Episode Transcript
[00:00:00] Good morning, everyone. I want to talk today about workforce management in ukg.
[00:00:07] And let me start with a little anecdote. Most of you have probably been on an airplane. And you know what happens at the airport is while you're waiting to get on the plane, there's a lot of people bustling around, getting wheelchairs, bringing food onto the plane, cleaning the plane, fixing things, and they all sort of appear, do their jobs, and you get on the plane and they vanish and they go off and do something else. Well, those people work for different companies, like a company unifi, for example, that manages their work, their schedule, their skills and their activities. When you go to the hospital and you check in and you're given a hospital room or a diagnostic procedure, there's a whole bunch of people walking around, pushing others in wheelchairs, cleaning the place, taking care of equipment, perhaps the nurses themselves, who are also just there when you need them. And then when you don't need them, they go off and they do something else. It turns out almost 80% of the workers in the United States are frontline workers. It's more like 70 to 75%. Around the world, it's almost 80%. These are people that are often paid hourly. Sometimes they're on salary, sometimes they're not. They work in transportation, they work in entertainment, at hotels, theme parks, they drive cars, they take care of airplanes, they work in healthcare, in nursing homes, they work in fast food, in restaurants, gas stations, 7/11. All over your life, everywhere you go, you're running into people who are serving you or helping you or creating things on your behalf who are frontline workers. And these frontline workers are generally paid hourly. They don't make a huge amount of money. And when they need more money, they have to get extra shifts or they work overtime. So they just like all of us, are interested in making a fair wage. They're interested in having a flexible work experience so they can take care of their home lives. Because many of them work nights and weekends and multiple shifts. And they want to grow and advance in some form in their role in their career growth might mean becoming a supervisor. It might mean learning new skills to get paid more money or changing shifts. Or it might mean moving into a more managerial, supervisory or white collar role. Or it could mean changing professions entirely, as Amazon supports with Amazon Choice. So these 70 to 75% of the American working population, or 80% around the world, have lots and lots of needs that we white collar desk type people really don't think about. If you're an Oil and gas. You, you need very specialized skills to work in different parts of the refinery or the distribution network. If you work in healthcare, same thing if you work at McDonald's, you have to be trained. If you work in a transportation company, you need to have safety or driver's licenses. So there's a lot of things to manage here that go far beyond the traditional talent management, HR kinds of things that we talk about in at least a lot of the traditional HR practices. And this is usually called workforce management or WFA.
[00:03:19] And what's happened over the last 20, 30 years that I've been involved in HR is as the percentage of the workforce in this segment has gone up. Because by the way, this is the part of the workforce that's growing. This is the part of the workforce that is not going to be automated by AI. And this is the part of the workforce that is in very short demand. And more and more people are moving into this part of the workforce, particularly in the United States where we've stopped immigration because there's fewer people entering the country to take these lower paid jobs. And I'm not saying these are not good jobs. These are meaningful jobs for many, many people. Being a hotel or service worker is very gratifying. Taking care of patients is very gratifying. Working in a restaurant can be very gratifying, depending on what you want to do with your life. So I don't mean to in many way diminish the value of their work because in fact, if you think about this from the CEO perspective, the value that these people provide is enormously high because they're the ones that serve customers directly. They create the customer experience. If you go to a theme park or a hotel or a restaurant and somebody's in a bad mood, or they're under trained or they're understaffed and there's no one there to help you, your entire brand experience is affected. So we need to find ways to manage this particular part of the workforce to keep these people happy, to keep them trained, and to schedule them to meet the widely varying demands of these kinds of companies. If you're a retailer, you can predict there's going to be a big demand during Christmas, but you can't predict there's going to be a big demand because some product gets hot or there's some supply chain issue that gets in the way. Same thing in healthcare, same thing in transportation. So we need highly dynamic technology based solutions if they're available to manage this enormously important workforce. Well, historically this has been a sideline for most human capital management software companies. The vast majority of HR software companies don't really do this as their core business. They have purchased or over time built workforce management tools. ADP recently integrated their tools into one new system. SAP just launched a new workforce management system. But the company that's really doubled down on this is ukg. And so I'd like to take a few minutes and talk about ukg, particularly to highlight Jen Morgan and and the Aspire conference they just had about a month or so ago. So UKG is a combination of Ultimate Software and Kronos Kronos Group. So the acronym UKG really is the combination of the two companies. Ultimate Software is a 20 or 30 year old payroll company that focused on the mid market that was one of the darlings of the early web cloud payroll business. They were a very successful company focused mostly on mid market to small businesses and they really did pioneer easy to use mid market small business payroll and HR solutions. Kronos, in a completely different universe, invented the time clock and therefore the scheduling software that's needed to schedule people at work. And over a similar 20 to 30 year period, Kronos developed highly sophisticated scheduling algorithms and scheduling tools and interfaces between the scheduling and time clock systems and other systems and companies in all of these hourly workforces. Many something like 10 years ago, I don't remember the exact date, a private equity firm decided to take these companies private and merge them. There were a whole series of activities that happened in the middle there. But the company that brought them together, I actually met with them in the early days of this, felt that there was a market for a new integrated solution and they were right. But it took a while because in reality these are completely different systems.
[00:07:15] The time scheduling workforce management application is typically used by the head of workforce management, which is not often an HR person. In fact it might be somebody in operations. A lot of that is done on spreadsheets and other manual tools or tools that are built internally inside of companies. And so what UKG or Kronz did is build an application that did that for these workforce management specialists or supervisors. By the way, supervisors and individuals do a lot of the scheduling. You as a staff person, an exercise instructor, somebody working in a hotel or a restaurant, you might just want to look at your shift schedule and say hey Tuesday, I've got to take my kids to school early, so I can't come in until 10, but I can come in Thursday at 8 to make up the time, et cetera. There's just thousands and thousands of Permutations like this and then of course it's got to be adjusted by your skills, your tenure, your location, et cetera. They merged the two companies together and initially spent a few years figuring out how to go to market as an integrated solution. Rebranded the company and went to market as ukg. Since then with a series of management changes, they recently brought in Jen Morgan. Jen Morgan, who I'm going to be interviewing on the podcast next year, is a senior HR executive, or senior executive really, who was the co CEO of of SAP and prior to that had some other really interesting experiences, is one of the most charismatic and dynamic leaders that I would say I've ever met. And she brought the companies together and decided to really focus on growth. They brought in a very new senior management team and they've been focused very heavily on building and deploying a new integrated platform. This new platform, which they call the workforce Operating platform, is the future of where human capital management systems need to go. It combines the HR functionality of a typical HR or human capital management system, the payroll functionality of a complex global or local payroll system with workforce and a sophisticated industry by industry workforce management system in an integrated system. And what they've been doing over the last couple of years, and they launched at their conference a few months ago, is introducing an entire AI agent architecture around this platform. So let me tell you just in a few minutes what's going on. The first thing that I think's interesting to consider here is something they call their workforce Intelligence hub. Basically what it is is it's a way to look at demand for work activities. In other words, it might be retail demand, it might be healthcare demand, it might be oil and gas shipments, it might be other demand based on the business dynamics of your supply, which is the people that are available, their shifts that are available, their skills that are available and their limitations. And this is not supply like headcount, this is a very dynamic supply system because people's time and schedules and shifts vary very specifically to them as individuals. And so what you can do with this UKG intelligence hub is you can schedule and monitor and plan demand based on seasonal changes or real time changes in your business, in retail and hospitality, in quick food, in healthcare, in manufacturing and logistics, in transportation. This is a very, very important functionality. And to my knowledge what they have done is the probably the most sophisticated in the industry. The second thing they announced is a new rapid hiring system. Now if you are paying attention to what's going on in talent acquisition recently, in the last few months, workday acquired A company called Paradox. Paradox in my opinion was one of the most sophisticated agentic or NLP based conversational hiring systems for high volume recruiting. We're going to be doing a lot more case studies with Paradox. We have a great relationship with them, they're terrific company and Workday will hopefully integrate them into the workday suite. But meanwhile, ukg, who by the way, one more thing here while I'm talking about UKG. UKG is a $5 billion company. They're half the size of revenues of workday, they're growing at double digit rates and their earnings are almost 40% of sales. So this is a very significant company with 80,000 corporate customers of different businesses, different sized businesses, selling roughly 2 to 3,000 new customers per year. So it's a very significant company. So getting back to recruiting, they recently acquired a technology which they call rapid hire, which is basically designed to do agentic high volum hiring to meet the needs of these dynamic labor businesses. I haven't been down the detail of it, but it's a very slick looking system and it looks like it can really help people recruit to meet the demand quickly to deal with these dynamic labor market issues. The third new part of the system they discussed was the workforce planning or dynamic labor planning system. This is a system that has been working been going on at Kronos for a long time. For predictive labor planning and staffing. In other words, you can use historic demand patterns and historic or existing constraints like we only have so many beds in the hospital, we only have so many trucks, we only have so many seats or stores or whatever it may be, retail, hospitality, healthcare, manufacturing, and matching labor to these predicted volumes. This helps with seasonal hiring, this helps with peak demand based on different conditions and all sorts of things that happen in different businesses. I know, for example, my gym is the Equinox, which is a big company that does exercise and fitness all over the world actually. And my personal trainer uses UKG and he showed me his interface and it's actually quite astounding what he can do to find a shift, to find time when he's available, when he needs to go home early for something dynamically through his user interface. And that's the third thing they discussed is their new conversational and advanced interface for workers.
[00:13:22] Let's think about it. The worker experience in a dynamic labor market frontline work environment is very, very important. These are people that don't have computers in front of them. They may have a phone, but they certainly can't stare at it all day. And they have immediate needs for understanding their pay, their schedule, shifting their schedule, swapping their schedule, looking for overtime pay, figuring out what they need to do to get promoted, understanding what skills they're missing, looking at compliance, going through documentation on the process that they're trying to achieve. And all of that is in a sense the front door, as it has been said, to all of these business processes that are going on in the company. So what UKG has done is created not only an integrated front end system for mobile applications, but also a voice activated version of this, which they call Project Alto. So you can literally talk to your phone using Siri to identify your current schedule, change your schedule, ask for a new shift, try to see what your pay is going to be this week, et cetera. So all of those accessibility and ease of use things that are very, very difficult and complex to do for somebody in a frontline role are really handled quite elegantly by ukg. The fourth thing they discussed is another interesting innovation, something they call the frontline worker network.
[00:14:46] Now those of you that understand benefits and wellbeing and the employee experience market, you know that there are literally hundreds of tools and solutions and services to help employees manage their lives. They might be well being programs, they might be health programs, they might be benefit programs, real time pay systems, education systems, things that allow you to re credential yourself in new roles, tools to help you with mental health, tools to help you with alcoholism, tools to help you with budgeting and managing your money, tax planning tools, et cetera. And so what UK is doing, since they have such a massive network of these kinds of providers that their company customers need, is they're building and they have built a frontline worker network to do this. Initially, companies like TurboTax and some of the benefits providers are in there and you can imagine there will be hundreds and hundreds of solutions. By the way, ADP does this because ADP is very big in the frontline worker space as well. So I don't want to discount adp. They're a major player in the space too. The fifth thing is intelligent recognition. So one of the ways that UKG grows is through acquisitions. And this is very common in large companies in the HR space because there are so many niche applications, nobody can build them all. And so recently UKG acquired a company with a pretty robust recognition system and they've introduced that. Now the reason recognition is a big deal in frontline work is that you're dealing with people that are doing, you know, kind of difficult, above the call of duty work. All the Time. And it really makes a big difference whether people appreciate each other. And as the Great Place to work research shows, and Great Place to work is another business I'll talk about in a minute. It's also owned by ukg. Trust and support and a sense of community is a massive, massive part of running a frontline workforce. If you listen to the CEO of Unifi, the company I mentioned at the beginning that serves airports, he actually makes a big point that the 45,000 people that work in that company really feel that they're in the service business together. There's a lot of community culture and energy in that business and I'm sure that has a big impact on the results and the experience of passengers and customers. And you know, that's true in a restaurant, that's true in a hospital, that's true in, in a hotel, in a gym. So. So this tool, which is called Beacon, is an intelligent recognition system. And not only does it allow people to recognize each other, but at a corporate level or at a divisional level, you can look across the organization and see where there's recognition, where there's not recognition, where there's managers who are getting recognized or not getting recognized. Because of course, in a frontline worker first company supervisors and managers are a pivotal, critical role. You know, all of us that have been managers understand that moving into management is a particularly difficult transition. And in a company with lots and lots of workers coming and going, and perhaps high turnover, managerial roles are constantly changing. So we want to evaluate and train and support managers all the time. So this particular tool is very widely used and very valuable in frontline work. The final thing I want to talk about is kind of the architectural and industry solutions at ukg. They recently hired a series of technology executives from some of the big tech companies. One from Amazon, another one from Adobe. And what they explained to us is the AI architecture under the covers. As you can imagine with all of these different tuning knobs in a workforce management based human capital system, there are lots and lots of opportunities for automation and for agents and for AI. And so what they've built is a network of AI agents under the brand name Bryte B R Y T E. And through a few other acquisitions, the acquisition of a company that specializes in oil and gas and energy scheduling and workforce management and a few others. They are building more and more agents to handle these workforce management applications for you. Some of the examples that they talked about I think are pretty interesting. And these are what we call super agents that are going into our AI Blueprint So say, for example, you're a restaurant worker or a retail worker and you decided that you're not making enough money and you go to the HR system or the application and you say, I would like more shifts. The system might say to you, well, there's a shift available on Sunday that'll pay you overtime and that would give you this much more money and your tax implication will be so and so. And if you're interested in real time pay, here's how much you'll take home. It also might say to you, but you also have the option of upskilling your capabilities to the next level in your job. And you can extra $2 an hour if you want to get credentialed in this new capability. And here's the information on how to do that. Or you could go to a different store which is understaffed, which is 10 miles away, and if you're willing to make the commute, there's an opportunity there to take a few extra shifts because they're understaffed this week. That is not exactly a simple thing to do in a very dynamic company where things are changing all the time. But that's just a tiny example of what some of these agents could do. Imagine that agent also being informed by the traffic pattern, the demand for products and services, a managerial outage where somebody's not showing up for work, et cetera. Millions of, or thousands, I suppose, of things like that are going to be programmed and being developed into the UKG system. Now, we've talked to a lot of UKG customers and many of them have been using either ultimate or Kronos for many, many years. And occasionally, of course, they do, you know, use other human capital systems. Many UKG customers are pretty good sized companies. Some of them use Workday or SAP or other larger human capital systems. But the general finding that we've come to as we've analyzed this market is that because of Gen's laser focus and the management team that has been assembled in this company, I really think UKG is setting the agenda here. And by no means am I discounting the work that's going on at the other vendors. Oracle, SAP, Workday, are all very aware of this market and they're working on it too. But the strength here is really in the industry solutions. The way a restaurant chain or a hotel chain or a distribution network or a healthcare provider or a manufacturing plant or a gym operate is different. And so because UKG has 80,000 companies using these tools, they have a lot of industry experience.
[00:21:29] And my experience working with them and understanding what they're doing is that this is going to give them a big benefit in the market going forward. Now, we're going to have Jen come on the podcast next year and I think most of you will really enjoy listening to her because she's such an interesting, dynamic person. And I just want to highlight UKG because they're such a pioneer and such an innovator in this space. They're certainly not the only one. There's lots of other companies focused on this, but for those of you that are dealing with workforce management issues, I think you could learn a lot from UKG and we're happy to help you with this. We are now in a multi year research program to study frontline work. We want to talk to you about your situation. If you're operating or leading a frontline workforce and you you're in any of the industries we talked about or others and want to share your experiences with us, please let us know. We will get you on the phone, we'll interview you. We are about to launch our pacesetter program, our recruitment ignition program for HR organizations. If you're doing something particularly unique and exciting that you want to share, we will help you highlight it and celebrate what you're doing. And we're going to be putting lots more benchmarking and other forms of diagnostic information in the frontline workforce into Galileo in the coming year. Thank you. I hope this has been sort of interesting information for those of you in HR and have a great weekend.
