Transcript
Speaker: Welcome to my friend and today's guest, Terry Sikowski, who's VP of PEO and insurance for that little mom and pop named Paychex up in New York State and everywhere else in America.
Speaker: But his title belies his enormous clout, as I know this, he'll never own up to, which is great.
Speaker: And I'm so glad that you're able to be with us today.
Speaker: And you're a busy guy.
Speaker: And I'm glad you're able to subject yourself to this inquisition today.
Speaker: Well, first, Pat, I would like to make a few opening comments, if I may.
Speaker: Am I going to have to do rebuttal or are these going to be OK?
Speaker: No, you will not.
Speaker: By the way, it is your podcast, of course.
Speaker: But I do want to congratulate you on a great career in running the National Association of Professional Employee Organizations.
Speaker: Thanks.
Speaker: I do have to say throughout Paychex and the industry, we're grateful for your advocacy, your energy, and really the positive impact in our industry.
Speaker: It's incredible.
Speaker: But hey, longtime listener, first time caller.
Speaker: And I was just thinking, you know, this is an honor to be part of this podcast.
Speaker: It's very well produced, by the way, with a great moderator.
Speaker: But I was thinking it looks like we're up to episode 25.
Speaker: And I was wondering, what season are we in actually, Pat?
Speaker: And are you into the mode where there's syndication in your future as you roll off into retirement?
Speaker: Yeah.
Speaker: Yeah.
Speaker: I have a huge team of lawyers that are working out syndication now.
Speaker: It's a thing.
Speaker: This will go on in infamy.
Speaker: That's it.
Speaker: And we're alphabetical.
Speaker: We just get into the S's now because clearly you would have been way up on this list.
Speaker: You know, we're just getting around to that now.
Speaker: Yeah, I was wondering why I was not, if I did something wrong or what.
Speaker: But seriously, you've had some really great people on the program.
Speaker: I mean, real players in the industry.
Speaker: And it's really an indication of the respect I think everyone has you personally and professionally.
Speaker: So sorry for the intro, but I'm really happy to be a part of it.
Speaker: Thank you.
Speaker: It's great.
Speaker: I was worried you wouldn't be able to read my handwriting there for a minute.
Speaker: So thanks for saying all that stuff.
Speaker: Yeah.
Speaker: Thank you.
Speaker: I tell everybody this podcast is great because I don't do the talking.
Speaker: People find that impossible to believe.
Speaker: But you're right.
Speaker: The guests have all been great.
Speaker: No pressure.
Speaker: And then I've mentioned this before that Jason Randall of Quesco said, hey, a bunch of the private equity folks are listening to this podcast and they're getting a feel for this industry and a very positive outlook for the industry.
Speaker: We'll talk about this a little bit today, but he's like, you got to know I'm talking to some private equity people.
Speaker: They're listening to this.
Speaker: So that's good.
Speaker: Your ratings are very strong.
Speaker: Are we tracking ratings, by the way?
Speaker: Oh, yeah.
Speaker: Yeah.
Speaker: We're way up there.
Speaker: We've eclipsed the crown.
Speaker: We're up against Ted Lasso.
Speaker: We're not quite there yet, but we're we're doing great.
Speaker: It's terrific.
Speaker: And it's only audio.
Speaker: If it was video, imagine we'd crush it.
Speaker: It really would be something.
Speaker: Yeah.
Speaker: We're giving the Kelsey brothers a run for their money.
Speaker: I love it.
Speaker: It's great.
Speaker: So you know how this is, right?
Speaker: I do it in two parts.
Speaker: I do, you know, the story of Terry Sikowsky, the man, the myth, the legend, and then the story of Terry Sikowsky in the PEO industry.
Speaker: We do a little bit of both, but we'll start at the beginning.
Speaker: Pennsylvania, Central PA.
Speaker: Is that right?
Speaker: Yeah.
Speaker: I mean, Southeastern Pennsylvania.
Speaker: I'm from the suburbs of Philadelphia.
Speaker: Okay.
Speaker: Okay.
Speaker: blue collar family.
Speaker: And there's probably three influences in my life.
Speaker: I would say first, you know, my parents were divorced at an early age.
Speaker: My mom was about four and incredibly young.
Speaker: And what an influence on my life she was.
Speaker: I mean, Marianne DeAngelis, you know, with a four and a two year old working two to three jobs.
Speaker: She was a key punch operator, believe it or not.
Speaker: She taught typing at the Votek School in Montgomery County.
Speaker: And she also laid at tables at the fabulous Village Inn and Tavern in Norristown,
Speaker: Pennsylvania.
Speaker: Is it still there?
Speaker: I wonder.
Speaker: I've been long gone from there.
Speaker: I've been, Texas, but next time I'm there, I'm going to drive by.
Speaker: But she was a four foot five powerhouse.
Speaker: And, you know, just watching what she had to do on a daily basis to keep the family going was inspirational.
Speaker: The one thing she wanted was my sister and I had to go to college because she got married early and she couldn't do it.
Speaker: So I ended up at a very small state school, Shippensburg State, got a marketing degree.
Speaker: My mom passed away way too young.
Speaker: She passed in 2007 and the whole family has a psalm in honor of her, which is, this is the day the Lord has made.
Speaker: Let us rejoice and be glad.
Speaker: She set an example of moving forward as a positive attitude in just about any situation.
Speaker: It's so great.
Speaker: It sort of reminds me of my grandfather is he spent no time preaching.
Speaker: It was all example.
Speaker: It sounds like that with your mom.
Speaker: Yeah, but she would preach if he got out of line, which was great.
Speaker: That's true.
Speaker: I don't know if I would call that preaching, but.
Speaker: But it sounds like her example of resilience and hard work came through loud and clear.
Speaker: Whatever cards you've been dealt, play them.
Speaker: That's pretty much her story.
Speaker: Yeah.
Speaker: And that stays with you in life, right?
Speaker: It does.
Speaker: Her brother, by the way, was my Uncle Paul.
Speaker: He was a young hustler.
Speaker: So he was in many ways a father figure to me.
Speaker: He bought...
Speaker: an auto bono body repair shop and worked there in high school, worked there in college, you know, did whatever you had to do, but he was an absolute hustler.
Speaker: He built that thing from nothing.
Speaker: And, you know, 90% of his business was through referrals.
Speaker: So it's amazing what you're getting throughout life, but never did an ad, never did anything.
Speaker: It was all client referrals that drove his business, which,
Speaker: Really helps when I got into industry.
Speaker: You know, I wanted to try to emulate that.
Speaker: And that's all about providing great service.
Speaker: And then the last one would be my father.
Speaker: You know, I didn't grow up with him on a daily basis, but, you know, his family didn't have the means to send him to college.
Speaker: He wanted to get an education.
Speaker: He went to Pierce Junior College while he worked in the day, did that at night, got an associate degree in business, then went to Drexel at night for an accounting degree.
Speaker: And really was able to parlay that.
Speaker: But I saw him kind of grinding constantly.
Speaker: So three people really of interest and helped me in my life.
Speaker: And my career is different than many of your guests, however.
Speaker: I mean, I took the corporate route.
Speaker: And I'm always fascinated by your guests because they took a more entrepreneurial route.
Speaker: I love both.
Speaker: Yeah.
Speaker: But I took the corporate route, you know, primarily sales, then general management.
Speaker: And I've always been a big proponent of results matter.
Speaker: Yep.
Speaker: Finding ways to perform at high levels, earn the right for a promotion.
Speaker: That's also what I say who aren't good at interviewing, by the way.
Speaker: No, but I want to go back a little bit is, you know, with that background, don't you feel you're kind of on the bubble?
Speaker: Like you could have gone either way, you know, not gone the college white collar route.
Speaker: Don't you think?
Speaker: I could have very easily been working in the automotive business for my career.
Speaker: And that would have been great.
Speaker: Right.
Speaker: You know, it would have been great, whether it was car dealership, used car dealership service.
Speaker: I could have definitely followed that up.
Speaker: But you took the college route.
Speaker: I did.
Speaker: And it's something your mom was really determined for you and your sister to do that.
Speaker: She was, and we both checked that box for her.
Speaker: Yeah, that's great.
Speaker: That's great.
Speaker: Okay, so you got out of ship, and where'd you go?
Speaker: What'd you do first?
Speaker: Yeah, I got some advice that I should go to a big company where I can get great training.
Speaker: So at that time, the stone ages, Xerox, IBM, they were big names, General Electric.
Speaker: So I pursued those three, ended up at Xerox in a sales capacity, and
Speaker: Wow.
Speaker: Actually, you do any sales job they would give me.
Speaker: And where was it?
Speaker: In Pennsylvania or not?
Speaker: Yeah, in the Philly area.
Speaker: So worked at Xerox for nine years as an individual contributor.
Speaker: Went to a company who was doing roll-ups called Icon Office Solutions.
Speaker: They were rolling up different dealerships.
Speaker: It was a great experience.
Speaker: They rolled up 400 different dealerships and then ended up integrating them into one company, which was sold to Ricoh.
Speaker: So I ended up working for Japanic and Ricoh for some time after it was bought by Icon.
Speaker: You know, that's a tough business.
Speaker: It took me way too long.
Speaker: One of my mentors at Icon Rico, Mark Bottini, went to Paychex.
Speaker: About a year later, I followed him here.
Speaker: That was 2013.
Speaker: In January of 2013, I've been in this industry.
Speaker: But let me back up for a minute.
Speaker: What did you learn from Xerox?
Speaker: What did you learn in that sales training from those eight years, like a retail level man grinding it out, getting the street?
Speaker: Like, what was that like?
Speaker: What did you learn from that?
Speaker: My only somewhat entertaining story is they wouldn't allow me to sell copiers when I first got there.
Speaker: You would think anybody they would let sell a copier.
Speaker: So they gave me a typewriter.
Speaker: It was this giant typewriter.
Speaker: And this guy named Bill Gates, I think, just invented something called Microsoft Word, PowerPoint, and Excel.
Speaker: I've never heard of it.
Speaker: The typewriter wasn't a smoking hot product.
Speaker: And I was lugging that thing around the streets of Philadelphia.
Speaker: It took me three months to sell it, just grinding.
Speaker: And I think somebody took pity on me and bought it.
Speaker: Thank God they did, or I would probably have never lasted there.
Speaker: Yeah, that was the entertaining thing.
Speaker: I wasn't allowed to graduate to copy or sale.
Speaker: Yeah, although I guess the margins were probably pretty good on that typewriter.
Speaker: Who knows?
Speaker: I mean, it was $2,800.
Speaker: That's all I remember.
Speaker: Can you imagine $2,800 for a typewriter?
Speaker: And then I pretty much tried to get into as many different aspects of the business as possible.
Speaker: Every year I tried to sell a different product, whether color was coming into the market or digital or whatever it might be, or even document processing.
Speaker: And I wasn't doing it to really diversify my inventory of knowledge.
Speaker: I was the guy who was chasing the comp plan that the guy in Rochester, by the way, another company headquartered in Rochester, New York.
Speaker: It's hard to believe I've worked for two.
Speaker: You can't get away from Rochester.
Speaker: I can't.
Speaker: But I was going to where I thought I could leverage the comp plan the most.
Speaker: Ended up getting all kinds of different experiences by just being greedy in that way.
Speaker: Early in my career, that's what it was about.
Speaker: And it really benefited me because in eight or nine years, I worked in eight or nine different industries, business segments.
Speaker: It really helped me diversify my understanding from selling to a school district, to an enterprise corporate company, to a quick printer.
Speaker: I mean, it ran the gamut.
Speaker: So really helpful.
Speaker: And so you got to Paychex in 2013?
Speaker: I did.
Speaker: To do what?
Speaker: I came to Paychex and I was responsible for our SMB payroll division.
Speaker: At that time, Paychex was generating over half its revenue from pure payroll, pure small business payroll.
Speaker: Since then, I've seen it really change in the majority of our businesses and other stuff like PEO.
Speaker: So started out in payroll.
Speaker: I lived in Houston at the time.
Speaker: So I got really interested in the other stuff in the business.
Speaker: I was seeing the complexity of PEO.
Speaker: I was seeing people in ASL.
Speaker: I remember being keenly focused to getting engaged in that part of the business.
Speaker: So I forced my way into client interactions.
Speaker: That's pretty much what I did.
Speaker: I would refer a PEO client.
Speaker: And I would make the sales manager take me on all the calls.
Speaker: Don't refer and go.
Speaker: I want to be on the first call.
Speaker: I want to see the proposal.
Speaker: I want to see implementation.
Speaker: I want to see enrollment.
Speaker: I want to see go live.
Speaker: I mean, what I learned there is you can't learn the PEO through a book.
Speaker: In my opinion, the PEO is an experiential learning experience.
Speaker: It is.
Speaker: There's so many moving parts when you think about the process from first engaging a client to implementing, enrolling, first check date to then a benefits renewal.
Speaker: I mean, if you go through the life cycle of what happens inside a PEO sale, the moving parts are extensive.
Speaker: So you have to be learning agile.
Speaker: You have to be curious.
Speaker: And luckily I was.
Speaker: And, you know, like most people, you get interested in it.
Speaker: Yeah.
Speaker: In 17, I'll tell the rest of the story.
Speaker: I had an opportunity to manage the ASO business nationally for paychecks, then very soon 401k, then PEO, and then the agency sales.
Speaker: then timing is everything in life, right?
Speaker: In 19, we started to get more acquisitive.
Speaker: John Gibson was a senior executive here who's our CEO now who has experience as a CEO, who you know, I think.
Speaker: And he spearheaded those acquisitions, HROI, Oasis.
Speaker: So now I'm getting PEO experience.
Speaker: And then I had M&A experience from Icon.
Speaker: So I got an opportunity to work with guys like Pearlberg and Terry Mayotte and Barb Dreams and Mark Rotofeld and
Speaker: As we began to try to pull these companies together, man, it was a great time working with those folks.
Speaker: I learned a lot.
Speaker: And, you know, Paychex really had an open mind about how to do things.
Speaker: We didn't say we know everything.
Speaker: You know, what's the best business practice?
Speaker: What's the best idea?
Speaker: Who cares who it's from?
Speaker: Yeah.
Speaker: And let's try to implement it and make a really good PEO.
Speaker: And if you remember Oasis,
Speaker: You think of Oasis as one company, but it was a roll-up of probably 12, 13, 14.
Speaker: I think it was up to 15 different acquisitions they did that were rolled up.
Speaker: So that was a lot of fun.
Speaker: So I got to work with them intensively and still do rely on those folks for advice and counsel often.
Speaker: Let me go back to the sales part, and I want to catch up with this again.
Speaker: It's a difficult sale, isn't it?
Speaker: It is an extremely difficult sale.
Speaker: I think the biggest challenge in the industry is getting a new sales rep productive quickly.
Speaker: You can talk to anyone.
Speaker: Is it six months?
Speaker: Is it nine months?
Speaker: Is it 12 months?
Speaker: And then give me the definition of what productive is.
Speaker: How many worksites?
Speaker: So it takes a lot to really scale a PEO and build it.
Speaker: You need to build tenure in your sales force.
Speaker: That definitely helps.
Speaker: But hiring people that are, you know, I hate the word hungry, so I won't use it.
Speaker: I prefer to use like competencies.
Speaker: In my opinion, you need to find people who have a certain degree of business acumen and people who are learning agile.
Speaker: You need to understand how business works and continue to be excited about learning things.
Speaker: If you don't have that, in my experience, it takes a long time to get a sales rep to productivity levels that are acceptable.
Speaker: And then acceptable, the definition is different to anyone you talk to.
Speaker: Yeah.
Speaker: Yeah.
Speaker: Do you still do sales calls?
Speaker: Do you still go out on sales calls?
Speaker: I do.
Speaker: What do you lead with?
Speaker: When you say, what do I lead with as a product or a service?
Speaker: Like, how do you start?
Speaker: Like, how do you start making the sale?
Speaker: You walk into somebody, obviously, it's not cold.
Speaker: You didn't just knock on the door.
Speaker: They've set up the meeting and you go in.
Speaker: And yeah, how do you start selling PEOs?
Speaker: Well, I think there's a high level sale to the PEO.
Speaker: And then I would tell you, there's so many parts to it that the actual pre-sale strategy discussion is critical.
Speaker: So you can zero in on the right component of the PEO that matters most to the prospective client.
Speaker: And that's hard.
Speaker: Discovery inside the sales process is critical.
Speaker: Because you can get lost in it and a client can get lost in it.
Speaker: So really nailing down the compelling reasons.
Speaker: There's always the high level, like why should you buy from paychecks and why you should buy from our PEO, right?
Speaker: And then there's the lower level, which to me is all about the discovery process, asking great open-ended questions and understanding what a business owner is trying to achieve.
Speaker: Yeah.
Speaker: You know, it's interesting.
Speaker: You mentioned before in the copier business, you were working with, you know, all sorts of different players.
Speaker: And when you first got the paycheck, you own school boards and auto shops and all the rest of that stuff.
Speaker: So you're doing that now.
Speaker: And when we do focus groups, it's so interesting to hear people say, I want somebody who knows about me.
Speaker: Right.
Speaker: I mean, that comes up again and again and again.
Speaker: Right.
Speaker: So you know,
Speaker: have to pivot, right?
Speaker: If you're talking to a food prep business or you're talking to a machine shop or a software developer or something else, right?
Speaker: You've got to be able to pivot with all that stuff.
Speaker: Yeah, you absolutely do.
Speaker: I mean, that's why many people in our industry, as you know, go to vertical market strategies, right?
Speaker: Yeah, yeah.
Speaker: But when you go there to make that sale, you've got to be able to pivot to whatever it is interested, right?
Speaker: Or whatever their issue is, right?
Speaker: I'm really talking about I've gained access to a potential client.
Speaker: I understand some things about their business.
Speaker: I've done some research.
Speaker: And now I want to get some what I call direct hits, you know, in terms of what will help their business improve.
Speaker: And by the way, there are so many.
Speaker: The great thing about the PEO is our product set is so vast.
Speaker: It has so many things.
Speaker: Again, I think the biggest issue is a sales professional can get lost in
Speaker: and all the capabilities inside of PEO.
Speaker: You can't get lost.
Speaker: You can't get lost.
Speaker: You can't just show up and show 15 brochures.
Speaker: It has to be a more targeted approach, in my opinion.
Speaker: That's one person's opinion.
Speaker: Yeah, no, that's interesting.
Speaker: By the way, then throw into it HCM and ASO.
Speaker: I mean, there's so many different variants.
Speaker: that the best person that sells is going to win the deal.
Speaker: Forget about what product they're offering, right?
Speaker: Or what service they're offering.
Speaker: If they're able to prove their solution meets the client's needs better, they're going to win.
Speaker: Are you finding that the buyers are getting more sophisticated or not?
Speaker: They definitely are.
Speaker: I don't think there's any question.
Speaker: I mean, think about your tenure, Pat.
Speaker: 10 years ago, you know, how many people knew what a PEL was?
Speaker: You know, not many.
Speaker: Yeah.
Speaker: The PEO was regional.
Speaker: Let's be fair.
Speaker: The PEO was a regional product 10 years ago.
Speaker: And now you can go into just about anywhere.
Speaker: And the amount of time you have to spend educating, I'm finding is less than it was 10 years ago.
Speaker: And that's thanks to the great work your team has done.
Speaker: Well, thank you.
Speaker: Yeah.
Speaker: And you know, it's funny.
Speaker: I call it the guy next to me on the airplane test, right?
Speaker: It's like 12 years ago, the guy next to me on the airplane, what do you do?
Speaker: You know, the PEO industry, like what?
Speaker: But the more people I talk to are like, oh yeah, yeah, we use a PEO.
Speaker: And I know what a PEO is.
Speaker: And I used to work for a company that used a PEO.
Speaker: And it is just anecdotal, but it is definitely, you know, the million dollars a year in marketing spend is starting to move the needle, I think a little bit.
Speaker: Let me ask you about paychecks because, you know, I'm leaving.
Speaker: So if I piss everybody off, you guys can fire me.
Speaker: During my time here, to be honest, before you and I knew one another, the chatter was, you know, is paychecks really wed to the PEO space?
Speaker: You know, and it seemed like you guys waxed and waned.
Speaker: I'm just talking when I started like 12 years ago.
Speaker: Nobody asks that anymore.
Speaker: So were you there for that process, that transition that, you know, again, I think to be honest, it was like you guys are kind of half in and
Speaker: Half out, it seemed.
Speaker: You know what I mean?
Speaker: It's like there wasn't the growth.
Speaker: There wasn't the focus.
Speaker: And man, starting, I don't even know how long ago, seven, eight years ago, like it just seemed to me like somebody flipped the switch.
Speaker: And from that moment on, you guys have been all in and you got the growth to show for it.
Speaker: When did we buy National Business Solutions?
Speaker: 1996.
Speaker: I could go back.
Speaker: It was 96 or 97.
Speaker: I'll bet I'm about right on one of those years.
Speaker: Paychex has been in the PEO industry for a while.
Speaker: I mean, there is natural conflict between ASO and PEO.
Speaker: And we have a very good ASO business.
Speaker: I mean, a very good ASO business.
Speaker: But there's synergy too.
Speaker: Well, there is.
Speaker: I draw a line, which was when we bought and acquired HROI and then Oasis.
Speaker: That was over a billion-dollar investment in both those companies well over.
Speaker: And I think once you spend that type of money to really expand your offerings, and to me, that's when we really began to be very interested and serious about mergers and acquisitions.
Speaker: Yeah.
Speaker: And then from then on, I mean, there's no question now.
Speaker: I mean, there's zero to your point.
Speaker: I hear very little on that anymore.
Speaker: But yeah, when I first got here, for sure, you know, how interested are we?
Speaker: I think we're $1.5 to $2 billion interested in acquisitions or whatever.
Speaker: So, yeah, talk to me about the acquisitions.
Speaker: How on earth do you pull together and integrate all those companies in a company your size?
Speaker: Yeah, I think you have an open mind, number one.
Speaker: Look, did we learn a lot?
Speaker: Yes.
Speaker: And how we went about it?
Speaker: And would we do some things differently?
Speaker: Sure.
Speaker: Look, it's not easy.
Speaker: It is a challenge.
Speaker: I would tell you it probably took us two years and there was a lot of work.
Speaker: If Mark Pearlberg and Terry Mayotte and the people that I mentioned weren't also vested in making it work, it probably wouldn't have worked.
Speaker: So I think you had support across the board on both leadership teams.
Speaker: Yeah.
Speaker: I would tell you it was a good fit.
Speaker: We're able to work with each other very, very well.
Speaker: Put our employees first, put our clients first.
Speaker: And I think you take it from that starting point and then figure out how to grow and be efficient.
Speaker: And then how to maintain as much of the human capital as possible.
Speaker: I think that's terribly important.
Speaker: You're not just buying worksite employees, in my opinion.
Speaker: You're buying ideas.
Speaker: You're buying human capital.
Speaker: We are very fortunate that we had a lot of folks that chose to stay.
Speaker: By the way, there's still some remnants of it.
Speaker: I mean, we're one of the only PEOs that offer two different technology platforms.
Speaker: We're still very engaged with Prism HR, and we have our own platform in Flex.
Speaker: That's a benefit that's more complex in terms of servicing, but it's a real benefit to the client.
Speaker: Everybody's with the Paychex PEO right now.
Speaker: Yeah.
Speaker: And I think it's really good.
Speaker: And I think we're at a place where we're ready to do more of that.
Speaker: We're one PEO.
Speaker: Culturally, we're joined.
Speaker: I think that's the other thing is culturally, we were able to bring both these organizations together.
Speaker: And when I say both, remember, Oasis was a roll-up.
Speaker: Bring all these organizations together.
Speaker: Yeah, I want to get the culture in a second.
Speaker: Now, I've mentioned this on this podcast before.
Speaker: I was on the National Mediation Board meeting labor disputes in the airline industry.
Speaker: USAir bought Piedmont, remember, years ago, right?
Speaker: And it was like three years later.
Speaker: And I went over to meet with the head HR guy at USAir.
Speaker: And I said, oh, you know, what are you doing?
Speaker: What are you working on?
Speaker: He goes, oh, you know, just this merger.
Speaker: I said, what merger?
Speaker: Yeah.
Speaker: And he said, Piedmont.
Speaker: I was like, that was three years ago.
Speaker: And I never forgot it because it just imprinted on my brain that, wow, like a merger of this magnitude takes years, takes years.
Speaker: Now, of course, the punchline there, you know, if you're from that neck of the woods, US Air took the great culture of Piedmont and dumped it and kept all the crappy stuff about US Air and ended up going out of business.
Speaker: So they completely screwed it up.
Speaker: So talk to me about culture.
Speaker: How important is it?
Speaker: What is it?
Speaker: And how do you do it?
Speaker: How do you keep it?
Speaker: Culture is, first of all, it's definitely one of the reasons to work at Paychex.
Speaker: My boss right now, a guy named Mark Bottini, who I worked with at IconRICO and now Paychex, he talks about it in three parts, you know, mission, values, and guiding behaviors.
Speaker: So, you know, it starts with the mission and our mission at Paychex is to provide American business the freedom to succeed, right?
Speaker: That's a great mission because it can run across all parts of our business.
Speaker: Whether you're selling somebody payroll, you're helping provide their business the freedom to succeed.
Speaker: When you're selling PEO, I mean, my goodness,
Speaker: Yeah.
Speaker: You're really providing that business the freedom to succeed.
Speaker: But it's such a grand vision, too, is like this is for American business.
Speaker: Right.
Speaker: To me, you know, that's great.
Speaker: That's audacious in a sense.
Speaker: Right.
Speaker: That's a grand vision.
Speaker: And then it comes down to things like PPP loans.
Speaker: Like we were one of the first to offer PPP loan, the loan forgiveness tools and the loan calculators.
Speaker: I mean, that helps drive that.
Speaker: Let me pause on that for a second, if you can.
Speaker: Early on in that, we had a webinar about Ebola, and somebody told me very brusquely, like, I'm not interested in the PPP loan stuff, right?
Speaker: Because I'm not doing anything I don't get paid for.
Speaker: I was like, okay, okay.
Speaker: So,
Speaker: What's that mindset to say, we're going to take on PPP loans?
Speaker: That's not your space.
Speaker: You guys don't know anything about it.
Speaker: That's not what you did before the pandemic.
Speaker: So how do you get into that?
Speaker: What was that decision to say, like, we're in, we're going to learn the PPP loan process and we're going to get in?
Speaker: You and I were talking about COVID earlier and how the world's changed since March of 2020.
Speaker: And at that point, you know, we were in a totally different mind space.
Speaker: You know, businesses didn't know what end was up, right?
Speaker: Would we survive?
Speaker: What do we need to do?
Speaker: How long will this go on?
Speaker: You must have had people in the company saying, we don't do PPP loans.
Speaker: You know, we're blessed.
Speaker: You know, we had Frank Fiorelli on the board for a while.
Speaker: Yeah, yeah.
Speaker: We have a great risk and compliance department, tax department.
Speaker: So we're lucky enough to have that infrastructure.
Speaker: It's one of the benefits of a paychecks.
Speaker: You know, our product team, Frank and his team just dove into that pretty quickly and began unwinding it.
Speaker: Our tax team, our compliance analyst,
Speaker: And they delivered a lot of great products.
Speaker: Our website was the most highly visited in that 24-month span during that time.
Speaker: People were going to our website to get information about PPP loans.
Speaker: Wow.
Speaker: Yeah, that's pretty good.
Speaker: That worked out really well.
Speaker: And we're blessed to have the resources and people that can go do that.
Speaker: Yeah, mission drives things like PPP loans in life.
Speaker: And then you go to values, right?
Speaker: So what are your values that your company is made up of?
Speaker: And ours are service, integrity, partnership, innovation, respect, and accountability.
Speaker: So those values are pretty strong and woven deeply into the fabric of our company.
Speaker: Yeah.
Speaker: You know, they all have meaning through guiding behaviors.
Speaker: So give me an example.
Speaker: Anybody can say I'm innovative, right?
Speaker: That's one of our values.
Speaker: So guiding behaviors are five statements that prove if you are innovative or not.
Speaker: So what's a guiding behavior for innovation?
Speaker: Here's one.
Speaker: I'm willing to rethink existing processes to solve problems or create new opportunities.
Speaker: So I may be innovative, but I may not be willing to rethink and pivot when necessary, where I start from curious when listening to other people's ideas and opinions.
Speaker: I've got some highly innovative people who don't listen very well, right?
Speaker: So I think the guiding behaviors is something we took to the next level by defining it.
Speaker: So if you get those three things right, Pat,
Speaker: Yeah, yeah.
Speaker: And you get it top down.
Speaker: The culture should then define how you behave and what you stand for as a company.
Speaker: I think we've done a really good job in getting that right.
Speaker: And again, especially when you're trying to integrate other companies as part of this whole thing, right?
Speaker: Trying to integrate companies into the operation.
Speaker: You've got to be right about culture, right?
Speaker: You do.
Speaker: So what is the outlook for the industry?
Speaker: You've been in the industry, at least paychecks, 10 years.
Speaker: What's the outlook?
Speaker: Yeah, I would say the future is bright and the future is bright because the service is powerful.
Speaker: I like to say the PEO is no longer a luxury for your business.
Speaker: It's a necessity.
Speaker: That's the one I like to use.
Speaker: And I'll use that on pretty much every sales call.
Speaker: I mean, and then you can cite any publication on issues facing American business.
Speaker: Napio has vast resources on those.
Speaker: The last one that I had in front of me was the National Federation of Independent Business Research.
Speaker: They all talk about the same thing, right?
Speaker: Yeah, yeah, yeah.
Speaker: Cost of health insurance, finding and keeping skilled employees, complexity of taxes, multi-state located employees, unreasonable government regulations.
Speaker: All of those things, as long as all of those things persist, this is going to be what I call a service that matters.
Speaker: And I don't see the PEO stopping in terms of its growth opportunities based on all those things.
Speaker: Can you imagine trying to run a small business without the services we offer?
Speaker: I can't imagine.
Speaker: And I know I'm biased, but I just can't imagine just the risk you're putting yourself at, right?
Speaker: By guessing on all this stuff and hoping to get it right.
Speaker: That to me is such a risky proposition, right?
Speaker: We mapped out, we call all roads lead to PEO to your earlier point.
Speaker: Like, what do you care about?
Speaker: You know, prospects.
Speaker: Revenue, okay.
Speaker: Roads higher than PEO.
Speaker: Turnover, boom.
Speaker: Survival, boom.
Speaker: It doesn't matter what they talk about.
Speaker: I'm worried about compliance.
Speaker: I'm worried about potential fines.
Speaker: I'm worried about like, it doesn't matter what they're worried about.
Speaker: All roads lead to PEO.
Speaker: PEO can address all and does, right?
Speaker: It is a high impact product that makes a difference in America.
Speaker: Probably sounds a little bit overstated and dramatic, but it absolutely is true.
Speaker: So the flip side of that question I always like to ask is, what are the headwinds?
Speaker: So the outlook is good and everybody seems to agree with that.
Speaker: What are the dangers?
Speaker: What are the headwinds?
Speaker: Well, the dangers are uncertainty over economic conditions as always, right?
Speaker: Yeah, yeah.
Speaker: That's one.
Speaker: By the way, you could also argue...
Speaker: All those things are reasons why you probably need a PEO in the first place.
Speaker: Right.
Speaker: Most of us get paid based on wages or the amount of worksite employees we have under management.
Speaker: And when companies aren't adding employees and they're cutting them, that's certainly a risk.
Speaker: And then, you know, everybody talks about uncertainty over government actions.
Speaker: So economic conditions, government actions, is the PEO going to be caught up?
Speaker: I was reading the PEO Insider about the new California legislation.
Speaker: Those are all things that we need to keep updated on.
Speaker: And really, it's one of the great functions of your group.
Speaker: Thank God we have Napio to help us and argue those points.
Speaker: And we have Pat Cleary to hit the hill.
Speaker: And talk about ERTC loads.
Speaker: You saw them all quaking in their boots, didn't you?
Speaker: Could you see that?
Speaker: They were like, oh my God, they brought out the big guns.
Speaker: That's it.
Speaker: We did.
Speaker: Yeah, no, no.
Speaker: It's interesting though.
Speaker: You said that every threat to the industry is actually an opportunity.
Speaker: Yeah, they keep coming.
Speaker: So you go out on sales calls.
Speaker: What's your better mousetrap?
Speaker: What is it?
Speaker: Why should people go to paychecks instead of Joe's PEO down the street or large or small company that they're doing business with?
Speaker: I think I talked a little bit about it.
Speaker: And I think a lot of it comes through the synergy of all the mergers and acquisitions.
Speaker: But it had us starting to think about how do we be a PEO that offers the best of both worlds, right?
Speaker: The service and support you get from a small boutique PEO with all the power, resources, and scale of paychecks.
Speaker: And if you could blend those two together with a relationship-based service model, and then I could still leverage hundreds of compliance analysts and risk experts, benefit specialists, if you could bring that together, I think that's powerful.
Speaker: Secondly, we always talk about our benefit suite and being focused on the holistic well-being of our worksites.
Speaker: Another important reason for a PEO, in my opinion, I mean, it's not just physical through medical insurances.
Speaker: There's
Speaker: mental health, there's financial well-being, there's social health.
Speaker: So, you know, we have built, in my opinion, a fantastic and well-rounded benefit suite that addresses all four needs of the holistic well-being of our work sites.
Speaker: And the last one would be portability.
Speaker: Yeah.
Speaker: You know, we have the product and services to move a client up and down the spectrum.
Speaker: They could start in HCM.
Speaker: They can move to ASO.
Speaker: They can move to PEO as their needs change, they grow.
Speaker: Or if their business contracts, even something's happened.
Speaker: Doesn't happen often.
Speaker: But look, we can move you down to the HCM solution.
Speaker: And then when the business looks differently, we'll come talk to you about PEO again.
Speaker: So I think that ability to scale up and down our spectrum of products is certainly something that Paychex has that not many have in the industry.
Speaker: That's a huge advantage, right?
Speaker: There's no doubt.
Speaker: What about when you're out there trying to sell PEO?
Speaker: Why don't people do it?
Speaker: What's the biggest reason people say PEO is not for me?
Speaker: You know, it's really interesting.
Speaker: There was a time when the quote, co-employment issue raised its ugly head.
Speaker: I don't hear that much anymore.
Speaker: The answer to the question is easy.
Speaker: There should be very little reason with a client that has more than 10 or 20 employees that a PEO wouldn't be the right fit for them.
Speaker: If you do a great job in the discovery process and you understand all their needs, it always is going to be the highest value product to the client based on everything it has.
Speaker: The other part of this is when do we lose clients?
Speaker: And when clients aren't consuming all the capabilities of the PEO or aren't getting their money's worth, yeah, they'll leave or they'll buy something different.
Speaker: So I really believe consumption is a big deal.
Speaker: The more they consume of the product, the more value they get from it.
Speaker: Yeah, that's interesting.
Speaker: And from the association perspective, the more engaged companies are in us, the more likely they're going to renew their membership.
Speaker: It's the same theory, right?
Speaker: That's the thing.
Speaker: So I'd be remiss if I didn't point out that in our webinar archives from just two weeks ago, we just did all our research on co-employment.
Speaker: We did focus groups and research on that.
Speaker: And some folks were like, why would you lead with that?
Speaker: No, no, no, no, no.
Speaker: We're not leading with it.
Speaker: This was focus groups of small businesses to try to feel out
Speaker: how we should talk about co-employment and when we should talk about co-employment.
Speaker: So there's great data, again, for anybody who's listening, go on our website and our webinar archives.
Speaker: It's just from a couple of weeks ago.
Speaker: And there's some really interesting data about how to talk about it and when to talk about it.
Speaker: To your point, you have to.
Speaker: At some point to close the sale, you got to talk about co-employment, right?
Speaker: That's the thing.
Speaker: I don't know.
Speaker: Do you?
Speaker: You go to some PEO's websites and you don't see the word PEO anywhere.
Speaker: No.
Speaker: Right.
Speaker: They're selling the service.
Speaker: So, hey, look, I'm anxious to see that.
Speaker: It just seems like, how do you do this?
Speaker: How do you saw the lady in half?
Speaker: You're like, well, it's co-employment is how we do it.
Speaker: They all have to go through an enrollment process.
Speaker: So you're right.
Speaker: Eventually, that's going to be a topic of conversation, probably.
Speaker: But
Speaker: But looking forward to seeing that document, by the way.
Speaker: Yeah, it's interesting.
Speaker: It's some interesting reaction from people about in small business about how to deal with it.
Speaker: OK, so somebody new to this industry, what's your advice?
Speaker: Somebody's like, hey, I want to get into the PEO industry other than, you know, don't do it.
Speaker: No, I'm kidding.
Speaker: What's your advice to a newcomer to this industry?
Speaker: You know, I was talking about the hiring profile that I like, right?
Speaker: And that we found to be successful.
Speaker: But if you're interested in it, go for it.
Speaker: You know, it's a great business and career opportunity.
Speaker: I don't think there's any question.
Speaker: Then I always preface it with the service is complex and requires a ton of curiosity, learning agility, and problem solving.
Speaker: Like you have to be a problem solver.
Speaker: I call the PEO the business version of a Rubik's Cube, right?
Speaker: You have to kind of like doing the Rubik's Cube, right?
Speaker: I should ask that in an interview question.
Speaker: Have you ever done the Rubik's Cube?
Speaker: Right?
Speaker: So that'd be part one.
Speaker: If you enjoy that aspect of it, never to be bored, it's a perfect problem.
Speaker: And a perfect business to get in.
Speaker: I would say this, it always comes with challenges.
Speaker: There's always going to be some issue that surfaces.
Speaker: whether it's ERTC, you know, whether it's the California legislation that we just potentially talked about, right?
Speaker: There's always going to be challenges.
Speaker: So you have to be able to weather the storms when adversity hits.
Speaker: And when you do, you're going to come out on the back end better for it.
Speaker: So...
Speaker: I don't know.
Speaker: That's kind of high in the sky stuff, but that's the advice I give on the PEO when I'm talking to people.
Speaker: Yeah, that's good advice.
Speaker: It is good advice.
Speaker: You're right.
Speaker: You've got to take the long view on some of this stuff.
Speaker: You know what I mean?
Speaker: You can't live and die each day, right?
Speaker: That's it.
Speaker: Okay.
Speaker: So my favorite part, last question, what is something people don't know about you?
Speaker: So before you get to answer questions,
Speaker: I have to say, for all your great career and all the great stuff you've done, your involvement here in APO and on the board, unfortunately, the one thing that sticks in my mind is I was complaining to you about your beloved Philadelphia Eagles.
Speaker: that they booed Santa Claus and you made the case for booing Santa Claus.
Speaker: And I was like, this guy is the most rabid fan because most Eagles fans at that point are a little chastened.
Speaker: And they're like, yeah, I know we shouldn't have booed Santa Claus.
Speaker: But you were like, let me tell you something.
Speaker: Here's why we booed Santa Claus.
Speaker: I was like, this is an astonishing conversation.
Speaker: I was like, this guy is the biggest fan I've ever met in my life.
Speaker: Well, look, you got to own it, Pat.
Speaker: You've got to own it.
Speaker: Right.
Speaker: So and all I'm doing is quoting Grandpa Sikowski.
Speaker: May God rest his soul about why we booed Santa Claus.
Speaker: He was there.
Speaker: I wasn't.
Speaker: Well, you owned it, man.
Speaker: I was, you know, horrified and really impressed, really impressed.
Speaker: I was like, wow.
Speaker: And I said to my wife when I got home, I was like, man, Terry Sikowski, he defended the booing of Santa Claus.
Speaker: I was like, this guy, the Eagles should bring you out at half time.
Speaker: No, they boo you instead, but they should give you like box seats or something like that.
Speaker: The Eagles should.
Speaker: It's fantastic.
Speaker: They're a passion in Philadelphia, as you know.
Speaker: So what's something we don't know about you?
Speaker: I was listening to some of your podcasts.
Speaker: I waited for episode 25 and a chance to be invited.
Speaker: I was anxiously listening, wondering if I would ever be invited.
Speaker: We had a slow news day, you know, so we picked you up.
Speaker: Yeah.
Speaker: But in any event, look, some people were mentioning that they're terrible at golf.
Speaker: And I also happen to be terrible at golf for whatever reason.
Speaker: That's something that I guess people do know about me if they play golf with me.
Speaker: I don't play golf that often because I am terrible at it.
Speaker: I love music.
Speaker: I really enjoy music and have forever.
Speaker: You play terribly.
Speaker: I also play guitar terribly.
Speaker: So what kind of music?
Speaker: Just about anything.
Speaker: I mean, I grew up on classic rock, moved to Texas, huge prime country person, 80s and 90s hip hop.
Speaker: You know, I can do it all, right?
Speaker: I appreciate somebody who has that talent.
Speaker: I mean, just watching somebody singing.
Speaker: Wow.
Speaker: I wish I could do that.
Speaker: That seems like such a great superpower.
Speaker: You know, it's great when you can move somebody emotionally through your voice.
Speaker: So I'm a huge music fan.
Speaker: Also at a time when I wanted to be a weatherman, believe it or not, that's something that nobody knows about me.
Speaker: Wow.
Speaker: Well, there's still time.
Speaker: You think?
Speaker: I was told when I went into the Shippensburg State College radio station that my voice was too high and nasally and I could never be on the radio, let alone
Speaker: leather man.
Speaker: Here's the thing on that.
Speaker: I've just realized, don't let anybody kill your dreams, Pat.
Speaker: I shouldn't have killed it.
Speaker: You shouldn't have.
Speaker: Or when you're talking about singers, you think like, well, you got Bob Dylan as a singer and he's not too good, but he's done okay.
Speaker: You know, I also love my Peloton.
Speaker: That thing is a great invention.
Speaker: I am all in on the Peloton lately.
Speaker: But you know, the 40 bucks a month, just I can't do it.
Speaker: My daughter is a Peloton freak.
Speaker: I think I pay for the 40 bucks a month for her, but for me, it's just not right.
Speaker: I just, I can't get
Speaker: I think it's gone up.
Speaker: I think it's actually 45 or 50 now.
Speaker: It keeps going up.
Speaker: Oh, I feel better.
Speaker: I feel better about that.
Speaker: Wait, so what's the last concert you saw?
Speaker: I live in the Woodlands, Texas.
Speaker: We have a pavilion.
Speaker: It's probably Chris Stapleton.
Speaker: Yeah, we're blessed to have a great music amphitheater here.
Speaker: And I think the second largest attended amphitheater, I think, behind Red Rocks in Colorado.
Speaker: So we get a lot of great acts here coming through constantly.
Speaker: A friend of mine told me I heard tickets to Stapleton a couple of years ago, and she said he could just sing names out of the phone book and it would sound great.
Speaker: Yeah, he's talented.
Speaker: He's just, his voice is just so unbelievable and he's great.
Speaker: So yeah, my daughter and I saw him a couple of years ago out here at Wolf Trap.
Speaker: So he's fabulous.
Speaker: Yeah.
Speaker: I don't care who's there.
Speaker: If we're out for dinner and somebody's playing, like it could be Hall and Oates.
Speaker: I saw Train that way.
Speaker: You know, Train was playing.
Speaker: Let's go see Train.
Speaker: You just walk in and see somebody, sit on the lawn.
Speaker: That's a great evening.
Speaker: Yeah, yeah, yeah.
Speaker: No, absolutely right.
Speaker: My daughter and I both enjoy live music.
Speaker: Anytime we get a chance, we go out and catch a show.
Speaker: Wolf Trap is our thing here, outdoor pavilion.
Speaker: And same thing, you can walk up and maybe get a lawn seat if you're lucky and see a great show.
Speaker: Well, pal, I want to thank you so much.
Speaker: Again, I know you have a full-time job that doesn't involve podcasting.
Speaker: I really want to thank you for being here in episode 25, season six or eight or 10, whatever.
Speaker: Syndication is coming.
Speaker: And I want to thank you for your service on the board here.
Speaker: And we all chatter among ourselves, of course, but it's like you're engaged.
Speaker: You do your homework.
Speaker: You're serious.
Speaker: When your hand goes up, it's like, OK, here's going to come a serious question and a thoughtful question.
Speaker: And it always does.
Speaker: You never fail.
Speaker: And so I really do appreciate it to be as involved as you are with us and to care as much about what we do.
Speaker: I really do appreciate it.
Speaker: And I remember we had a bunch of conversations about who's the right person from Paychex to come on after Frank's service timed out.
Speaker: And of course, Frank, same thing.
Speaker: Big brains, the great asset to the board.
Speaker: And we got to have somebody else.
Speaker: And we talked a lot about it.
Speaker: And I remember that day you called me and I was thrilled.
Speaker: You're like, well, we picked the next person for the board and it's me.
Speaker: And it's, you know, we want the highest level possible, somebody who's thoughtful.
Speaker: And for me personally, somebody who every day wakes up and thinks about it.
Speaker: How can we grow PEO, right?
Speaker: How can we grow the PEO business in my company or in this country?
Speaker: To me, that matters.
Speaker: And you fit the bill on all those items and you haven't disappointed.
Speaker: So I really do appreciate it.
Speaker: I know it's been hard to make all the meetings, but you have, and we are grateful.
Speaker: And I'll see you next week in Sarasota, right?
Speaker: Honored to do it.
Speaker: And I'm looking forward to next week.
Speaker: So see you there, Pat.
Speaker: We'll see you there, pal.
Speaker: So that's it.
Speaker: Terry Sikowski, VP of PEO and insurance, although I call him the king, the king of paychecks PEO.
Speaker: Thanks for being with us today.
Speaker: It's just great.
Speaker: Thanks, pal.
Speaker: You got it, Pat.
Speaker: Have a great one.
