Outsourced HR, Stronger Systems, and Smarter Growth: Lessons from Mike Godwin of Principal Strategies

Running a growing business can feel like wearing every hat at once.

You are trying to sell, serve clients, manage people, solve problems, protect the business, make payroll, keep employees happy, and still find time to think strategically about the future.

For many small and mid-sized business owners, human resources becomes one of those areas that only gets attention when something goes wrong.

A difficult employee situation.
A hiring mistake.
A payroll issue.
A compliance question.
A benefits challenge.
A culture problem that grew quietly in the background.

But according to Mike Godwin, founder and CEO of Principal Strategies, HR should not be treated as a back-office task. It should be part of the growth strategy.

In this episode of Full Throttle Business, Kelly Peitz sits down with Mike to talk about entrepreneurship, outsourced HR, leadership, hiring, systems, and what it really takes to build a business that can grow without chaos.

Mike brings more than 25 years of HR and operations experience to the conversation. His path started in recruiting, moved through HR leadership and operations, and eventually led him into entrepreneurship. After helping build and sell a hospital system, Mike launched Principal Strategies, an HR outsourcing firm serving small and mid-sized businesses, primarily in Hampton Roads.

Today, Principal Strategies supports around 40 clients with a team of about 20 people. Their sweet spot is helping businesses that have grown beyond the “we can figure it out ourselves” stage but may not yet need a full internal HR department.

And that is where the conversation gets powerful.

Because this episode is not just about HR.

It is about how leaders protect their time, build systems, hire for fit, use technology wisely, and create companies that can scale without losing the personal touch.

From HR Professional to Entrepreneur

Mike’s career began in recruiting and human resources. Over time, he moved into operations, HR coordination, management, and director-level leadership before eventually landing in Portsmouth, Virginia.

That move became a major turning point.

He was recruited by Wes Mason, who later became his business partner across multiple ventures. Together, they eventually left corporate life, built their own hospital system, and later sold it.

That experience gave Mike a front-row seat to what it takes to build something from the ground up.

It also gave him a clear view of what many businesses struggle with behind the scenes: people, process, leadership, compliance, and culture.

When he launched Principal Strategies, Mike was able to bring that experience into a new model. Instead of serving one company internally, Principal Strategies could help many businesses access senior-level HR support without needing to build a full department on their own.

That is a major lesson for business owners.

Sometimes growth does not require doing more in-house. Sometimes growth requires knowing what to outsource so your leadership team can stay focused on what drives the business forward.

What Principal Strategies Does

Principal Strategies is an HR outsourcing firm.

That means businesses can outsource some or all of their human resources functions, including areas such as hiring support, benefits administration, payroll support, HR strategy, compliance, onboarding, terminations, and employee relations.

Mike explained that their average client has around 40 to 50 employees, although they serve companies smaller and larger than that. Their strongest fit tends to be businesses with roughly 10 to 70 employees.

That stage of business is important.

At 10 employees, people issues are usually becoming more complicated.
At 25 employees, the owner may be spending too much time solving HR problems.
At 50 employees, informal processes usually start breaking.
At 70 employees, the business needs more structure, consistency, and accountability.

This is often the point where business owners realize they need help.

They may not need a full internal HR team yet, but they do need real expertise. They need someone who understands the legal side, the people side, and the business side.

That combination is where outsourced HR can become a growth strategy, not just a cost.

The Power of Local, Personal HR Support

One of the biggest differentiators Mike shared is that Principal Strategies is local and relationship-driven.

Many HR outsourcing competitors are large national companies. They may have strong systems, but they often cannot provide the same level of hands-on, boots-on-the-ground support.

Principal Strategies is different.

More than 90% of their clients are in Hampton Roads, which allows their team to physically go to client sites when needed. That matters when a company needs help with an investigation, onboarding, a termination, or a sensitive employee issue.

For a business owner, that local presence can make all the difference.

There is a big difference between calling a national hotline and having a trusted HR partner who knows your company, your team, your culture, and your leadership style.

Mike also described how Principal Strategies gives HR managers a form of “skin in the game” through an equity opportunity over time. That helps attract talented HR professionals who are invested in client success.

That is a strong business lesson.

When your team has ownership, they think differently. They serve differently. They take responsibility differently.

Why Referrals Have Fueled Growth

Mike shared that Principal Strategies grew quickly during the pandemic, partly because more companies became open to outsourcing support services such as HR.

But in recent years, growth has been driven heavily by word of mouth.

In fact, Mike said 90% to 95% of new business has come from referrals.

That is both encouraging and challenging.

It is encouraging because referrals are usually high-trust, high-conversion leads. When a happy client recommends your business, the sales conversation starts from a stronger place.

But it is also challenging because referrals can feel harder to control than other lead sources.

The lesson for business owners is clear: referrals are not random when the client experience is intentional.

A strong referral engine comes from:

• Doing excellent work consistently

• Creating a clear client experience

• Asking for feedback

• Building trust over time

• Staying visible

• Giving clients a simple reason to talk about you

Principal Strategies has grown through relationships because their work is relationship-based.

That is not an accident.

Marketing Still Matters, Even When Referrals Are Strong

Even with strong referrals, Mike shared that Principal Strategies is investing in marketing.

The company is using social media support, especially through LinkedIn and Facebook, to build visibility and strengthen relationships. Mike admitted that LinkedIn had been something he ignored for years, even though he already had more than 1,600 connections.

That is a common issue for many business owners.

They have networks, but they are not using them strategically.

They have relationships, but they are not nurturing them consistently.

They have credibility, but they are not turning it into content, conversations, and opportunities.

Principal Strategies is also testing an AI-supported email campaign. Mike explained that the campaign uses publicly available business information to make outreach more relevant and personalized. Instead of sending generic “salesy” emails, the approach references specific interests, activity, or business context.

The result has been stronger response rates than a typical direct email campaign.

But Mike also made an important point earlier in the conversation: AI may give an answer, but that does not always mean it gives the right answer for your business, your employees, or your situation.

That is an important distinction.

Technology can support your business.
It should not replace judgment.
It can create efficiency.
It should not erase the human element.
It can help with information.
It cannot fully understand your culture.

For HR especially, the human layer still matters.

The CEO Balancing Act: Working In the Business vs. On the Business

Kelly asked Mike how much time he spends working in the business versus on the business.

Mike said he is currently around 50/50.

That is a strong place for many entrepreneurs, but he also acknowledged what most business owners feel: they always wish they spent more time on the business.

Working in the business includes things like closing deals, handling client issues, visiting client sites, and solving operational problems.

Working on the business includes strategy, acquisitions, long-term planning, senior team development, systems, and future growth.

The goal for every business owner is not to completely eliminate working in the business. The goal is to make sure the business does not depend on the owner for every decision, every client, every sale, and every fire.

That requires systems.

It requires leadership.

It requires team development.

And it requires the discipline to step back and build the business while still serving the business.

Hiring for Fit, Not Just Skill

One of the strongest parts of the conversation was Mike’s view on hiring.

Like many businesses, Principal Strategies faced a talent challenge as they grew. At first, they could hire through known relationships. But eventually, they had to advertise and evaluate candidates outside their immediate network.

That raised one of the hardest questions in business:

How do you know whether someone is the right fit?

Mike explained that talent and potential are often easier to evaluate. You can see experience on a resume. You can assess skills in an interview. You can identify potential through conversation.

But fit is harder.

And for Principal Strategies, fit is critical.

Mike shared that they sometimes take candidates to lunch and pay attention to how they interact with servers, bartenders, or waitstaff. The point is not to create a trick. The point is to observe character.

How people treat others when they do not think they are being evaluated says a lot.

That is a valuable hiring lesson for any business owner.

Skills matter.
Experience matters.
But character and culture fit determine whether someone strengthens the team or damages it.

Kelly added an important point: many business owners say they hire for culture, but they have not clearly defined their culture.

That is where the real work begins.

You cannot hire for culture if your culture only exists as a feeling. You need to document it. You need to define it. You need to know what behaviors support it and what behaviors violate it.

Systems Create Freedom

Mike shared that Principal Strategies has been very deliberate over the past two years about streamlining processes.

Even as a boutique firm, they still need systems.

That is an important business principle.

Boutique does not mean chaotic.
Custom does not mean inconsistent.
Personal does not mean unstructured.

Mike explained that there is still a process behind determining what a client needs, making recommendations, and helping HR managers serve clients well.

That is how a business scales.

You do not systematize to remove the personal touch. You systematize so your team has more capacity to deliver the personal touch consistently.

As Kelly said during the conversation, systems run businesses.

Without systems, the owner becomes the system.

And when the owner is the system, the business eventually hits a ceiling.

Measuring What Matters

Mike also shared how Principal Strategies uses metrics and KPIs to guide growth.

They set goals around revenue, profit margin, growth, and client satisfaction. One practical example is their monthly client feedback process. Every invoice includes a SurveyMonkey link asking clients for feedback.

That gives the company a consistent client satisfaction metric.

Mike said they hover around 4.5 out of 5, and while that is strong, they still want to improve.

That mindset matters.

Strong companies do not only measure money. They measure experience.

Revenue tells you whether people are buying.
Profit tells you whether the model works.
Client satisfaction tells you whether the business is earning trust.
Feedback tells you where to improve.

For service businesses, especially, client experience is the product.

Leadership: From Transactional to Servant Leadership

Mike described how his leadership style has evolved over time.

Earlier in his career, he was more transactional. He had learned how things should be done and often pushed in that direction.

Now, he describes his leadership as more transformative and servant-based.

He takes more feedback from employees and clients. He uses that feedback to shape the direction of the company. He believes that serving employees well leads to clients being served well.

That is one of the most important leadership takeaways from the episode.

A business owner cannot personally take care of every client forever. At some point, the client experience flows through the team.

So the leader’s job is to build, support, train, and empower the team.

When employees are supported, clients feel it.

When employees are confused, clients feel that too.

An employee-first mindset is not soft. It is strategic.

What Business Owners Can Learn from Mike Godwin

This episode is packed with practical lessons for business owners who want to grow stronger, not just bigger.

Here are the biggest takeaways:

1. HR should be proactive, not reactive

Do not wait until there is a problem to care about HR. Hiring, compliance, employee relations, benefits, payroll, and culture all affect growth.

2. Outsourcing can be a growth move

You do not have to do everything internally. The right outsourced partner can give you expertise, capacity, and confidence.

3. Local relationships still matter

In a world of automation and national platforms, personal service can still be a major differentiator.

4. Referrals come from trust

Word-of-mouth growth happens when clients believe in the experience enough to share it.

5. AI is a tool, not a replacement for judgment

Use technology to improve efficiency, but do not remove human expertise from people-centered decisions.

6. Culture fit must be intentional

Do not hire for an undefined culture. Write it down. Define the behaviors. Hire accordingly.

7. Systems create scalable service

The more clearly your business operates, the easier it is to grow without breaking the client experience.

8. Leadership must evolve

The leadership style that gets you started may not be the style that helps you scale.

Why This Conversation Matters for Hampton Roads Business Owners

For local businesses in Hampton Roads, the conversation with Mike Godwin is especially relevant.

Many growing companies are big enough to need HR structure but not big enough to justify a full internal HR department. They need help navigating hiring, compliance, payroll, employee issues, benefits, culture, and leadership challenges.

At the same time, business owners want support from people who understand the local market.

Principal Strategies has built its model around that need.

They bring professional HR expertise with a local, personal, boots-on-the-ground approach. That combination gives small and mid-sized businesses access to support that feels practical, responsive, and connected.

For any business owner trying to grow, the message is simple:

You do not have to carry every operational burden yourself.

The right people, systems, and partners can help you build a stronger business.

Final Thoughts

Mike Godwin’s story is a reminder that growth does not happen by accident.

It comes from experience, relationships, smart delegation, strong systems, intentional hiring, and leadership that keeps evolving.

Whether you are dealing with HR challenges, trying to build a better team, or simply realizing your business needs more structure, this episode offers a practical look at what it takes to grow with confidence.

And if you are a business owner who feels stuck in the day-to-day, this is your reminder:

You do not need more chaos.
You need better systems.
You need the right team.
You need a plan that gives you room to lead.

Ready to simplify HR, strengthen your team, and build a business that runs with more confidence?

Book a Strategy Session today and let’s build a plan that helps you grow at full throttle.

FAQs

What does Principal Strategies do?

Principal Strategies provides outsourced HR support for small and mid-sized businesses. Services may include hiring support, payroll support, benefits administration, compliance guidance, onboarding, terminations, employee relations, and HR strategy.

What size business is a good fit for outsourced HR?

Mike shared that Principal Strategies often works well with businesses in the 10 to 70 employee range, although they serve companies both smaller and larger than that.

Why would a business outsource HR instead of hiring internally?

Outsourcing HR can give a business access to experienced support without the cost or complexity of building a full internal HR department. It can also help owners reduce risk, save time, and improve people processes.

How can business owners hire for culture fit?

Business owners should first define their culture clearly. Then they can evaluate whether candidates demonstrate the behaviors, values, and character traits that align with the company.

Why are systems important for business growth?

Systems help businesses deliver consistent results. They allow teams to operate with clarity, reduce owner dependency, and support scalable growth.