3Sixty Insights #HRTechChat with Michael Haske of Paylocity

Welcome to 3Sixty Insights’ latest #HRTechChat. Last week, Michael Haske, president and chief operating officer of Paylocity, joined us for a wide-ranging conversation. Following is a taste of the ideas we discussed:

• How you could replace the “versus” in concrete versus abstract HCM with “and”—and how this parlays nicely with what Paylocity refers to as “tactical” and “strategic” HCM
• How tactical/concrete and strategic/abstract HCM are both incredibly important to organizational success
• How most aspects of HCM are, in fact, both tactical/concrete and strategic/abstract simultaneously—think of a Venn Diagram with most of the two circles overlapping
• How C-suites are really beginning to come around and take strategic (and abstract) HCM seriously
• How Michael sees the shift as not only situational (e.g., the pandemic), but also generational: younger people are basically wrestling our notions of the value and meaning of business to society into a more progressive place, but without necessarily dispensing with the traditional
• How more people are getting into HR for the value it can bring to the table, beyond being a cost center—and how this caliber of HR person brings a level of sophistication to the organization and can become a leader’s trusted advisor in ways we just didn’t think about years ago
• How all this, especially as we exit the other end of the “COVID wormhole,” is awakening the C-suite’s right brain—the creative, people-focused interests and aspirations of C-level executives

Transcript

Brent Skinner 00:00
Welcome to the 3Sixty Insights conversation. With me today is Michael Haske, president and chief operating officer of Paylocity. Michael and I had a wonderful discussion very recently, and at the end of it, we wished we’d recorded it as an impromptu podcast for the public domain. So we agreed to schedule a time to try to recreate the magic. And that’s why we’re here today. Mike, Hello.

Michael Haske 00:26
Hey, Brian, thanks for having me. Yeah, looking forward to trying to rekindle our conversation. Once again.

Brent Skinner 00:32
Fantastic, fantastic. How about we start off with a really interesting idea that would, that really made me think from our last call, and that was Paylocity, that idea of tactical, and strategic HCM? And how they’re, they’re different. But they’re both important. And they how they align loosely with 360 idea of concrete versus abstract. Ah, yeah,

Michael Haske 00:55
yeah, absolutely. Yeah. And I think what we have found over the years, especially the last few years, is there’s a real appreciation for, you know, two different sides of the coin, when it comes to payroll, and human capital management and all the tertiary pieces of it, you know, classically, it’s this very tactical, you look at it as something to automate manual processes stay in compliance, and are really kind of just, you know, ROI based on, you know, time saved and money saved. But there’s this other side of it, too, which is this, you know, burgeoning, growing strategic side of it, which is where you really start to see, you know, HR professionals, and even members of the C suite who are starting to, you know, really recognize the importance of looking at your employee population differently, especially these younger generations that are, you know, they’re trying to attract and retain, and you start to think about things that don’t have as straight align to ROI, but things like the communication, things like collaboration and engaging the employees and, you know, different forms of development, and of course, even the need to help empower them to work from anywhere in this COVID environment that we’re in, and, you know, there are ways to measure those things. But, you know, harder sometimes to tie them back to what we classically, you know, looking for, which is, you know, how is this gonna save me time and money. And so you start to see very different conversations with different people in our in our organizations and populations that we’re engaging with.

Brent Skinner 02:22
Yeah, that’s interesting. And it does fit in with the concrete versus abstract HCM concept that we have 360 insights are espousing just sort of promulgating in the market of ideas this year. And if I had to write it over again, I’d probably write it as concrete and abstract HCM. Because I don’t think they’re, they’re really two different things to be thought of, as in, you know, in conflict with each other, which I think is what you’re saying, too, with tactical and strategic. I’m curious. If you have any insight into why exactly. I mean, I can think of a few ideas. But why exactly is strategic HR, strategic HCM coming more to the fore? Why are you seeing that as something that leaders are starting to take a little bit more seriously, this is something that’s been that HCM has been trying to make happen for a long time. So I’m curious. Yeah, you’re

Michael Haske 03:17
absolutely right. First, I’ll take a step back, I agree with you, I think they are connected, I almost if I was drawing, it’s two concentric circles with that big overlap in the middle, right. And so they absolutely go hand in hand with each other. And, and yet, they are, you know, also very unique in what they do this strategic versus tactical, you know, so I would say what we’ve seen is a change in, you know, HR moving from what we would call from the back room to the boardroom, over the last many years. And it’s been a consistent, you know, shift where there’s been more and more of an appreciation for HR as not just some back office function that you have to have to, you know, pay your people and stay out of trouble. But an appreciation for HR can bring value way beyond that to the table. And I think you see more and more people getting into HR with that being the reason that they got into it. So I think part of the shift is people just started to appreciate it, you started to attract different talent into HR. And those HR people bring a level of sophistication, they can become a leaders right hand individually in ways that we just didn’t think about years ago. And then I would say everything is accelerated because of the pandemic and the pandemic is thrust us into a world where we have employee challenges and needs that are completely new and different or at or accelerated. I think they were coming anyways, but they’re now on our doorstep as opposed to being a couple years away. And HR is in an amazing position to address and help an organization navigate that alongside the rest of the organization. But they bring an element to the table that’s much needed right now. So I think you see that. And then the third one, I’d say is the generational shift. You’re seeing, you know, a different type of employee with different demands and expectations in a highly difficult market to attract and retain talent, a very competitive market for that. And so I think when you wrap all that up, that’s why HR has really thrust its way up into the organization. And there’s an appreciation by the CEOs and the CFOs of these companies for the need to really make sure you invest in that piece of it. Because if it can help you get through all this and thrive and all this,

Brent Skinner 05:41
I love the word thrive. That is a that is a term. That’s an idea that’s come up that actual word and other conversations that we’ve had, in terms of the post, the post COVID I guess we’re not quite post COVID yet, but hopefully, we will be at some point. Yeah, but even thriving during the second half of the second half of the game, even write a few things that came to mind. You know, just parlaying off what, what you said. One is this idea that it’s kind of interesting that, that for the longest time HR was seen, and I’ll just roll payroll into this too, even though it started off as his own thing, obviously, but HR was seen for a long time, something that you had to have. And yet there was this reflexive sort of, if then thought that if it’s something I have to have, then it’s something that a god, I, gosh, I need to keep it at bay, I you know, but the very fact that you have to have HR should have told people right at the beginning, if we could get in a time machine, go back to the beginning sort of told people well, you know, what, this is actually really important from a strategic standpoint, too. So it’s interesting that we’ve come around over decades and decades of time to, to see it that way. A couple of other things. When I was when I was thinking of concrete and abstract HCM earlier last year, if first I thought, well, some aspects of HCM are very much were mostly concrete. And some other aspects are very much are mostly abstract. But it’s sort of occurred to me that, that most things in ACM are quite a bit concrete and quite a bit abstract, even payroll the most, you know, the most at first blush, concrete or tactical aspect of HCM, right is actually very abstract or strategic to I mean, because if you pay someone, right, they’re gonna feel good. They’re working, because they want to get paid. That is, that is the fundamental reason why they’re working in the first place. But then there’s all the other stuff around career building and all that. So that’s just very interesting to me. And the last thing that I wanted to say around this, that you made me think of this, this idea of the pandemic is it I liken it to a wormhole and the any Star Trek geek will understand that right, where we were moving, we had all these trends, we were moving toward all these things anyway, a better in play experience or remote work, all these different things, even this idea that the that in place, feelings are important, right and actually may have bearing on the the success of the organization. Now we’ve been sort of hurtled through this wormhole of the pandemic, and all of a sudden, we’re that much closer to having to get these things, right.

Michael Haske 08:31
Yeah, I couldn’t agree more. So I’d say first time, your first point, yeah, it’s it is funny that we didn’t appreciate HR and this idea, but there has been a shift and I don’t know the best way to put it, but I’d say corporate America and capitalism are changing, and maybe they’re getting a heart or a soul. And then they’re also have an expectation on them to play a role in society different than the role that kind of came out of the 80s. You know, and, and so you’re seeing us evolve as a society from a public facing perspective in terms of corporate America. And as a result of that, like the employees that are coming into those organizations have expectations on and you’re right, the things that HR and payroll deal with are all emotional for the employee, they mean the world to them and their benefits, their pay, you know, all of these things. So, you know, it put HR already on the front of the emotional connection between employer and employee. And now where companies have to play a role socially, not just corporately, you can see that there are conversations that need to take place, things that people need to be dealing with, you know, the pandemic is one thing we didn’t even talk about all the social unrest yet, that also, you know, was a pivotal, you know, thing that thrust HR into the spotlight on what they needed to do to help their CEOs and leaders to navigate this because companies needed to address it, you can’t just tuck your head in the sand anymore as a company and say, well, that’s the separation of church and state, it doesn’t work that way anymore. And it’s not going to anytime soon, which is also part of that generational piece. But you’re right, I think we’re at Paylocity, kind of, you know, in a way excited that things have moved so much quicker than we expected. We’ve been making investments in areas of HCM that we don’t see really too many other companies doing around specifically communication and collaboration, and all these other pieces of engagement that you do see some of and all and we didn’t expect massive interest in that probably for a few years from now, you know, their early investment seed investments. And yet now, we’re seeing demand and interest. We’re seeing our client base, suddenly using aspects of our application that were, you know, relatively low utilization all of a sudden, are growing rapidly. And we’re seeing interest from new customers and partners for things that they weren’t asking us about before. And now they’re asking us how we can help them in those ways. So yeah, we have definitely shot through the wormhole and come out, I don’t know, five or 10 years into the future.

Brent Skinner 11:11
Yeah, we have, you know, it’s interesting, how can HR help to ensure that it, that it that it remains a player in all these things that are happening, because you think about employee experience, it really happens between them and their managers? Right? There’s performance management, which is, you know, administered by HR and followed by HR. So I’m going with this,

Michael Haske 11:40
I want to say, you know, one of the conversations that are one of the things we talked about in our previous conversation is how the role of it has changed so much, and in an organization, and when it comes to, you know, acquiring new systems and new tools, and I think HR is, has an opportunity to be part of filling that gap. Because I really do believe that when an organization is recognizing, hey, you know, I got to find new ways to attract this talent and retain this talent. And I’ve got to find new ways to operate in this world where we may never come back to the offices fully. So I got to think about this work from anywhere. And I got to think about how do I measure if my employees are engaged or disengaged? And then what do I do about that if I have an engagement problem, and I care about, you know, making this a great place to work and getting that feedback? Well, there’s, uh, there are tools out there, and I believe HR not only can provide, you know, the, the advice, not only can create an awareness for their C suite that these things need to be important to us, you know, because not every C suite has woken up to that reality yet, and they can do that. But then they’ll be the ones that can help solve it. And that’s, that’s always the missing ingredient. Everyone can say, yeah, we need to do something about this, and we have a problem. But the important thing is to have someone in the organization that says I can also lead us to the promised land. And I think that’s where HR has a chance to really not just keep their spot, but even improve their position in corporate America as a real part of the leadership team.

Brent Skinner 13:12
Yeah, you bring up a really good point in it. And it made me think, you know, is, is HR going to become HR have an opportunity to become the metaphorical it of people management?

Michael Haske 13:25
Yeah, absolutely. I think that is a great proxy for what we’re talking about here. And very much could be the way things play out over time. How do

Brent Skinner 13:35
you how does all of this stuff that we’re talking about how is it affecting the buying process?

Michael Haske 13:42
Well, you know, I think in a few ways, I you know, what we’re seeing is that there’s a need to move be on what we have classically done, which is really talk to people about that tactical side of it, you know, that’s where they tend to want to lead you. And that’s how they think about it. Because you know, most organizations, even in the enterprise space, they don’t have a playbook on how to evaluate a payroll HCM solution, right. And so they’re kind of playing it by ear. And as a result, any buyer in that situation tries to delineate it down to something really simple for them to say, I’m going to evaluate on these things. And so you do tend to try, they try to push you into a place where you’re evaluating on the classic time saved, compliance, customer service, right? Those are the tenants that are easier for them to get their mind wrapped around. But what’s happening now is, I’d say, you see this whole move into Wait, we got to move beyond that, like there’s stuff that we need to think about that we might not be able to measure it right back to some ROI. And it’s you start to get into analytics and machine learning and you start to think about how am I going to measure my employees and understand where we’re at along this journey, and what am I going to do about that? And we’re so early in It’s hard to tie, you know, ROI based outcomes to this, these things lead to investing in these things leads to better business outcomes, although we’re starting to see that, and I believe that wholeheartedly. And so that changes, the buying discussion also changes who you’re engaging with the organization, then go a lot of times, we would often just deal with the people in payroll and HR, and it would ultimately be their decision. And then as long as the economics of it made sense, you know, the change costs and all that the C suite wouldn’t even get involved in the evaluation, they were just rubber stamp it, but that’s changed. Now more than ever, the C suite is interested in being a part of that evaluation, because they don’t just want to change from one system that’s keeping them in compliance and automating things to another one, they want to move beyond that, and they have this growing appreciation that’s starting to show itself for there’s more I want to get out of HR. And as such, there’s more I want to get out of my payroll, HCM solutions, to help me with these other things that are now on my plate in front of me.

Brent Skinner 16:05
That’s interesting. Would you say that? So in your observations and your experience on what you’ve seen, as of late, would you say that that the C suite is actually sort of developing a little bit more of a right brain than it used to have where it’s looking at things that crude a bit more creatively and thinking about more than the bottom line mitigating risk and increasing revenue?

Michael Haske 16:29
There’s no question. And it’s funny, you put it the perfect way, because it is a right brain left brain thing. And you see some people that are kind of maybe stuck in the past. And there’s that group that is resisting this and just wants it to be the way that it always is. But you see that the more progressive people, the people who see where this is going and, and are not going to, you know, I often say that we are at a point where if you know, companies don’t get on board with caring about these things that they didn’t used to have to care about, it’s going to be hard for them to exist, they’re going to become dinosaurs, and they’re going to be prehistoric, because employees will very much make their choice of where they’re going to work, and where they’re going to stay based on things that companies have to care about that HR is leading the way on, you just take one example of so many, like diversity and inclusion. These are things that we’ve always known we needed to focus on, but they are really front and center right now. And companies know, it’s important to be the most successful they can be that’s starting to become recognized, but also that their employees care about it, like new hires, and existing people care that that’s happening within the business. So they need help, they need tools to measure where they’re at, and to get them to where they want to be, because it is very competitive to do that. And that’s one of many examples of things that I think they’re waking up to realizing is a stack just about the bottom line, although you can probably draw a line back to all of these things, and long term bottom line. And there’s a little faith that goes into, I’m going to care about this stuff, because it’s the right thing to do. But I also am going to care about this stuff, because I actually think it’s going to lead to better business outcomes for me, even if that’s not something you can find in a study today someplace that someone’s done.

Brent Skinner 18:17
Yeah. And you know, what, you brought up a good thing, a really interesting thing about all these things are in the end traceable back to, to the bottom line, right, but some take for longer than others. And it’s almost the end of a of a, you know, say, a benefit that’s thrice four times removed from, from, from, you know, the financially quantifiable thing, right? Well, maybe it’s that far removed, because of the length of time that it would take for it to bear fruit. That’s, that’s a really, that goes back to some some things that I’m that I thought about a lot in a previous life. So thanks for bringing it up. You know, what’s interesting, also, is this, this idea that it’s really it’s reciprocal, it’s so it’s, they all go together, right? It’s not it’s not one or the other, you know, this strategic HCM, abstract HCM, whatever you want to call it, the employees feelings and, and whatnot. And actually is part of the bottom line now. So there’s almost a chance, you know, in all this in the storm, there’s almost a chance here for a reconciliation or a sort of a massive epiphany, if you will, with these two societal attitudes, one being, you know, hey, bottom line, this is the way business has always been. And then the other side saying, Oh, we got to think about all these other things right. And each side has had legitimate complaints about the other but, but but the complaint complaints have almost obscured their view of how they actually not to get to Keep up, we all are one or something like that. Yeah,

Michael Haske 20:02
I agree with you. And, you know, I think there is a convergence of it. And I will tell you that that’s why I think that the the companies that are getting ahead of this, and even if I think they do it often for just because it’s the right thing to do, and they’re not worried that, you know, this is something that needs to be translated into better business outcomes, although I think they often think this will like, you know, the basic tenants of happy employees mean, happy customers, I go back and say, I think we can draw the correlation that lets us engaged instead of happy, we know engaged employees are going to stay with you longer and likely work harder for their employer than disengaged employees, right, we all know, we don’t want the ones trying to sink the boat, we want the ones that are rowing the boat towards the destination, and those of you who are engaged versus you’re disengaged, you can look at any business in almost any function in any business. And I can almost promise you that your most tenured people are your most productive, whether those are sales producers, who are producing a lot more than a first year person does, because they’re in your three, four, or five, or whether it’s somebody in your operations center, who’s taking customer inbound calls, their ability to handle those calls more effectively, more efficiently, create better client experiences, leading to better retention is tied to tenure, I think we can say safely that an engaged workforce is a more tenured workforce, and more tenured workforce leads to better business outcomes across your business. So I think that you can do it for the right reasons, which is to be socially responsible as a corporation, and that’s going to benefit you over the long haul in terms of business outcome.

Brent Skinner 21:46
Right. And even if even if you do it for just selfish reasons, even the get to the same, the same end point anyway, I think that’s interesting point, too. You know, what’s interesting, also is this idea that, that those tenured employees, moanings, don’t exist unless the company is engaged, right, they just aren’t there. And at the same time, if the if the organization shows any type of fissure in the culture, they are among the very first to leave,

Michael Haske 22:16
they are and, and they are the most painful losses, you know, for the reasons that we’ve talked about. So you got to be you got to be sensitive to all those things. And, you know, there’s just demands that they have on their employer expectations that they have that weren’t there for Generation X and those that came before them. So it’s just a really interesting dynamic, which takes us full circle to why HR is at the very center of the storm, in a position to really help guide their organizations in ways that just we weren’t even talking about a decade ago.

Brent Skinner 22:52
Do you think that we’re any, we’re close to really being able to quantify some of these more strategic or abstract ideas in HCM? Do you? Are you seeing any evidence of that?

Michael Haske 23:07
Yeah, I can tell you that, you know, we’re starting to use our, you know, our own solution. So you know, a lot. We’ve got 10s of 1000s of customers, you know, that are interacting in our software. And we’re able to, you know, identify utilizations and even be able to get sentiment analysis, because of, you know, the tools that we embed, they’re somewhat unique in our application in the human capital management space, things like our community. And, you know, our, our early analysis of this is able to draw correlation between those organizations that score high on this engagement level within the score algorithm that we’ve put together and having better business outcomes. So, you know, nothing published or anything like that. But I don’t think we’re that far away. And I think other companies are going after this also, in different ways. You can see other systems like Microsoft is obviously found finding ways to measure a lot of this within their business tools. And I definitely think there’ll be a way to tie the two together.

Brent Skinner 24:12
Yeah, yeah. Well, that would be, that would be a great day, when this kind of stuff can be pulled into, say, the, the, how we put it The, the, into the an accountant, right, so something that a more read.

Michael Haske 24:31
yard dream is, you know, we want to be able to create some type of score for you to see where you are. I think benchmarking is incredibly important. So we look at it and say, listen, we want to tell you where your organization is relative to companies like yours. And then we want to help you get more granular in that measurement. And we want to then prescribe the types of things we see you could do, where are those opportunities for you to get your employees more engaged and get you more of a finger on the pulse of how you’re employed? are feeling and what they’re thinking, and then be able to actually do something with that data and actually do something for those people to get your score up to the to the, you know, highest to be in the 99 percentile of your industry in your size organization. That to me, if we then tie that back to the people that do have the highest scores, or the ones with the best business outcomes, it becomes an accountant string. Yeah,

Brent Skinner 25:26
yeah. And then you’ve come full circle. I’m looking at the time. And I think we have a little bit less than a minute. And I think that this may just end on its own. So thank you very much, Mike, for joining me today. This has been an incredible conversation. Thank you so much very insightful.

Michael Haske 25:44
My pleasure. Thanks for having me. I enjoyed it as well. I think we’re seeing things very much the same way right now and how everything’s unfolding. So it’s always nice to talk to someone who has that same perspective. Likewise,

Brent Skinner 25:57
likewise, thank you very much. Speak with you soon

Michael Haske 26:00
and talk soon.

Brent Skinner 26:01
Bye.