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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: 277
Air Date: July 30, 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.

SPEAKERS: Stacey Harris and John Sumser

John Sumser 0:14
Good morning and welcome to HR Tech Weekly, One Step Closer with Stacey Harris and John Sumser. Hi, Stacey, how are you?

Stacey Harris 0:21
Hi John, I’m doing well. Having a nice time in North Carolina with the sweltering heat of 90 plus degrees last couple weeks while I’m packing up my youngest son getting him ready to head off to his first apartment on his own next week. So it’s been a busy busy week, and how about you?

John Sumser 0:40
Well, you know, it’s pandemic time in the midist of a financial crisis. It’s weirdly interesting. We’re figuring out how to have people come to the backyard and stay socially distanced so that we can have a meal six feet away from them. And, after five months of isolation it’s a sweet thing. Can’t hug them, you can say hello, but you can make a little eye contact and feel their presence.

Stacey Harris 1:06
Yeah, It’s amazing how just being able to somewhat be in the same room with people. And you’re like, Oh, this is contact once again, right? Yeah, it’s been quite a process working with my son as he’s been trying to find an apartment whilst this social distancing and pandemic, you know, we’ve been doing virtual tours of apartments. And, you know, we’ve been calling all the utilities virtually and doing everything virtually. And yeah, everything changes when you’ve got to try and figure out how you manage life, six feet apart with masks and no no ability to really sort of know the environment, sometimes you’re heading into. So it’s the whole new world, right, that we’re working in.

But, we are figuring out how to move forward in it, which I think we’re hearing from around the world that every economy is trying to figure out how to take a step forward, while still acknowledging that many, many people are sick and losing their lives during this time because of it. And so we have to be very, very cautious, but the numbers aren’t looking good. You just sent me some details on the economy that are just blowing me away today. This was probably the sort of worst numbers we’ve seen in a while. Talk a little bit about this, John, because this was your conversation about how big this is. We haven’t really sort of grasped it, right?

John Sumser 2:16
Yeah, the GDP numbers today said that the economy contracted 32%, last quarter. In the last 90 days, the economy ran at 60% of its capacity. And that’s the worst decline in 200 years. Nobody has ever seen anything like it. I would guess that people are blown away and scratching their heads. This is devastating news. This is deeper that the deepest hole of the Great Depression. And you know, you and I took a quick review through the few hundred years of numbers that are out there and it’s never the case that the economy bounces right back up to the top, This news today is going to be a driving force in the election.

Stacey Harris 3:03

John Sumser 3:04
You’ll never hear the end of it. 32.9, I think is the total, you’ll never hear the end of that number.

Stacey Harris 3:11
I will have to say, I sort of opened up the image on internet and you look at the chart, just for the last 50 years, not even 200 years. And you look at the red line dropping, and everything else is minus two, minus four, and this drop down to minus 9.5%, comparatively, right, like from quarter to quarter, which is a 32% drop from the previous quarter. And it’s literally like, four levels down from where everything else is at it completely goes off the chart. Like, it makes the entire chart look so tiny. This is the kind of chart where as a statistician, you’re like, well, this doesn’t even equate you can’t even fi it on it, right. So, it’s pretty eye popping is a good way to put it.

John Sumser 3:48

Stacey Harris 3:48
From your perspective, this is the GDP. So, GDP is sort of the amount of money that we spend, right and…

John Sumser 3:56
No, no, no no. It’s not the amount of money we spend. It’s the amount of money that moves through the economy. So, spending is what consumers do. And consumers are a percentage of gross domestic product, consumer spending is, I think, maybe 25% of gross domestic product, but it’s the money that changes hands between companies and across borders is across state borders is that and so there’s a huge drop in consumer spending, people got put out of work, and there’s some fuzziness in whether or not those numbers are right, but there’s a lot of people who are unemployed, so spending stops when unemployment goes up on the consumer level. But this is this is a 32.9% contraction while the economy was consuming $3 trillion to keep it afloat. And so this number is a number after the greatest economic stimulus Anybody ever injected into an economy? So, so the stimulus was a failure, and we’re in trouble. We’re in serious trouble. The depression, it took 10 years of steep unemployment to get through the depression. It was an entirely different world than the kind of one that we’ve been living in, with all sorts of different economic expectations.

Stacey Harris 5:25
Yeah, they’re saying that the numbers were at one point 43 million filed new state Unemployment Claims last week. So, this goes along with the continued decrease of open positions and people filing for new unemployment as well. Correct?

John Sumser 5:39
Yep, that’s right. That’s right. This is a monumental change. And, you know, I think just to shift it into the industry news. Qualtrics is being sold by SAP and while for my money, it’s a good idea strategically, I think it tells you that SAP needs cash. And SAP needs cash because they’re numbers are not as good as they might be.

Stacey Harris 6:02
That’s definitely been the conversation. Right. This is one of the biggest announcements that came out on Sunday. SAP announced that it’s intending to take Qualtrics public through an initial public offering. And that which, for those who do sort of follow our industry as much, I mean, they just bought Qualtrics 18 months ago for an unheard of amount in the industry. You know, it was I want to say a billion dollars, right? Yeah. Therefore, the investment $8 billion and taking it public conversation. I mean, the idea when they originally bought it was that they were going to take one of the biggest industry surveying and engagement platforms roll out of the play of their partners. They have lots of relationships with other ERP and HR technology vendors in the space. Now as an SAP acquisition it became their primary partner. Qualtrics grew by 40%. Their revenue in the last 18 months since it was purchased. So, this is not a matter of that or that Qualtrics hasn’t been finding, bringing in the kind of revenue they expected. And now this decision, and I agree with you, I think for everybody who’s been watching this, this makes people feel more comfortable that Qualtrics will continue to innovate and Qualtrics will be able to, and I should make a note that we are a customer of Qualtrics. We use it for The Annual HR Systems Survey. So, this is not unpleasant news for me as a customer or as an analyst. I think it’s going to give more life to what Qualtrics can do, the partners you can have, but at the end of the day, at some level, yes, I think he’s going to get some money back, but they will have lost some money on this deal as well as cache, wouldn’t you say? As well as you know, sort of the kind of turmoil that transition takes through this kind of thing. Won’t they?

John Sumser 7:40
I don’t know. It always struck me as dumb that Qualtrics should be inside of SAP. Because if Qualtrics is part of SAP a whole lot of people aren’t gonna have access to it.

Stacey Harris 7:51

John Sumser 7:51
Right. And so it is the best visualization tool out there. I don’t know that at their size they’re actually capable of innovation, but that’s a somewhat separate topic. They’ve been very successful. They’re very big. It’s a novel way of looking at things, it requires specialty training to be able to use it well, and its market is bigger than SAP, and it was constrained by being seen as a part of SAP. So, this is probably really good for Qualtrics.

Stacey Harris 8:25
And I think that the market in general agrees with you on this. And I haven’t heard anyone say this is a bad move. I have heard them say, you know, why did they make the move in the first place to make the purchase? And I think so there’s been back and forth as to whether that was good or not. But, I think to your other point in the earlier point that we were discussing is that the economic environment lends itself to being more cautious about what you’re doing internally and and where you want to get cash in your organization. Correct? And that’s a big driver when you’re thinking about an economic downturn. And one of the stats that came out in this particular article about the economy that that I was looking at Is that Germany which the two biggest audiences without a doubt for the SAP market is Germany and the United States. Germany is also seeing, you know, a big hit. Their economy had its biggest slump in 50 years, obviously, like many other countries did. So, this seems like having cash on hand for SAP would probably be a good thing right now.

John Sumser 9:20
Yep. Yep. It’s a big old player. And the leadership transition has been brutal. Just been brutal for them. So we’ll watch this closely. What’s the next one?

Stacey Harris 9:32
Well, I think there’s a couple other things going on. We saw this week, lots of stuff considering how much change is happening in the market. One of the companies that you and I both watch on a fairly regular basis Modern Hire, some of you might have known it as Shaker and Montage previously, is expanding its global footprint with the acquisition of automated video interviewing tool provider Sonru.

We also saw this week that Paradox which is another sort of talent manager type of organization is bolstering their board of directors by adding former Workday and SAP executives and renowned Stanford University Professor. It’s worth talking about the expansion of this talent base and I think trying to reinvent it in this new market. We also saw Infosys last week launch Reskill and Restart as a solution to rescale the American workforce. But, part of the reason it caught my eye is they are partnering with Pymetrics, which is someone that we both know a really interesting organization in the talent space along with Merit America, Per Scholas, Revature, & Woz Enterprises. So, there’s some interesting stuff going on there about creating a platform for rescaling going up in the Infosys team.

And then there’s a whole group of things happening in the small SMB payroll space. As Zenefits launched some new tools, we saw Paychex launch some new capabilities for the PPP loan forgiveness model, we’re seeing Paylocity again, all those really small SMB market unveiling new brand identity. So, lots of stuff going on this week that we haven’t seen for a while I guess is a good way to put it. Is there a particular one of these that sparks your interest as we talk about how the economy is playing out in the HR tech market.

John Sumser 11:06
Well, this Reskill and Restart the innovative solutions to reskill the American workforce. There are a bunch of these endeavors out there. There are whole bunch of these endeavors out there, and they’re rarely run in a way that works. You know, they tend to be thought up by people who don’t understand the employment market. And maybe the simplest way to say they don’t understand the employment market is they don’t have any sense about how job boards work. Right. And so this is a great intellectual idea. The question is, how do you find the people who need the jobs? How do you tell if they’re going to be good at the job, I think that’s the part they probably have, or claim to have, that you can understand who will be good at a different kind of job and what skills they need. Then you have to get them the jobs, right. So they have them, they have some of the middle piece maybe. But, the thing doesn’t work with the middle piece, the middle piece is like the meat grinder, first you need the meat, then you need somebody to eat it. The fact that you can grind it doesn’t really help. It’s interesting, it’s interesting but the meat grinder is useless without the meat and people to eat the meat. So, these solutions like this never address the actual execution realities.

Stacey Harris 12:29
It’s about job creation as well, right? That’s the other side of what you’re saying. There has to be jobs. I mean with the Pymetrics involvement here I think is that the matching part and Frida Polli who most of us know has an amazing background in really understanding how you think about diversifying workforces. But, that still requires a for the amount of workers that are going to be pulling out of it correct? Is that what you’re saying?

John Sumser 12:53
Yeah, yeah. Well, so let me stop you there. I don’t think there’s anything about Pymetrics that I’ve seen that helps the restaurant worker understand what they need to be a computer programmer. Right? That’s a skills matching kind of thing that you might expect out of Workday for instance. What Pymetrix does, as I understand it, is this sort of personality testing. Rright, fancy personality testing, so they can tell you if somebody will be suited to the job, perhaps if there is such a thing as that, but they don’t do re skilling or identify which technical skills you need to do a new job. And, so maybe Infosys, although that doesn’t seem like an Infosys strength either. It’d be really interesting to get a deeper briefing on this, because I don’t understand how the pieces go together now that I look at it. It doesn’t have meat, it doesn’t have consumers for the meat and it’s got a grinder in the middle that I can’t tell what it does from this press release.

Stacey Harris 13:52
Well, that seems to be, I think, something we’re seeing from a lot of these kind of press releases, like they smatter in a few partnership, a few relationships, some technology, and you’re not exactly sure what will come out of it. And I think that’s even the bigger message, which is there’s a lot of things being thrown at the wall, what’s going to stick, is the real conversation. Which is, to me the most interesting thing happening in the SMB payroll base, because unlike some of these talent management conversations and these re-skilling conversation in the SMB payroll area, the things they’re adding the things they’re sort of investing in right now are very timely, absolutely. You know, it’s critical things that you’re seeing come up because they’re dealing on a day-to-day basis with these small businesses, which are the fastest place for seeing the impact of the economy hit.

John Sumser 14:43

Stacey Harris 14:44
Paychex specific new enhancement, is they’ve created a loan forgiveness solution to produce signature ready application for the PPP loans that went out, as you said, the economy’s being bolstered by a lot of this investment in the industry. And just the maintenance and management of those paperwork you need for the loan has caused a lot of angst for many of these small businesses. And that’s where Paychex is investing its time and energy, because it’s a very, very real and tactical need right now. Those kind of investments seem to be reasonable. But, do you think that they’re not going to get us out of this next conversation, which you were just talking about, which is how do I get so people who have the capabilities and the skills matched up with the people who have jobs? This is really just about sustaining current state? Correct?

John Sumser 15:30
Right. This is just about staying current. The question about how do we we’re just now starting to have the earliest grasp of how big the problem is that we’re going to have to solve. And it’s going to involve moving people who used to work in one area into another. This is, remember in the Great Depression they had the work projects act that people who used to do whatever, could get jobs building stuff, basically. We’re going to have to have some version of The Work Projects Act to move people from one discipline to another, it will probably involve some people relocating. It’s going to be the story of our lives by the time all is said and done, because this is going to be transformative in the ugliest possible way. And so the innovations that people are doing now are what you do when you can’t figure out what the big picture looked like this set will have a clearer notion of how deep the hole is that we’re in by election time. And then once all that’s done, then we’re going to start digging out.

Stacey Harris 16:34
Yeah, the interesting thing I think around a lot of this is that much of this was on its way already before we started down the road of the pandemic. Much of the shift of the economy, the shift of the job skills requirements, the shift of the roles that people were needing inside their organization. This accelerated what was already at the starting point in many organizations. Had my ankle worked on not too long ago had a physical therapist and he’s talking about his wife going back to work, and that the work she does in the medical field can all be done from home. And her boss is really adamant that everybody comes back into the office. He didn’t close the office the entire time she was off because she was having a new child. And she was a little concerned about going back to the office and the big conversation he’s having is, well, now there’s a lot more organizations that do what she has capabilities for that is offering work from home opportunities, which means she can get jobs all over the country. And so he’s in hope that she will be able to find a job where she can work from home more safely, not have to go back to the office with the existing job. And I just thought that’s an interesting conversation to have that we’re going to start seeing some of these shifts around who can work where and when, and will that also have an impact on it? I think to your point, people moving or changing around or having to be retrained in lot of jobs. This will require changing how we think about work, and that’s the conversation that we’ve been having a lot of, but we haven’t really talked about how painful that change will be for many, you know, leaders and for many organizations that don’t understand how to do that.

John Sumser 18:06
Yeah, so far conversation has really been,, how do we get the existing workforce to learn new stuff. Right? There’s been no thinking about how do we take racial inequality or financial inequality and resolve that while we’re moving people from one state of being to another state of being, but that’s now going to be something that’s beyond the control of the companies, really beyond the control of the companies, and it’s going to become a national problem to solve in some way. One of the other things that’s in the news is there’s a chamber of commerce program that does something very similar to what the Pymetrics and Infosys deal is, but they’ve got 300 major employers involved in building the tools necessary to rescale the workforce and so I would bet that the by the end of the year, this is the only thing that we’ll be talking about.

Stacey Harris 19:04

John Sumser 19:04
Is everybody’s new tool to move the economy forward.

Stacey Harris 19:11
And not just move it forward. I think your example of the shift that had take place when we were coming out of the depression, which was basically moving much of what was workers who were in farming communities or in environments that where there’s a lot of manual labor into more automated workforces. We’re taking that same kind of leap into what will probably be a more service based industry, more health focus, more personalized industry, because we are building out more automation through this process. Yeah, so these skill conversations will also be about retraining, how management works, and retraining how businesses are designed, which we’ve been talking about for some time, but it’s always seemed like that’s 10 years, 20 years down the road. This is considerably sped that up. Don’t you think?

John Sumser 19:55
I do, I do, well, let’s hope it’s sped it up. Because this is, this is, so dark that it’s impossible to get that glum. That’s a piece of bad news that’s so bad that you can’t even process it is what 32.9% decline in the economy means. Unbelievable, unbelievable! Well, you know, we’re in the right place because a whole lot of this is gonna be solved in and around HR departments over the coming years.

Stacey Harris 20:26
HR will be at the center of this in a way that I don’t think, because there was there wasn’t an HR that was as strong as this HR community has been in the last several downturns. You know, the most recent in 2008-2009 I think we were just getting to a point where the idea of a strategic HR. I mean, I could remember we were just five years out from so why hate HR article at that point in time, we were just getting to a point of strategic HR conversations in 2008. Today, strategic HR is seen as an expected in any large normal organization and that’s the place where these kind of conversations will be coming from. And strategic HR means that you are partnering at a much higher level with operations with business leaders, and as well with even, you know, industry leaders and people in your community as well. This is a place to be, but it will be stressful, there’s gonna be a lot of retraining of HR professionals as well. So, I think that’s a place we’re going to see a lot of interest from HR is how do I gain the skills I need to have these kinds of conversations, right?

John Sumser 21:29
Yep. Yep. This is an actual watershed moment right now. It’s going to be next week’s news ought to be really juicy actually. So, great conversation. And let’s do it again next week.

Stacey Harris 21:42
Looking forward to it.

John Sumser 21:44
So cool. You’ve been listening to HR Tech Weekly, One Step Closer with Stacey Harris and John Sumser. We’ll see you back here next week. Bye, Bye now.

Stacey Harris 21:53
Bye, everyone. Thanks.

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