Rebooting Merger of Equals Into A Multinational Market Maker, Chris Todd - UKG

[MUSIC] Welcome to another episode of The Reboot Chronicles and No Holes Barred Forum with Global Leaders, Authors, Entrepreneurs and CEOs about how organizations stay focused on growth and innovation and are unprecedented times. [MUSIC] I'm your host, Dean DeBias, coming to you live from Reveaves North American Headquarters in Chicago, and we would like to thank you for joining us from around the globe today. [MUSIC] I'd like to welcome Chris Todd to The Reboot Chronicles. He is the CEO of UKG, a leading provider of HR payroll and workforce management solutions. The three now going to $4 billion annual revenue company is consistently ranked as one of the best places to work with about 15,000 employees serving over 75,000 organizations in 100 countries around the world, pretty impressive. Now one of the largest private companies or private software companies in the world, they've just had a couple of quarters where they hit a billion dollars in revenue, which is very impressive. Chris, it's good to see you. Thank you, Dean. Happy to be here today. Yeah, we've been looking forward to talking to you. It's always fun to talk to private companies, first as public ones, and having run both of them, I prefer to be in your seat. You guys have gotten really big, really fast. And maybe I was going to jump right into you and your leadership style because I really like it, so why we invited you. But maybe just to start out, let's just talk about how you guys got here, the original merger with Kronos and Ultimate. And then up to the great place to work, acquisition as well, and Michael Bush and all that stuff. So maybe just take us through that journey. Perfect. Yeah, thank you for having me. I'm thrilled to be here today. Proud of the UKG story and everything that we've been able to do and excited to have the opportunity to talk about it a little bit. You're right, the UKG is a newer company, right? It's a newer brand, which resulted from the merger of Kronos Incorporated and Ultimate Software. And both Kronos and Ultimate Software were companies, various established software companies that are a couple decades old. Reddit combined sort of 30, 70 years of experience. All the thing was about 30 years old. Kronos was about 40 years old. You're like an old school startup. We are an old school startup. And we, you know, maybe a different conversation for a different day, but we started the work to merge the two companies in late 2019. We announced the merger of Kronos and Ultimate Software in the third week of February 2020, at which point for us, COVID was a small supply chain issue as it related to, you know, a little bit of hardware we build, which is a very small part of our business. And then March 12th, we sent all the employees home and then we merged, you know, so formally, it sort of launched the merger on April 1st, 2020. And so we took two organizations, both of whom had 6,000 employees at the time and merged them during COVID, right? Having every single conversation like this. And you can imagine what it was like, you know, for me and for everyone else trying to meet 6,000 new people through this medium, right? Very difficult, very challenging, a lot of extra work, a lot of time. But we're really proud of what we've done and how we were able to do it. And we were both Kronos and Ultimate Work Companies that were very serious about their culture, both companies that you are going to leave and all over great place to work lists. And I'll talk a little bit more about that in a moment. But we knew that the new culture for UKG would be different, right? UKG was going to need to be different than what Ultimate was and was going to need to be different to what Kronos was. And so we worked behind the scenes. We worked more on culture and branding and employee messaging than anything else. Because we knew that we needed to land that in the beginning. And we landed on our purposes people as our tagline. It worked, right? It resonated with the employees immediately. And it allowed the employees to begin to look forward, right? Part of what we knew we were going to have to get through. As I said, Kronos was amazing. Ultimate was amazing. But we needed to show all the employees that UKG was going to be amazing. It was going to be different than what they had before. It's similarly amazing. And worth continuing to invest in in terms of their time and careers and energy and enthusiasm and everything that goes with that. And that was a big part of it, right? That was the, you know, I know we're here to talk about reboots. And that was the original reboot for UKG. Yeah. And most people forget about the people. The leadership kind of says, well, we got to get this thing put this together. Having bought and sold a lot of companies have been on the good end and the bad end of that. It's usually the culture smash doesn't always work. Sold one company to Salesforce that, you know, with the culturally, it was great at first. Sold another couple of companies to, you know, big multi-billion dollar conglomerates that they just squashed them. They can be lost. Probably help. You're both the same size, similar. It did help a little bit that we were the same size. And ironically, I think COVID helped us, right? It made the integration more challenging. It for sure slowed down the efforts to meet new people, make them more comfortable. But it was a very obvious time for companies all over the world to lean into their employees and really put energy and enthusiasm behind protecting their employees. And so given we merged, you know, as I said, 18 days after we sent everyone home and our employee brand promise was our purpose as people. The fact that we sort of had this global pandemic and we were able to lean into the employees right away, preserve their jobs, take care of them, take care of their families, support them, give them the challenges that they were going through. I think, as I said, ironically, it gave us an opportunity to prove the case right out of the blocks, which helped us. It gave us a baseline that then we were able to build upon. And you had two cultures. You had a Boston culture and a Florida culture. Is that fair to say? That's true. Right? It's true. We, uh, uh, Chronos was headquartered here in Lowell, Massachusetts, where I'm sitting today in Ultimate Software was headquartered in in West and Florida, a slightly west of Fort Lauderdale. So, you know, we had New England, we had South Florida. You're right. Two completely different cultures. One of them hugged more than another. But, um, all the Boston folks are getting used to hugging and all the Florida folks are getting used to, uh, sort of bad weather. Right? Um, beyond that, we've sort of pushed through. And part of, part of what we did early on, which we've maintained today is we have a dual headquarter strategy. And so we maintain the headquarters at all and in West end for all the obvious reasons. It was, it was important to, uh, both organizations to, to, you know, celebrate the history, but more, but, but more than that, you know, we're a software company and our intellectual property, you know, and, and the brains of the outfit actually walks out the door every single night. And, uh, we wanted to make sure we sent a signal to all the employees that they were important and they were valued in a big part of the UKG story. Yeah. The, um, you know, for those that don't know you, your, your whole people passion thing. It's not just a merger slogan or, or an edict. It was, it's also your personality, which is, which is great. And I just wrote a couple of Forbes articles on what I teach with Kellogg, which is, you know, or, or at least in how we actually reboot companies forget about teaching. And it, we focus on people, platform and passion and the, uh, you get the two bookends, the, the platform, usually what takes up all the time, which is the product, the product, road map, the partnerships and the sales and the ARR and, oh my gosh, the sky is falling. Oh, the little guy, how do you, how do you balance all that? And it's nice to be people culture and all that, but you're also delivering some pretty hefty quarters. Right. Right. Um, yeah, it's, it's good question. We, um, I try. I think those were the, um, those really were the, I think those are the right three platforms for sure, um, or the right three categories and think about it. And when we think about the platform, yeah, it's one of the reasons the merger made so much sense was that we, we, both companies came into this, was true with truly complimentary product sets and platform sets. And so the, the work behind the scenes to figure out how to bring, ulti pro, um, and how to bring work for central and work force dimensions together in an intellectual sense was quite simple. Technically, you know, it's, it's a, you know, it's something we've been working on for a couple of years. Sure. Um, but, but how to do that work and what we wanted to do didn't take much long to figure, much time to figure out at all, which then gave us a lot of time and a lot of energy and a lot of intellectual bandwidth to deal with the people side of it and to deal with the, the, um, process side of it. And the people side of it was important to us because of the cultures that we came from because we wanted, um, the chronos and ultimate employees to be excited about the new UKG, but also as a company that had staked its claim on being one of the leading cultures in the world, selling solutions to HR and operations professionals who also want to lead their organizations into having fantastic cultures. It's deeply strategic for us to focus on culture, right? It makes us a better place to work. It makes us an employer choice. It encourages people to want to spend their, um, their careers with us. But at the same time, we fundamentally believe that in a strategic sense, it gives us better insight into, into the products and services that we're delivering to our country all over the world. And that's part of our promise is that the energy that we put into culture will manifest itself in the products and solutions that they purchase from us. It'll enable them to be more successful too. Yeah, I was going to go with the merger forced you to like blend these two platforms, not easy, but that's probably how you move more of an open, not open source, but open platform to plug in all types of different partners and other products and services on top of your platform, which some companies aren't that great at. Actually, some don't want to do that. Like if you like something like Zoho, they're not really doing a lot of that. They're not acquiring. So you, um, and then on top of that, you picked up Great place. You just kept acquiring. Is that where you? So I just figured this out. So UKG is ultimate chronos in great. Is that is that UKG? No, that's a that's that's I wish we were that in that much foresight. You and KNG is ultimate chronos group. And then about a year and a half ago we acquire and now about a year and three quarters ago we acquired the company great place to work. We acquired the great company great place to work for a number of reasons. It was again for us our purposes people and being a great place to work. It's on brand for sure. It's it's a great business in and of itself which just makes us sort of sort of bigger and more successful. But beyond that what we were able to the sort of the true intellectual property behind great place to work which was so interesting to us is all the data and all of the all the sort of use cases as to sort of what separates a great place to work from a not so great place to work and having the access to the data which allows us to again sort of deliver those sorts of solutions through our products that we offer to all of our customers. And so we are we as an organization are continuing to lean in more and more and more behind this notion of being a great place to work. We want to be a great place to work for all and we want to enable all the organizations to be great places to work. The brand helps the data helps the methodology helps the people helps and so it's been a real accelerant for us on that journey and in fact later this fall we're going to release our first product sort of branded great place to work and it's a diversity equity and inclusion hub which will be in a different additional part of the you know the HR and workforce management suite that we offer that will allow companies not only to go on their DE and I journeys but to understand how they're doing and to benchmark themselves against others and to access the great place to work intellectual assets to learn how to do it and how to be more effective and how to you know how to have challenging conversations or courageous conversations with your employees on and on and so we think it's a great way to continue to expand our human capital management suite lean into the great place to work methodology and brand and data and enable our customers to go on this important journey in a way that's it's meaningfully different than they've been able to do so before. Yeah I like the data angle I mean if you look at some like ADP and if we got employment data and they've got an index some you guys can come up more on the qualitative side of this which I think is so is fascinating. Well we have that data as well in fact we we go toe to toe with ADP now and the federal government in terms of our insight into you know how employers are doing and it's it's actually something for all the obvious reasons we really leaned into at the beginning of COVID when we were trying to figure out what was happening with the economy and we have access to the payroll data same level payroll data that ADP has not as much payroll data but sort of equally predictive but we've also we also have data that we think is even more predictive and earlier than payroll data because we're the world's leader and workforce management solutions which is you know if you sort of think the most basic level is sort of time and attendance people punching in punching out working ships seeing their schedules and tens of millions of employees interact with our workforce management solutions every day we actually know at a punch level at a shift level how much people are working by region by industry by size company and we know that a week or two or a month before people get paid because people weren't before they get paid which is giving us fantastic insight to where the economy is going and so in fact we were on CNBC this morning and and continuing to actually work with federal government ways that ideally we can help the Bureau labor statistics to be even more predictive they've been in the past I think it's smart it needs to be triangulated because the old dog data just to me is not is helpful it's used to be no it's especially coming out of the scope of it it's just a bunch of exaggerations right it's right yeah the data's late and because of the COVID effect right the data is still really bouncy right and it's hard for people to talk for people to interpret so when you look at the other thing we measure a lot is what I call BBB build by Barrel so you in terms of the platform right so you're you're clearly you know buying you know how to acquire in terms of building your own stuff and borrowing partnerships what how do you have any balance that this product road yeah product road match yeah not without getting too geeky but you know no but that like and that's the right trade off and as we do our annual strategy reviews every year when we think about where we want to take our platform that's exactly the analysis that we that we go through and you're right historically we've been a company that has been a quesitive and is is is we think pretty effective at integrating certain new companies and new pieces of technology that said you know in order to have great products and to be a leader we have to build great products as well and so we have a you know an engineering organization that's 5,000 people large and and we've invested two and a half billion dollars in R&D over the past five years that continues to grow every year and and a significant portion of that that R&D budget is explicitly allocated toward new features and innovation every single year in order to in order for us to keep the platforms moving and to continue in vestuaries like the D.E. and I have that I just reference so that we continue to to be a leader in the human capital management space and then borrowing if sort of borrowing is code for open platform partnerships that's an important part of our strategy as well I do use a B so yeah that's what yeah again and we that's been a core part of of how the products have been designed and how they've worked for years we have about 250 technology partners and as much as and as much as we're sort of proud of the solutions that we have and love our human capital management workforce management solutions we are aware that that organizations do need you know they need supply chain software financial software other other products to run their businesses in order to be effective it needs to be open right and they need to be able to to sort of work with multiple vendors in order to satisfy the needs of their organization and to be great employers which we want them to be and and I wish we had a corner on the market on all the world's great ideas but we don't and and having an open platform allows us to to sort of access those ideas and sometimes generally a little bit more revenue but more often than not just make the customers a little bit more successful and happier and sometimes moving faster I mean most companies big and small they would like to buy you know more products from less vendors just to simplify life so you're seeing them move to that everything from sales force to into it to Zoho to I mean even ADP is you know the big dog the old dogs I call them you know you got no this why I brought this up from a competitiveness standpoint when you try to reboot the whole competitiveness angle sometimes you know we get a little too excited about our own products and services and how do you how do you how do you stand up I usually ask who do you who do you hate I think I know vendors you hate your competitors but yeah how do you how do you be more competitive over the next few years in this space because there's a land grab going on it seems yeah there there is and we we focus on this in a couple different directions one is the the area that I highlighted earlier we make sure that we allocate a meaningful portion of our engine is a lot that's amazing yeah but specifically toward innovation you know to your to your taxonomy so using the word baro our open our open platform and having a couple hundred partners does allow us to get insight into where the market's moving where people are innovating that we might not have thought of at the time if for sure gives us real insight into what the venture what the venture community is funding and how they're thinking about the markets and we spend a lot of time I spend a lot of time sort of with startups thinking about startups trying to figure out where they're going and and making sure that we're sort of remaining sort of competitively viable and and remaining a sort of leader in our space and so said differently you know chronos was once a very small company ultimate was once a very small company and now we're a large company and so we worry a lot about those really small companies and what they're doing and pay a lot of attention to them because that's you know that's where that's where innovation and disruption comes from exactly and you know now you're part of the problem you're you're over you know once you start heading to four billion it's like okay you're one of the big dogs and I run this program called dancing with startups which helps large corporations partner with startups all over the world whether they're doing bilbire baro who knows but yeah having a problem so glad you wrote it up so I don't have to get into it with you but having a process to do that for big companies you I'd just say over a billion you want to start doing that it can't be a hobby it needs to be a you know part part of the DNA and it sounds like the way you've set it up it fits in well because it doesn't seem like you've lost your smallness it seems like you you still have it for I mean for us that's actually I mean we have specific then that sort of what I just outlined for you like that is it it's a group of people with a specific leader and a budget and they lead sort of you know hackathons and programs for the smaller companies that we partner with so that we can work well with one another learn from one another I mean if we sort of spend a lot of time with them investing them quite a bit and encourage them to spend time with us and it benefits both of us for sure. And you're right. It has to be a it has to be a core part of the DNA and I would like to think that we've maintained an element of our smallness. We're a big place but as I like to say people don't survive here unless they do real work. Right. I have a you know I'm a CEO and that has a certain title to it and a certain ring to it but at the same time I answer all my own emails. I do dozens of customer calls every month. You know I did two customer calls today. Of course. And I've been here 16 years right. I have lots of customer relationships that I've just developed over the years but but those matter and having that sort of granular tactile sense of what the customers are doing what they think of the products, how they're using them is meaningful to running the business for sure. And to some of the elements that you were referencing a couple minutes ago helps us to keep a sense of where the market's headed. And you know how our buyers are thinking about areas that they're investing in where they're spending the money as well. Especially if you're global. You know some companies they're just focused on the states and you guys need to be so many cylinders you have to hit it at the same time. I can't use it. I can't use the car analogy there because there's too many of them. So how did this all go for you personally? 16 years is a long time. The previous CEO Aaron I think was your mentor and coach and yeah it takes credit for everything you do probably. And he deserves it. I'm kidding no. So yeah so tell us about that a little bit about the personal side of your journey and you know becoming a big time CEO. Yeah it's um I joined I joined Chronos in 2007. Um uh previous I was a company called BlackBod and Charleston South Carolina. I'd been there for seven years. And um had had a wonderful time there and um I've fundamentally have had I've sort of said this sort of many many times before I've I've basically had two managers in the last 23 years and I hit the manager lottery. Um I loved the CEO at BlackBod got named Bob Sawal's key. Yeah I'm good. A tremendous mentor to me in the early 2000 still a close personal friend I last talked to him a couple of weeks ago um and then Aaron then Bob retired and um I started to look around a little bit and landed at Chronos and and and in the end well in the beginning sort of ended to Chronos I was attracted to the business and the market opportunity and all of that but I also really liked Aaron and I thought he would be a great manager and I thought he would be a great mentor to me. By the way he was then and he is now completely different personality than Bob and I thought that would be helpful and um to me as I sort of continued to sort of think about my leadership path and it was and as I said I made a big bet on Bob once upon a time and I won and then I made a big bet on Aaron once upon a time and I won um and Aaron and I have worked hand in hand for the last 16 years since the summer summer 2007 and it's been amazing. I mean interesting incredible mentor he's invested thousands and thousands and thousands of hours in May um in this point he's like you know he's much more than a mentor and a coworker he's a deep personal friend um and oh he's also still ex-exec chairman right? Yeah he's still the exact chairman you know we talked multiple times a week um and we worked on this we worked on the CEO transition for four years um which may be a record for these transition but most people most people are like four weeks that's amazing but it enabled us to be um really well prepared um as individuals it allowed us to be um to sort of prep the organization for the changes that were coming such that when we announced it um and I mean this in a good way I think across the organization it was a giant shrug um and um and it allowed us to and I think this is something that isn't sort of thought about or talked about enough it allowed us to sort of be sensitive to one another as we are going through that journey right? it's a it's a big change for me for all the obvious reasons but also a big change for Aaron and um it allowed us the time and the space to um invest in one another's journeys and make sure that we really understood one another's journeys and I think one thing that'll give us both enormous credit for others will judge how the business does um we did a fantastic job sort of taking care of one another through the journey um and checking in with one another and making sure that um he set me up for success as CEO I think I set him up for success um as exec chairman um and you know as I've said multiple times and he said multiple there is more than enough work to go around there's more than enough credit to go around and um if we don't continue to share that then that's fantastic and then folks it doesn't always go that way I've seen you know I've seen it where someone takes over and the you know the old guard just doesn't want to let go or because you had to come in and reboot things I mean you you didn't just sit around and watch you you didn't just magically get to a four billion dollar or a one billion dollar quarter or two uh yeah do some hard things but what were some of the tough changes you had to make well yeah I mean there are a whole a whole bunch comes with it right one benefit of of having the time that we had was we were able to sort of do the work on the executive team that we needed that that was going to happen sort of prior to the announcement and so because this was so long and coming I was fortunate to be able to come into the job with the whole team knew this was going to happen and they were sort of prepped and ready and up for the next journey um and that allowed us to um so to launch forward as a team immediately but you have to do the things that you you know you have to do in the beginning you do have to remake the executive team um you got to remake the rhythm of the business a little bit um we sort of change our investment profile as a business we um refocused on some products we sort of focused a little bit less on some other products to change the portfolio mix a little um made an acquisition you know so continue to be active in the M&A markets as we sort of reshape the portfolio so um got a couple new board members along the way so a lot going on yeah you know yes why I always start with people I mean people platform passion just sounds cute but it's the the people that got you to you know a $900 million company or not always the ones that didn't get you to a six seven eight billion dollar company which seems like uh where you're where you're headed and that's right it seems evident um but it's it's hard to do and it's uh it's a challenge it's a challenging journey for sure and and as an organization we went through that right both ultimate and chronos on their own were about 1.4 1.5 billion dollar companies and then magically we all woke up one morning and worked for a three billion dollar company and as I said over and over again like it takes unless you happen to have worked for somewhere else no one here had ever worked at a three billion dollar company and so we have to figure it out and now we're hurt past four and heading toward five and um we do need to develop new skills and and new processes and new platforms to continue to support the organization going forward um historically we've been good at having those conversations though right where part of our purposes people is we do we care for one another we take care of one another um which allows people to have the emotional space to be honest about how they're feeling and what they want to do which which helps us as we go through these transitions as a business I bet when you look at the market and the competitiveness you know over the next few years what are you most excited about in terms of a growth and innovation track you know whether you're extending into something new maybe new markets new products new services new geographies what what what what are you most excited about yeah we're excited about we're excited about a couple different areas where there are um fantastic opportunities for us to continue to invest globally and build our business globally and so you're going to see us sort of expand our presence outside with with sort of products specifically sort of outside the United States Canada and that's exciting for us and it's going to sound like a little bit of a cliche given everything you've been hearing since last fall um but we're really excited about you know AI and large language models and what those might allow us to bring to bear both in terms of allowing us to offer sort of different differentiated more exciting more meaningful products to our customers while allowing us to invest in our own operations internally and deliver more effective service yeah we're going to ask you about healthcare AI um before we ran out of time and uh kind of got sidetracked on the people stuff which is actually fascinating um but you have so many verticals to focus on the impact that AI can make is that's that's a lot of work for you guys how do you how do you prioritize it's a company's just focus on one vertical and that's enough so AI comes in throws a wrench in things um right both good and yeah what you know we have we have we have big presence in retail and healthcare and manufacturing and services and distribution in public sector it's part of the strength of the um of the business but we um um so our state of strategy which we're we're executing on and we think we can and we can we can deliver is that we believe there's there's sort of a platform of work that we can do um in this area that will be applicable across all the verticals and sort of think of that as like the first layer of the cake right um and then there's a second layer of the cake which may be related to time may be related to scheduling um we'll have some vertical flavors to it that that um we think without a without a sort of an inordinate amount of extra effort we can verticalize those solutions and so So think of those as sort of models built with AI. LLM technology that are specific for the space that we're in, human capital management and workforce management. And then the top layer of the cake is allowing our individual customers to interact with those models, you know, to introduce their data and in ways they're going to be effective for their operations or whatever they're trying to do. And so we think we've got a sort of beat on those first two layers of the cake and we'll see where we can get to with the third layer and allowing customers to interact and you know, back to our tests and sort of create a bidirectional impact here. Yeah, well said without unpacking it, we could unpack that for an hour. Right, we could. So I really want to thank you for joining us today, Chris. Any parting words for people, young leaders who want to grow up and do what you do? I mean, they don't always have two best mentors in the world. They don't always have, yeah, what would you tell me? I think the good, I mean, there's so much I could share, but I think the what has served me well is continuing to remember that it's not about me. This is about it's about the company, but more than the company, it's about the people who work here and the impact that we're able to have on them and their families and their lives and their communities and the impact that we're able to have on our customers and which will enable them to have impacts on their lives and their families and their communities and and that's that's what we want to do and we're in a really fortunate position. I'm in a really fortunate position where if I do my job well, if we do our job well, we're enabling people to have meaningful work and meaningful work is meaningful and and by that I mean people who have meaningful work are better connected to their communities, they're better connected to their families and and I've always believed and continued to believe that that has a positive sort of butterfly impact butterfly effect on all of us and that's what motivates me and that's what gets me going every single day and it's the you-cruers who excite me and it's the the lives that they're leading that excite me and when I combine that with the products that we get to deliver and the impact that I know it has on the on the organizations that we serve that's great and and and having and having something sort of deeply meaningful can propel a person and maybe end up in a role like this maybe you don't but at the but if a person sort of goes on that journey to figure out what's meaningful to them, they'll end up doing something that's personally important and that's enough. Well said. Awesome. Thanks Chris. You've been listening to Chris Todd. Who's the CEO of UKG? Check them out. This is Dean DeBias with the Rebrew Chronicles. I'm Mike. Thank you for joining us today and we'll see you soon.