John Harman Transcript
[00:00:00] Welcome to The PEO Podcast, where we interview industry leaders to discuss all things PEO’s from compliance to technology, to client relations, and everything in between I'm your host Andreas Deptolla.
[00:00:18] But I think there's going to be an awakening of, let me sit down with each employee and figure out what they want to do and work what works best for them.
[00:00:31] Welcome to another episode today, we are sitting down with entrepreneur and businessman. John Harmon. John is the SVP of Aon's PEO solution group. We'll discuss his interesting path into the industry, his involvement with NAPEO, and client relations.
[00:00:52] Tell us an interesting fact about you, that your team at Aon, doesn't all about you. I guess the most interesting thing that they don't know [00:01:00] is my wife and I play a game when we're traveling that if we see someone that looks like someone we know, but they're in a different city, we would say, Oh, there there's Munich, uh, Andreas.
[00:01:11] So, you know, we would, we would play a game like that. And over the last 10 years, we've, uh, had some interesting encounters. You know, we were in Hawaii a number of years ago and sitting by the pool and I was on a telephone call. Conference, my wife nudges me and she goes, Hey, there's a there's Hawaii Sheryl Crow.
[00:01:31] And I look over and I go, Nope, that is Sheryl Crow. She happened to be in dental plan a concert and was at the same hotel that we were. And then a couple years later we were traveling to Rome. And we were at a spa in Rome and my wife walks through and she goes, I just ran into Rome, Owen Wilson. And we walked back by and I go, Nope, that is Owen Wilson.
[00:01:53] He had been over there vacationing most recently, a couple of weeks ago, we were [00:02:00] done in Boca Raton, uh, visiting a college for my daughter and we were having breakfast and my wife says, Hey, there's a Boca Raton, Jerry Springer. And, uh, lo and behold, it was Jerry Springer. A guy walked up to him and started talking.
[00:02:14] So, uh, she she's been a lucky person to pick out famous people in the towns that we're in that I probably wouldn't have noticed. So I hear that you got into the, into this industry, the PEO industry by accident. Tell us more about that.
Yeah, I did. It was, uh, back in 2007, you know, we live in St. Augustine, Florida. And at the time I was running an insurance operation for a large bank and ran Florida for them. I happened to be in line for the national position and had told my next door neighbor that we might be moving. We were looking at that. And then, uh, through the interview process, I came in second for that position and came back and told him we were staying.
[00:02:57] Lo and behold, he had a [00:03:00] boutique employee benefits consulting practice that worked in the PEO space and was looking for a, uh, a transition plan. So after a couple of months of talking about it, I became a partner in that firm. And. Started my career in the PEO industry back in 2007 have enjoyed it ever since.
[00:03:20] That's interesting, right? How sometimes life like one door closes and then another opportunity opens here. It does. And, uh, you know, I'm a firm believer that it works out for the, for the best at sometimes you may think he missed out on something, but I believe there's something better down the down the path you essentially took over that, that company.
[00:03:40] You're now at Aon, tell us what, what happened in the years in between. Yeah. So 2007, I came into that from a year later, took over as CEO and ran it through 2013. Then, you know, some life changes came in, sold out of that firm and went back into the banking side for a [00:04:00] couple of years. After three years of doing that, I was out of my non-compete with the old firm and decided that I missed the PEO industry.
[00:04:08] It's one of those industries that I think is very relationship driven. It's a small niche market. You get to know the people. And, uh, after three years of being out of it, I, I miss them and I miss. The dynamics of the PEO industry. So I started my own firm again in 2016, ran that for three years and then got approached by Ayaan and asked, you know, they were looking to expand their PEO practice at that point in time.
[00:04:36] So they purchased our firm and we came over in 2019. And now we're part of the, uh, the broader am family, still focusing on as though. And I can imagine that the decision to sell to Ian wasn't, wasn't the easy one, right? Again, there are different paths based different opportunities. What, what ultimately led to that decision?
[00:04:56] When you're self-employed and an entrepreneur running [00:05:00] your own business, there are a lot of pluses and there are a lot of minuses. You know, the pluses are, you can move very quickly and adapt and change with the market. There's not a lot of, uh, red tape or areas to go through the, to say, if, if we want to go this direction, you do it.
[00:05:15] You know, with that as well. There's, there's some downside, you know, there's, there's payroll, there's growth, there's, you know, investing your own capital. I wasn't looking to join a larger firm, but the thing that attracted me about the am opportunity was really the breadth of services that they offer inside of the PDF.
[00:05:35] You know, most of my career had been on the health and benefits side of working with PEOS and Aon had a number of PEOS they worked with on the health and benefits side, but then they also had a number that they work with on the risk and the property and casualty side and the opportunity to come over and kind of build a cohesive unit that goes after PEOS on both sides of that equation was really attractive to me.
[00:05:59] And I was [00:06:00] at a stage in my life where it felt like the right thing to do. And, um, you know, a couple of years later, I, I can say wholeheartedly that it was the right thing to do. You mentioned the, the broader service portfolio, right. Is that part of the key value proposition of Aon on the PEO market. And is the largest brokerage in the, in the world.
[00:06:22] You know, we have resources that are on the workers' compensation, claims management drilling down for data science, uh, working in cyber and cyber protection, you know, working with voluntary benefits, working with healthcare, uh, and just across the spectrum. The interesting part is now working with all those different areas that are entrenched in Aon.
[00:06:45] And figuring out how do we mold those to this specific industry of PEO, which is very different than a single employer. So, uh, it's, it's fun. It's exciting. It's always changing. And, uh, something that, that keeps me going in the mornings.
[00:06:59] [00:07:00] You mentioned to me in our early conversations that like, Hey, when, when I went and entered the industry and built relationships, NAPEO was one of the key organization to success there.
[00:07:11] Tell us more about your involvement in NAPEO over the years and what you gained from the organization. Yeah, I think the PEO industry is one that's that's unique from the standpoint, the role that the association plays in the, in the industry. I can't say I've spent a lot of time in other industries, but NAPEO itself is very intrical and central.
[00:07:36] To the PEO industry, a lot of content, a lot of education, a lot of networking opportunities come through that association and they've done a great job of building a community. Inside of the industry, unlike any other industry, I've never seen something like the PEO industry where competitors are willing to help one another out with [00:08:00] ideas, with suggestions, with leads and contacts.
[00:08:03] From the standpoint of service partners. And those types of things. It's a very sharing, uh, industry, even though sometimes they may compete with one another. So when I first got in the industry back in 2007, I thought it was critical that as a service partner, we become involved in the organization and work with it.
[00:08:22] And then when I came back in the industry in 2016, It was an easy re-entry point because when you come back at those events that NAPEO hosts, it's easy to see old friends and, and reconnect with that over the years, you know, I've been on the, um, the healthcare committee, you know, I've always been a sponsor of events.
[00:08:44] And using that forum as a way to reinvest in the industry and to give back from time to time, get called on either myself or some of our partners that we have inside of Aon get called on as subject matter experts. [00:09:00] And that's a good way for us to give back to the association as well. Yeah, I'm sure like in, in, in these times of crisis, right?
[00:09:08] Pandemic, good example here, what we all saw over the last 12 to 14 months, that's bad. These endorsers who associations really come to shine, uh, and, and provide a lot of benefits to all of their members. What is your current involvement in NAPEO currently? I'm involved in the, uh, the healthcare committee.
[00:09:26] And we are sponsors of a number of the events that, that come out. You know, most recently we were able to bring in some expertise from our cyber team at stress-free Freebird and lend some context and information that was pertinent to the industry around cyber protection and cyber assessments and reaction, you know, given some of the things that recently happened in the industry.
[00:09:53] Obviously cyber security have, as you mentioned, very, very hot topic right now in the industry, right? If you take the [00:10:00] perspective of a PEO a leadership team, right? What are the top three, four or five topics? Things that the PEOs should think about these days or can actively do, uh, on the security side.
[00:10:14] We're definitely all of that has changed over the last 12 to 14 months. If you think about a year ago, everyone was working in the office, they were centrally located. You had, you know, maybe some protocols and things that were in place for your cyber protection based on the hub that you were working from.
[00:10:34] After that everyone started going out, working remotely. So now you have multiple. Spots where people are working from a laptop. You know, they're working from their wifi at home, a lot more vulnerability to cyber attacks and to fishing and maybe less control over how you're protecting those types of things.
[00:10:55] So. The PEO industry itself is also one of [00:11:00] outsourcing, right? It by nature is an outsource solution for worksite employers and a number of the technology platforms that PEOs use are, uh, outsourced from them as well. So I think, you know, the first thing is really just looking at and doing an assessment. Of where you stand with your cyber security prior to the pandemic, and maybe some of the recent things that happened.
[00:11:24] People thought I have a cyber policy. So I'm protected. The better approach is, well, how do you assess your vulnerabilities to make sure that you limit them as much as you possibly can and try and prevent people? From having a cyber attack on you or any of your vendor partners and then layer on insurance to protect those things that can't be anticipated.
[00:11:47] So I would say the first thing is just gauging where you are and where you need to be from that protection standpoint. And then putting in protocols to start building up. Your your [00:12:00] protection and your, uh, eliminating your vulnerabilities and then layering in insurance because you can't possibly protect against everything.
[00:12:08] And, uh, there's a saying now is when a cyber attack happens. Not if there's laying that out. I assume if rightly done by the PEO, this might then turn from a stretch to certain degree, to an opportunity as well, in terms of differentiation in terms of customer acquisition and really making that as one of the key focus areas.
[00:12:29] Absolutely. And, and you're starting to see now, PS that are interested in, how do I educate my work site employers on what their potential cyber risks might be. And, and where their vulnerabilities lay and how do I help them as a valued partner, make sure that they're protected. So it's starting to go downstream.
[00:12:52] There's not a lot of small employers that, you know, really understand their own personal vulnerability with that. So you're starting to see that as [00:13:00] well. And you know, you're starting to see also on the individual level where PEOS are, uh, you know, putting credit protection or any type of those things out.
[00:13:11] For individuals that might make them feel more comfortable, that if they're tacked individually, that at least their financial elements are protected from that it's a growing concern. And one that I don't think is going away anytime soon, clearly. Right. And I think that that point then it's about like, okay, well, what can the industry, what can the individual PEOS do to be more proactive?
[00:13:32] And you know what you mentioned, they're really providing value to the employer groups, right. That might not have the resources to do that by themselves. Yeah. And the big thing is education. And I think that's where pianos are really shining now is they're educating small employers that don't get a lot of attention from other elements.
[00:13:52] About a number of different things that are, um, valuable to the, uh, to the work site. Employer is really gonna help the PEO industry [00:14:00] grow, you know, as we go forward. And you mentioned that the, the pandemic right work from home had an impact, uh, on unsecurity clearly tell us more about your team at Aon.
[00:14:10] How did you guys, uh, with others, Tom, so to speak and how did you handle the work from home in the last year during the pandemic? First naively. I thought it was going to be two weeks. My life was built around traveling. So I was gone from Tuesday and came home Thursday night. So I thought I'm going to take two weeks off the road and this is going to be great.
[00:14:31] A lot of us went into that. So naive it's like, well, yeah, we'll, we'll send everybody at home for like two or three weeks and return back. And a year later we are obviously dealing with, yeah, jokingly. I say, since I was most of my career, I've been on the road and I have a wife and two daughters. That over the last 14 months of being at home, I figured out everything they were doing wrong while I was gone on the road.
[00:14:55] They don't necessarily have the same opinion of that. And they're going to be glad when I start [00:15:00] traveling again. But, uh, you know, I I'm 54. Most of my career has been built. On face-to-face contact with clients, with prospects, with building relationships, that way kind of the old school way. So I went into the pandemic nervous about, you know, as it started going on, how, how do we continue to build relationships?
[00:15:20] How do we, we further those and, and how do we do our business remotely? Through mediums like zoom and WebEx, I've really, over the 14 months have gone in a different direction that I don't know that I'll ever travel as much as I used to. I don't know that it's necessary. I liked elements of it. Uh, I didn't like other elements of it.
[00:15:41] But I think there's going to be a different way for all of us to do business going forward. I think the mediums of zoom and WebEx, where you can see people on the cameras as really helped for me personally, I like that much better than a conference call. So our team at Ayaan has [00:16:00] really adapted well and, and in many ways, I think we're almost more.
[00:16:06] In touch with our clients now through this medium than we were in the past, because I think everybody felt like me that well, if we're going to spend time with a client, we need to be there and travel and habits, a lot of that. So we're seeing a lot more weekly touch bases, scheduled appointments with clients going through.
[00:16:25] Zoom and spending a lot more time getting to know their business. It's really worked out a lot better than I thought it would. You know, when we go back to the office, if we go back to the office that remains to be seen, but I still think there's going to be like anything else. The best of both worlds. I still want to go out and have dinner with clients.
[00:16:44] I still want to walk through their facility. See what's going on. Get to know a little bit more, more of their culture that way, but I think there'll be use of the virtual. Mediums that we've gotten used to over the last 12 to 14 months, that will make it [00:17:00] easier and better to do that. You know, if you ask my kids, they would, they would never want to go see somebody in person will prefer to do this.
[00:17:07] So I think this is the pandemics kinda allowed us to blend the best of both of those. And try to submit DEMEC that there also is a school of sorts that like that there are two models and both extremes that work well. Right. Everybody's in the office every day, right. Or everybody is working remotely. And then if everybody's remotely, your processes, your communication, everything is adjusting.
[00:17:29] Right. So now we also hear about this hybrid model, right? So on people walking from home, maybe a couple of days in the office of a, the days at home. What's your take on that and what our discussion that you now have with PEO leaders, right? How's the PEO industry thinking about returning to the office or staying, uh, remotely everybody's concern was always before.
[00:17:54] If we let people work from home, they're not going to be working, you know, they're, they're going to be tending to their kids. They're going to [00:18:00] have other stuff that's coming on. You know, there, there's a certain element that, you know, my clients have gotten to know my kids, my dog, you know, my wife a little bit more because they pop in on zoom calls.
[00:18:12] So yeah, I think we've all have adjusted to that, but I think there's going to be an awakening of. Let me sit down with each employee and figure out what they want to do and work what works best for them. Some people want to come back into the office because they can't work at home because of the distractions and the other types of things.
[00:18:34] And they'll want to come in. There are others that will be more productive working from home. I don't know about you, but I think my work day is much longer now that we're working remotely than it ever was when we were going in and out of an office because it doesn't end and everything blends together.
[00:18:51] Yeah. I can schedule appointments back to back to back and before, you know, it. You know, you've missed lunch and, and you're into somewhere else. And, uh, you've [00:19:00] been on calls for six straight hours, but I think there's going to be more openness to working with individuals on what's better for them. And then maybe also an opportunity too, to attract talent that companies haven't been able to attract beforehand.
[00:19:16] Right. Because it looks like geographical restriction. Yeah, exactly. We have clients that have looked for talent. As a benefit manager or a, a risk manager that before you would have a great candidate, but the candidate wasn't willing to relocate to come to your facility, that now you realize that you don't need them there.
[00:19:39] They may have to travel every now and then to come in. Person, but they can work remotely. They can be in another part of the country and still be effective. So I do think it's going to allow people to have better talent, potentially lower costs as well. You're not having to pay for that move package and you're not having to relocate people and there's going to be less need for brick [00:20:00] and mortar.
[00:20:00] Or at least as much of a lot of business owners are thinking about, you know, you mentioned the cost, right. Cost in general, but specifically cost to acquire a customer, right. And then customer lifetime value. Right? These two variables, if we look at the costs, why a new customer, you know, obviously we have sales, commissions, salaries, and whatnot, but travel was.
[00:20:23] Typically a pretty big budget item. Right. Do you foresee that zoom, the zoom calls and WebEx of will that, uh, yeah. Continue to be an acceptable method of communication. Do you think that the. Expectations from clients for what will change? What do you foresee here? It's interesting. I think definitely from the corporate side, there's going to be less budget for travel and entertainment, because if you look at, you know, what percentage of the sales process that used to be.
[00:20:56] I'm sure it was much higher than the past than it was over the [00:21:00] past, uh, past year or so. So we've, we've kind of proven in many organizations that you don't have to spend as much money to acquire business. So I think there will be less budget. For travel and entertainment, but I do think there needs to be continued emphasis on going out and seeing people again, because there are people, you know, my age that are used to that, and that's the way they want to build the relationship.
[00:21:26] But there's younger people that are running businesses now that don't find that necessary. So I think it'll be less than it was before, but not going away. Yeah. Well, it will be interesting to see how different companies adjust to that. Right. And see success in different approaches here. Exactly. So you have a very good thing on the polls.
[00:21:47] You're, you're talking to many, uh, PEO leaders, right? What are, what are the most strategically common questions, topics that you discuss with your PEO clients? Is this. Typically it's it's on [00:22:00] what does the employee value from their employer? From the standpoint of benefits? You know, if you go back 30 years ago, people were joining companies that had a pension plan.
[00:22:13] Well, pension plans don't exist anymore. You know, then it was, I want to make sure that the company has a 401k or some other type of defined contribution plan. But the question comes is what is the next generation ones? And there's a lot of studies out there and a lot of time spent on what do employees value from their employer.
[00:22:34] And we started seeing more and more that they want their employer to help them manage the financial aspects of their life. So, whether that's helping them to better understand their investments and how they should be doing that, is there a program that the work can offer, that's going to help educate them so that they don't have to go out and find an individual?
[00:22:58] Did do that. You know, there's [00:23:00] different benefits that now are value work from home. For example, is, is one that was on there that I think is only going to grow higher. Now that we've been through this things like gym memberships, things like pet insurance, things, like are there resources to help me. Uh, as an individual, that's now, you know, having to care for my parents that are aging, as well as my kids that are, are, are coming along.
[00:23:26] So the idea of what a benefit is, is changing and ever evolving our clients want to know what is the next thing that we need to be thinking of, that we should be, you know, using in our benefits package to help our employers better manage their employees and meet the needs of their employees. I'm sure that like whiskeys demands and new benefits coming out, it's more and more important for the employers, right.
[00:23:54] To be able to compare benefits, right. Packages, what have you seen there on the market [00:24:00] innovative for tools, strategies to accomplish that? The market's really changing on that. And I think there's a lot of, uh, technology platforms that are helping with that, the way to deliver the message to the employees needs to be multi-pronged.
[00:24:17] You know, some people want self-serve. So the technology needs to be in place for them to look at the offering that is available. Get advice electronically. On the things that they should do through AI, that's maybe taking their individual situation, running algorithms on it and saying, this is the type of program you should build for yourself.
[00:24:40] But there's still people out there as well, that wants to talk to an individual and get counseling, you know, one-on-one individually that way. So we're in a situation where lawyer, especially like in a PEO environment, needs to have different ways of delivering consultation on their benefits, packages to their employees based on.
[00:24:59] The [00:25:00] vast array of, of, uh, needs that the employee has and the way they employ wants to be counseled. And I'm sure that Heidi depends on as well on the ideal client profile of the PEO. Right? Uh, is it more like blue collar workforce or not? And what are the specific demands right. Of these groups? Exactly blue, gray, white collar, all have different expectations on how they're going to, uh, or, or what benefits they want and how they need.
[00:25:27] And most of the PEOS really, we have penetration in all three of those. So they have to be broad and, you know, have approaches that are going to cover everybody unless they're really specific in the end industry that they're going into. They need to be very careful, very diverse and offer a wide array of options.
[00:25:47] W we have seen a good amount of legislative changes already with the new administration. Right. Um, and as part of the pandemic that has kept the PEO ecosystem busy, you [00:26:00] know, what have some of the PEOS done really well, that, that navigated this in the best way possible. And then also, what else are you expecting from a reform perspective?
[00:26:09] Right? What, what should we all be looking out for? One of the things that's interesting is, you know, our government and Congress froze out laws that are complicated. They don't necessarily dig down into the detail about, well, how do you administer this? Or how do you carry it out? And the PPP loans last year was, was one of the big ones.
[00:26:27] Right? Great idea helped us save a lot of businesses, but a small business that needs the loan to stay in business. Really doesn't understand the elements of it that are going to impact them and how to apply for it. You know, what's necessary to meet the objectives or meet the qualifications for it. So I think without a doubt, the PEO industry really stepped up and I think maybe helped a tremendous amount with that last year.
[00:26:57] And disseminating information is putting together [00:27:00] webinars. To help train the PEOS on what's necessary to get the lungs and how to administer it, that then allowed the PEOS themselves to take that down to the work site. Employers know there's statistics out there that, um, you know, I'm not as familiar with, but I mean, Napier did a great job or a publishing, um, that, you know, the amount of, of loans that they were able to help their work site employers get through PEOS was just tremendous.
[00:27:27] And, you know, if you know, All employers that weren't with the PEO. A lot of them were very frustrated and didn't get the loans and aren't sure if they got them, whether or not they're supposed to pay them back. And I don't hear a lot of that with, uh, employer groups that were with PDFs and the same thing started to come up now with the new law on Cobra, you know, starting April 1st, if you're in voluntarily, let go, or your hours are cut below a certain point.
[00:27:57] The government has said, you know, your employer's going to, [00:28:00] or we're going to pay 100% of your Cobra benefits. Well, the PEOS the employer. So the PEO is the one that has to pay that, but then they get a credit back somewhere down the road from the government against that. So everyone's struggling now with, okay.
[00:28:15] How do you administer it? What are the qualifications? How do you put that in? If you're educating the PEOS. On the laws around that, it's going to be more likely that the work site employer is going to know how to handle it with their particular employees. It's a complex field. There's a lot of moving parts on the Cobra side.
[00:28:35] We're not sure exactly what the uptake rate is going to be on that, but we're working with our clients to help figure out administratively how they have to manage it. Risk-wise maybe what's the impact to their medical plan. And then in the long-term, you know, how do you run a successfully and, and get your money back on the backend?
[00:28:55] Yeah. Th I think Balsam, PPP and COBA extension, uh, [00:29:00] good examples of where, where PEO can truly deliver value to them employers. Right. And then the key obviously is how do you communicate that effectively? Right. So that, okay. These are certainly things that, you know, smaller organizations it's, it's, it's hard to do these things where I was a small team and certainly a different value proposition to the PEO Valencia.
[00:29:22] I mean, absolutely. I mean, again, having run my own firms before, you know, whether it's five people or whether it's. 40, you can have an expert in every area. So we used PEOS and, and I'm a big advocate of small employers using them because, you know, you're paying an administrative fee, but you're getting a lot more expertise than, than you're paying for.
[00:29:43] From that perspective. And I don't think you could go out and hire the expertise that you need for the same amount of money. It's an effective way for people to get knowledge. What do you recommend to look out for here as a PEO to be successful in the market in the next three to five years? Right? What are [00:30:00] topics that the leadership team should be focusing on evaluate and mass in order to be successful in the market?
[00:30:07] You know, I, I think the first thing is understanding who you are and who you're serving. And I think one of the things, whether any business, if you start getting too broad and, and don't have a vision that is honed in on exactly who you're trying to go after, it can be troublesome. So the, the PEOS that I see are most successful are ones that, you know, know where they want to be 12 months, five years, 10 years from now, and lay out a plan to get there.
[00:30:35] And, and they stick to that plan. Most of them are heavily driven by sales and sales can sometimes drift you and pass that you don't want to go. So, you know, making sure that you're being true to your mission and your vision statement is one, and then understanding the risks. That, that you're managing as well.
[00:30:54] You know, PEOS have a lot of different levers that they pull, whether it's the [00:31:00] administration fee, you know, work comp or whether it's the benefits or SUTA unemployment, any of those types of things, managing the risk. Well, Being disciplined in that and being true to your, uh, to your mission, I think are probably the keys that I see the most successful P as sticking to this podcast is sponsored by strive, pass a trusted PEO partner for employee benefits from pre-tax accounts to Cobra administration.
[00:31:30] It's drive past empowers employees to thrive through exceptional service in innovative technology, more at thrivepass.com. Thanks for listening to today's episode, don't forget to subscribe and visit us at peo-podcast.com to learn more. I'm Andreas Deptolla and this is The PEO Podcast. We'll see you.