Imagining the future of the HCM with Paylocity’s executive chairman

For Paylocity’s executive chairman Steve Beauchamp, the human capital management (HCM) landscape is tough and competitive. His Illinois-based HCM platform is focused on delivering a modern tech stack that can deliver an easy-to-use experience for HR and payroll pros and their employees.

“We’re really trying to focus on really creating a very easy-to-use employee experience for all of our customers across the entire HCM landscape,” Beauchamp said. “We have all of the modules that you might expect, whether it’s recruiting, onboarding, compensation management, performance management—you name the module in HCM, we really built that out completely.”

Paylocity, a cloud-based HR and payroll solution for SMBs and larger enterprises, is working to deliver HR-related tech solutions all across the function. To keep competitive and meet the needs of clients, Beauchamp told HR Brew that Paylocity is aiming to “go beyond traditional HCM” in order to meet all the employee-related business needs on the very platform that allows employees to get paid.

“Everybody has to pay their employees somehow, so you need some system to be able to do that in today’s world. And so a lot of our points of differentiation go after those core experiences—payroll, time tracking, PTO tracking—and really try to be able to deliver a very automated and easy-to-use experience.”

At this year’s HR Tech conference and expo in Las Vegas, Beauchamp offered HR Brew insights about the current and future landscape for HCMs like Paylocity.

HCM’s with AI

HCMs are already deeply invested in leveraging generative AI technology and incorporating developments in that space right into their platform.

“Clearly, AI is a new platform capability that is increasingly being used. I think, from our perspective, you’ve got to get down to the very specific use cases to add value,” he said.

Expect AI to show up with enhanced natural language search, able to create content like job descriptions, offer assistance with meeting notes, and suggestions for recognition messaging, for instance. But enhanced AI features will show up in HCMs in other ways, too: new reporting capabilities will be unlocked leveraging that same natural language interface, offering insights based on employee data and knowledge based on industry best practices.

Paylocity is working on shipping its AI-powered chatbot to “answer the ‘How do I…’ question.” This feature is already available for early-adopters on the platform.

Beauchamp told HR Brew he imagines this technology in the HCM will allow HR pros to staff up in areas that create the biggest impact on the business—managing a company’s people resources—rather than task management work that shows up on HR’s own job descriptions.

“I think there’s a huge opportunity for them to do more of what they want to do that can actually have an impact on the organization,” he said.

Employee self-service

Employee self-service and other supervisor and manager tools inside HCM platforms will aim to reduce HR pros’ task management work.

“I think the HR professionals’ world has gotten a lot more complicated,” he said. “The idea is to save time with all the task management that’s critical for them to get done, and then allow them to spend more time engaging with their workforce, so that they can drive higher rates of attraction and higher rates of retention.”

Moving tasks from the HR wheelhouse to the manager, supervisor, or even employee will free up more space for HR pros to communicate via video and post news and announcements that will make those same impacts on the organization that Beauchamp suggested AI will help address.

Better integration

HCM platforms are also flexing their integrations “beyond just sharing the data.” Beauchamp said it’s a workflow issue.

“Traditionally, IT would manage their own directory; HR would have their own employer of record (EOR); the finance team would have their own information about people,” he said. “There’d be some file integration to try to keep this in sync. The advent of APIs and more modern technology, [allows] this in real time [and] also allows you to tie right into the workflow that might occur.”

For example, Paylocity last month announced a headcount planning solution that can help streamline headcount efforts by HR, TA, and finance teams, all inside the platform.

Pay equity

Pay equity issues are increasingly becoming mainstays at organizations both to address growing compliance needs and to spur a diverse and engaged workforce. Data available inside the HCM platform can help run audits and make informed decisions to address inequity.

“There needs to be a frequent exercise done by an organization to go through pay equity analysis, and it ends up actually being a relatively complicated statistical analysis,” Beauchamp said. “There’s a whole bunch of data that you obviously need from the platform, and so we’re focused on giving you high-level visualizations of that data and then making that data easily accessible.”

But Beauchamp warned that pay equity audits are only a part of the equation. He said HR leaders need to also focus on their equity and inclusion programs to ensure a diverse workforce, engage with their employees, and gather feedback about the culture, all in addition to making sure employees are fairly compensated.

“Your employees want to have faith that the organization is being equitable,” he said. “They want to work for a company—and I think they’re going to have more pride in working for a company—where they think there’s equity there, whether that’s by gender, by race, frankly, by age, by experience.”

Earned wage access (EWA)

Navigating new HCM and payroll features that allow employees earlier access to the wages they’ve earned (or expect to) is an area where technology has raised new questions for employers. These types of solutions may impact retention and financial wellness, according to advocates, but it’s also an area ripe with change as regulators look to address EWA fairly.

“This is a good example where the technology got out ahead of the compliance and…we’re in the catch-up mode right now where states are trying to say we’re going to regulate how earned wage access can happen,” Beauchamp said.

The CFPB is also investigating this practice to make sure these offerings aren’t predatory.

“I think the idea of being able to get people earlier access to their wages, either by running their actual payroll more frequently, sometimes even on a daily basis, or by giving them an advance and fitting in under those state rules to get the advance, that’s the model that most people started with. It’s a model that we offer today to our customers,” Beauchamp said.

But Beauchamp expects the current wave of compliance changes to impact the EWA landscape in the short term.

“I think this will continue to grow in a customer’s mind, gradually and slowly, and that the compliance burden will likely mostly fall on the provider who’s offering that solution,” he said.