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Hosts Stacey Harris and John Sumser discuss important news and topics in recruiting and HR technology. Listen live every Thursday at 8AM Pacific – 11AM Eastern, or catch up on full episodes here.

HR Tech Weekly

Episode: 37
Air Date: September 10, 2015


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This week John and Stacey discuss:

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Hosts Stacey Harris and John Sumser discuss important news and topics in recruiting and HR technology. Listen live every Thursday at 8AM Pacific – 11AM Eastern, or catch up on full episodes here.

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John Sumser:                       Good morning and welcome to HR Tech Weekly, One Step Closer with Stacey Harris and John Sumser. We are live on the radio this morning. Stacey, how are you?

Stacey Harris:                      I’m good. I’m good, John, this morning. I am just getting back from Detroit yesterday and had the maybe beneficial, but very scary thing of leaving my phone behind, so I have been phoneless for the last two days learning how much not only how much I depend on it, which we all know, but how much the world around me depends on me having a phone. Such as, now there’s no phones anymore to make calls and there’s no way to access information without your phone if you’re on the road. So, I’m learning to be less digital these last couple days.

John Sumser:                       Isn’t that crazy? It just wasn’t that long ago that you could actually get along just fine without a phone and now it’s a handicap.

Stacey Harris:                      It really is. I knew how much I depended on it, I mean we all know that. That sort of becomes very personal to who you are, but leaving my phone behind in Detroit, and thank heavens a peer was able to get ahold of it and will hopefully ship it back to me, but what really hit me as I was in the airport just trying to get access to my, because all my check in and boarding passes and everything are on my phone now, right? I’m just trying to get them to give me my boarding passes and they’re like, “Well you need this identification, and you need this.” It was definitely a process. Then you get off the plane and you’re trying to figure out who you have to call and you’re like, “Oh, there’s no phones to call.” When you’re on the plane they send you all the information about what your next gate’s going to be so you’ve got to find out where all the gate things are at, and now they’re farther apart because they have less of them because you can get it on your phone. It really is amazing how much the world depends on you having access to that phone to keep getting along, particularly traveling.

John Sumser:                       You think the reason that the airlines have moved those things further and further apart is because you get the information on your phone and you don’t need them.

Stacey Harris:                      Yeah. They are eons apart. I was at Chicago and normally, I’d been thinking back when I used to travel without a phone there’d be one almost every couple feet as to where you went. Now, I had to go to the very next station to try and find my number and I had to grab a United flight attendant and ask, “Is this the number? I’ve got to get to it.” It was definitely an interesting commentary on what’s happening in our digital world, right?

John Sumser:                       This is for somebody who lives in North Carolina, which is not the booming tech capital of anything.

Stacey Harris:                      It isn’t.

John Sumser:                       That’s crazy. What are you seeing in the news? I get the sense that this is a great time to be in the benefits business and that … Go ahead.

Stacey Harris:                      I was just saying, we were just talking about this because I was saying how my inbox has been filled with information from various benefit solution providers, both updates announcements and information about what they’re doing. Are you seeing the same thing John? We didn’t really get to that conversation, are you seeing as much as I’m seeing?

John Sumser:                       Yeah, it’s usually been the case that the high volume of promotional material in the fall has been about talent management and recruiting in particular. It looks like today there is just a land rush of people who are opening benefits companies, there are several new big investments in Silicone Valley over the last year, and existing companies jumping more deeply into benefits. I tend to think that’s got a couple of causes. One of them is that most of the executives in the benefits world that I’ve talked to wish they could figure out how to get the Obama administration a third, fourth, and fifth term. Largely because the amount of regulation and compliance that’s been added in the last couple of years makes their companies more and more necessary. The democratic administration has been quite good for them. Then, the other thing is there’s a great deal of money at stake in the cash flow that goes into that benefits operations and not a few of the players are interested in running that money through their accounts. What are you seeing?

Stacey Harris:                      Yeah, definitely. The particular article that I pulled up this week, though, I think fit exactly into what you’re talking about. The one is a small company plan source, I haven’t spend too much time getting to know them. They are a provider of cloud-based health care benefits administration and technology. They just recently got a 70 million dollar investment in their organization from Minority Equity Investment.

It was just sort of interesting to me that that came on the heels of also seeing that Mercer has launched a new product called Pathfinder by Mercer, which is a co-developed, personalized benefits platform with Jiff, which is another sort of cloud-benefit tool provider. They do more sort of like aggregations of benefit-type of things into an app-type format. Mercer and Jiff together sort of co-developed this new platform which is called Health Pathfinder, which is, I haven’t had a chance to see it, it will be interesting to see what it looks like, but if I understand what they had in their news announcement it not only allows you to sort of go out and get your companies benefits products, right?

You usually have your three or four options of what you can pick, but Mercer now is saying along with that you can pick some of Mercer’s specific customized products and whatever maybe is available through this Jiff program and sort of customize your benefits experience. Which isn’t just about your packages, but it seems like it’s also about things like wellness programs and your information about various health improvement programs and tools. Then, you can also personalize some incentives to go along with this and ultimately you can sort of create your own personalized health care app that you’re using.

These two announcements are on the heels of some really big announcements by Towers Watson moving deeper into this space. We knew that we heard some interesting new announcement from Benefit Focus not too long ago. There’s just a lot of stuff going on in this space, and I’ll be honest, I’ve had a lot of clients recently asking me questions about it. It’s definitely been on my mind. Does that surprise you now though, John, that it’s not so much about the content of the benefits? You were talking about all the government regulations, but it seems like it’s the idea of personalizing and giving you more options. Do you think that’s actually something that’s valuable to the end users and to the employers at this point?

John Sumser:                       You know, I’m not sure what the underlying thing is there. This idea that companies would want their employees to have a great experience with their benefits product, that’s kind of new. There’s been some development of that idea over the years, there’s a company called Jelly, I think, Jellyvision in Chicago who has been making funny videos about benefits and funny personalization with benefits, but it hasn’t really been a land-rush of any kind and now you’re starting to see this bigger emphasis. Although, for the life of me, I can’t figure out what a great experience working with benefits would look like. Does a great experience mean that when I’m bored at lunchtime I go over to my benefits account and start playing games on it because it’s so much fun to do benefits? I have a hard time understanding how you would assess the effectiveness of something like that. I’m not sure.

Stacey Harris:                      I think some of it is the connection with the wellness programs, and that’s really what it’s coming down to is the idea that healthier employees are less at risk and provide more cost benefits for employer organizations is sort of an ongoing theme that we’ve been hearing quite a bit about in this space. I think it’s not as much about the experience as it is about, how can we incent people to become healthier which gets into a whole conversation about, right now it’s incentivized, at some point will it become a penalized system? Will we become to the point where people are saying, “Look, if you aren’t a certain weight, if you’re not a certain type of person, will you have to pay extra or additional fees?” Which is what’s happening right now, at least with those who smoke and other things within the industry.

I will give a shout out to someone I think who gets this space very well, Mark Selzner helped me out just a few weeks ago when I had a question with a client. He runs IAHR Consulting services around, particularly, benefits and some other HR stuff. I thought he had a really good comment about this which is that, not only is the regulations changing and not only are we seeing the organizations sort of shift in what they’re offering to include this whole wellness concept, but he said also there’s a big challenge for a lot of these organizations in that they really can’t accommodate with the existing systems they have, all of this in a single platform. What they’re doing right now is they’re leveraging a lot of different solutions and a lot of different platforms to make this work. Not only is it costing them money as a company from a purely cost perspective for the solutions, but it’s costing them money because they’re having to invest more administration and more technology in it to just manage it all. I think all three of those could be part of the reason this thing’s exploding.

John Sumser:                       Who actually has that problem? That’s not every company everywhere, that must be some specific sizes of company with some specific kinds of organization have that problem. Do you have any insight into that?

Stacey Harris:                      Well, you know that’s an interesting perspective. I would have said that it was primarily the large and global organizations because the benefits is such a different conversation across the globe. Then for large organizations, oftentimes they’re dealing with, particularly if they’re sort of a partially unionized, maybe not in other areas unionized environment. For example, I was at a hospital health care provider yesterday and that was exactly what they were dealing with. They had two or three sites that had union environments and two or three sites that didn’t so they had to have very different benefit programs. They were trying to figure out, could they manage this in-house or should they be totally outsourcing it. We’re seeing a little bit of a growth in outsourcing if you look at just the data itself, but still predominantly most people still manage it in an on-premise environment or in an environment that they have within their HR [Mass 00:12:44] Solution, but they sort of partner with various products. We do see this sort of idea that maybe if we outsource everything it will make our lives easier.

The other comment about your size though, I think, is that when I was talking to Mark, he specifically said that generally they dealt with just large companies, but they have seen that in the last year that they’re dealing with a lot smaller companies on this topic of benefits. I don’t know, that’s one person’s perspective but …

John Sumser:                       Well, there’s certainly a ton of new software companies that provide benefits administration solutions, and if there’s a dryer topic for a software company I’d be happy to have somebody let me know what that is. You can imagine, like many areas in HR, that a company that develops an expertise and finds the kinds of people who take pleasure in solving this particular problem set is going to offer a better service experience than the internal people who can’t stay on top of it all. You can see why there’d be a trend, and it’s really kind of the result of all of the big investment. If you think about the fact that PlanSource got 70 million dollars in investment, that’s staggering. That’s staggering. That’s somebody trying to compete with Zenefits and that’s interesting, it’s another VC throwing an oar in the water. I don’t recall a time when there were two huge investments in benefits, that just hasn’t happened in the past. Something’s changing in the investor mind as well.

Stacey Harris:                      No, I would agree. Maybe the comment from the client organization that I visited maybe be sort of capped as far as he said. I think I’d rather have my technology inside the company focused on doing strategic things like talent management versus having them focused on the benefits area. I don’t know if all benefits people would agree with that comment, but that was the person’s sort of their head of talent management’s comment on it. He really felt that they could get more out of their IT group working on talent management stuff. That might fit what you were saying, John.

John Sumser:                       Don’t you think that’s interesting? Because in a traditional IT environment, data intensive problems like benefits management are what IT has always specialized in and talent management, which has got a little bit of record keeping and a whole lot of wisdom involved in it, tended to be off on the edges of what IT was focused on. Do you think there’s a change going on there?

Stacey Harris:                      I think there is a little bit, and I think this comes down to the need for, what we’ve been talking about quite a bit, which is that when you really think about it the need for greater data analytics, and better data reporting, and better insight into your employees in the organization, I think that organizations feel right now that they can get that by investing more time, and technology, and investment from their IT department in the talent management, and probably the HR, yes, area right now. I’m not sure that I completely agree with that concept, because I do think they can get more than they actually realize out of areas like payroll and benefits. You and I have had that conversation, I think you feel the same way particularly about payroll. It sort of fits with what we’ve just seen.

There was an announcement by Ultimate this week, it was their summer launch of their quarterly release of their updates to their platform and one of the things they launched is their new workforce predictors. Now, they’ve been talking about having predictive technology, and they’ve had it in some small formats, but this, I think, is their big announcement with big dashboards. In it they say they’ve got a retention predictor, a high-performer predictor, and a high-performer indicator. That requires, on some level, IT making sure the right data is inside that system. I would guess that’s to some extent what this head of talent management was talking about.

John Sumser:                       That’s interesting, I wonder if we are at a place where people have figured out how to make HR technology that employees will use. I was noticing the other day, I was reading up on, this tells you about my life in some ways, I was reading up on the stats for effective use of exit interviews. This particular report that I wandered through said that, about 35% of people will fill out an exit interview form if it’s done on paper, and about 65% will do it if it’s done online in some way. I looked at that and I said, “Wow, 65% participation is as good as you can get for an exit interview, which is singularly important and ought to be easy to persuade people to completely.” Right? Why are you leaving? Here’s your chance.

Stacey Harris:                      Exactly. Opportunity of a lifetime, right?

John Sumser:                       Here you go. You’ve been wanting to say this for six months, now go. You can only get two-thirds of the people to fill it out. That makes me think that there is a larger problem of relevance and comfort that people feel giving data to HR. I’m going to guess that an underlying motivator here is that companies are having trouble getting people to use their HR systems in the first place and so we’re screwing around trying to get better usage. If you’re selling predictive analytics that are dependent on people participating in the system, that’s a really interesting proposition. That means that you’re selling software that doesn’t actually work, which I tend to think is the case in analytics. Analytics depends so heavily on the employee population using software that they don’t use, that I wonder how good analytics is going to be.

Stacey Harris:                      I think that’s part of why, for me, part of the opportunity for HR organizations to really look at is not all the time what someone needs to fill out, or what someone needs to create, or what someone needs to do, but what data do they automatically have on that employee, which they do take time to invest in. Benefits data, you’ve got to be very careful with it from an EESE perspective, but benefits data is an area where employees take the time to fill that information out. They take the time to go through that information very carefully because it’s very specific and very important to them, right? Payroll information, government tax information, those are areas where employees do take time to make sure that things are right for themselves, and oftentimes we do think of those as administrative, but they may be the most reliable data sources that we have on employees. Not saying I know exactly how you would use that, because you’d have to make sure you’re not using it in a way that impacts the employees’ privacy, but there is a lot of data there that we overlook, I think sometimes.

John Sumser:                       It’s where, as far as I’m concerned, the payroll data in specific is critical to understanding what’s going on in the organization. HR is often blocked from understanding other aspects of what people are doing and you can see the breadcrumbs from payroll about who’s being effective, who’s working overtime, who’s on a team that matters, it’s all discoverable in payroll data. My sense is that payroll and benefits data, at a meta level, [inaudible 00:21:58] of personally identifying information is an essential place to get a sense of what’s going on inside of your company. People are not catching that yet.

Stacey Harris:                      Once you outsource it, particularly if you outsource it in a way in which you can’t get it at a meta level that you were talking about, if you can’t get it at a view that gives you some sense by region, or group, or something like that, then that could really have an impact on your ability to access the information that you do have about your employees. Now, to your point about whether or not employees actually fill out or use talent management systems or other solutions and can predictive analytics do their job. I agree with you that there is some sense that employees probably don’t get in there and use it every day like we expect or hope them to do. I do think that there is a trend, and this is having done an employee survey last year, we only do it every two years but employees do get in and access those tools. They may do it unwillingly, they may do it oftentimes because they have to or they’re told to, but they do get in and access these tools, I think, more than what they did a few years back. Maybe not as much as we would like them to.

I think that the next generation, my perspective on their goals for personalization, their goals and expectations of their companies, are going to actually drive them to use a lot of these tools a lot more. When you look at the tablet and phone generation, the group that is truly living on their phones right now, they personalize a lot of things if it’s important to them what that outcome’s going to be. I think the companies that really want to make these tools usable are going to have to be able to show, almost immediately with someone putting in information, or making a change to their profile, or filling out details, almost immediately how that’s going to benefit them if they’re going to have that data become accurate and completely filled out on a regular basis.

John Sumser:                       It’s a crazy problem. I think that, this will show you my bias, but the sense that I get is data on the people you want the data from is hard to get, and data on the people that you don’t really care whether or not you have the data on them is easy to get. Figuring out how to make HR relevant to high-performers, basically, is the trick here. How do you get somebody who is just hitting home runs left and right and working 60 hours a week to take the 61st hour to enter data into the HR system? I don’t know how you do that. My sense is the one-third of people who are not filling out these forms are the people whose data you wish you had.

Stacey Harris:                      That’s a very, I think, realistic probably answer on that. That’s a challenge, and that becomes a challenge, I think it isn’t just a technology challenge, it’s also a challenge on a workforce perspective, which is if those are our most highly productive employees, if those are the employees who really are vested in the company, how do we also provide them benefits if they’re not going to fill out that information? I’m not talking about benefits as in terms of benefits for health care stuff, I’m talking about as being an employee, how do we continue to incentivize them, continue to make sure they feel valued so they don’t become disenfranchised if we don’t have data on them. It’s a two-way road and it’s a challenge, I think, both for the employee and the employer.

John Sumser:                       I wonder, there’s this view that … There’s a really weird echo here. There’s this view that having all of the people in the company provide all of the data is what nirvana is all about, but it seems to me that managers are great at managing the people who are at the top of the pile and terrible at managing the people who are at the bottom of the pile, so that what you get when you have a system that doesn’t have data about the big guys and has lots of data about the little guys is actually a pretty good tool. Maybe the idea that it’s broken when you don’t have everybody in it is the problem.

Stacey Harris:                      It’s an interesting perspective, but I can see, yeah it’s definitely … I think there is a, one of the things that a value proposition that I found when I was doing early research back in the days when I was working with another organization was that if we did HR technology appropriately it allowed us to do for the masses what we only were allowed and able to do for a few people in the organization, right? If we used it appropriately, which meant that we could start to really provide development, succession planning, real talent conversations for everybody in the organization if it was used appropriately, right? I’m not sure that everybody thinks about it that way and oftentimes we only think about the top talent within the organization as part of our talent management strategy, but if you look at technology as an enabler to reach everybody, it sort of becomes a different type of technology as you were talking about.

John Sumser:                       It’s one of the disconnects between the executive branch of the organization and HR. In HR the idea is that what you want to do is reach everybody, and when the CEO talks about employees and the value generated by employees he or she is generally talking about a small group, not the entire body of the organization. That’s a continued source of friction between the two, I think.

Stacey Harris:                      Maybe that kind of wraps up the last article that I had pulled out, which really didn’t have much to do with our benefits conversation, our predictive analytics conversation. It was something that you had actually tweeted out and I thought it was an interesting conversation on the Uber ongoing conflict about whether or not an employee is marked as a true employee or whether or not they are sort of continued to stay as 10-99 contractor employees under the Uber list models. Tim O’Reilly is not someone who I follow a whole lot, but I do see his work from time to time in the tech space, had a commentary that he felt that the conversation was actually the wrong conversation to be having.

In his article, basically, that he put in the Business Insider that, well the Business Insider sort of talked about what he had said, so it wasn’t really his article, per se, but basically it was commenting on is that if we’re talking about whether or not someone should be a W-2 employee or not, we’re sort of missing the boat because as soon they move them to W-2 employees, and he had mentioned those organizations like Instacart that had gone and done that, gone from the contractor 10-99 model to a W-2 employee, they also capped all the employees’ hours at 29 hours and made them all part-time employees so they didn’t have to pay the benefits that went along with a full time employee. Not only did these employees lose the hours, they also weren’t getting all the benefits that we supposedly get from being a W-2 employee. His comment was, is the W-2 employee the wrong thing to be chasing, or is it that we just are not giving enough profits that are coming down from the top to the bottom to employees? John, any comments on that in the bigger conversation that we were just talking about? Is this sort of meeting all the employees’ needs? The masses?

John Sumser:                       There’s a pretty interesting question that you and I should be talking about routinely and that’s, it’s in a world where the average tenure on a job is three years and the average person on the job is a part-time employee, even if they’re well-paid, then all of this stuff about succession planning is kind of nonsense. All of this stuff about talent management is kind of nonsense. You get somebody in, they work there for three years and then they’re gone and they never were full-time. The most important thing you can have about them is their contact information, not some grandiose scheme for keeping them in the job like a lifetime employee. I think that’s what Tim O’Reilly’s trying to get at is, all of these notions about who should be a W-2, or what’s a 10-99, or what are the status of employees depend on a 20th century view of work and what’s happening is work is changing to be something that is more refined and less committed.

Stacey Harris:                      Yep. Well John, I think that would be a great conversation for our next call next week. What is work in the 21st century? What does it really look like? Particularly not only with what we’re facing today but what we’re seeing maybe down the road in five years. That would be a really great place to pick up the conversation. We’ve gone through our 30 minutes though today already.

John Sumser:                       Yep. You sound like a therapist. “Okay, your hour is actually only 30 minutes, get out of here now and give me some money.”

Stacey Harris:                      I’m cultivating that, right? It’s a very good skill to have sometimes.

John Sumser:                       You’ll just need an inflatable couch to put in your traveling bag so you can have people sit on the inflatable couch and tell you their woes.

Stacey Harris:                      Telling me their woes, that’s right.

John Sumser:                       Another great show. Thank you so much for doing this, Stacey. It’s always a lot of fun.

Stacey Harris:                      Definitely, yes, looking forward to our next conversation. Thanks everyone out there for listening.

John Sumser:                       Thanks for listening. This is HR Tech Weekly, One Step Closer with Stacey Harris and John Sumser. This was our 37th show, thanks for tuning in. Bye-bye now.

Stacey Harris:                      Bye, everyone.

End transcript


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