Podcast: CEO Steve Beauchamp on Paylocity’s Evolution

Paylocity

Transcript

Mark: Welcome to PeopleTech, the podcast of the HCM Technology Report. I’m Mark Feffer. This week my guest is Steve Beauchamp, chief executive of Paylocity. The company was long known for its payroll tools, but lately it’s been moving into HCM.

We’ll talk about that, the impact of COVID-19 and what to look out for in 2021, all in this edition of PeopleTech brought to you by NetSuite. If you’re a business owner, you already know that running a business is tough, but you might be making it more difficult on yourself than you have to. Don’t let QuickBooks and spreadsheets slow you down anymore. It’s time to upgrade to NetSuite. Let NetSuite show you how they’ll benefit your business with a free product tour at netsuite.com/HCM.

In this podcast, we talk with @Paylocity CEO Steve Beauchamp about the company's evolution into HCM, managing during the pandemic and how HR technology's changing. #HR #HRTech Click To Tweet

And now, Steve Beauchamp, welcome. Well first, can I ask you how’s the pandemic been treating you and been treating Paylocity?

Steve: Yeah, definitely been a challenge, I think, for all of us at Paylocity and our more than 3000 employees and then our 25,000 plus customers. I think internally we have a large part of our workforce that was already remote prior to the pandemic, so that’s almost 50% of our folks. And then a lot of those other 50% do work with flexible schedules and have experience working from home. So that part of the transition was probably less challenging, still challenging.

We did that very early in March. I think what we see from our employees is just the stress from obviously having potential loved ones impacted with COVID, but also having kids out of school and trying to manage working from home and kids. And so I think for us just being there for our employees allows us to then be there for our customers. And I’m really proud of how we’ve kind of weathered the storm and kind of got into this new normal and still been able to kind of produce great results for our customers during a difficult time.

Mark: And how has the pandemic impacted the business? Are you hearing different things and different needs from customers?

Steve: So I think first and foremost, the obvious thing is the customers on average have less employees, right, unfortunately, particularly in impacted industries like restaurant, retail, hospitality in general is certainly down in terms of the number of employees. And so that’s a big challenge for our customers. And then sometimes that creates strain on those HR departments. So they might be either under-resourced or all of a sudden have new initiatives and projects that they’re trying to manage. And they’re trying to manage all their employees’ nervousness and angst as well. And so as they come to us, they are looking for solutions for communication and connecting with their employees, particularly now that some of those are going to be remote. So we have a product called Community that we’ve seen usage really increased significantly over the last six months.

 So think about that as kind of a social collaboration capabilities within the platform where our clients are doing announcements and they’re sending out documents and videos and really trying to connect with their employees. And then we’ve also seen them leverage a lot more learning management. So some of this training that you would do onsite and you have a classroom setting and some of it’s compliance-oriented training, but some of it’s skill-based training. And so we’ve seen increases over the last, call it, six plus months in utilization of Community, which is a free product, as all of our customers have, but we’ve also seen signups and utilization for our learning management increase significantly.

Mark: Okay, now we’re recording this in early December and there’s beginning to be signs that there may be a vaccine soon and distribution beginning soon. And so talk about reopening has started up again, but realistically, how do you think reopening is going to play out if you consider the work involved in manufacturing the vaccine, distributing the vaccine, making sure everybody in the workforce is accounted for in some way or another? What are the challenges do you think employers going to face with that and what is Paylocity going to do to help its customers?

Steve: Yeah, so I think some of the challenges that we’re going to see over the next year are unfortunately fairly similar to the ones that we have now. So when you’ve got a lot of uncertainty, which is what we’re going to have, even around the vaccine, when are people going to get vaccinated, what impact that’s going to have. So I think you’re going to see a lot of uncertainty in your employee base.

And so one of the challenges we saw that came really evident early in March is you’ve got to over-communicate with employees, find ways to listen to them, whether you’re surveying them, whether you’re having round table sessions, whether you’re doing Zoom calls, but this idea of trying to continue to connect with employees, because they’ve got a lot of questions and they’re uncertain themselves. They don’t know when their kids are going to be back in school. They don’t know if they go back to school, are they going to then end up being back online and now I’m working virtually.

And so that’s the number one thing that I think we’ve really tried to help our clients with using our survey products, our learning products, our Community is get more connection points with your customers and make sure that not all those connection points are live Zoom meetings, where they’re worried about what’s happening in their background and they don’t have flexibility in their schedule. They have to be on a specific time. Use asynchronous tools.

So a lot of our video product that we’ve launched allows you to record and share video content, as well as maybe your screen at the same time versus maybe having an hour meeting or taking that hour meeting down to 30 minutes or having a meeting free Friday morning or something like that. And so I think this idea of flexible schedules and communication, which has been a big point of conversation over the last now almost eight months, will continue to be throughout 2021.

Mark: I wanted to, I’m curious about one of those tools that you talked about, your video messaging, which had just launched not too long ago. What’s the reaction been to that? It’s seems kind of interesting that you’ve got something where a user can record a message and then send it almost like a video email. So it’s about sending a more dynamic message as opposed to having a conversation.

Steve: Yeah.

Mark: Are people adopting that or?

Steve: Yeah, they are and in different ways. I would say the most common use case that people are adopting for is HR and the leaders at the company. And so for me, for me as the CEO of Paylocity, I do send video messages rather than maybe having an all-company town hall to supplement the all company town hall. And then I’m seeing leaders across the organization try to communicate and make that more personal connection because that’s one of the things that we all miss when we’re spending time remotely is you don’t see people enough and video isn’t a replacement for it, for sure, but you can supplement some of those connection points with asynchronous video. And the real part that people enjoy is they can then digest that information on their schedule. So it just automatically creates flexibility for them. And so we see a lot of announcements, various different initiatives.

We see people actually using it now, and this is probably early stage, but as an addition to a one-on-one meeting. So we have a journal product in Performance where you can do kind of ongoing Performance conversations, but you can also send a video message maybe before I’m having a one-on-one with my leader about the topics that I want to be able to cover and maybe some initial thoughts. And you can maybe take that hour one-on-one session and maybe kind of get it down to half hour by having this connection points ahead of time.

So we’ve seen people start to adopt it that way. And then we’ve also seen people kind of create their own training. So I’m going to use this video capability and I’m going to show you a product demonstration, or I’m going to show you physically how to store products. And then I’m going to share that with people across the organization.

And so this idea of being able to create these asynchronous videos and give people the flexibility to digest them, we’re starting to see that in a few different use cases. I think the last one I would mention is a newer one that we’re kind of working on is the video job description idea. And so, when I go to a company’s kind of website and I’m seeing a job, I can maybe hear it from somebody who’s in that job what it’s like to be in that job, or maybe the leader that’s going to be hiring for that job, some of the criteria that they’re looking for. And so we really started to insert a lot in the way we work at Paylocity.

So one of our philosophies is let’s use our products first, figure out what the most useful use cases are, roll them out to our customers, watch what our customers actually do, and then continue to iterate. And so I think we’re still early in seeing how our customers are using it, but that’s what some of the most common use cases so far.

Mark: Okay. Let’s take a quick break. You’re listening to PeopleTech from the HCM Technology Report.

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And now back to my conversation with Steve Beauchamp, the CEO of Paylocity.

I’d like to step back a little bit and talk about Paylocity and, let’s say, the vision. It seems like the company’s been undergoing a change. You were once a payroll company, pretty much known for that, but now you’re extending your capabilities into HCM. This year you added video messaging that we were just talking about. You also bought Samepage for collaboration. What’s your overall vision? What’s the form you’re building here?

Steve: Yeah, so I think if you look at our history and how that vision has evolved, you’re right. It started with being one of the first to have really true online payroll software and really robust capabilities for that midsize customer. And then what we did is after we went public, we raised some money. We really expanded our R and D efforts. And we started to build the other modules. Some of them were more tactical. You think of something like an expense management or even some of your time and labor type tracking, but we did move into the talent management space as well. And so adding things like recruiting and performance. More recently surveys. We’ve got an onboarding product.

And so I think as we’ve started to complete the talent management suite, really in some ways with the launch of Learning Management was probably the last big module that we had to complete, we started to think about, “Wait a minute, it’s not just good enough to have all of the capabilities. We have to have think about are those products designed in a way that’s going to meet not just the needs of our clients today, but the needs over the next several years?”, and started to think of the demands of the Gen Z workforce and what they’re looking for. The real-time nature of communication, transparency, all of the broader trends in HR and we’ve really tried to evolve our vision so that our goal is to have the most modern technology platform.

So not just be able to automate everything for an HR person and have all the modules, but let’s make sure that the experience is a much more modern experience, and in some ways, for employees, it starts to feel more like consumer products that they’re used to using instead of this kind of back office software that they then have to learn, that feels older, that isn’t the way they actually connect and communicate. And that’s probably the newest part of our vision is taking all of those modules and making sure that we’re building these new use cases that are just naturally much more modern and start to go beyond traditional HCM, starts to connect and communicate with employees, starts to allow them to collaborate because the rich data that we have about every person allows us to just make that much easier for our clients to use.

Mark: So what does the company look like in five years? What kind of customers do you have? Are you end to end in terms of the HR services you’re offering? Could you talk about that a bit?

Steve: I think in some ways, a lot of what we have to offer today has end-to-end capabilities in the traditional HCM. And what we’re really trying to drive towards, though, is that we want to use the data that we have about the individuals on the platform. So all the employees that are on the platform, and then we want to be able to build additional use cases that get a little bit closer to how they get their work done, because if we know all the data about the skills that they had when we recruited them, we know the managers they’ve had, we know what positions they’ve had, we gain a lot of information that allows us to use that information to dynamically create teams and complete projects and different initiatives. And so we’re really trying to extend almost beyond traditional HCM so that we’re working on collaboration, we’re working on communication.

And so I think in the past, people would say, “When I buy Paylocity, I became more efficient and I’ve kind of enabled my employees and managers and leaders to get things done more efficiently.” I’d like to say two, three, four years from now, they say, “When I buy Paylocity, not only was I more efficient, but they gave me time back and with that time, I’ve rolled out all these initiatives, using the platform to engage with my employees differently. Now I can say I’ve got higher client retention. My employees are more productive.” And so we’re really trying to focus on this broader concept that goes way beyond automation.

Mark: How has the pandemic impacted your plans? You’ve obviously taken a bunch of steps this year in the middle of the virus. Has it put you behind, given you new ideas?

Steve: It has. In some ways, it’s probably accelerated our mindset around this idea of being the most modern platform and how that actually resonates in the marketplace. So what I would say is the great example is VidGrid acquisition. And so the idea of having video as part of an HCM platform, we had obviously been working on it pre-pandemic because we closed that acquisition back in March, but our theory was, this is probably going to be a pretty slow roll out over the next several years and it’ll take time for the market to catch up, but we think it could be very useful. And what we’ve seen in the sales process is people are so much more comfortable with video now, right? And so the idea of being able to communicate using video, if we were talking to people back in January, I think eight out of 10 people would say, “I’m not sure we would really want to do that. I don’t want to put myself on a video screen. I’m not comfortable creating messages.”

And now I would tell you it’s resonating in the sales process probably with half of the prospects and growing. And so the pandemic, because it’s accelerated some of these trends like remote work and the need for flexibility and transparency of communication and more automation around listening to your employees and gathering feedback and looking at data, I think it’s accelerated our view of how quickly we need to move down that path. And so that probably led us to looking at that collaboration space and making that Samepage acquisition, because that allows us to create even greater number of use cases for our customers.

Mark: So as your product becomes more dynamic and starts to touch more aspects of the whole employment life cycle, do you see yourself expanding your customer base into new tiers, maybe starting to look for bigger employers or smaller employers?

Steve: Yeah. I think we, as we’ve invested in our product and it has certainly expanded significantly, it’s more than doubled in terms of the amount that we sell to customers over the last six years, we have seen larger customers look at and evaluate us and select Paylocity. So we’ve traditionally kind of focused on the small end, think of that maybe 20 to 50 employees and even 10 to 50 employees. And then 50 to 500 is kind of our mid-market where we have probably the bulk of our revenue falls in that 50 to 500 marketplace. But we’ve seen customers with over 500 employees, in some cases, several thousands of employees come and evaluate Paylocity and then select Paylocity as their vendor of choice. And if you think about our strategy, we have over 3,500 employees. We’re the first user of every part of our product, right? So when we launched Learning Management, we used it for a year before we launched it. When we launched Community, we used it internally for a year before we launched it.

So in many ways, as we build our products, we’re actually making sure that we’re not only creating solutions for our smaller customers, but because we are one of our big customers and we’re using it first, those features are naturally becoming much more attractive. And so we definitely had greater success in that 500 plus market, but I don’t see us going after 20,000 employee customers or the Fortune 500. I think we want to stay true to kind of small and medium, medium to a little bit larger businesses, because I worry that when you design product, sometimes the really, really large customers have so much complexity that you just give up so much ease of use. And so we’re trying to find this balance where we can give our larger customers enough complexity, but have it super easy to use for their managers and ultimately for the employees so that it just eases the burden of implementation and roll out.

Mark: Let me ask you one more question before I let you go. We’re a few weeks away from 2021. 2020 has obviously been a pretty wacky year.

Steve: Yeah.

Mark: What are the things you’re really keeping an eye on as you head into the new year?

Steve: I think that we’re going to continue to see accelerated trend, some of the same trends that we’ve seen now. And I don’t think they actually even go away post-pandemic, because I think, in many cases, employees are going to be demanding more from employers. I think this is kind of where it starts. And so some of that demand is going to come in the fact they want more flexibility. And so I’ve been able to work from home effectively. I had flexible hours. I get my work done when I want to. Now you want me back in the office from nine to five. There’s certainly some industries that you’ve got to be in person, but they’re still going to want more shift flexibility than they’ve ever had before and more say in that. And so I think that is going to continue into 2021 and beyond. I think they’re going to want more information at their fingertips.

So, and you get to a period where people are really anxious and you start to over-communicate and you really start to try to connect with your employees and you try to listen to them more and understand where that’s coming from, well, that’s not just going to go away during the rest of the pandemic or after the pandemic. So think of tools like survey tools and social collaboration tools, and then just other things that you need to do, town halls and round tables. And I think this idea of giving those employees a greater voice, they’re going to push for that. And when they have a greater voice, they’re going to ask for more transparency. They’re going to ask for you to be open around diversity, equality and inclusion conversations. And so the pressure that I think employees are going to put on business owners and HR leaders, now that we’ve kind of opened this up even more, will really be there in 2021.

And I think that’s going to extend beyond. And then I think for people like Paylocity, that gives us opportunity to see how our clients are starting to creatively use our products and then maybe almost create templates or adoption kits of how other customers can look at the best practices across our entire platform and use it. And in fact, one of the things that we’re going to be launching in 2021 is a recommendation engine that looks across our 25,000 clients and identifies where our customers are finding their employees are the most engaged and how often our customers might be surveying their employees. And we’re going to do that by industry vertical so that you could then benchmark yourself to the rest of our customers and say, “Geez, my turnover rate looks higher or lower than other customers in my industry.”

And hey, by the way, we recommend that you roll out Community. And here’s some groups in Community that all of our other clients see a lot of activity, right? And so, for example, right now, one of the most popular groups that clients create in Community that are fun is your pets group. So if you want to find a way to get to connect with employees, fun, find something that people have in common. People are sharing pictures and pets and so on. And there’s obviously a ton of work groups, but you’ve got to kind of think of this much more broadly because people want that flexibility. They want to be communicated differently. And I want it to feel like social media applications that I’m using.

And so I do think that 2021 will bring a lot of challenges for us, but I think if organizations focused on all those different ways to connect with employees, they can come out of it stronger on the other side of it and ultimately create a better environment for their employees, which results in better attraction and retention of talent, which powers all of our businesses.

Mark: Steve, thanks very much.

Steve: Thank you very much.

Mark: My guest today has been Paylocity CEO Steve Beauchamp here on PeopleTech, the podcast of the HCM Technology Report.

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Image: Paylocity