Episode Transcript
[00:00:00] Speaker A: Okay, everybody, I'm really excited. Today I have Jen Morgan, the CEO of ukg, a company that most of you know a lot about, but you may not.
And I've known Jen for quite a while. She's one of the most charismatic CEOs I've ever met and one of the most successful CEOs I've ever met. So, Jen, welcome.
[00:00:20] Speaker B: Thank you.
[00:00:20] Speaker A: Josh, tell everybody a little bit about yourself and UKG for those people who have never heard of the company.
[00:00:27] Speaker B: Okay, so let's see. I'll start with ukg. You know, the simplest way to describe UKG is that UKG basically makes and supports the workers who power the goods and services in the world. If you think about your day to day, all of us consume different goods, different services. You might travel through the airport, get on a plane, go into a restaurant, go into a hotel, see a doctor, get a package. Pretty much most workers that you come into contact with know where to be to help you because of ukg. So the workforce runs on ukg. That's the easiest way and more interesting way to describe us than simply saying hr, payroll, workforce management. For about me, let's see. I've been at UKG for about a year and a half. A little bit more. I was prior to that on the board for a few years, which is kind of how I fell in love with the company. We can talk about kind of how I learned about the company. But essentially, Josh, I grew up in consulting. I loved consulting, but I always was curious. I worked at companies like Marriott and National geographic and State Department implementing. I actually implemented PeopleSoft way back in Y2K. And I was always curious, how do companies make decisions about technology? What leads them to deciding we're going to modernize this part of the business or that part of the business? And that led me into software. And I spent. I spent about 16 years at SAP where I was ultimately co CEO.
I spent a few years at Blackstone. And I learned so much about so many amazing companies and a little bit more from an investing lens. And that was really interesting. And then through that experience, I found myself on the board of ukg. And here we are today doing this podcast.
[00:02:14] Speaker A: Great. Okay, that's wonderful. So you have a lot of really interesting background on this technology part of hr.
So let's talk about the U and the K a little bit.
[00:02:27] Speaker B: Yes.
[00:02:27] Speaker A: So the history of the company is Ultimate Software and Kronos. Tell. Tell us a little bit about those two companies and what you've been doing the last year and a half. To bring it to the new position that you're now in.
[00:02:40] Speaker B: Okay, so if we back up the clock a little bit, we, we have been 50 years on the front line. What does that mean? So we started a big part of the company, started in time and attendance 50 years ago. And in building solutions around time and attendance, we learned a lot about a few things. First of all, we learned about frontline industries. So think about retail, manufacturing, healthcare, all of those frontline industries. We learned deeply about those workers and how work happens in those industries. Frontline work is very different, as you know.
It's the velocity, the constant change, the motion. It's very action oriented, very operational. Through that work, we built out the category that we all know as workforce management. That expertise led us to developing solutions around workforce management. Scheduling, absenteeism, workforce planning and forecasting that became known as Kronos. And at Kronos, most, most companies, I like to say pretty much any company that has a front line, most of them run in ukg.
What we realized through all that learning, as I said, is frontline is different. The majority of the workforce is made up frontline employees. And so we feel that that experience of the frontline worker, it's just different. Right? You and I engage with HR systems not very often, but our employees we support, they're touching UKG multiple times a day for a lot of reasons. We'll talk about that. This is why we unified HR and payroll from ultimate alongside workforce management with Kronos and that became ukg. You can probably figure out what the U and the K is G is group, but we just call it UKG now. We kind of refreshed our brand. We just go by ukg. And essentially with where we are now, we can talk about, you know, a lot of the innovation. But what made me fall in love with this company were a few things. Number one, this is a big company. We're, we, we support about 80,000 customers. And I think, I think the quality of a company in addition to its employees is reflected both by the employees, but the customers that companies serve. We serve 85% of the Fortune 100 2/3 of the Fortune 1000. We have a huge mid market business and we serve a lot of SMB businesses. So I like to say companies start their journey and they continue to choose us for decades. And then companies who are just starting and kind of these really innovative companies that are coming out, they're choosing to start with us as well. And so while we continue to have such sustainably relevant solutions in the category of hr, you know, payroll, workforce management, that's what we call our workforce operating platform. We'll get into that. What we have as a result of that 50 years is unbelievable depth of knowledge about what's happening in the labor economy.
Because as I said, Josh, like, you know, we process a lot of payroll and we see, we see a lot of lagging indicators. But more importantly, only UKG sees what's happening in the moment because we're, we're structurally situated in the flow of work, the schedules, the time, the shift and everything that's happening. So we see a lot of trends. And so as a result of our poor businesses, which are still very core, we're actually creating new businesses, new value streams, new innovation as a result of that. And AI comes at the perfect time because we have all this insight that companies have access to in the flow of work. AI is going to actually help them do more with it versus look back on what happened and change it the next day.
[00:06:06] Speaker A: Well, let's talk a little bit about that in particular. You know, my, my trainer works for the Equinox and he is, they just got UKG a month ago and he was showing it to me this morning. So I don't think most people maybe who listen to this realize that at least 70 to 75% of the workers in the United States qualify as frontline workers. So this is by far the largest workforce in, in the world. It's more like 80% worldwide.
[00:06:33] Speaker B: Yes, yes.
[00:06:33] Speaker A: So, so the idea of a workforce operating system or operating platform has a lot of implications. You know, and I, I could rattle off a lot of the things you guys announced recently. Tell us what your, you know, how you position this with companies as to how you optimize that experience for, for workers and all the different things you guys do across the platform.
[00:06:55] Speaker B: You know, it's interesting, Josh, because as I've met with our customers, what I realized is, you know, some folks, it's some of our customers. And I think many times folks have a little bit of a dated view of what we do. You know, we're really, really important. I mean, most, you know, you go into, you know, most big stores out there, they're not going to open unless UKG is, you know, it's mission critical to the operations. But when you think about, you know, some of the exciting things that we're up to right now is when I meet with CEOs and CFOs right now, one of the biggest topics, in addition to AI, of course, is the workforce. Companies are trying to understand for example, what is happening with my workforce, especially if you have a front line, what's happening beneath the surface, what's happening in my industry? There's typically a lot of leakage that happens. Companies have a really hard time matching kind of the demand to the supply of what they need to, whether it's on the manufacturing floor, whether it's in a store, whether it's in a hotel. And this is what we help companies do is actually really understand that full labor costing picture. And what's happening not only in the workforce, but also the frontline workforce is the window pane to what's happening with your customers, with your patients, with your constituents. And also, in addition to what I just described, a lot of companies, a lot of executives, they're hungry to understand that information. But ironically, those people who are your window pane many times are disconnected from the enterprise. And typically, you know, many of these employees, they don't have email addresses, but millions of them run on our app, right, because they can see their schedules, their pay, they can request flexibility, all kinds of things. And so one of the capabilities we came out with is called talk, right? And this has been a great innovation for CEOs or other C suite folks to actually be able to connect with and understand not just some of the labor costing and what's going on in the business, but what's actually happening with their employees and on the front line. That's just one small example of kind of our structural advantage. Josh, because we sit in the flow of work from a management perspective, we can really expose all of that real time insight and data during the day in a retail store, as an example, or in a hospital, in that example, if you're thinking about kind of the management teams, typically what's happening is, you know, you've got a monitor for, you're looking at your demand signals, you're looking at your sales of the day, but you're also making sure, okay, do I have the right people?
What does my overtime look like? What is my capacity? Do I not have enough people on the floor? Do I have compliance issues that might be coming? Is somebody taking the right meal break? It's a lot that's happening at once. What we've just launched is something called dynamic workforce operations. And what that allows somebody to do is literally have a real time kind of control center, that workforce control center that gives you all of those signals, but more importantly gives you AI to actually guide you in terms of what you should be doing before you're reacting to something that's the beauty of AI and kind of the tailwind that it gives our business because we're already structurally in the flow of that work. We have all that insight and that data. We understand the complexity of everything happening all at once. AI now allows us to take it to the next level and allow those people who are usually reacting to actually get ahead of things, spend more time with employees, spend more time with customers or patients. That's our new. We call it the dynamic dynamic workforce operations.
[00:10:21] Speaker A: Well, there were, there were two examples of that I want to highlight just for people listening. One that you talked about at your user conference recently was dynamic scheduling based on external data and history where the AI could anticipate increased demand from weather conditions or a fire or you know, a freeway stoppage where all of a sudden you need more people to show up. That's right. And. And then you bought this company that does rapid hiring so you could open racks and people could apply for jobs and come to work. The.
[00:10:52] Speaker B: Exactly.
[00:10:52] Speaker A: That's pretty amazing.
[00:10:53] Speaker B: Exactly. That's rapid hire. So what you just described, those two elements you just described are really important. And that's why we unify workforce management, HR and pay. Because with your dynamic workforce operations, you just described it using different words, but you see exactly what's happening and what you need. That's why, like that demand engine needs to be connected to your recruiting engine so you can go right away and in that day, to your point, do the high volume hiring that you need to do and have all of that connected. That's exactly why we really feel every company in the frontline, they need a frontline operating system. Right. Many of them have, maybe they have a different payroll provider or different HR provider for, you know, some of the core HR capabilities. But think of ukg. Lots of companies run the whole suite from ukg, that whole workforce operating platform. But we also allow customers to snap in the various components so they can make sure they're serving the entire workforce.
[00:11:46] Speaker A: It's really remarkable what you guys have done because I've seen so much of it now. And I mean, I think the alternative approach that a lot of HR tech companies have adopted is run your HR software, buy a workforce management tool and attach it on, which doesn't give you the integrated operating platform like you guys have. What's your. Give us your perspective on that approach? Because most of the HR software companies have done something in workforce management.
[00:12:11] Speaker B: Yes. So I think again, what. There's a couple things that have changed the world. As you know, it's just moving so so quickly. And that frontline work happens at a different velocity. And there is so value capture that can happen, that creates the win win for the employee and the company. And so there's a couple things that that really differentiate us. One is, as I said, we structurally we're right in that flow of when the work is happening. We're not before it or after it. We're actually managing it as it happens. We have so much intelligence. Right. And to your point about innovations, one of the things we launched is what we call our workforce intelligence hub. Because what we saw happening is customers are pulling information, trying to understand, like what happened yesterday so I can fix it tomorrow. What we're doing is we're actually now surfacing all that insight about what's going on in that company. We call that the workforce intelligence hub. But in addition to that, every CEO and every CFO is trying to understand what's going on in our industry, what might be happening in my geography. And so we're launching benchmarks. So if you maybe are seeing a challenge of attrition in one of your plants or in one of your stores, is it something about the area that I'm in? I'm competing for workers in a lot of different industries and are my wages competitive? That's just one simple example. We just have so much of that intelligence that helps executives. So I think the both the intelligence kind of where we sit in that flow of work now, the emergence of AI is what changes everything for us. There's lots of talk about enterprise software is dead for us. We love AI because it takes what we do and in the complexity and the scale of it, and allows us to do it even better. So for us, we're excited.
[00:13:51] Speaker A: So one of the big issues with frontline work is the retention and engagement of people that are maybe part time, maybe overworked, maybe underpaid, hourly looking for to make more money, get extra shifts and so forth. Tell us about the great place to work part of the business and what, what is your strategy to help companies make their employees happier?
[00:14:14] Speaker B: Yeah, great, great question. You're right. That is kind of what everybody is searching for. It's ironic because a lot of the answers are right under the surface. So what do I mean by that? What's interesting is as I go visit customers, whether they're large or mid size or even small, we're able to show them kind of take a look back over the last several months and almost show them a flow of their workforce. And we can show it by tenure. We can show it by capacity, overtime, hours of work. And right away you see some pretty emerging trends. It's pretty simple. When people take a job, they leave if they're not getting the hours they expect to work. They leave if they're not getting the pay that they wanted. They leave if they're not getting the flexibility that they need. Right? And so usually right under the surface, those answers exist. That's one of the reasons we launched our intelligence hub. Because you can see really clearly those folks who are working too many hours and the capacity that you're not leveraging because they're not getting the hours they need. Both ends of that barbell are your biggest attrition risks. And when you can start to really right size that that's when the win win happens. That's when the productivity and margins look better for the company. But that's also when the workers are actually getting what they want and what they expect.
So that is one component of it. The second component that we're really passionate about, we hear so much, you talk about this all the time. White collar work, knowledge workers, AI. None of us are going to have jobs in five years. It's going to change everything, right? Every time a new technology comes out about the legal profession or the finance, it's like, oh my gosh, those jobs are going away. I hear nobody talking about frontline workers. Like there's silence on AI and frontline workers. We have a really strong point of view on this because the workers that we support, many of them, as I said, they run, millions of them run on our app. And so we see how they work, what's important to them, what matters. Some of those things that I just talked about and we are creating a world and launching agents. We call it kind of our, our frontline assist, our bright agents. That will be frontline agents. Every worker will have one. It will advocate for them, it will empower them so that they can pick up their phone and you know, just in a voice activated way. I need to make an extra $500 by the end of the month. How can I do this? Oh, by the way, I can't work Saturdays. I need to swap my shift on this date. I need access to my pay before my paycheck is coming. Those are just a few examples. But by being able to do that and connect that to the company, those agents working together, that changes everything because now you've got the worker actually being able to advocate, you know, very easily and directly with the company. The company now understands exactly what matters to that worker. That's where the magic's going to happen. That is a win win. Companies win, their P and L wins, their customers win, their patients win, but the worker wins and they get what they need. It's really interesting because, Josh, one of the things you and I were talking about the other day is, as I said, we see a lot of information.
One of the things that's interesting is as we look at shifts and what's happening in various industries. When we were at our Aspire conference, one of the things that we were sharing in November was that we had seen the length of shifts decrease on average of 0.2 hours over the year. And you think, oh, what does that kind of tell you? But when you multiply that out, that's 750 million of wages that aren't being paid to workers. Think about what that means.
That's not only their wages and the impact to the worker. That worker is the consumer. That's money. Not only that they're not earning, that they need to pay their bills, but that's money they're not spending in the economy.
So a lot of the conversations that I have with executives are in addition to what's happening in their workforce. It's helpful for them to understand what's going on in various parts of the country industries as they think about planning. So there's typically answers hidden under the surface. The challenges, you know, for most companies it just takes them too long and it's too late by the time they find the answer.
[00:18:20] Speaker A: Well, you know, I'll give you a sort of an interesting message that I believe. There's been endless reports about the AI destruction of software engineering or legal profession or white collar work. And you know, and companies are claiming to have all sorts of productivity improvements in those jobs and eventually a lot of that'll happen. But actually from the 70 to 75 to 80% of workers that are frontline, AI is going to have an even bigger impact on productivity. When you think about schedule optimization and pay optimization and flexibility and resource management, that's multi trillion dollar economy of wages going to the workers that use ukg. And you guys can improve the productivity of all of those companies.
That's a way bigger story than this stuff about software engineers running code.
[00:19:07] Speaker B: Exactly, Josh. And think about what we just talked about. That win win that we were just talking about. That drives better outcomes, dollar outcomes for the companies. It drives better dollar outcomes because the workers are getting what they want and need. Everybody wins and that drives productivity in our economy. So to your point, it's a Much bigger picture. And this is when I talk to CEOs, CFO CEOs, they understand this.
And Chros, I'm seeing more and more, especially with AI. The partnership between chief people officers, chief human resource officers, alongside the cto, alongside the CFO is really important because every company is scrutinizing where they're spending money and just replacing a system that is an HR system or payroll system. It's got to be pretty important if you're going to do that. And so for us, we, we're having more and more conversations about the industry, about the operations, about the business and the workforce as a whole.
[00:20:05] Speaker A: I want to ask you about your job for a minute. You know, I get a chance to talk to a lot of HR software companies and everybody's very nervous about the impact of AI on their businesses for a whole variety of reasons. Maybe the technology is old, maybe the company doesn't have the skills. It's not clear where AI should be applied. You're now leading a company that's been around a long time, very large company, lots of customers. What are you doing? How do you transform UKG to get, get with the AI strategy fast? Because I know you've already done some amazing things. But I'm curious, what have you learned by transforming an hr, a software company?
[00:20:40] Speaker B: My gosh, we learn mostly from our mistakes, don't we?
I've learned a lot.
You know, I think one of the things in particular that's always been helpful is the common language in our company is our customer. And so one of the first things I did was let's change our language and our focus around the North Star, which is our customer. Because whether you're an engineer, whether you're in support, whether you're in sales, it's so important that everybody understands, like, number one, what are our customers going through? What are their businesses going through? Like, it's hard out there for all of our customers. To your point, they're trying to figure out what to do with AI. They're trying to optimize everything that they're doing out there. It's tough out there right now as an operator. So understanding kind of our customer and everything happening has definitely help us understand how all of our capabilities and all of our functions work together. So speaking kind of that common language and being more integrated has been critical in terms of AI. This is an area where one of the first things that we did early on is you can't just talk about AI from a product perspective, but we're going to build products that have AI. In addition to that, you've got to enable and equip your entire workforce to really understand what that means. Right? Because I think some folks out there in companies, you know, they're. They're nervous, and it's what it feels like some of this is happening to us, like, things are moving so fast. What do I do? And we wanted to put tools in people's hands so that we could bring out a lot of the entrepreneurial spirit and ideas that folks in our company have had. And so that was one of the first things that we did because we wanted people to really get familiar with it, use it. Some of the best ideas we have have come from our individual contributors who are doing amazing things, whether it be serving our customers, whether it be new ideas around our product, whether it be support. And so that's, I think, a big area that we've really focused on. We're seeing a ton of opportunity clearly, in areas like customer support, because you can understand and act much quicker around what your customers need. Clearly. Engineering is an area where AI is absolutely changing the game in terms of the speed in which you can build products.
But even when you think about product management, gone are the days of kind of presentations and papers. Now it's all about prototyping real time. So the speed at which we're able to move and how we work is changing. Right. And it's been fun to kind of see different people and how they unlock the technology. But, Josh, it's hard. I think things are changing fast. Every company, not just us, but every company, sees how fast AI is reshaping their industry and their business, and they're trying to move fast and take advantage of that, because guess what? Everybody's competitors are doing the same.
So there really is no alternative. The. The other side of that is people haven't really changed. Like, there's no. We haven't been rewired. Right? Human beings are still very, very much the same wiring that we have been for many, many, many years. So it almost feels unnatural because you've got this incredible technology that's forcing companies to change and change structures and change ways of working that feel really unnatural and uncomfortable. And that's hard because when you are leading organizations with thousands, tens of thousands, and many of our customers, hundreds of thousands, people don't change overnight. Organizations can't flip on a switch. But that's a lot of what's happening out there. And I think that many of us are learning kind of some of that as we go, and most importantly, trying to make sure that we're over communicating with employees and explaining the why. And so one of the things that I'm learning is I've got to do. I've got to continue to do a better job of explaining the why. But I think people also want to hear from their leaders. What are you reflecting on? What have maybe you not gotten right? You know, because people want to. They want to hear the truth. They want to hear what's really happening. You know, they want to understand where things are going.
[00:24:42] Speaker A: And can I give you sort of some feedback? My experience with you guys? I think one of the things that you've done that I've observed, it's easy to think about an HR software company as an HR software company and selling more software, which everybody's trying to do. But it's also, at least to me, you framed UKG in an economic and business context that you're really focused on the productivity and growth and financial success of these very, very complicated companies that have very complicated operations. You're dealing with the most complex companies of all. And to me, that has already raised your product vision a lot. When I look at some of the products that came out at the conference, they're really things that CFOs and CEOs care about to optimize the whole organization. So I think, I don't think many HR software companies think about that, frankly. They think about their software and how it can compete with another person's software.
[00:25:36] Speaker B: Right? And it's a. And Josh, it's a crowded space. Right. And so that's why when people ask me to describe, you know, ukg, I don't usually like to just describe it as, you know, the literal is hr, workforce management and paying.
But as we've talked about, there's so much more to it. And I think why I get so passionate about it is, you know, it is about helping companies, you know, run great business and run great workforces and operations. But two things can be true at once. Companies can optimize, run great businesses, drive productivity, and also create the same thing for the workers who want the same thing for their lives. And the reality is those things, actually, when you get those hand in hand, both sides win and get better. And I think sometimes in the past, people look at those as if a company's doing better. If they're driving better margins, they're getting productivity, something else is giving on the other side. But in the case of workers, companies lose so much money through attrition, through workers who aren't happy, through productivity Issues through compliance. This is what we do. This is what we do. Josh, I want to say you've mentioned large, complex companies, which. Absolutely, those are who we serve. But think about mid market companies and their journey with today. You know, if you're working with a large company, they have more sophisticated, you know, IT departments, technology. They're investing in AI, mid market and SMB customers, which we have, you know, thousands of those. They don't necessarily have the latest. They don't have necessarily people building agents inside their organization. So for them, they are looking not just for kind of your basic solutions, they are relying on companies like us to bring that innovation. Right. They want simplicity, they want great service, they want innovation. And that, that also plays to our strengths as well. That's why again, we unified and created that workforce operating platform.
[00:27:28] Speaker A: Well, I guess one final question that I think would be really interesting to people listening. If you were running one of your customers companies and you had one of these complex, even if it wasn't a very big one, but you had a lot of hourly workers and dynamic labor issues and this UKG salesperson came wandering on into your office, what is it that you would be trying to do that would make you a world class organization? In other words, what do you think the best world class frontline organizations do to optimize their businesses and their workforces? With or without a ukg?
[00:28:02] Speaker B: I think they understand what's happening beneath the surface and underneath the numbers. Right. When you, for example, you know a great CEO, Doug McMillan, who recently, you know, retired and they were kind of looking back at his journey and some of the decisions that he made early on that really changed the trajectory of the company. He talked about going out and walking the store floors, distribution, talking to employees and understanding what mattered to them and also what they were seeing with the customers. And he saw exactly the things that mattered. And he saw that pretty consistently 10 years forward with where we are today. I think every CEO is clamoring to understand what's happening with their employee base. This is what we can help them understand. Not just in numbers. Numbers do tell a story, right? And I think our numbers help people understand what's actually happening and why there may be issues with your employees, but also the connectivity to the employees, right? To be able to actually touch those employees and not have them be this kind of offshoot to the enterprise. And that's where that connectivity that we're building innovation around for the app is an example so that you can communicate, hear from them, get input. I know as a CEO I always want feedback. I don't always love what I hear, but I need to hear it. And it's. A lot of times it's tough feedback. But when you can understand what matters to your employees, when those employees tell you what's happening with their customers, what's happening with patients or constituents, as a CEO, you are so much better equipped to make decisions using the data and the numbers. But I'm a really big believer that when you focus on people, numbers tend to follow. When all you focus on is numbers, people don't always follow. And so I think that's what we help companies do, is focus on their people and also help them get the numbers to follow right alongside that. So that's what we do.
[00:29:50] Speaker A: Well, as an American citizen, I'm so glad you're there, Jen, helping us improve the world we live in and the products and services that we buy and the economy as a whole. And thank you for your time today. Fantastic.
[00:30:01] Speaker B: Thank you so much, Josh. I really appreciate it. It was a fun conversation.
[00:30:04] Speaker A: Yep. Same here. Bye.
