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PTO Exchange w/ Rob Whalen




Karen Mangia

In this Success from Anywhere blog, we'll discover how hosting a steak dinner became the intermezzo in a high-stakes startup. This founder’s entree into entrepreneurship is addressing a 1 trillion dollar gap between employers and employees. Rob Whalen, CEO and co-founder at PTO Exchange is the expert on the matter. Welcome, Rob.

Rob Whalen

Hey, Karen. Thanks for having me.

Karen Mangia

Thanks for speaking with me. I like to ask every guest: What was your first paying job? And how did that job inform or inspire your career trajectory?

Rob Whalen

My first job was at 11 and a half, and I had a paper route. It was for the Seattle Times. So it was the afternoon delivery. Every day after school, I'd get off the bus and go to the paper shack, get my papers, and deliver the documents to the neighborhood. And then, at the end of the month, I'd have to go and collect money.

Karen Mangia

When you own a business, like you do now, collecting is a valuable skill.

Rob Whalen

It is a valuable skill. It's one of those nobody likes to do, but it's how you make money. I did that to pay for some things I wanted to do personally.

Karen Mangia

I can relate, I built a babysitting empire, and part of the upside was money for the things your parents would not fund for you.

Rob Whalen

And that's exactly it, right? I grew up in a family of nine; I was seven out of nine. And so, there just was a little to go around. I had a lot, don't get me wrong. We had a lot in the family, but going skiing or buying a particular bicycle needed to be within the budget. So I went out and worked for it to afford those things.

Karen Mangia

You and I share the title of being emeritus employees of Cisco, the technology company. What inspired you to step out of the enterprise space and into the entrepreneurial space?

Rob Whalen

Prior to joining Cisco, I started at WebEx first, and then Cisco bought WebEx. But prior to that, I had started a couple of companies in the software business, and one of them was successful. We sold it. The other one went down in flames. Not in flames, but we wound up selling the technology. We didn't make any money off of it. And then I would go to work for great companies like Cisco. But I always have had this side hustle part of me that said, “Hey, you need just to solve problems.” And that's really what I'm good at, solving problems. And so, entrepreneurship is all it ever is, solving problems. This opportunity came, there were a couple of us that had left Cisco, and we got this payout. And mine was somewhere in the $30,000+ range because I had 280 hours of PTO. There were 14 of us. And then one of the others said, “Well, wouldn't it have been nice if we could put it in our 401k while we're there or used it?” And that's when the light bulb moment came. And then we just said, “I wonder if you could do that?”

Karen Mangia

Say more about the problem you're solving. We've been discussing the gap between what employers offer and what employees expect. And you saw a series of problems for employers and employees to solve on both halves of that equation. And this problem you're solving has a significant financial impact on all humans gathered around that equation.

Rob Whalen

It is. One of the things that I brought to the table was my accounting background because I graduated in accounting. So, I understood what was going on in the balance sheet and how PTO was accrued, and then it sat on the balance sheet as a liability, offset by cash. But it grows over time, which is interesting, and people need help understanding this part. I accrued my wage at $30,000, for example. I accrued PTO that year, rolled it over the next year, and made $40,000. The company has to make a journal entry to true-up those hours. So, it becomes a growing liability for the enterprise or the company itself. But on the other side, the employee side, there are policies in place, like sometimes you can only roll over a week. But you had two weeks and lost a week you didn't take off. And you, as a good employee, worked that time but didn't get paid for it. And so, we saw this disconnect in how PTO was being leveraged. Here is the idea. You can give more control to the employee if you allow them to do more things with that benefit dollar, like allow them to put it in their 401k or pay down student loans. That dollar now has a more significant effect on the company as a retention tool or attraction tool. And we're finding that that is the case when put into action. That's the two-sided problem we're solving right now.

Karen Mangia

When I first interviewed you for Authority Magazine, this concept was mind-blowing. Your PTO can work the way your health savings account does. Say more about the options you've discovered that people value or prefer traditional PTO hours.

Rob Whalen

Well, the number one thing people like to do is just cash it out. They want the cash, period. People like to get cash, extra money. And in today's world, where almost 65% of your workforce doesn't have $400 in their savings account, yet they have roughly $1,500 in their PTO account, accessing that cash is a significant benefit. Employees use it to bridge cash gaps so they don’t have to tap into their 401k, go to a day lender, or even do the earned wage access. In this model, employees front their cash flow. Cash-out is the number one thing. The next one is financial wellness—student loan repayment or paying down your student loan debt. Or you put it in your 401k or your HSA. These employees can't just put $22,000 in their 401k every year. So, if they put an extra $500 in there, it goes a long way for their future because it gets the compounding interest and all the tax benefits. And one of the things we have learned about this is every benefit dollar is not created equal. A dollar to your 401k is more advantageous than just cashing it out because it's going into pre-tax dollars. Same with HSA, you get the triple tax benefit. You need to start thinking about how you use these dollars to set yourself up for better financial wellness, which helps you live your life better downstream.

Karen Mangia

I hear you say that helping people build financial acumen is part of what the PTO Exchange is doing. Say more about what organizations could be doing to improve financial acumen.

Rob Whalen

Companies today need to look at the total benefit dollars that they're allocating to their employees and understand, one, what is their engagement and uptick? How many people are taking advantage of them? And then understanding where their employees are in their financial lifecycle. And I know this takes work for an employer, but when they do it, they can match their benefits with their employees. And having a benefit that is flexible enough to meet the needs of a multi-generational workforce is extremely important in today's world. It's important because a person who is 50+ has different needs than someone who is 24 coming out of college with debt. Or the woman or man with a family and two children at 32. They're all different, and everyone is different.

Karen Mangia

You're poking holes in this prevalent myth or misconception that personalization at scale is expensive or almost impossible. And you just outlined a way to meet your employees where they are at every age and stage and offer what people most want, which is flexibility and choice. And to paraphrase, choose what benefits them relative to where they are. I interview a lot of employers who are perplexed and trying to drive adoption programs to get employees to utilize their PTO. What kind of adoption statistics do you have? Does this change the uptick or utilization by employees of the PTO hours they're given?

Rob Whalen

Yes, it does. It will increase the utilization of the PTO dollars. Some clients don't want that because they make money on unused PTO. We have an employer type that will say, “We make money off the backs of our employees not using their PTO because we have a use-it-or-lose-it policy.” We're finding that far less as we grow our business and our idea starts to scale. But what we find most interesting is how specific plans affect your employee population once you turn them on. Roughly, we get around 27% to 28%, depending on the engagement plans, on our platform from the employee community. But a lot of them are the rank and file. A lot of them are the ones trying to bridge that gap. It's not the executives; they don't need the money. They don't need those types of things sometimes. But the rank and file, they need to be able to cash out to make rent or pay down their student loan. They're looking and saying, “I can't afford to take 3% of my income and put it on my 401k. But if I could use a week of my PTO, I can get there,”—those types of things.

Karen Mangia

Speaking of executives, I read that you offer the option, in some cases, to donate your PTO hours to other employees or convert it into a not-for-profit donation, which seems appealing to any number of executives.

Rob Whalen

Those are the areas of the product or the plans of the product. You do get an uptick from the executive—the ability to take your week and give it to a nonprofit. And if your company has matching dollars, receive those matching dollars. We have that capability. We integrate directly into the IRS database of 501c3’s. So, we have 1.9 million you can give to, and we have a complete giving and matching platform running behind it. And we have some of our clients that use that. It doesn't get used as much as I wish, but you can share your time with another coworker who's in need. And this was used in COVID a lot.


We had a lot of companies come in and turn this on. During COVID, say I took all my PTO, and now my parents have COVID. And I need to take time off because I have elderly parents. I need to take time off to help care for them. Well, the ability for an employee to say, “I didn't get COVID and I have extra time to give another employee that is struggling, or I can put it into a sharing pool that can be dispersed to others,” becomes a fulfilling aspect.


We have seen many executives utilize this option because they get a lot of time off: “I have six weeks and will donate that time or four weeks into the sharing pool at my pay rate as an executive.” And it has a monstrous impact on the rank and file because the rank and file don't make that much. So, they'll get 40 hours at their pay rate compared to the executive. We had one CEO, who said after he donated, and this was after a hurricane in Florida, who said that when he signed up for the platform, he didn’t think it would affect his culture. And what happened was the hurricane occurred, and many people, mainly the rank and file, needed help. He donated six weeks of his time, which impacted almost 70 people in his company. And he did it anonymously. But somehow, it got out that he had done this. And he was getting all these thanks from his employees for sharing that most intimate thing, which is time that he accrued. And he said, “Boy, now I'm in the foxhole. They know I'm with them.” It just builds a different culture and community. When the executives come down to that level and say, “Thank you, we're here to support you.” And that's just one of the things that occurred. If executives did more of that, I believe that their companies would be behind them more, and they wouldn't have such bad gradings.

Karen Mangia

And what a great example of how to build employee trust, rapport, and loyalty authentically and genuinely. One of the genius aspects of what you've built is that you've challenged the idea that something that we think is fixed could be flexible. What would happen if we all looked around our organizations at these various aspects of culture and leadership that we believe to be fixed and challenged ourselves to think about how those principles, policies, or core values could become even more flexible?

Rob Whalen

I agree 100%. And that's what organizations must do, especially when you have to come into the office in the flexible work mode, where you're working from home. Working from home is a great company benefit. It's great if you have families that must be home at certain hours to get the kids and all those things done; it’s terrific. But a company does miss out on building its culture if people don't come together to collaborate, unify, and have relationships. Relationships in a company drive innovation and are the best outcome for a company. Work-from-home or work-from-office, you have to have a little above; it can't be one or the other. And so all those fixed things need to be reconsidered to benefit both the company from a cultural standpoint and the employee from a quality of life standpoint.

Karen Mangia

Many reading this might be leading or are employees of organizations with Unlimited PTO. What would you say to them? Does this make what you offer the PTO Exchange irrelevant? If I have Unlimited PTO, do I have anything to trade? How does that work?

Rob Whalen

First of all, let's say where Unlimited came from. Unlimited PTO is the unintended consequence of a poorly written law in California. And what companies started to look at is how we get around this because companies are very good at finding ways to be profitable. And they said, “Well, let's not accrue it. So, we don't pay it out when we terminate an employee, or they leave. And it only grows over time in our books.” Okay, so financially, it's a significant impact to them. And that's how it started. “Hey, let's just not accrue it. If it didn't get accrued, it didn't get earned. We don't have to pay it out. Let's call it Unlimited.” The other thing I dislike is that it doesn't build equality. And I'll tell you why. I'm an executive. My hours are more relaxed. They don't have to be there; I can take more time off. Or I'm an engineer, and I've already finished my project. I'm fast at it; I can take as much time off as possible. But the person down the way, maybe a secretary or someone always on call, can't do that.


We just did a study showing that Unlimited has this burnout flavor. It builds this inequality into the workforce because each manager decides who gets to take time off and how much, instead of you getting three weeks, right? So, if you're going to do Unlimited, it has to be a stringent policy, and it has to have a lot of guidelines. There needs to be training around it, period. When I look at my paycheck and see three weeks, I know I got three weeks of PTO. Instead of this, looking at your paycheck, I have Unlimited, and I wonder how much I can take off. There are many people, usually the rank and file, the diverse group, that says, “I don't want to risk my job by taking time off.”

Karen Mangia

It's an extension of Brene Brown; “unclear is unkind.”

Rob Whalen

Absolutely.

Karen Mangia

It could be a workplace equity issue if somebody feels like, “I'm the boss's favorite, I'm high enough up,” or whatever the scenario might be, “I'm comfortable taking as much time as I want under this policy.” And somebody else might say, “I don't know where I stand, and this could be held or used against me. So, I better never take a break.”

Rob Whalen

If you're different or feel different, whether you're African American or LGBTQ, any of these minorities, you already feel like you're under the gun. And so, if it's not explained to you how much you can take, you don't feel like you can because all you're ever doing is trying to come out from underneath your differences, which is very difficult. And so, Unlimited builds huge inequalities in workforces.

Karen Mangia

As we're talking about culture, training, and benefits, I'm curious, from your point of view, what is the most important trend to watch or what you believe every HR leader and Benefits Administrator needs to know right now to be more effective in their role?

Rob Whalen

The change is rapid now—many CFOs discount HR, which I can't stand. But HR needs to be looking at all the technology changes that are going on in the world, meaning around AI, crypto, and tokenization. And how will that parlay into the world of benefits and HR. It will come quickly, and some of those things will add incredible flexibility and capabilities for HR to deliver benefits and value to employees. I think like any person who's in HR or technology. You always have to be reading about the future because it is closer than you think it is. It is.


Who would have thought about AI two years ago? And now it's exploding, and it's taking jobs. And now you hear IBM saying, “We will remove 7000 jobs because we can do it in AI.” HR needs to be very proactive in learning and educating themselves in these areas that may seem outside of HR. But they aren't; they are not because HR are the ones who manage 70% of the expense of the organization, which is the people. So, people are your most expensive thing. And how do you keep those people happy? How do you educate those people to be better resources and grow the company's bottom line?

Karen Mangia

What is one piece of wisdom or advice you would offer entrepreneurs, intrapreneurs, or aspiring people in that direction?

Rob Whalen

One? Don't do it.

Karen Mangia

Oh, I hope your investors are not reading this, Rob.

Rob Whalen

No, I'm just kidding. I am a believer that without risk, there's no reward. And I'm a big believer that you have to jump off the cliff. And I know it's tough. You have to do hard things. And the most challenging thing is looking at yourself in the mirror. If you find a problem you want to solve, go after it, and don’t ask for forgiveness. Don’t ask for someone to say it's okay. I think everyone's looking for someone to say yes. And if you do this, you must remember that the world will be all about saying no, not yes. Nobody believes it can be done. Nobody believes in your business. And in turn, you have to almost kind of disengage yourself from that.

As you know, you're just solving a problem. It's tough, really hard. And I'll give you an example. My wife did not want me to do this business.

Karen Mangia

Well, everyone wants to know if you're still married now.

Rob Whalen

I've been married for 33 years. But sometimes, you just have to go against the warning, even from those closest to you, to make a point and solve the problem. Now today, she's happy, right? Because it all worked out. But when you're married to an entrepreneur, it's not an easy life. But she knew that.

Karen Mangia

Normalize “No” and celebrate the occasional “Yes.” Takes the sting out of the “No.”

Rob Whalen

Yeah, we celebrate every little “Yes”. There it is.

Karen Mangia

We like to imagine that we're gathered around this virtual water cooler for that old-school spontaneous chat that used to happen. And what I like to do is ask guests just five quick questions. You say the first thing that comes to your mind. It helps everybody get to know you a little bit as a person.

Rob Whalen

Great.

Karen Mangia

What time of day do you do your best creative work?

Rob Whalen

6:00 a.m.

Karen Mangia

And speaking of time, imagine every day now has 25 hours instead of 24 hours. What are you doing with your extra hour?

Rob Whalen

Working!

Karen Mangia

I hope your wife is paying attention. He's making good on his promise. All right, what would you eat if you had to eat one meal every day for the rest of your life?

Rob Whalen

Sushi.

Karen Mangia

Oh, I love it! Now the zombie apocalypse is coming. Who are the three people on your team?

Rob Whalen

My wife, my current two partners.

Karen Mangia

Awesome. You're in good company. And how can people learn more about you and your company and stay connected?

Rob Whalen

You can visit us at ptoexchange.com or follow us on LinkedIn or Twitter. That's the best way to get a hold of me. You can just reach me at info at PTO Exchange; it comes directly to me. That's how you can learn more about us.

Karen Mangia

Rob Whalen, CEO and co-founder at PTO Exchange, thank you for giving us your insights on Success from Anywhere.


Because success is not a destination.


Success is not a location.


Success is available to anyone, anytime, anywhere.


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