Larry Dunivan – Solving HR Technology for the Mid-Market

Connect with Larry:

• 

Connect with Dwight:

• 
• dwight.brown@salary.com

Connect with David:

• 
• 
• david.turetsky@salary.com

Resources:

• Namely
• Trust Mineral
• HR Data Labs Season 3 Episode 15
• HR Data Labs Season 3 Episode 13

• “The most important thing [mid-sized businesses] have to do is develop great relationships with their vendors . . . One of the reasons why they get so frustrated with support is because there's often this misalignment between expectations and reality.”
• “If you don't have a handle on recruiting and onboarding in this labor market, whether you're growing or not, not much else matters. If you do it poorly you're at a massive disadvantage. So that's job number one.”

Announcer: 0:02

Here's an experiment for you. Take passionate experts in human resource technology. Invite cross industry experts from inside and outside HR. Mix in what's happening in people analytics today. Give them the technology to connect, hit record, pour their discussions into a beaker, mix thoroughly. And voila, you get the HR Data Labs podcast, where we explore the impact of data and analytics to your business. We may get passionate and even irreverent, that count on each episode challenging and enhancing your understanding of the way people data can be used to solve real world problems. Now, here's your host, David Turetsky.

David Turetsky: 0:46

Hello, and welcome to the HR Data Labs podcast. I'm your host, David Turetsky. And like always, we try and find most fascinating people inside and outside the world of human resources to talk to you about what's going on with HR data analytics and HR Technology. Today we have with us Larry Dunivan, from Namely. hello, Larry.

Larry Dunivan: 1:07

Hey, David. Thanks for having me.

David Turetsky: 1:08

My pleasure. And as always, I have my friend and compadre. Dwight Brown from Salary.com. Hey, Dwight!

Dwight Brown: 1:16

Hey, David! Hey, Larry!

David Turetsky: 1:18

So Larry, I know that you're the CEO of Namely, but why don't you give us a little bit of background as to who you are and how you got to this place?

Larry Dunivan: 1:26

Sure. I am the CEO of Namely, I've been here for almost three years. My claim to fame is the only thing in life I can claim to be an expert on as HR technology after 35 years in this industry. I started in classic customer facing functions. And then I spent about 20 years in product management and engineering. And then spent about five years or so leading sales teams primarily at Ceridian leading up to our IPO in 2018. And at that time, I decided it was time to go for the gold and be a CEO. So I left and spent about a year as the interim CEO at a company called Mineral compliance software company. On whose board I still chair and joined Namely in 2019. So here I am. Living the life in New York City.

David Turetsky: 2:08

There you go. Gotta love New York. One quick question. Agile development. Love it or hate it?

Larry Dunivan: 2:14

I'd say love it. Yeah. Okay. And you know, listen, I manage COBOL programmers. So you know, there was nothing magical about that.

David Turetsky: 2:21

Wait wait, you manage COBOL programmers now?

Larry Dunivan: 2:23

No, no I did.

Dwight Brown: 2:26

Unless you work for the government, he doesn't work for the government.

Larry Dunivan: 2:29

I did it until like, 2011. Let's not...

David Turetsky: 2:31

Wow, hey, you know, they still have some legs?

Larry Dunivan: 2:34

Yes, they do.

David Turetsky: 2:35

But Larry, what just like everyone else who's ever been on the HR Data Labs podcast, we need one fun thing that no one else on Earth knows about you?

Larry Dunivan: 2:45

Well, that no one else on Earth knows would be a story right now. Um, so? Yeah. All right. The one the one and probably nobody even understands this. Unless you're, you know, at least 50, Is that in college, I was the president of the Rula Lenska fan club. And Rula Lenska was a famous Brittish actress who was famous for her commercials about wandering around London, and somehow in college, I got infatuated with this woman.

David Turetsky: 3:13

There you go. Well

Larry Dunivan: 3:14

Led her fanclub.

David Turetsky: 3:16

We all do strange things in college, but I will admit, that one's pretty good. I actually like that one, obscure at a minimum, definitely obscure, but although I love London, and I will tell you that, that I would probably have fallen in love with her too, because I'm a Londonite.

Larry Dunivan: 3:32

There you go.

David Turetsky: 3:34

So today's topic is fascinating, because we're gonna be talking about how HR technology is solved in the mid market. Or what problems are mid market firms facing and how HR technology can help. So Larry, the first question for you is, what are the major business problems that face the mid market company? And why is that different from enterprise sized companies or small businesses?

Larry Dunivan: 4:11

Yeah, it's a great, it's a, it's one of my favorite topics these days, because I've dedicated the last three years to kind of really fully understanding what I was not the way I describe a mid market customer, which is important. Think of it loosely in companies that have between 50 and 300 employees. And here's what's special about those businesses. They're big enough that they've started to inherit some of the real complexity in HR technology, but they're way too small to do it with without without friction. And so I always like to say that, you know, first of all, it's rare when one of these companies has more than three or four people in HR and zero people dedicated to technology, and nobody whose job it is to know how the system needs to work. So the only time these customers understand about technology is just in time, and what does that Well, it means that they're never going to be deep experts on the technology. So you're always going to be talking to them about the how to stuff in the application, they have to figure it out as it comes. And if you bring them a product that's too complex to configure, they'll give up in, in frustration. So the balance between complexity and the simplicity of the functionality is really, really important, because they can't figure out how to use it every day, when they have to make a change.

David Turetsky: 5:26

But but but in terms of the business problem, which is, I think, a little bit different than the user experience and the thing that HR is trying to solve for, which is, how do I get my job done? The business problem that mid market companies face is pressures from the top as well as pressures from small businesses, right? You know, you get some pressures to grow, and try and stay mid size is tough. But you also get competition issues with either big box stores, if you're a retail or if you're a restaurant, you know, how do you not grow to two different sites or whatever? Staying mid market is tough in and of itself, from the business perspective, isn't it as a as an owner,

Larry Dunivan: 6:05

but even more so in the last couple of years, because you can add all those classic business activities. And on top of it, how many CEOs have walked into the office or on a zoom call, said to the head of people who has maybe two people, oh, by the way, go deal with DE&I, go deal with Black Lives Matter, go deal with the pandemic. But I think you know, from a broader business perspective, you know, that they all face the same challenges. It's just about scale, you know, so if you're growing fast, of course, the number one thing that the business owner, the CEO cares about is, you know, hiring and retention. And yet, there's all these other dynamics that are required to keep the business operating, you know, a great example is with the move to remote work, on average, our customers are in 42% more states than they were two years ago. You don't think about that. You just like let these people go remote, it's gonna keep them around. It's the way the world is changing, right? But then all of a sudden, you got all these all these compliance, headaches,

David Turetsky: 6:58

reporting issues and taxation. Now, now you're dealing with different municipalities with different laws and regulations and potentially licensing issues.

Larry Dunivan: 7:08

Yep. tax notices are a nightmare for customers. Right now.

David Turetsky: 7:12

Right. Right. And not even you're not even getting into things that that have actually happened when you start having remote people like garnishments, you know, and all those different municipalities or other issues. So yes, tax makes things tough. And, you know, I'm not we're not getting into a political discussion here. But the government tried to make it a little easier, but they really didn't make it easier. They said it was going to be easier. But it actually never went that way. Really. I mean, it was it was more about kind of the holidays on taxation, rather than the actual changing of the tax code itself.

Larry Dunivan: 7:44

Oh, they made it more complex, at least temporarily. Right? Yeah. I mean, what what companies like ours went through to make sure our customers could stay on top of things during COVID was insane, you know, and then and then and then again, not getting political. Somebody wanted to stop withholding FICA taxes. Yes. Yeah. You know,

David Turetsky: 8:02

that they weren't do it just meant you were weren't gonna withhold them. And people didn't understand that, right? Well, didn't, they thought that they were gonna get away with that. And then all of a sudden, it would, there wasn't really April, but it was when their taxes were due. They had a shock. Oh, my gosh, I actually owe money. And I never owe money or I, I'm getting less. And I thought it was gonna be able to invest in another piece of furniture, or vacation for my family. Yep. Surprise, surprise, surprise. But But ostensibly, I agree with you around the business problem that the mid market has to face. It's it's a little bit of a mentality issue of we're not a small business anymore. We actually it's not like we're just gonna just share hats. We have specializations we have to deal with, and how does technology has HR technology help us solve that problem becomes different. We're not on QuickBooks anymore. We're going from QuickBooks. We're graduating. And now when we graduate, what headaches are we going to adopt versus what business problems we're going to solve with us?

Dwight Brown: 9:04

And you're trying to deal with changing culture at the same time? Because you're going to, you know, you've got that corporate culture that's got to keep up on that. How do you keep the technology abreast of that? It's, it's a lot to deal with all at the same time. Right?

Larry Dunivan: 9:19

Well, in the end, they mimic what organizations are trying to do in the enterprise. I mean, it's the same stuff, it's just on a smaller scale, but that doesn't make it magically less complex. Right, you know, and, you know, a great example of that is around analytics. And, you know, what you can do and how you can do it and how you can make meaningful decisions from it. And, and, and in fairness at times as well, I think some mid market customers will get wrapped around kind of the, you know, esoterics of it, when, in fact, they need a more pragmatic view of it, you know, there he goes, you see on both sides of the continuum, in my view,

David Turetsky: 9:52

although I really wish and I think I've actually had the opportunity to speak to a lot of midsize companies about adoption of standards around analytics where, you know, just take the turnover rate the way it's given to you. Exactly. Yeah. And just deal with it. Yes, you may have had a corporate exposure corporate culture before where turnover was calculated a different way. Okay, well, you can't afford that right now. You're getting, it's getting handed to you. So deal with it.

Larry Dunivan: 10:20

Good luck with that.

David Turetsky: 10:23

You know, sometimes sometimes you can be successful with that, man, sometimes you can't. And what I like to do, especially with the midsize companies that I work with is show them how standardization helps them, especially if the companies they're working with provide benchmarking or other things that are benefits to them.

Larry Dunivan: 10:40

Remember, back when Jack Fitz-Ens had all those metrics that he decided? So I tried to build an analytics product, I'm not joking. 20 years ago, that use those and I thought it was the best idea ever, because we we actually built his his formulas in the last five minutes. Now that was more and more skewed enterprising.

David Turetsky: 11:00

Yes. But Larry, I mean, even I built an analytics product, I guess that's now seven years ago. And still, there are companies who are kind of fighting back or pushing back against the Sherm standard that exists for metrics. So I hear you, and it's gotten better. But the adoption of one standard, I think, is a little bit of a fallacy. The good news is, is that people are starting to look at them. The bad news is, is that either if they've made up their mind, then they have to go kind of more custom, not off the shelf, like a lot of others can't afford to do the custom. So they have to buy off the shelf.

Dwight Brown: 11:37

Yeah, well, let's face it, I mean, companies moving into the mid market are still in that startup phase where they've got we're different ism going on. And, you know, what, I don't want to adopt standards, because we're different. That's how we made our name. That's how we grew, you know, if they can afford it,

David Turetsky: 11:54

if they can afford it, they have to be able to adopt whatever they can get their hands on. Exactly.

Larry Dunivan: 11:59

And I also think what's important about that I alluded to it earlier is that, you know, there's, there's this, there's just all important balance, because if somebody thinks they want enterprise class flexibility, it comes with enterprise class complexity. And a mid market customer cannot cope with that it doesn't work. And so that's something that we we spend a lot of time, you know, most of all understanding from our customers. So we make the right investments. But it is not trivial. And you'll get that you'll get that Chief People Officer, for example, that worked for a very big company went down market to a startup, and brings all that baggage, and it doesn't, it doesn't end well.

Announcer: 12:36

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David Turetsky: 12:47

So that brings us to question number two to talk about the capabilities of HR in a midsize world. They are typically understaffed. They're typically a small, a small group, typically generalists that have to take on everything. And then there are challenges that HR technology presents them, and can actually also help them right. So there's a balance there. How does HR deal with HR technology in the mid size?

Larry Dunivan: 13:14

I think the most important thing they have to do is develop great relationships with their vendors, you know, the the thing that the thing that's most important is in a larger environment, you'll have people there in house that you can, you can consult with about how to use and leverage that technology, mid market customers have to rely on their provider, it's one of the reasons why they get so frustrated with support. Because there's often this misalignment between expectations and reality. Right. And, you know, if your only means for support, for examples, call an 800 number and you got a consultative problem, you know, you get you get stuck really fast. And so it is it is really important that organizations look at that with a pragmatic lens for what they can actually accomplish. And then to the point we're just discussing earlier, they're gonna have to generally speaking, if they've made a good choice of a vendor that fits their business, use the tools as they've been provided, because, you know, massive, massive configuration complexity. And, you know, customization just isn't it's a it's not an option, it's not sustainable.

David Turetsky: 14:16

And that's one of the problems is that a lot of times these midsize organizations, as you mentioned, their small HR groups, they typically don't get the first dollar invested from it in HR. And so they either have to take a model where they're outsourcing everything, including the technology to a vendor that can do it all including payroll. Yep. And, and be able to get back to your point, be able to get back what they need, how they need it, and not have to do a lot of manual stuff to it in order to be able to deal with it. Because they don't have the time because they're also trying to solve for as you mentioned before, cultural and societal issues. They're dealing with pandemics, and they're actually having to solve problems that their business leaders managers and employees are facing as being HR. So I guess the next question in there is, does the does this mean that midsize companies typically adopt more of a outsourced IT model? Or, you know, like a software as a service? Or is it not just software as a service, but it's also technology as a service where they're actually getting a lot of these issues, whether it's customer service, or, or otherwise, that are actually kind of borrowed as well, those resources?

Larry Dunivan: 15:31

Yeah, I think it's great question. You know, I think there's a, you know, there's a range of options here, you know, you take a small cut a smaller business, you know, 50 to 75 employees, a lot of them that got their starts on a PEO, they realize that what they need outgrows the PEO. So then where do they go? Well, then there's a gap because the PEO is doing everything. What really this customer wants to do is onboarding, recruiting, compensation, performance management, culture engagements, they don't want to do payroll or benefits, because they don't have that expertise. Right now. Yes. And so and so there are there are solutions out there, though, that will help them make that transition. So you're going to see more and more Managed Services offers around benefits and payroll, right that support then the organization's taking on the core competency of the HR functions. And I think you'll see more of that, especially companies transitioning from PEOs, then when you you know, when you hit that 500, employee threshold, you know, or higher, then all of a sudden, you might graduate yet again, into one of those enterprise class products,

David Turetsky: 16:34

right, and you're going to have alongside of that, you're going to hire a compensation manager, you'll probably hire a benefits manager, probably hire an HR IT slash payroll person, once you hit that specific magic number, and you start moving into the more enterprise class company, you have to hire those specializations, because those problems cannot necessarily be outsourced away, although they can. But you get a level of service with that you have an expected level of service, you're going to get what you get, and you can't get upset about it. So you know, it's good, and it's bad. But there are costs either way. I grew up in the world, Larry, before outsourcing. And then outsourcing became the thing back in the early 90s, it became the thing to start having people having consulting firms having organizations take out away whether it's compensation or benefits or payroll or other things, take it off your plate. And there was that push and pull. We need to do it ourselves. No, we don't, we can't, we can't invest in all of that. We need help. You know, these guys have technology, they have the people with the knowledge. Let's invest in them. And so that push and pull continues to this day.

Larry Dunivan: 17:49

Yeah, for sure.

David Turetsky: 17:59

Let's talk about our next question, which is what are the lessons or examples that can help midsize companies figure out where they need to be on this journey? And where could they be?

Larry Dunivan: 18:13

Yeah, it's a great question. And I think that, you know, we talked about it very beginning, like, what are the business priorities? And, you know, it's all it's a, you know, it's a trite response, but it's always true. And where does the where does the HR team need and want to have the most business impact, and that varies from, you know, time to time and circumstances circumstance? You know, I alluded to earlier, you know, if you don't, if you don't have your handle on recruiting and onboarding, in this labor market, in this high in this climate, whether you're growing or not, because your turnover is spiking, you know, not much else matters, you know, you got to do all this stuff reasonably well. But if you're doing that poorly, you're at a massive disadvantage, you know, and so that's, that's job number one. And so many organizations struggle to do that well, but more importantly, so many other organizations do it in a differentiated way. And so the bar is much higher, you've got to decide where you want to be on that continuum. And technology is only one element of that, of course, but it's a crucial one, you know, if you've got any kind of hiring velocity, whether it's the talent acquisition side of it, or the onboarding, you know, and then I think that the, the day to day operation, so the business doesn't get into this hell is really important. I alluded to this earlier, you know, remote workers are creating major problems with compliance, managing taxing authorities and the like, and rarely do people that are working in these companies who've been in three states for a decade, know what to do when all of a sudden they're in 13. And listen there is nothing worse than getting a frantic phone call from a CFO and a client company, because they've got 10 states sending them tax notices and threatening, you know, to put liens on the business and it does happen, and it's not because anybody does a lousy job. It's just the stuff gets ignored, and it doesn't flow up until that notice comes from the taxing authority, by the way, who respond to your letter in like four months?

David Turetsky: 20:06

Well, yeah, and I think this is there's a little bit of an issue here with empowerment. Right? Do we give the employee the empowerment to update their own address records? And do they know they have the opportunity to do that? Right. So there's a little bit of UX issue here. If the if the people in payroll or if the people who were responsible for payroll or the CFO knows that someone moved to another locale, where they do not have either an SCM, or they don't have Fe sorry, FEIN, where they aren't registered? Do they need to? Does the software, let them know they're now in a new locale where they're going to need to collect either withholding or they're going to need to do reporting? Does it?

Larry Dunivan: 20:49

Yes, I know of one that does. Let me tell you something, it still doesn't work. We have resorted to presenting the information. Every time we run payroll, presenting the information every time you address an employee tax record, you have employees in a state where you don't have an unemployment experience rate.

David Turetsky: 21:10

Right. But but so that's the reason why notifications have become such an important part of the HR technology. Notification, not just the person who's responsible, but three levels up to make sure that, you know, there's there's an important thing that's happening, do you know that it's happening? Are you on top of this? I think that goes to, you know, not just notifications and employee experience. But it goes to the sophistication of the of the company, and their ability to deal with things. And, you know, going back to the thing you mentioned before about analytics, analytics isn't going to solve for that tax issue. It's not I mean, there's, I mean, that's a notification, potentially, but but but so can we create, though, analytics that do focus people on other issues that it could and give those people in the mid market and understanding about what's happening in their business, so they can react to other things like, you know, whether it's a great resignation and a great awakening, or whatever we're calling it, you know, you're getting people who are leaving, because this this termination reason what, you know, is that a compensation issue? Maybe? So do we then tie that notification to then open up the compensation and see if they're being paid fairly against their market? You know, the all of that can be kind of linked together? I think what the problem is, in the mid market, they typically typically don't have specific compensation experts. And so the technology kind of needs to do a little bit of that hand holding, don't you think?

Larry Dunivan: 22:36

Yep, absolutely. And, and some, some of the things you'll start to see, I think over the next few years, is, you'll start to see more and more of that, because we've got to find these external sources of the data, whether it's compensation, equity, market, equity, you know, the example I always love to use is when you hire 100, and first person in the state of California, the world just changed for you. Right, and, and I, you know, it shouldn't have to be I sent you an email, it should be giant red flag, pop up, Blinky light, you just hired your 101st person in California, here's all the resources you need to deal with. And here's some of the things that system just changed for you automatically, in order to allow that to happen. And what's important there, and all of these examples comp is another great one is that there's all this external data that has not yet been, you know, kind of created, and it's a granular enough form, that it can be digested, and then more importantly, the technology with the right API's to consume it and use it. Interestingly, you know, Mineral is a very interesting company in that regard, doing some of that kind of breakthrough work around core compliance. But, you know, there's been companies around for a while that have done that really well for taxes, you know, so that, you know, we don't companies like us, don't have to worry about what what the withholding table rates are for the state of Illinois. Yeah, that kind of stuff.

David Turetsky: 23:53

Yeah. One of our one of our partners, which will remain nameless, is a really big in the tax compliance world. But, but like going a little bit further, API's have been a really big boom for a lot of technologies, HR, especially where the ability to get the experience or the difference or the What's New, why is this important? The ability for API's to be able to help be able to get experiences that other technologies have that other technologies have solve for, is really critical. And, you know, we've seen that specifically when we're talking about things like compensation, where we're, we can get an API and go and ask for what's the hiring rate for XYZ job, and you get back a minimum midpoint Maximum, or you get back a 25th, median 75th on base salary. And then you can tell somebody in the right in the user experience, hey, you're hiring for this accountant job in California and LA, here's what the starting rate is based on this API that were going out to this other third party company to get that data. That's really cool stuff. And to the extent at which HR has been able to utilize that, like so many other technologies have, hint ERPs, is that, you know, we should be doing more of that, don't you think?

Larry Dunivan: 25:04

Without question. And I think it's there's a couple of distinctions here, because some of those API's are relatively straightforward. They're passing credential data. You know, the best example is when you feed somebody accepted offer to an onboarding process. Pretty clean, pretty straightforward. But these others that are more dynamic, you know, that need to account for a sequence of events that then link to data, right, those more those more interesting ones, we're still not there yet. And there's two reasons why. One is because the sources of that data are often not all that technology savvy in the way they use it, manage it and expose it. And then the complexity and the and the modernization of some of those API frameworks. While the technology exists, haven't matured enough yet. But you'll see we'll start to see that change more and more. And I think the mid market will be the greatest beneficiaries of that, because we have to be able to anticipate the things that are happening did happen or might happen. And as I said earlier, the only time they understand is just in time presented when it's actionable.

David Turetsky: 26:04

exactly, yeah, absolutely. So Larry, we've talked about the business problems facing mid market clients, and what can HR help them with, we've talked about some of the types of things that HR generalists in the mid market world usually have to deal with. And then we've talked about some examples and lessons for those mid market companies and for the HR teams. Anything else you want to put as a finer point before we close?

Larry Dunivan: 26:38

No, I just think that I think it's super important that the world understands that those requirements are unique, and we have to account for them. That's it's as simple as it gets. And I think it's been underserved, for sure.

David Turetsky: 26:51

Outstanding. Well, Larry, thank you so much.

Larry Dunivan: 26:54

My pleasure. Thanks for having me.

David Turetsky: 26:55

Dwight. Thank you.

Dwight Brown: 26:56

Thank you, and thanks for being here with us, Larry.

David Turetsky: 26:59

And thank you for listening. And if you've enjoyed this podcast, please hit subscribe. If you know somebody who might like it, please send it their way. Thank you very much. Take care and stay safe.

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