and turning it become more possible, right?

So that that's what I see. But then I see people not just taking jobs away. Some of that will happen, but but invest in that in that people connection that we were talking about earlier, and that really being the differentiating factor because obviously when you've got automated machinery, that consistency is gonna be better, right, over over time everywhere, right? But that connection is the differentiating factor of that.

And that can't be replicated through automation or AI, right? I think the from a HR point of view, what I would hope to see is more investment and belief in people, is that you know, when you look at AI and how it's gonna change industries, it's gonna automate the processes and the logical and the people side of things is gonna be, you know, the thing you can't do that with and how businesses can stand out. So therefore, you should see more investment in people. And that's why, you know, people and culture teams need to be involved in these AI initiatives because people are scared about losing jobs, but it can actually be a positive because we can take away the work that nobody wants to do and and give them the work that we actually enjoy.

Yeah, that's right. You talked a little bit about it there with the AI and automation, and I think we've done really well. We didn't talk about AI much there at all, but uh I love the AI topic, so I did try and promise myself I wouldn't spend a whole episode talking about it. But when you talk about the sector and and where you see it go, I find it quite interesting because in a lot of roles right now, there's a lot of uncertainty.

And you know, I I am in the camp of AI will definitely replace a lot of positions, more so from a responsibilities perspective. I think there's a misseducation or or misunderstanding on the role, responsibilities, and skills. I think that's where people are getting a lot of confusion because they feel, oh, like I'm gonna be replaced. Essentially, your role could be replaced, but I think a lot of roles will evolve.

And I'm maybe just thinking out loud here, but do you see that as an opportunity for hospitality then to look at, hey, we're gonna have all these people coming out into the world of work. Maybe they've worked in tech for the last 20 years and their role is a little bit uncertain. Do you see maybe people like that or talent like that looking at hospitality as a way of you know retaining employment long term? Because especially in a lot of that customer-facing sort of role, there will be a need.

Yes, funny AI. We could talk about AI forever, right? Yeah, yeah. But some of the studies that you've that I've seen, you know, show you know the the percentage of industries that actually could be automated today, although we're not doing it yet, right?

And you know, it's all those customer-facing ones, it's actually really hard to do it. So I do feel that they're gonna become a more attractive industries, whether that's for people coming out of other industries as changes happen, or whether that's for school levers looking at where I should actually go and educate myself in moving forward, which will definitely be beneficial for the sector. I mean, the the difficult part about it is the wage level, right? Like, and so fundamentally that would have to change, I think, for it to be seen as a really attractive sector, and that's difficult.

I think the world of work is going to be turned on its head a little bit, right, over the next five years. So who knows where that could go and and what's really valued in the future compared to what it is now? 100%. It's a very interesting time.

You could say scary, right? Because change is scary, but I think it's interesting, like to see where it goes as long as you're prepared to keep, you know, going and and and learning as you go. Yeah, I'd agree with that. It is an interesting time.

And although, you know, there's a bit of uncertainty, I think, you know, you read the media, which I try not to, but it's traditionally does love to create a lot of a lot of drama as well. I mean, look, I I remember, I know it was only six years ago now, but like during that sort of whole pandemic globally, there was mass restructures and redundancies. And, you know, the the the core reason by a lot of organizations was because of the uncertainty of the virus, which, you know, I think in a lot of organizations, the truth be told, it was the PL and it was an opportunity for them to chop a bit of dead wood if they could.

And then, you know, once the pandemic died off and lockdown opened up, you could see organizations rebuilding their capability. Hiring in Australia went through the roof. Now we're sort of seeing a bit of a rebalance. I feel like AI is going through a similar time where you know what our friends over in the US, you know, there's big tech companies over there that are announcing, you know, we're going to get rid of you know 40% of our staff next week because of AI.

And I'm sure that does have a part to play, but I don't think it's the core reason. I think a lot of companies are maybe struggling financially and they're using it as an opportunity to restructure, or finances are fine, they're just using it as an opportunity to restructure and and and rehire. So maybe we do see a boom like we did a couple of years ago with uh with hiring again, but I don't think it's gonna happen in the next 12 or 24 months, just given the recent budget announcements.

I think the the the right answer is probably jobs are gonna change, right? New jobs will be created and some jobs won't exist anymore, right? But there will be jobs as long as you're prepared to learn and grow. I also think that companies will start doing more investment in retraining over time rather than just cutting a load of people.

Obviously, the some of the newer jobs are obviously very different right now to some of the ones going, which makes that hard, but there definitely will be opportunity. The reality is more that a proportion of jobs will go, a proportion of what somebody does in a job will go and and and new things will come in. That that's the more the reality. But I agree, companies are using it to manage their PL.

Yeah, well, funny enough, when we roll out that survey I mentioned earlier, one of the questions we asked around, you know, what what is your sort of key focus in your organization right now? And you know, these were all participants who were HR leaders and talent leaders, it was retention. Retention was their number one focus. It wasn't we're gonna like replacement or you know, some people did say AI adoption, but it was like how do we retain our best people?

So I think that will continue. But I really appreciate your your time, Kathy. Love the chat. I know we've spoken quite a few times in in recent months and we've bumped into each other at at some of the HR events.

So long may that continue. But um appreciate your time. No worries. Thanks for having me.

I really enjoyed it.