By Boyd Davis
Today, we announced that I joined Payfederate as CEO. I’ve been working with the team for a few months and became increasingly passionate about the role we can play in the compensation software market. As an entrepreneur, I believe strongly that every new business, no matter how small, should have a distinct reason why they must exist for their customers. It’s not enough to do similar things a little better than market incumbents. A bakery may provide the only fresh bread for a neighborhood. A machine tool maker may be the only one capable of meeting custom specs in a certain time frame. An insurance broker may be the only agency capable of finding underwriting for a complex project. In each case, the absence of the company would impact their customer base with added costs, inconvenience, or even viability.
This begs the question why Payfederate must exist, and why I’m so energized to lead it. There are two primary reasons, one driven by a fundamental change in the way employees and job seekers understand their pay; and the other by a massive shift in the way software is delivered to enterprises. Both can be described as inflection points, a term I learned from Andy Grove, the CEO at my first job.
I’ll tackle the first inflection point, pay transparency. For decades and generations, compensation was a very private topic between an employee and an employer. Employers didn’t share too much context about pay, and employees never discussed it with one another. In fact, as recently as last year, there were reports of employees being terminated for discussing pay. Colorado was the first state to enact a pay transparency law in 2021. Now, about 25% of the US workforce is covered by pay transparency legislation and that’s slated to double. There is also a societal shift occurring, with the percentage of workers sharing their own salary data with colleagues more than doubling from baby boomers to Gen Z. The impact of transparency on pay equity is another post, but the end state is clear – pay ranges for almost all organizations will be largely public, and employees will know how they compare to peers internally and externally. The implications for compensation professionals are profound. Only about 2/3 of organizations have a job architecture and formal ranges, and many of those aren’t ready to be scrutinized at the employee or candidate level. Consistent, explainable ranges will now be utilized and visible in employee communications and recruiting. When changes are made, other stakeholders will need to be updated. Most compensation management solutions target benchmarking, with data focused on market surveys. Now, benchmarking must account for job posting and job offer data, and the focus must shift to ensuring the internal ranges are effective. Payfederate is dedicated to addressing this new challenge.
The second inflection has been occurring for many years but is not yet common enough in HR software. In the early days of enterprise SaaS software, and still prevalent today, the goal of engaging customers was to show a demo, convince the customer to buy, and then implement and hope to show value. Prospects are bombarded with emails, calls, and LinkedIn messages from inexpert sales development reps, all hoping to land a demo where a salesperson can convince you how their software will change your life. A different model emerged, where customers could research their needs, select a potential solution, and try it on their own to see if it fits. Only after seeing value would a customer consider buying. Engagement with the customer is purely to help them get value – not to sell them. This approach, especially for complex solutions like compensation management, requires intimate understanding of the customer, a flexible architecture, and a willingness to disrupt the status quo. Payfederate possesses all of these, and we plan to be the most customer-centric HR SaaS solution available – at every step of our customer’s journey.
We, of course, are not the only option for customers to address their compensation challenges and we have great respect for our competitors. However, Payfederate must not only exist but thrive for organizations to fully meet the expectations of the modern workforce. I’m thrilled to be a part of the team.