Podcasts

Finding a Human Capital Management Company

This podcast was recorded at Connect & Simplify™ HQ in Wisconsin. We help hundreds of businesses (nationwide) with their human capital management company needs. For many businesses in the 50-250 employee range, Connect & Simplify™ is a profitable or more effective alternative to full-time employees dedicating all or some of their time to managing the chaotic and complex problems of human capital management.

Finding a single HCM vendor solution

Roger here. Human Capital Management Consultant for The Benefit Companies. So we have spent time talking about human capital management. As a whole, we talked about the services that you should look forward to talking about that are available. Today, we're going to talk about the marketplace and what's really going on across the entire space. So when we're looking at human capital management companies, you do a search on Google. You're going to come up with 1500 options that pop up, we're not going to spend time on 1500 options. But Kathy is here today, and she's going to talk about what is going on in the HCM market space today.

A human capital management market overview.

Yeah, thank you, Roger. You just talked about Googling, I did it the other day, too. And I think I came up with eight and a half million different hits in about six seconds. So there's definitely a lot out there. And for companies that are looking to learn more about HCM services, technology and services, and software, there's a lot to pick from. I can give you some of the highlights of the marketplace. What we see here in the state of Wisconsin, in particular for employers is, I would say the major players are what we would call the “pays.” It's Paycom, Paycor, Paylocity, Paychecks, pretty much anything that starts with pay. But there's also ADP in this space as well. 

And our resource is Kronos. And for those of you who don't know, Kronos has been around for 47 years. They started in the time labor management space, and really grew their product into the human capital management technology space in about 2014, launching their workforce-ready product. And then about a year and a half ago, they merged with Ultimate Software, which has been in the human capital management and HRIS system space with a really big focus on HR. So the blending of these two companies really created quite a powerful strategy for them, being that Kronos is very heavy into time labor management and Ultimate Software in HR. 

Determining HCM company services

That’s the playing field here in the state of Wisconsin. What I think is interesting is that it's a mix of all of the major players; it's a mix of publicly held companies, as well as private companies. And really the differences between them are what their core business is, so to speak. So Paychecks for example is core businesses and payroll. ATP’s is payroll and then they build the systems out from there. So typically, what an employer is going to experience when they start looking at these different platforms is they're going to learn what elements of a human capital management company are needed. Not every HCM company breaks it into modules that you can purchase separately. A lot of companies will say you have to have payroll in order to have HR or you have to have HR in order to have payroll. One of the things that UKG does, says we can absolutely break the modules into three: payroll, time labor management, and HR. And you can have any combination of them or they can be standalone, and then you can build the system out over time. So I think that's probably initially what most employers are going to experience when they start engaging these different platforms.

HCM company pricing models

One of the other biggest questions besides what we've talked about already, the software that's available and the services that you should be looking for. One thing we haven't talked about is how they go about pricing all of these pieces. Certainly, you pay for the software and certain things on a monthly basis. And then there are other costs involved. So how do we navigate that?

HCM company subscription model vs. physical software

Yeah, that's a great question. And I think where I would start, and typically where I start when I explain pricing to our prospects and clients is to remind them that this is cloud-based technology. So it's more of a subscription pricing model, as opposed to purchasing software, installing it on your server, and then running with it until an update happens. And then you've got to purchase the update and have somebody come in and run the update. 

This is honestly what I'll call a subscription model and you guys will all know what that means when it comes to phones and things where you're paying a monthly fee to access the software. The advantage to an employer under this model is that you're going to get the latest and greatest technology all the time. It's just like our Apple phones that are getting pushed updates, and all the latest and greatest software elements are included in those updates. So it's a great way for a company to make an investment in technology and know that they're going to have the latest and greatest as they move forward with it. 

Other company’s human capital management fees can add up.

Employers should expect to pay under that scenario, what I call a recurring fee or a subscription fee. And what that means is you're going to pay, for example, for payroll, you're going to probably pay a per person per paycheck fee. And for time labor management and HR, you're probably going to pay a monthly fee based on active employees in the system. So those are sort of the recurring fees that an employer should be prepared to pay when they invest in an HCM technology platform. In addition to that, there are other types of costs that you want to consider implementation fees, for example, so companies that make the purchase, decide, yep, for January 1, we're going to invest in this new system, there's going to be an implementation fee. And that implementation fee generally covers the configuration of the system to the specific characteristics of the organization. And so there's a fee for that, you know, getting history into the system, so that employees can pull paychecks and get one W two at the end of the year from one provider, you know, making sure that that stuff is in there also will affect the implementation fee.

A more effective HCM company training plan

And then the third thing that you should look for from a pricing standpoint is training costs. So you want to make sure that whoever you're working with is providing training not only for the admins that are going to be in the system all the time using it but also for the managers and the employees. One of the greatest successes that we've had on our side when we work with employers is going in and actually training the employees, especially if the employees aren't technology savvy. And there's sort of that barrier a little bit. Our team can go in and actually work with employees, help them download the mobile app, show them where they can go to get their paycheck stubs, their W2’s, how they can make changes in the system. And that is a huge hurdle. If you're a company and you want to invest in this technology, you want your employees to be using it.

Additional hidden company costs associated with human capital management

Right, so beyond those costs, we have some fixed and some variable ones. Anything for troubleshooting or for updates, or what else have you seen that might be a hidden cost? That doesn't show up, right at the beginning of the process?

Yeah, I think that that's a great question. And I think one of the hidden costs that do come up a lot of times is some of the specific fees that exist for things like troubleshooting. But also, like on the payroll side, you want to make sure you're looking for the devil's always in the details. So you want to make sure you have a clear understanding of any year-end costs that may not be built into what I call the subscription fee or the recurring fee, things like charges for W2’s or garnishments or state new hire reporting, those types of things. You're going to want to flush out where is that bundled into that per person per paycheck cost? Or is that going to be something I get charged for at the end of the year? 

Where ROI factors in when choosing an HCM company

The other thing that I'll mention because I think this is important is a lot of times, employers will look at the cost of moving to one of these human capital management platforms and embracing the technology. And oftentimes I will have a conversation with them about their return on investment, their ROI. Because these systems are designed to really reduce the administrative burden on an employer, by handling a lot of these things automatically address changes and withholding changes and things like that, that how much time is getting freed up for the person doing those tasks, tasks at the employer. That's a return on investment. So when a company is saying, Okay, it's going to cost me this much to launch this new technology platform. Remember, you're going to get a nice return or you should because you're going to be eliminating a lot of those manual tasks.

Straightforward company cost breakdowns.

So I know we've had this conversation before with our prospects or new clients will say, “I don't know what I'm paying for.” I can't break it out. Because I have three things going on or three modules but the vendors putting all the pricing in the one spot I can't figure out where it goes.” Maybe you can describe that better, but what we do is make sure that we have that separated out and you can see it's exactly what you're paying for.

Yeah, that's another great thing. And so thank you for bringing that up that you want to watch out for. Sometimes employers like that, hey, just give me the per employee per month cost for the whole thing. And that way, I can just evaluate it that way. But again, the devils in the details, so you want to make sure even if you get a per employee per month price, that you have an understanding of really what that's made up of. Because down the road, if something does change, and you want to take a piece of this and go in a different direction for your business, you want to have a good understanding of how the costs break down. Good point.

Alright, so marketplace pricing, we've talked about that, where do we see things trending? Or what's coming up?

An outlook in human capital management for companies

Yeah, it's fascinating. We've really seen the small and medium-sized business market embrace the technology. And we've talked about this in other podcasts. But this whole younger generation of a workforce now coming into fruition, the Gen z's and the millennials, are really pushing this technology and embracing it and having businesses make the investment out of necessity. So we've seen that I think we've all become way more comfortable with technology. I know I have personally, and I enjoy it.

AI in human capital management

So where's it going? One of the things that we're seeing that I think is fascinating is including AI in some of this technology, artificial intelligence. And why that's a benefit in this type of technology is because there's the ability to analyze down to a member level, how active people are in the system and what they're doing. And from that, you can use analytics and artificial intelligence to predict future behavior. So whether somebody is a flight risk, meaning they might leave the organization, we've seen analysis around that. So that gives visibility to the HR people or the administrators that are working with the system to say, maybe somebody needs some additional help, or gosh, this person isn't very engaged, we need to, to figure out what's going on with them. 

Companies are becoming more analytical.

We've also seen the ability to use analytics for succession planning, not just at a management level, but at every job at the organization level. So if you have a team of people, and they're working on important projects for your company, you want to almost build out a succession plan for that team, you can look at that team and say, who's likely to move into a leadership position from that team and who's likely not to who's likely to leave the organization. You can predict the risk to your company of such succession. So it's really interesting where it's going.

Identifying company opportunities through human capital management

And so two things kind of jumped into my head, as you describe that, and we don't need to necessarily dig into it. But not only could you predict who's maybe next in line to move up the scale, but maybe who's got the skill level to go to a different area entirely and in the company, so that they aren't spending that time looking elsewhere. That might be an opportunity. And then also, if people aren't engaged, it may be they're looking for another opportunity. Maybe they just need more help. Maybe they need more training, maybe that's an opportunity to give back and say, hey, what can we do to make sure you're comfortable?

And that's a great statement, Roger, because you're right. I mean, there are people within the organization, I'm sure every employer listening has this, that they have employees that if they had a little bit more structure, or had a little bit more training would engage to the level that would then allow them to be very successful in their jobs. So I've been able to identify that before there's a problem. Huge for a company, especially today when, you know, employers trying to get employees and everybody's fighting for good people.

So that's kind of an overview of the marketplace and where things are at. We're going to continue these conversations, talking about some of the other things that we do and the service and software, etc in other spaces. But that's all for today.

We appreciate you learning about The Benefit Companies. Find our podcasts and everything you want to know about our trademark human capital management platform Connect and Simplify™.