Matt Straz is a thoughtful entrepreneur and HR tech innovator. As the founder and CEO of Namely, the leading HR, payroll, and benefits platform for mid-sized companies, Matt has enjoyed some success in recent months. This past February, Namely raised an additional $30 million in venture backing led by previous backer Sequoia Capital, bringing the company’s total to $107.8 million. The company, now four years old, processes over $2.5 billion in payroll with over 75,000 employees on the Namely platform. But it’s people—and building technology to bring out their best—that Straz is the most passionate about.
I sat down with Matt to talk about the year’s biggest issues in workplace legislation, what makes Namely special, and what the recent focus on employee experience means for HR.
What is unique about the challenges for HR professionals in mid-sized business compared to small businesses?
Matt Straz: Part of what makes my job so interesting is I get to hear from HR professionals every day. We work with a lot of hyper-growth companies, and they experience challenges in nailing HR administration. They’re looking to successfully onboard dozens of employees at once, properly run payroll, enroll everyone in affordable employee benefits, and keep the heart of the company together while growing.
But when it comes to mid-sized businesses, we often see HR faced with two very important priorities. The first is no surprise: It’s still HR administration. That need doesn’t go away, of course. The second priority is more strategic: It’s providing a meaningful employee experience. Deloitte just had a great write-up on this in their 2016 Global Human Capital Trends report. Mid-sized companies, now that they have some of the basics of administration handled, are hungry to offer the kind of fulfilling, career-growing experience that ups employee retention and productivity. Mid-sized companies are ready to really bring their performance management to the next level. Review cycles and compensation conversations should be standardized company-wide, and cascading goals across the entire organization are more important now than ever.
At the end of the day, it’s your company culture that fuels a rewarding employee experience. Culture isn’t necessarily a conscious decision when you’re a smaller business. The founders and first 10 employees essentially define your company by means of their backgrounds and sensibilities. When you grow to be a mid-sized business, a well-defined and motivating company culture is absolutely essential—as is consistent internal communication. We see our clients focusing more on making certain that company policies are clear, and surveying their people on everything from benefits to time off to snacks. In mid-sized businesses, we also see our clients using cascading goals—goals that start companywide and then trickle down from executives to managers to individual contributors. That way, everyone’s efforts map directly back to those of the company.
Here in California, one bit of HR-related news that’s dominated the headlines is our new minimum wage—$15 by 2022. Think we’ll see more of the same elsewhere?
We probably won’t see Congress budge on the federal minimum wage, which is $7.25, until the next administration at the soonest.
Instead, we’re seeing states take the lead. California is a great example, but New York and Oregon just passed significant increases as well. In both of these states, legislators opted for a regional model with different minimums for urban and rural counties. It’s a clever approach that’s meant to address how someone’s cost of living or purchasing power can vary widely within state borders.
For those who’ve opposed minimum wage increases in the past, mainly under the belief that they would hurt businesses in rural or suburban towns, this new flexibility is a game-changer. Don’t be surprised if we see movements pick up steam in states like Massachusetts, New Jersey, and Illinois later this year.
Minimum wage increases aside, what are some of the other big developments in HR this year?
New regulations at the state and city level are impacting mid-sized companies like never before. Equal pay, paid leave, and laws limiting criminal background checks have gotten a lot of traction. Just in the past month, New York state passed an historic paid leave law granting up to 12 weeks for new parents or those with a sick family member. As unprecedented as some of these state laws are, a few cities are going even further. San Francisco just passed an ordinance requiring businesses to pay for the 45 percent that isn’t covered by California's program—giving the city the first “full paid leave” program in the country. HR professionals everywhere should keep an eye on their own local laws.
But as important as those developments are, the biggest story we’re watching is the Department of Labor’s changes to overtime rules. The minimum salary to exempt someone from overtime currently sits at $23,660. Under the new rules, we could see that go up to $50,440 or even higher. That means nearly a quarter of all employees currently exempt from overtime will have to be reclassified.
The new rule hasn’t been finalized yet, but it’s expected to arrive around late spring or early summer. We expect that the DOL will give companies 60 days to comply once the rules are released. If you’re in HR, don’t wait—you need to start looking at your overtime classifications right away.
There are so many new HR technology companies coming on to the scene. What makes Namely different?
I called out two of the biggest HR priorities for mid-market companies earlier. Both of them are exactly what we built Namely to solve. While there are lots of great, emerging point solutions, we offer the first integrated HR, payroll, and benefits platform built to fully handle HR administration for mid-sized companies. And on top of that powerful functionality, employees also love using Namely. We believe great software certainly contributes to a great employee experience. We’ve always placed an emphasis on building software that is intuitive, with a clear user interface like the consumer technology people use every day. When HR technology is easy to use for everyone—not just administrators but managers and employees as well—that means a better working experience.
Also, as we’ve discussed, the Affordable Care Act (ACA) and rapidly changing regulations at local, state, and federal levels have forced mid-market companies to prioritize compliance more than ever. Namely’s all-in-one technology automates ACA reports and enables our clients to satisfy today’s complex payroll and benefits requirements. While we’ve built our technology to support local and federal legislation, we’ve also hired people who have deep experience across HR, payroll, and employee benefits to help keep our clients compliant. We track the most crucial updates in workplace legislation over on Namely’s HR News.
Namely has the deep administrative functionality and compliance that mid-sized companies need, and we’ve built it to be simple enough for every employee to use every day. If we can help our clients give their people an even better employee experience, we know we’ve done our job.
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Follow Matt Straz on Twitter: @MattStraz