A conversation between Aron Ain (CEO of Kronos and Ultimate Software) and Gail Goodman (CPO and cofounder of Pepperlane & former CEO of Constant Contact) that covers Aron's insights into the recent Kronos and Ultimate merger and advice on building and maintaining a strong work culture during the "new normal."
Creating a merger like no other (0:59)
COVID strikes during merger (4:35)
Combining two company cultures (5:15)
Dealing with employee burnout (8:08)
Supporting our teams however we can (15:49)
The importance of leadership (17:02)
Tom Hopcroft: Hi, thanks for joining us as we take a journey on the tech trail. I'm MassTLC's CEO, Tom Hopcroft, and this podcast series takes you inside the minds of remarkable leaders to better understand their journeys and to gain insights from their strategic decision making to help us along our journeys. In today's episode, we're on the Tech Trail with Aron Ain and Gail Goodman.
Gail Goodman: Thank you so much for taking the time to talk to us today. Really excited to hear about the way you are navigating an incredible year of change. So before we start, what I would love to hear you talk about is just as you were headed into 2020 and thinking about this immense merger, what was in your head in January and how were you thinking about things?
Aron Ain: January? Gosh, that seems like a century ago at this point. January, I was thinking about how we were going to create a merger like no other. Two 6,000 employee companies, two organizations that were both ranked in the hundred best places to work by Great Places to Work for All and Fortune magazine and how we were going to bring these two remarkable cultures together and change all the dynamics around that.
Gail Goodman: Wow. That's a lot to think about. In case our listeners just aren't completely down the curve on the merger, can you talk a little bit about Kronos Ultimate Software and the rationale for the merger just to give people the background?
Aron Ain: Sure. So Kronos is a 40 plus year old company focused on helping organizations effectively manage their workforce, time and attendance, employees scheduling. We also do for smaller organizations, HR payroll, talent management. Ultimate Software is a 30 year old company focused on payroll, human capital management, talent management, doing a little bit of workforce management. Kronos is the recognized leader in workforce management. Ultimate a recognized leader in human capital management. The worlds we live in are deeply connected to each other, close siblings. So we're bringing together the best and the best to create something even better.
Gail Goodman: Got it. So you did not think of each other as competitors or was there a little edge of competition in this?
Aron Ain: Really good question. We thought about each other as competitors around the edge, but let me be very specific to illustrate it. In North America where both organizations are most active in the same places, Ultimate's more of a domestic organization, Kronos a little bit more global combined 16,000 customers. Of those 16,000 customers, we only had 400 in common. When we looked at pipelines where we were actively competing, it was in the hundreds, not the thousands. So competed yes. Active competitors, not to the same extent as with others.
Gail Goodman: So you have this merger on the horizon. You announced in February. What was your key elements of the merger integration plan before COVID hit?
Aron Ain: It was to take these two remarkable organizations with remarkable cultures, remarkable product positions, remarkable relationships with its customers, and bring them together to create something that had never been created before. For example, Great Places to Work has been doing its rankings for 23 years. This is the first time two top 100 organizations have ever merged. So it was how we could bring new benefits to our employees and new benefits to our customers current and customers future by bringing the products together. Really that was the focus.
Gail Goodman: So I'm guessing you were also planning to do a lot of relationship building between the two teams as a way to merge those cultures and then bam, COVID.
Aron Ain: We had a lot of in advance culture workshops, ambition workshops, envision workshops, and right down to the various parts of the culture and then various work streams around product strategy, go to market strategy, how we interact and service our customers and support the customers we're bringing together. We had an endless list of work that was more than a 40 hour week. Then COVID hit and the biggest impact that had on us was not being able to be together, to work on these opportunities and challenges.
Gail Goodman: So now your 12,000 employees are all working from home. They must also be trying to navigate the changed organization and their roles. Wow. That feels like a lot of fear and a lot of uncertainty. How are you navigating that? How are you helping your leadership navigate that?
Aron Ain: While the cultures are both fantastic, they're a little bit different. It's evident that you can have greatness and there's not one formula to do it. So the way I've been doing it is the way I always do these things is to be honest and truthful and transparent. So for example, every week, every Friday, I send out a six to eight minute vlog to all 12,000 people where I just reflect on what's going on with the merger, what's going on with our business. My number one priority still is to protect all the people who work at the company, protect all their families. So got very focused on what it was going to do to get ourselves organized financially to be able to do that. So over communicate, build trust, and we were going to have to work really hard to go make sure that happened in terms of how we protected our balance sheet and protected our financial standing.
Gail Goodman: Well, we'll get to the business and the balance sheet in a minute. I want to stay on this vlog you're doing. So how are you getting a read culturally on where people are, what they're worried about, what they need to hear when you can't walk the halls and you can't feel the feeling of the energy in the building? What's your listening posts and how's that happening?
Aron Ain: We're leaning heavily in and asking our HR group to lean in. So that means, for example, we've done two extensive culture surveys. So it covers a whole myriad of topics around hard hitting questions, specifically focused on the culture. So we have a really good view by the different functions and levels how people are feeling about that. That's been remarkably helpful. Then you'd be surprised just talking to people and giving people an opportunity to communicate what you can learn and how you can hear what's happening, what's exciting people and what is introducing anxiety and nervousness. So we're doing all those different things. The culture survey, I can't say enough about the information it's provided for us. We had 8,000 of 12,000 people respond. Thousands of comments, which are very telling.
Gail Goodman: That's extraordinary. Clearly in the work from home world where people also have their children at home, their spouse at home who might also be trying to work, how is your organization navigating helping your employees manage their new reality and all the stresses and tensions of trying to find a new normal when nothing's normal?
Aron Ain: That's a fantastic question, actually. So we're experiencing what you just described with people at home, with families, with parents, with pets, with online school, with all these different areas. Number one, I'm concerned about burnout. I think people are working harder now than they ever have from home. They don't have the normal dynamics of commuting to work and having that be downtime or dinner with friends or weekend sporting events with your children, et cetera. So I think you finished your day and you walk then into the other part of your home or condo or apartment and reconnect with everyone. There's no downtime for you as an employee. What we've really tried to do is I've tried to communicate to people that it's okay for us to be stressed out. It's okay for us to be anxious. That I'm stressed out at times and I'm anxious at times.
So I've encouraged them through these vlogs and through my written communication is look right in the camera and say to them, I care about what you do. I care less about where you do it and when you do it and that I want you to find time for self care. One of my videos, my wife uses my iPad and she sits there and holds it. I looked in the camera and I said, you have my permission to take a nap in the middle of the day. You have my permission to play a video game. You have my permission to go for a walk, to read a book, to just find a time to do something different. When I said you have my permission to watch a video game, you could hear my wife start giggling thinking that was very funny for me to say. We're trying to tell people that we understand the stress level is way up and we're grateful that they're working from home and doing such a great job, but they have to take care of themselves.
Gail Goodman: Are people doing it?
Aron Ain: Some are doing it really well. They're telling me. They're sharing notes with me of how they're doing that, how they're finding times to unplug. Others are not. So it's still high on my list of making sure we don't have people get burned out, but I'm talking about it every single week. I'm getting notes from people, thank you for telling me it was okay to do that.
Gail Goodman: Yeah. I think managing people is incredibly different when there are no walk-bys. How was your HR team guiding managers to manage differently?
Aron Ain: Well, we're struggling quite frankly. So we're trying to figure that out. It's high on our list. I just talked to the team this morning about that. We're working now to put elbows out and lean in programs in place to teach and reinforce and insist that our managers ramp up what they're doing to create these leadership tool kits that our people need to help them navigate through what really is very confusing for many and very stressful for just about all. This means thinking about how we develop leadership programs for the new company. Are there things that we can do that'll give us quick hits around that from a content point of view? All of those type of things. So we just need to make it clear to our leaders that they need to awaken if you will, that it's different and they have to be proactive in supporting not only themselves, but their teams. Not going to kid you, it's hard.
Gail Goodman: Sounds like you are role modeling transparency in a way that hopefully they will role model down to their teams.
Aron Ain: I probably could do a little bit of a role model on the self care part.
Gail Goodman: All right. I give you permission to take a nap.
Aron Ain: Okay. Thank you for that.
Gail Goodman: I'm going to change gears on you now. Let's talk about the business and the strategic objectives that you'd had for the company going into the year, what's happening out there. Let's talk about the business for a minute.
Aron Ain: Okay. When this happened, we were worried like everyone. It wasn't clear. A lot of our customers include airlines and cruise lines and gaming industry and hospitality, organizations deeply impacted by this, but it also includes healthcare and manufacturing and logistics that might be doing a little bit better in some dimension. So it led us to build a stress case of what we thought our bookings, our revenue, what we could do with spending. So we modeled that we were going to be down from new product orders between 40 and 50% for the June quarter and the September quarter. Now being a software as a service a recurring business model, it takes longer for the problems to float through into the PNL if you will, but it will catch up eventually to us. So got very careful and tight on spending and hiring and closed 600 open recs and stopped travel.
We could tell even with that big downturn, we could protect ourselves. What's actually happened is that commerce has continued more actively than we expected. Code word, we're getting a lot of business. Both new business and add on business from existing customers. Not from the gaming industry maybe, not from the hotel industry, not from the airlines or the cruise lines, but other places that have activity that continues on. Maybe not at the level of would've been, but still pretty good, pretty good. So we're pleased about that. From a support point of view tracking it every week, what do the calls look like? From a sales support point of view, what do demos look like? How many demonstrations are we giving? What does the lead generation look like? What are the RFP volume look like? In all those instances, it's down, but it's still active and it's still robust in ways in this new world.
Gail Goodman: Everyone's looking at all the things we've done we didn't think we could do. Move entirely remote in under a week. Then how that might change the nature of work, the nature of your strategy going forward. What do you think are some of the things that are changed forever? How do you think about the combined Kronos Ultimate strategy being changed by what we've learned in COVID?
Aron Ain: So, first of all, I'm involved in a lot of conversations with other CEOs and I quite frankly don't think we really know how it's going to change yet.
Gail Goodman: Little too early to draw conclusions?
Aron Ain: I think it's too early to decide everyone's going to now work from home who can, or everything's going to go to online learning. I just think it's too early. I think we're learning right now about it.
Gail Goodman: Do you see any opportunities emerging?
Aron Ain: Sure, sure. I think there are ways for organizations that didn't trust their people enough to let them work from home whenever they could. I think this is a defining moment. We already had 40% of our 12,000 people working from home full time anyway. So for us it was easier, but for organizations that never allowed it, I think that this will offer an opportunity to change and think about how to do that differently. I saw a report recently that people who make more than $70,000 are only impacted by the current economic crisis at a rate of 2% of that group. People who make less than $30,000, it's like 70 or 80%. I'm encouraging the people, the 12,000 plus who work for our company who all have jobs who are all getting paid. They're not spending money on gasoline. They're not going out to dinner. They're not spending money maybe on daycare the way they were before.
My point is that their own personal balance sheet has shown a meaningful improvement and I'm encouraging them and I encourage everyone in a similar position that we need to take that financial benefit and we need to lean in and support in whatever form all the various businesses and others who need our help right now. I think it's something we really can do. So I think that may represent a little bit of a bright side that those groups who aren't as impacted financially can help lead our region and the country back out of this.
Gail Goodman: Yeah, that's a wonderful sentiment. I think it is really important that we continue to recognize we're all going through this, but we're not all having the same experience of going through this. Sadly, the people who were the most challenged are experiencing this in the more challenging ways and everything we can do societaly and individually to support those less fortunate than us. It's a really important time to be grateful for what we have and to give back to those who don't. Well, we are reaching the end of our time together. Are there other things that were on your mind for the audience about culture or strategy in the days of COVID and beyond?
Aron Ain: I think engaged leadership is more important than ever before. It's always an honor and a privilege to lead people. The impact we have as managers and leaders on those around us is always dramatic, but it's more dramatic than ever before. This is a time for those of us who have the privilege and honor to lead people and manage people to step up. Let me finish by saying I'm confident there's brighter days ahead. I'm confident we're going to figure this all out. I'm confident that with the right spirit and approach and attitude, we can get back where we need to be, where we were and make it even better. I'm committed to working hard to make sure that happens in my world.
Gail Goodman: Well, I thank you for your leadership and your optimism and for taking the time to talk to us today. Thank you very much Aron.
Aron Ain: Thanks Gail. Big virtual hug. You know I'm a hugger. So if I could see you in person, I would do that. So we'll have to settle for a virtual hug here.
Gail Goodman: Hug accepted.
Tom Hopcroft: Thanks for joining us today on the Tech Trail. We hope you've picked up some new insights to help you on your journey. Please tweet your key takeaways with hashtag Tech Trail and be sure to subscribe to get the latest episodes. Special thanks to our production partner, Matter. We'll be taking our next journey with Tracy Zen and Yogesh Gupta. I look forward to seeing you out there on the Tech Trail.