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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 7AM Pacific – 10AM Eastern, or catch up on full episodes with transcriptions here.

HR Tech Weekly

Episode: 73
Air Date: June 2, 2016


This Week

This week John and Stacey discuss:

Erin Spencer of Sierra-Cedar is sitting in for Stacey Harris this week.

  • Erin’s update on early incoming data from this year’s Annual Sierra-Cedar Survey Link
  • Bill Gates and AI
  • Microsoft’s Bots
  • Payroll systems that cheat employees at Domino’s

About HR Tech Weekly

Hosts Stacey Harris and John Sumser discuss important news and topics in recruiting and HR technology. Listen live every Thursday at 7AM Pacific – 10AM Eastern, or catch up on full episodes with transcriptions here.

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Begin Transcript

John Sumser: Good morning and welcome to HR Tech Weekly One Step Close with John Sumser and Stacey Harris. Today Erin Spencer is sitting in for Stacey in the co-host chair. How are you, Erin?


Erin Spencer: Just fine John. How are you doing this morning?


John Sumser: Okay. Where are you sitting today?


Erin Spencer: I am sitting in beautiful Cleveland Ohio where it’s 75 degrees and sunny. It’s not, John, I’m sure you’re in a more lovely spot but it’s not bad here. Where are you today?


John Sumser: I am in beautiful Newport Beach, California on the top story of a hotel in the heart plastic surgery community which is the heart and soul of Orange County looking out at Catalina Island in the distance. It’s gorgeous. The people here are all tanned and beautiful and everybody drives a Tesla. It’s an amazing place.


Erin Spencer: It is. It is but it does sound amazing. It’s definitely a little different than the rest of the United States but yeah.


John Sumser: Yes, it is. Yes, it is.


Erin Spencer: You people probably aren’t shopping at Walmart are they John.


John Sumser: The people here … I’m not sure they allow Walmart in Orange County. It’s possible that they do. I went into the Apple Store yesterday. I was looking for screen cleaner. I went to guy and said, “Do you have screen cleaner here?” He said, “No, we don’t sell that. You have to go get that at Target.” He looked at me like what’s wrong with you? When your screen gets dirty, you’re supposed to buy a new one.


Erin Spencer: Buy a new one, John. Just buy a new one.


John Sumser: Just buy a new one.


Erin Spencer: Houses become graveyards of old technology devices.


John Sumser: This week I have the bag and what we’re going to talk about today … We’ll talk about the Sierra-Cedar Annual Survey a little bit. We’re going to talk about Bill Gates and AI. We’re going to talk about perhaps Microsoft’s Bots. We are going to talk about … Let’s see. Dear me, let’s see. We’re going to talk about oh payroll systems. Cheating a payroll systems that cheat employees at Domino’s. We’re going to talk about the evolving conversation on performance management. If we get tired, we’re going to talk about hiQ Labs and its move to become the largest, most influential people in all this community. Why don’t we start with a little bit about the survey, Erin. How’s the survey going? You are the actual survey honcho. How’s it going?


Erin Spencer: I am. I control the survey. I run the back end and I get to look at the data first. The survey’s going very well. We obviously would love to have more participants. The more data we get the better all of our data is, the more information I can share with the organizations. Right now, we’re about 2 weeks in. We’ve got about 3 more to go. Please, anybody who’s listening, we’d love to have your personal organization added to our data to be counted. The data’s coming in nicely. Anything that of course that we share today is not final in any way, shape or form. We have an extensive cleaning process to do but I think we’ve got some interesting data so far. John, I know we were talking about this earlier?


John Sumser: Right. What are you seeing?


Erin Spencer: One of the most interesting things that we were seeing is last year, we definitely discussed initiatives. One of the questions that we always ask and this is, of course, is the 19th year of the survey. We’ve got a lot of data on what organizations are planning on doing for the next year and have obviously done for the last 18 years. One of the top 5 HR technology initiatives last year was creating an enterprise HR system strategy. That particular item from last year had a 30% increase over the last 3 years is something that organizations were planning on doing. Although my favorite parts about our survey data is that when we ask subsequent questions, we can actually see whether or not organizations are actually doing what they said that they were going to do. In this case, I can say with complete clarity that yes, organizations are actually creating and updating their HR systems strategies. We see a 30% increase from last year to this year obviously with preliminary data on organizations that haven’t their HR system strategy.


John Sumser: That’s pretty interesting. I should just underline that we’re talking about the Sierra-Cedar Annual HR Systems Survey I think that’s the name. If you want to find out more about it, one way you can do that is by going to the HR examiner. There are several obvious ad like objects around the HR examiner website that will allow you to click in and participate in the survey. Is there a good URL, easy to get to URL that allows people to download all their data?


Erin Spencer: Sure. If you go to, so Sierra S-I-E-R-R-A dash Cedar C-E-D-A-R dot come, you’ll see a link for the annual survey. From there, you can download all of our past white papers. We actually also have some individual white papers on specific topics such as healthcare and higher ed. If you’re in one of those areas, we’ve got some extra special information for you. All of that information is available on our website.


John Sumser: Fantastic. What’s the most interesting about the Sierra-Cedar Survey is that it is independently generated. The company that sponsors it does it for thought leadership purposes rather than any particular market agenda. It makes it unique of all the surveys with technology in the HR industry. This is the one that doesn’t have an agenda to make a case for some vendor or another as the best or worst, the brightest, the smallest, the fastest or whatever. It is the closest thing that there is to a broad scale analysis of what’s actually going on in the workplace with HR technology. It’s an amazing thing. The history allows you to see how the industry has evolved over time. If you’re starting a business in HR technology, if you’re trying to evolve your strategy as a business in HR technology, if you’re an implementer or recommender, you need to have the Sierra-Cedar Survey data in your back pocket because it’s the baseline. It must be really cool to work on that, Erin.


Erin Spencer: Absolutely. It’s so much fun. I love seeming data. I love seeing it come through. I know Stacey shares my thoughts. The 2 of us really enjoy what we do and we care about the data and having it come through and be helpful to the marketplace. As you mentioned, we’re very lucky that we’re not tied to a particular vendor or thought pattern. We can really share what the data says and not what the organization that funds the survey would like it to say because our particular organization doesn’t have the same constraints to a particular vendor or a provider would.


John Sumser: Yeah. That’s very exciting. You said you have to clean the data. What does that mean exactly?


Erin Spencer: Our data is actually cleaned extensively. There are some organizations that just take the data right out of the survey tool and kind of pop it in reports and you know, 2 weeks later they have a full paper and this is what their survey said. We don’t do that here at Sierra-Cedar. We actually go through an extensive cleansing process. We look a, first of all, we look at our organizations. We don’t look at just the individuals taking the survey. If 2 individuals from a particular company, Ford or IBM or whatever, they take the survey, we actually only keep 1 per company. I go through the survey and make sure that we don’t have duplicates and so I’ll pick the one that answers the most completely because obviously sometimes people skip things. I’ll keep that data. Then once the survey closes, I’ll actually sign the financial information for publicly traded companies. I will look up revenue and expenses and operating income growths and then we can tie some of our questions to financial that are obviously independently given. We’re not depending on organizations to provide that information for us.


John Sumser: That’s fantastic. What a great piece of work. I’m looking forward to hearing more about it over time. Let’s talk about Bill Gates and Artificial Intelligence. What do you see over there?


Erin Spencer: The most interesting thing to me is that people really are looking at Artificial Intelligence and stuff that 30 years ago was just a science fiction movie. They’re making those things a reality. That people are actually talking about using robots to do a lot more than just be a toy for kids to program. You think about the Jetson’s and you got a robot to clean your house. Now, we have robotic vacuums. It really is becoming more of a reality and you’ve someone like Bill Gates and the money of Bill Gates who’s actually speaking about it and then investing in those things.


John Sumser: I have a friend who’s headed up to spend a day with Google. I would say Google, Amazon, Apple, Cisco, Facebook, all those companies are starting to pioneer artificial intelligence in ways that really interesting. It almost seems to me like Bill Gates is coming to the party late. That this is … One of my deepest fears is that I’ll end up looking like the old guy trying to dance at the sock hop. The chaperon who should just stay over at the corner. There’s some degree to which that’s what Bill Gates is doing right now. AI is here in a lot of places. It doesn’t look like it did in science fiction. AI from what I’m seeing and hearing looks like smart 4 year olds. It’s not really artificial intelligence, it’s artificial smartness because common sense, wisdom, those sorts of things that are hallmarks of human intelligence. This is not what computer’s do. In computer intelligence there’s no kindness and there’s no irrational or at least hard to quantify loosey goosey judgment. It’s just like a 4 year old. It’s just like a 4 year old. Very curious, very able to connect dots but unable to create context. What they’re talking about a lot in the deployment of artificial intelligence is very specialized applications.


You don’t ever get something that is generically so smart that it takes over the universe. Instead, you get sort of an infinite variety of small intelligences. I think that’s fascinating. It’s great when you’re looking at something like HR technology because not all intelligence that know about things like the likelihood of attrition. The larger questions about how does this person, Erin Spencer, contribute to the team currently and how is she likely to contribute to the team in the future given the changes that everybody else will go through. That’s something some people are capable of thinking about. I imagine it will be quite a long time before some digital machine is going to be able to process all those nuances because as human beings we write a lot of that stuff up as intuition even though it’s probably advance nonverbal processing that we simply don’t understand. I’m excited about AI. It is definitely coming. There will be AI presence galore this coming Christmas. I’m not so sure that it is a state change for the human race like some people seem to say this. What do you think?


Erin Spencer: I think that when it comes to practical applications there are definitely places where AI can take over from humans. I know especially we talked last week a little bit about the minimum wage going up. When you have that going on, you have a lot more kiosk and interactive bots and essentially computers providing the answers that humans used to provide but see it ready for computers are well, cheaper and easier to control in certain situations. I think when people first think about AI in a business context that’s an easy place to put it. You know, we’ve also talked a lot about machine learning and how does that fit in. You think about your algorithm for your Netflix. What movies are you going to watch? What shows would appeal to you based on things that you’ve picked in a task? To me when you think about the future, you know, are we looking at something huge and big that’s going beyond what we can think about right now or we’re looking at small incremental changes based on these little things that we’ve seen before?


The big stuff’s a little scary but the smaller stuff you have, the more familiar you get. With the little things the more you’re like, “Oh yeah. That really is a good idea and I like this. In one area of my life it could be okay in the professional arena as well.”


John Sumser: Just to take this another step further, Microsoft says this week that bots are the new apps.


Erin Spencer: Mm-hmm (affirmative).


John Sumser: What in the world does that mean?


Erin Spencer: The interactive pieces, is my understanding, are like the new apps on your phone. You just have that and you can use it just the way that you use your apps on your phone. I mean it’s an interesting thing. My kids who are 8 and 4 don’t have any problem accessing information on apps especially when they become the workforce of the future. Are those interactions the way of the future for especially that generation?


John Sumser: It says that there’s a Microsoft app that a blind engineer is using. It’s a pair of glasses that you take photos with and the glasses describe people’s emotions to you if you can’t see their faces I guess. It’s some sort of facial recognition tool. I could use one of those.


Erin Spencer: Well, I was thinking, you know, obviously especially in the Silicon Valley tech community’s got a very high incidents of asperities. How interesting would it be for people who can’t read emotions the way that a neurotypical person can have glasses that can tell them how to base their interactions with individuals.


John Sumser: Yeah. Yeah. Those of us who are occasionally clumsy could have coaching so that we reduce our tendency to hurt other people’s feelings. That’s interesting. Neurotypical. Did you just say neurotypical?


Erin Spencer: Neurotypical. Yes.


John Sumser: That’s such a great word. Where did you get that?


Erin Spencer: It’s part of with the internet doctor diagnosis sort of things but rather than the term atypical.


John Sumser: I see. I see. I see. Was your searching for neuro disorders, this comes up.


Erin Spencer: Yes. When you think about your children whether or not their actions are standard or not, you start Googling things. This is a typical development for a 5 year old and you search and think about what’s normal and what’s not normal. Can they do the things a normal 5 year old can do in regards to growth motor skills and fine motor skills but also do they read emotions, do they understand how their actions make other people feel.


John Sumser: That’s so interesting. You know when I raise kids, there wasn’t much of that available. Now, it’s sitting in your bedroom at night calling to you going, “Find out what’s wrong. Find out what’s wrong.” How do you sort out the information that you get that way? How do you sort that out now?


Erin Spencer: You know it’s interesting. I have a crowd of moms that have kids about the same time that I do so we do a lot of crowdsourcing amongst ourselves. It kind of gets to the point you’re talking about bots and interacting and robots. We’ll take pictures of rashes on our kids or cuts and say, “Hey. You think this needs to go to the emergency room and get stitches or do you think we could put a band aid on it and call it a day?” In a way, they’re my bots. I think people are used to crowdsourcing like that now.


John Sumser: That’s very interesting. I hadn’t really thought of that. Do you think that that goes on professionally in HR in a big way and is that something that you get out in the survey?


Erin Spencer: Well, our survey would definitely love to play that role. I would love to have people say, “Hey, what vendor do I want to have for my HRMS? I should go to the Sierra-Cedar HR Systems Survey and look up who likes what vendor and why they like it and be able to make a decision based on my data.” I mean you think about crowdsourcing these days you think about do you go to a restaurant without looking at Yelp and seeing what the reviews are first. That’s not quite machine learning or AI but it’s definitely taking information that wasn’t available 15, 20 years ago and using it to make daily decisions. I mean, John, if you were going to buy a car, would you walk into a car dealership and buy one today without having done extensive research on it first?


John Sumser: Well, I would but … Well, I would walk into a car dealer and buy a car but I would buy a car without research. I’m not sure that I understand that exactly. This is kind of a light bulb for me. The idea of a crowdsourcing is not some mass thing but it’s a collective of people with shared interest who are trying to make better decisions collectively. It seems to me that hasn’t really played up as much as it might be in the story of HR technology itself which is there are some really interesting going on. Every company of any substance has a user conference and what is a user conference but is sort of a form of crowdsourcing that allows you to be inside of the conversational framework of the vendor.


Erin Spencer: Mm-hmm (affirmative). Absolutely.


John Sumser: That’s a really interesting way to think about it. I’m pretty sure that we’re in the market for new ways of thinking and talking about what we do in HR tech. This is really good. This is really, really good. There’s another thing running around. Domino’s Pizza has a flogged payroll software system. The New York State Attorney has found rampant wage violations across Domino’s franchise stores. The payroll system led to underpayments to workers over half million dollars. They’re using this as a way of getting at the question of what is a franchise firm and what isn’t a franchise firm. I bet you’re pretty familiar with that stuff actually from your department at management recruiters. Because what they’re saying is that if all of these places are using the same payroll software and that the payroll software is cheating employees across the board, that means it’s not really a franchise but these are … The distinction is franchises have to be freely operating and you have to be very careful how you give them advice inside of the human resources stuff or they become company controlled units.


The company controlled units are accountable under different tax laws and different organizations structures.


Erin Spencer: Absolutely.


John Sumser: It’s a big deal that the payroll system is host up at Domino’s in New York State. It underlines the importance of trying to figure out whether or not the payroll service that you’re hiring is actually going to meet the needs. It’s a fascinating problem. What do you think?


Erin Spencer: Yeah. When I first read this, my first thought was so did Domino’s give the payroll system faulty information or is it somehow the technology’s screwing something up which you would hope that you could trust your payroll system to do things correctly. I know here at Ohio in the county where I live we have a local tax. I went to work for an employer once who didn’t know about the local tax and I got my paycheck and there wasn’t that money taken out. At tax time of course I got a nice little bill but was that the fault of the payroll system who didn’t know about it or was that the fault of myself for not letting that be known? Was it the fault of the company for not paying attention? I guess my first thought is so who’s at fault here? Then once you get pass that point how does that change the structure of your organization? Should you as a franchise be able to go outside the Domino’s payroll system and pick a new one? If you’re a franchise theoretically you should be able to control your own technology decisions but obviously as a parent company, it’s easier to have everybody under one brand in one spot and have more control.


John Sumser: Right. That’s the constant tension in the payroll business and it’s why it’s such a difficult place for HR software. The more institutionalize the process and procedures, the more it becomes a joint operation rather than a free standing franchise. That’ll be really wonderful to watch this story unfold over time. The other thing that’s in the news … Go ahead.


Erin Spencer: Does that make it easier … Does something like this make it easier for market disruptors to come along in the payroll system space and say, “Hey. We’re a new provider. You should go with us because the big guys are having problems? Does it make it harder because the big guys say, “Hey. We know about the regulations and we’re the software that you want to trust with your data.”


John Sumser: In our research last year we wrestled with the question of what’s the replacement cycle for various kinds of HR software. The replacement cycle for payroll systems is 10 years. My view is that it’s 10 years because a disruption in payroll is very damaging to morals. A payroll has to be pretty bad to be replaced. Once you’re up and running and you know what the problems are, people don’t replace payroll systems over night. That’s partly because when you have a payroll system it usually means that you give the payroll system provider your money for some amount of time, right? You give the payroll provider the money, the payroll provider makes the paychecks. The float with the difference between when you give it to them and when they have to spend it is one of the reasons people go into the payroll business. The float could be powerful. The float is a place like ADP is billions of dollars. Billions of dollars just sitting in a checking account. You could do a lot of things if you have billions of dollars just sitting in the checking account.


Erin Spencer: That is so true.


John Sumser: You actually have to have money because you have a lot of somebody else’s money and you start to behave more like a bank. That’s what people are after when they go into the payroll business. The problem is you have to win the trust, you have to win enough trust for a company to give you all of its payroll. Remember what bank robbers and stage coach robbers rob, right? It was always the payroll that they were robbing. The place where stage coach robbers live is somewhere near the payroll. That means that it takes an extraordinary amount of trust to get in and that people who have kind of mediocre track records keep their roles as payroll companies because they’ve never observantly stolen any money. It’s like sure we could use a better bank vault but this bank vault locks and nobody’s ever cracked the lock is the way this payroll business works. It’s hard for a disruptor to come in to established companies. What almost all of the disruptions do is they go after brand new companies.


Erin Spencer: Mm-hmm (affirmative).


John Sumser: I don’t think that they make it possible for them to be some sort of disruption. Wow Erin we’ve whipped through our half hour meeting.


Erin Spencer: We have. We have.


John Sumser: Yeah. What a great thing. This is great. You better tell … If you talk to Stacey before I do, tell her her job’s at risk.


Erin Spencer: I don’t think we’re going to need to endure that. Thank you John. I’ve enjoyed speaking with you on this radio show. That was a good talk.


John Sumser: It was great. Please tell Stacey if you talk to her first that her job’s at risk. She’s from Ohio so it will make her feel loved.


Erin Spencer: Well, there’s nothing like the threat of layoffs to bring up your heart rate. Probably better than going to the gym. I’m going to lose my job today!


John Sumser: We forget Stacey Harris lay off of the national news now. That’s great.


Erin Spencer: All right.


John Sumser: Okay. So thanks Erin. It was a lot of fun.


Erin Spencer: Thank you John.


John Sumser: We’ll see you again next week. Thanks very much and thanks everybody for tuning in. You’ve been listening to HR Tech Weekly One Step Close with Stacey Harris and John Sumser. This was our 73rd show. It was a pleasure to have you here. Thanks very much for listening. Thanks Erin.


Erin Spencer: Thanks everyone.

End Transcript

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