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Hosts Stacey Harris and John Sumser discuss important news and topics in recruiting and HR technology. Listen live every Thursday or catch up on full episodes with transcriptions here.

HR Tech Weekly

Episode: 250
Air Date: January 23, 2020





Important: Our transcripts at HRExaminer are AI-powered (and fairly accurate) but there are still instances where the robots get confused (or extremely confused) and make errors. Please expect some inaccuracies as you read through the text of this conversation and let us know if you find something wrong and we’ll get it fixed right away. Thank you for your understanding.

John Sumser
Stacey Harris


John Sumser 0:14
Good morning and welcome to HR Tech Weekly, One step closer with Stacey Harris and John Sumser. This is our 250th show. Hey, Stacey.

Stacey Harris 0:23
How are you doing? Hopefully, wherever you’re at.

John Sumser 0:30
It’s cold and gloomy here but cold and gloomy here means it’s 50.

Stacey Harris 0:34
Yeah. It’s 24 in North Carolina, which isn’t as bad as Ohio, which is at negative one is my understanding.

John Sumser 0:43
Oh, yuck. Yuck, yuck, yuck. Yep. Yep. Yep. I was in Chicago accidentally for a couple of days and I remember why I don’t go there in the winter.

Stacey Harris 0:53
And what were you going for this week? It’s been a busy couple of weeks with both the news and the work we’ve been doing.

John Sumser 1:00
I have a new client and so I went and spent a couple of days with a new client and dug deep into how they see the world. It’s always an interesting thing to start working with so. So that was the big deal. Mostly it was Chicago and it was cold.

Stacey Harris 1:16
My week was in Atlanta so I can’t complain. It was much better. So it was nice and warm and all internal meetings, so yeah.

John Sumser 1:23
So, what’s in the mailbag?

Stacey Harris 1:24
Well, it’s busy, but they’re different busy, right, like normally there’s a lot of moving and shaking. I think at this point, time, money. And the best thing we felt a little bit of that last week, but I was sort of expecting a little bit more to hit the ground. In this January, we got some interesting news about particularly the SMB HR space for that small medium sized business, which oftentimes doesn’t get as much attention as the large guys do. Right? But paychecks had an interesting fun month where they got listed on Fortune Magazine’s 2020 Most Admired Companies. That’s an interesting one for an HR tech company. We get a lot of times on those best places to work and you know, fastest Growing those kind of things, but the most admired so that’s that’s kind of interesting to talk about paint calm, which is another small medium sized business HR and payroll provider just got listed with the s&p 500. So they’re gonna replace somebody called welfare their shares up by, you know, 4%. I thought that was an interesting commentary on what we’re seeing happen in the HR tech space. So probably worth having a bit of a conversation about that. On the investment side This week, we saw a company called persona Neo and I think that’s pronounced appropriately not a company that I’ve gotten a chance to see it, but they’re German based HR platform for small businesses, they raised 75 million in series c funding and a $500 million valuation. What’s really interesting is that the investments in them have come from some names we know quite well like like big Venture Partners, as well as people like Lars old, our investment firm who used to the CO Packers which is sort of interesting in that German SAP competitive space. So that’s where some kind of Service now picked up a new company called loom systems focusing on artificial intelligence capabilities, which is worth some conversation much more on their operations and IP side but fill in the space. And then workforce management software, one of the smaller but more deep workforce management tools partners very heavily with SAP oftentimes, and other organizations have been in the market for a long standing time. And they have launched some new stuff, including a new brand new UX UI. And then if we get a little bit of time, we had some great insight producer and brands that thirst rates their new 2020 talent trends report talking about deals and gaps and where the markets heading from a talent management perspective and nationwide on along the same lines announced this week that they had 160 million dollars they were putting forth for employee digital literacy training. So a busy week but a lot of different places where sort of conversations could go john, where do you want to start with

John Sumser 3:54
with paychecks a little bit. They’re an interesting company. I think this award I haven’t suggested everybody in the category. But let’s see, wow, the ones that I think I was before. Nobody that I know of is on this list except paychecks as they are an amazing company with a huge customer base and a very quiet reputation. They seem to me to do a great job of focusing on adding value. I don’t know what you think about paychecks,

Stacey Harris 4:32
you know, I’ve often said that they take one of those Island organizations and i and i think they have over 600,000 organization. So they’re not a small company, right? They have a lot of very small businesses. So they’re from a pure numbers perspective, as far as financials, they’re not as big as some others, but for the amount of customers that they’re dealing with and the individual customers that they have to deal with their company. They do a lot and the tax and investment or the Tax Management space for the small companies. You know, I’ve always been a Cresta and I think you know you’re coming about them being quiet. I’ve been impressed by the fact that they are very focused on very small steps forward every time I meet them very clear what they’re planning on doing, moving forward step by step. And I will say this has been just really the last five to six years, I think originally, there was a perspective that, you know, well, we’re an older company with older software, and we kind of just keep moving the last five to six years, I’ve definitely seen a shift in them making real movement every couple of years in the user experience, new products, new service models, new tools. Again, I think quietly, you know, deceptively, they are inching their way up. And you’re probably one of the most important technology players in our market, I would say,

John Sumser 5:43
you know, I found in my AI research is that they’re taking, it’s not it’s not a completely unique approach to AI, but it’s an interesting subcategory where what the intelligence does is helpful. People do their jobs better rather than evaluate something externally. Right. And so this is this is the best case that I’ve seen of embedded AI, that makes work easier.

Stacey Harris 6:14
And that is their persona, very practical and how they work with their customers and their clients. So I think we’ll see a lot more from them. I keep an eye out for them if I were someone watching this day,

John Sumser 6:25
and then paycom is now in the s&p 500.

Stacey Harris 6:29
That’s how big of a deal is that? Yeah.

John Sumser 6:32
Why not in the s&p 500? I think it’s pretty big. I think it’s a pretty big deal. The s&p 500 is the 500 companies in their index, so may have been Dancing in the Street to pay so.

Unknown Speaker 6:49
This is a big deal.

Stacey Harris 6:50
I think it is. Yeah, I mean, there’s some names I recognize on a couple of other major names, but definitely, I think this puts a come in a different, you know, Light maybe from what others might have been viewing them. Similarly, the paychecks they were, we’re seeing these payroll and HR companies that a lot of organizations, I think discount because they’re dealing only with small and medium sized organizations, and generally they’re us centered as well. So to keep that in mind, they’re they’re definitely not dealing with international and global but they’re banning pretty rapidly and picking up a market size that is much bigger I think than most people are giving them credit for.

John Sumser 7:25
Gold now PR so do some Neo is an integrated HR is recruiting and payroll system. They raised $75 million as a valuation of about 500 million bucks.

Stacey Harris 7:41
I haven’t heard of them previously have you

John Sumser 7:43
know, but the world is big, right? The world is really, really big. And the idea that you can have a company that’s clearly going to be worth a billion dollars in Germany doing SMB payroll. That makes my little Zena phobic. American centric view of the world hurt. It’s so the world is such a bigger place than the United States. And it’s really easy to forget that

Stacey Harris 8:08
it is very easy to forget that and I think we can’t discount that the people who are investing in this are name that we’ve seen invest in some of the largest and most interesting organizations in the market and lightspeed Venture Partners who’ve been in multiple previous investments in the HR space Lars Eldred obviously has a long standing experience in you know, sort of investing in and starting up some of the most successful HR technology companies including success factors the CEO for many, many years before SAP bought them and it’s an interesting because you know, persona as at least at least be the way they described them on their website and the way that they described them as you know, the their plans for moving forward. You know, their employee ranges from 10 to 2000 employees. 2000 employees is really big. When you talk to someone like a paycheck, they have a few that are tailored 2000 but they really Like a 1000 employees are focused right of their employee sizes. So 2000 puts you solidly in a space where an essay p would also be selling as well for a unified business application environment.

John Sumser 9:12
It’s an interesting question about the investment. I don’t understand any of it. But at one point, Lars dawnguard, was slated to be the CEO of SAP, and then shortly thereafter he wasn’t. And so you could imagine wanting to build a competitor right in their backyard, if that happened to you. So that’s interesting to me about a large investment in this space.

Stacey Harris 9:40
Well, and definitely one to watch, I think, you know, we’ll probably all be reaching out to a little bit more about them and to see where they fit in the bigger picture. And there’s a number of companies that they haven’t actually using the application right now, right now it looks like they are in 40 countries, and they serve almost 2000 customers, which is a pretty big number for an organization that’s been around for a few years.

John Sumser 10:01
Service now is is expanding its AI operations into what looks like automated IT support with their acquisition of loop systems. You know, this is worth talking about just to bring up the subject again, HR technology as surveillance tools. now serves serves a broader market and then just HR and they are a super, super interesting company. This acquisition just sort of showcases how you can have a difference in perspective if you are the provider of the service and the receiver of the service. And so this new systems monitors what’s going on and all the desktops and helps improve issue understanding and diagnostics and fixes for it stuff which means they watch everything that goes on all the desktops in order collect the data. And if you’re on the receiving end of that, that feels an awful lot like surveillance. And if you’re on the giving end of that it feels a lot like collecting the necessary information to make the system work better. And so things are true. But most of the players in our space don’t understand that both things that you can be doing a perfectly wonderful job collecting information that is innocuous in pursuit of a higher good, while creating the perception of surveilling the employee.

Stacey Harris 11:32
I did a webinar yesterday with with the elephants. And what was so interesting about the conversation because it was on the trust crisis, and I think it was just as exact topic was that there are so many places where companies are doing things with the idea that they are in the betterment of everyone, right, you know, and so many times that the perception of the workforce is going to be very different. And you can’t put your head in the sand over it. You can’t say well, okay, well if I don’t know know about it, and I’m the HR side, then you know everybody else is doing it, then I don’t have to think about it. Because that’s not an answer, either you have to be part of the conversation, because what changes from a surveillance tool to a strategic tool the organization can use to make business decisions that’s valuable to everybody, including the workforce is your ethics policy and your governance model, I would assume what you say,

John Sumser 12:22
it’s certainly important to have an ethics policy and function in place in an organization today in a way that was never true before. But it’s also entirely possible to have an effect function in place and screw the whole thing up. Right? Just because you have the process in place doesn’t is not a guarantee of anything. So the thing is that it’s hard. It’s simply hard for the people on the top of a higher art organization to understand what they look like to the people on the bottom of the hierarchical organization and the power dynamic the On the top can decide whether or not you have a job and people on the bottom now that power dynamic causes people to behave differently. It totally causes people to behave differently. And when that power dynamic is expressed as somebody watching your keystrokes to get a better game, it’s really hard not to be. It’s really, really, really hard to build enough trust in the organization so that people understand that it is not policing that’s being done, but it is building something better for everybody that you really have to work communicating. And it only takes one blip to make everybody believe it over again. Right. So it’s a very, very difficult thing that organizations have to do to be effective in the 21st century, which is earned the trust of their workforce.

Stacey Harris 13:50
We’re seeing this in the consumer side, and there’s no doubt right, the idea of what Facebook and apple and LinkedIn are all facing right now and Microsoft is I trust you but right so that When you break that trust, it’s really hard to get it back. Right. And also the the idea of transparency, right is I have an expectation of transparency. And that’s really hard for businesses and companies, especially in a different part of Africa. Once you have the consumers, the consumers, they can decide to use you or not use or decide to spend the money or not spend the money. Right. As you said, in a business environment. That’s not as grew some areas, people have more opportunities than others. What do you think is the answer here, john, isn’t that HR should step up focus on transparency, focus on ethics, or do you think I mean, it’s just a case, I guess, that could be made for this? I mean, it would be interesting to get your partner Heather’s perspective on this. But is it more important to just focus on data privacy, making sure nothing gets out? No information is shared. And that’s our standard process

John Sumser 14:46
that we can’t imagine anybody doing that I think you don’t really have much choice, but to have an ethics function. I think you might not want to call it an ethics function. Right? It’s a ongoing question. That is And it doesn’t have a policy after that boils down to, are we doing the right thing? And so the right thing what’s, what’s the right thing is changes over time. And that’s why you can’t make it a policy. But if you can figure out how to get the organization is curious about are we doing the right thing? And what is the consequence of our behavior on the people in the place? You know, this is should be in the workspace of somebody’s thinking about employee experience. Yeah, cuz cuz Trust has to be the fundamental question and employee experience and dysfunction that I’m talking about what you might call ethics is a deep consideration of all of the things that build and hurt trust with the workforce. And that’s a an issue set that changes over time based on the fortunes of company, the changes in the economy, new competitors in the marketplace, all the things that an organization has to adjust to, when you have to make those adjustments. That’s Where trust is at risk. And so like introducing intelligent tools into the workplace, that’s a place where trust is at risk. So you need to as part of implementation, think about what it takes to make the workforce embrace the new technology, what would it take? And I think the question ever gets asked right now,

Stacey Harris 16:20
I think you make a really good point there. There’s a lot of people in the market right now who are pitching engagement platforms and engagement experiences and building out roles on the employee experience function. But I think your comment on the fact that the trust conversation, the ethics conversations fits inside of that were early make that role a bigger and more important role, because now it becomes not just about the personal feel good experience that the employee is having. But it also becomes about the perception and the ownership and the value of that relationship. And then there’s also we I think is a really this is what turns it into I think a bigger role is the risk calculation, right? When you start thinking about the risk of that experience one way or the other. Now you’re starting to get into financials, the numbers,

John Sumser 17:12
right books good. The thing that is interesting here is this is right next to the inclusion conversation. It’s right next to the inclusion conversation. If you create an organization where it’s okay for me to relax and be who I am, that’s the primary indicator of class right? There’s that there’s that I feel free to do work the way that I am. And I don’t have to pretend anything disrupt the world. That’s what inclusion is all about. And I am accepted the way that I am. If you don’t have that, and I have to put on some sort of performance because of the way that you’re monitoring me, then it’s not inclusive. This is probably a really interesting area to talk about, which is technology as an inhibitor of inclusion. Because if it feels like You’re being monitored, then you’re going to behave differently. And you’re going to behave as if you’re being people who are being monitored to have less freedom to do smarter things.

Stacey Harris 18:10
And I think this trust conversation goes beyond just monitoring and capturing and data, because that’s how we’re designing a work environment. One of the few things that got tweeted out from that presentation I did yesterday, which I said it and I don’t know how I feel, but you know, there’s a lot of you have to really put some thinking into what it actually looks like in reality, but the comment that we need to create an environment where work is the employees versus making the employees, that’s the word. That’s a really hard thing to think about. But I think that’s what you’re saying, right? Because if work with the employees, that means it needs them in a place where they can do their job the way they know how to do it. Right.

John Sumser 18:46
tricky, tricky ground. And it’s really, really hard to generalize here because it sounds like you could from somebody who heard work designed to fit the person as a way of helping spoiled People feel productive because because historically historically work has never been designed to fit the worker work has always been designed to solve a, a larger financial question, or a larger goal of some time and whether or not to me simply wasn’t a question. And do we move into a world in which that’s how it is I have a hard time imagining how you get stuff done. If you design work to 50 you know, no ergonomics, I should have a good chair and my screen should be the right distance from my eyes and my keyboard should be carpal tunnel syndrome, you know, all of that stuff. But if I’m an idiot, you’re going to design work so than it is.

Stacey Harris 19:49
And this is exactly why I was surprised I guess we got but on the other hand, I had said it because it was fitting in the in the context of the conversation about the fact that we that our workforce is definitely declining or And the amount of more highly skilled work more complex towards is increasing, right that the requirements for those levels of increased skill sets is growing rapidly. And every organization you talk to you is talking about if either they don’t have enough skills or talent to do the things they want to do inside the organization, my sense on this and is that we really need to rethink the idea of maybe what work is because if at a certain point, we’re getting to a point where we literally don’t have the people to do the job, which means it’s not just an education or a development issue, it might be that the work isn’t being designed in a way that it’s doable, you know, the processes that was put in place, or it’s feasible, right, I think there’s a work redesign concept that we have to keep in mind as we go through this, this new world that we’re getting into with artificial intelligence and automation and the idea of, you know, gig economy workers, we might have to rethink the idea of what work is I get completely what you’re saying, but that is it seems like it’s off the top of you know, oh, I am spoiled sort of worker, I’ve always had a, you know, the opportunity to move from from job to job. But I actually think there’s something in it for the next decade at a, you know, I don’t know exactly where it is yet, but I think it’s worth it a conversation

John Sumser 21:11
or two. I wonder I’ve been thinking about this a fair bit recently. I wonder if we don’t misunderstand what’s going on in the workforce. And so the question there is, what percentage of the work done by people in the workforce could be done by anybody? Is it 60% is a 70%, which is 20%. You know, given a little bit of other job training, what percentage of work could be done by anybody? And you’d be tempted to think I’m not sure this is true, but you’d be tempted to think that that’s minimum wage, is that would have a non wage job is and I think quite half of the workforce, that’s a minimum wage. And so I don’t know how you design work for the employer when it is a sort of a factory job in a retail setting or light industrial labor or consumer sales, that sort of stuff. And Mike, my guess is that that’s the largest share of what the what the actual work is, and that the shortages are in pretty narrow categories?

Stacey Harris 22:15
Well, I mean, that’s a good bread instance, or maybe a quick wrap up that we’re doing, and grams that did release the 2020 talent trends report. Maybe we’ll start off next week’s conversation on this topic, because I do think I might disagree with you a little bit on that. Because granted, I get what you’re saying that, you know, and I think we can start the conversation through talking about is there’s a difference between I can, I can walk in and maybe learn how to do the tasks of the job. But what these companies are saying they want is people who excel at them or who have the capacity to be agile and flexible, that may not be feasible, the way they design these jobs.

John Sumser 22:50
Is that really what Walmart and Target are saying about their workforce, Costco?

Stacey Harris 22:55
That’s the language we’re hearing, right.

John Sumser 22:59
Well, we’re talking about it, but I have the hardest part believing it. So that’ll be something great for us. For us. That means we’ve got life in the old horse after show 250. So, another delightful conversation. Thanks, Stacey. Always a pleasure. And thanks, everybody for tuning in. You’ve been listening to HR tech Weekly, One Step Closer with Stacey Harris and John Sumser, show number 250. Bye bye now.

Stacey Harris 23:28
Thanks everyone, bye!

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