Announcer:
From the library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're Inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership, and vision and global business, the dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years.
Each week we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism right here, right now at the NYSE and at ICE's exchanges and clearinghouses around the world. And now, welcome Inside the ICE House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
Our conversation today brings together themes from two of our recent episodes. In episode 365, BIGGBY's co-CEO, Mike McFall, shared his plan for creating the culture needed for sustained commercial success, his formula focusing on interpersonal relationships and becoming the leader that your organization needs to succeed. In the very next episode, Mandy Long, the CEO of BigBear.ai, that's NYSE ticker symbol BBAI, explained how artificial intelligence is augmenting or replacing human-powered business processes to be safer and more efficient.
Those topics, at first glance, seem to be, at best, unrelated and, more likely, perhaps opposed to one another, but not so, according to our guest today, Stephan Scholl, who leading Alight, that's NYSE ticker symbol ALIT, as its CEO. Stephan's company is focused on turning the tools that have transformed operations and customer experience over the past decade back onto companies themselves to both improve employee wellbeing and make it easier to navigate benefits from healthcare, retirement plans, and more.
Now, I can speak from some personal knowledge about the universal experience that we've all had in navigating the disparate systems, vendors, and interfaces to set up all of your employee benefits when you start a job. Just turning that into an easy-to-navigate experience would improve employee happiness a lot, also wellbeing. But that's just step one of implementing Stephan's philosophy.
In a minute, our conversation with Alight CEO, Stephan Scholl, on the Worklife platform, his career, and improving employee wellbeing from simplifying human resource processes all the way to mental health. It's all coming up right after this.
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Josh King:
Our guest today, Stephan Scholl, is the CEO of Alight. That's NYSE ticker symbol ALIT. Prior to Alight, Stephan was the president of Infor Global Solutions and, earlier in his career, held senior roles at Oracle, that's NYSE ticker symbol ORCL, and PeopleSoft. Welcome back to the New York Stock Exchange and Inside the ICE House, Stephan.
Stephan Scholl:
Thank you. Thank you for having me. Great to be here.
Josh King:
What brings you to the city this trip?
Stephan Scholl:
You.
Josh King:
Excellent.
Stephan Scholl:
Spending time here with you.
Josh King:
In May, Stephan, you wrote a blog post about employee resilience. The themes of that article are going to come up throughout the conversation that you and I are going to have. But what has talent learned about their own resilience that employers really can't ignore? Here we are, July 2023.
Stephan Scholl:
Helping break all that down, consolidate, simplify, and really bring a recipe to the individual to help them make better decisions.
Josh King:
We're going to talk about a lot of those decisions. Alight directly impacts the lives of, according to you guys, 36 million employees but, like our own company, ICE, here in this building, does a lot of its work really out of the public eye. It was formed in 2017 when Aon, that's ticker symbol AON, sold its enterprise resource planning or ERP business to Blackstone, ticker symbol BX.
Beyond that deal, the company's roots really go back decades. Stephan, can you provide a little overview of Alight's founding and, now that the company has evolved, leading up to you being named CEO those three and a half years ago?
Stephan Scholl:
I mean it's what I loved about coming here and why I decided to join Alight was the 40 years of history of being the record keeper, which means helping you make those decisions on benefits administration, on 401(k)s and pension systems, and the list goes on. But it's being there for 40 years and having all that history. So number one is we have the most complete set of data and history on the largest population in the United States.
Nobody, there's no company in the United States who has that footprint of information, truly important information. Again, if we think about wellbeing at the core of employee retention, employee productivity, employee success, then we have the most complete set of data to help make those decisions right, and it's 40 years of that history that we have. So that makes us pretty unique in terms of size and scale.
That history has allowed us to evolve in terms of who we are with our relationship maps. So think about who we serve, 72 of the Fortune 100. Half of the Fortune 500 companies look to us to drive that wellbeing, benefits administration relationship with their employees. So pretty big history with the largest clients and a big footprint of data.
Josh King:
I mean I spent many years of my career working at one of Aon's competitors, Willis Group. What was the impetus for Aon to spin out this part of the business and then for Blackstone to pick it up and then, obviously, to think about it being a standalone company?
Stephan Scholl:
Greg Case, CEO of Aon, is a great partner of ours. He's a great CEO, one of the best in our industry, but he's also very smart about focus. He's got a lot in terms of what he does with his business. "This was an area," he said, "it's just not a priority for us given all that we have and it needs attention." It needed a focus on investment and a new lens that I brought to the table and Blackstone brought to the table over the last five years.
Josh King:
Before we go down Alight's path as it went into Blackstone and now where it currently stands, your career roots stretch back to McGill, as we were talking about before we started recording. Before you embarked on a career through many of the largest names in the ERP space, was a career in the business of technology always the goal, and what led you to PeopleSoft in the first place?
Stephan Scholl:
I mean my history is pretty unique. There's not many people like me who started their career as a teacher. My degree from McGill is only, I think, one or two, maybe three, I can't remember exactly, but three places that you can go to college in Canada, and McGill was one of them. The biggest impact in my life, when I think about where I started, was teachers and I said, "I want to be a teacher." I always wanted to give back.
Josh King:
So you're out of McGill. Then what kind of school do you head to?
Stephan Scholl:
I started teaching for literally few weeks to months and I realized, "You know what? I'm going to come back to this. I have other things to go do." To be very, very direct about it, I don't talk a lot about it. But, for me, my history is I had a family where there was money and then there was no money. So you feel that pang of wanting to say, "I will never be in that position again." So I went down the road of where can I go? Banking or technology> Teaching, I'll always come back to.
So I went down the road of technology, and that led me to a small company up in capital of Canada called Ottawa. It was computer consulting type work, and I started there. And then I went to another company, New North Media, up in New Brunswick, middle of nowhere in the east coast of Canada. And then the right phone call, the right place, the right time. We always get these five-minute increments in life, and I had a five-minute increment that was PeopleSoft, one of the hottest companies on the planet with Dave Duffield.
Loved the vision of PeopleSoft around helping employees and automating some of those human resource processes, and I said to myself, "I want to be part of that." I didn't have any of the background, didn't have any of the software background, sales background, any of it. But what the leader who hired me saw was passion and perseverance and they hired me and took a bet on me, and it worked out.
Josh King:
PeopleSoft then got acquired by Oracle, ticker symbol ORCL, in 2004. Among the projects that you were working on was the development of the Smart Grid. According to an interview that we found with you all the way back in 2010, how did your experience with Oracle help you prepare for really the other side of the acquisition process in your current role?
Stephan Scholl:
There's so much. I mean when you think of we were the first really big acquisition of Larry Ellison at Oracle at the time. They went on a spree after that, and I had a chance to be on the front lines of that. I can't remember exactly the amounts, but we're talking 40, 50+ billion dollars of investments in technology at the time. Larry also believed very much in a product architecture, buy the best products, and he did.
So I was on the services side, able to be on the front lines of integrating, so the operational rigor, the product focus, the notion of really having the engineering prowess. Hire the best engineers. Build a cadence and a regimen of focus that allows you to make sure that you meet the client demands in the product versus service orientation. Those are the elements that I learned very quickly, how to integrate companies.
It's not easy to do that. Oracle was very much a belief of integrate as fast as you can, even if you're only half right. That's good enough. But speed matters in integration.
Josh King:
Were you part of the deal team when Larry and Oracle came in sitting across the table or next level once the deal got done?
Stephan Scholl:
Not when the deal was done, but when the deal was done, I was part of the integration team, so how do you combine Oracle and PeopleSoft, which was a pretty big piece of the business. I was on the services side, one of several people figuring out how to take this really big business of thousands of people, completely disparate products and organizational structures and how do you consolidate it and, by the way, do it in weeks and months, not years.
Josh King:
After a bunch of years with Oracle, you and a couple of colleagues joined Infor and engineered its turnaround, including launching Coleman, its AI platform. Stephan, this is years before ChatGPT became either the savior or the menace to the business world, depending on your perspective on this. How did that shape your sense of AI, and how do you see the technology's impact on the business world?
Stephan Scholl:
I mean, first, look how lucky I was. I worked for the president of Oracle, Chuck or Charles Phillips, depends on how you get to know him. One of my mentors, back to that teaching comment, he taught me a lot. He took me with him to take over the company of Infor. At the time, it was a sleepy, small, little company, but we had the belief that you could take real, deep, heavy manufacturing process flows and automate them and put them into the cloud and build all these capabilities of algorithms and technology and Coleman AI into making smart supply chain, smart manufacturing decisions.
So all those principles of what I talk about at Alight, there's already 10 to 15 years of history over on how corporations deal with their clients. I mean I lived at Ferrari for years in helping them. I remember meeting with the CEO and his team and he said, "We have no more space to build out. We need to increase our production cycles from one to two vehicles to five. We need to increase our productivity in terms of number of cars we build by 45 to 50%. Oh, by the way, we're going to start building Maserati engines on top of that, and we want to do all that within the footprint we have."
So we came in with Coleman and AI and technology and built a world-class supply chain and manufacturing capability for a place like Ferrari, and we all know who they are today. Look at the multiple-
Josh King:
Eventually, they found their way here to a listing in the New York Stock Exchange.
Stephan Scholl:
And a great company. Exactly right.
Josh King:
So those things that you did with Ferrari, what would you say were the most important in terms of being their accelerant for growth?
Stephan Scholl:
Immersing ourself into their business and their business plan, so really understanding the growth strategy of the team and what they wanted to accomplish, all those things I just said, increased growth, drive profitability. But they also saw a market need that said ... It used to be kind of cool years ago when you went to a Ferrari dealership and bought a Ferrari. They gave you kind of a golden ticket and said, "We'll see you in 8, 9, 10, 11, 12 months."
Well, the competitors came on and said, "Well, we're going to get you your car in five weeks, and we're going to personalize it for you the way you want." Ferrari got caught up a little bit in that and said, "We need to do the same, faster productivity." We all know, look at the margin profiles of adding personalization to a car like a Ferrari. Each car is unique to almost every individual today when you think about what it used to be.
To do all that, you need to have an incredible infrastructure, 3,000+ suppliers all integrated, just-in-time inventory. All that complexity from the way it was to the way we had to do it needed a complete redesign of their shop floor, re-engineering their third floor and their fourth floor capabilities. So super exciting and super fun. But the real skill is listening to what they wanted to do.
Their ability to adopt change was incredible given their history. We went in and, together with them, completely re-engineered how they do business, not only in building cars, how they sell cars.
Josh King:
So much innovation behind the scenes at Ferrari. Really, no matter what underlying technology is the disruptor du jour, success requires staying really at the forefront of industry trends and emerging technologies. How does Alight foster within itself this culture of innovation in its workforce?
Stephan Scholl:
It's letting history be its guide. All those examples I just articulated around how companies today deal with their customers, it's trillions of dollars of transformation, whether it's Accenture and Deloitte, all the big four, every company now has a personalized relationship or the goal of building, whether you're selling insurance, whether you're Nike selling shoes, whether you're a Ferrari building cars.
That whole thesis translates to the vision I have for Alight around helping employees make better decisions. Why don't you and I, as employees, have a recipe that's individual to you? Why should it be common? Why should you have a common pension plan, a common 401(k) plan? Why should your benefits be based on your job code along thousands of other people? Why should your deductible be one of three options? Why can't we personalize that whole wellbeing experience to the individual like you?
I've seen it happen on the client side. It's broken today. There is no company in the United States at Fortune 500 that does and treats their employees like they treat their clients. It's a pretty powerful thing to say that, right?
Josh King:
It is.
Stephan Scholl:
I get CEOs that get kind of visceral with me. "Well, we treat our employees great." I said, "Actually, let me walk you through how you treat your people in moments that matter, whether it's a new family having a baby." You know complicated it is in most Fortune 100 companies for somebody to start a family, to have a baby? Or you're getting close to retirement, everything in between. It doesn't matter who you are, all the big names. It's complicated. It hasn't worked.
Companies are trying, and they're spending a ton of money. So the wasted spend in this economic environment is dramatic. So there's losers on both side of the aisle. Employees aren't getting what they need, and employers are frustrated because they are trying. There's no CEO that I don't talk to that says, "Wellbeing, mental illness, anxiety, depression is at the top of everybody's conversation." They're all throwing their hands up and say, "What do we do?"
So enter Alight with our platform approach, with Worklife, trying to consolidate and simplify. But it's still early days. It's a long road. Just like the digital disruption with how companies dealt with their clients, that took decades. We're now still in the early innings in that same roadmap.
Josh King:
I mean you talk about it being early days, Stephan. Let's talk about your early days at Alight. You were named its CEO in what you could probably call it was a pretty inopportune time, April 2020. You've described your first day beginning when a UPS driver handed you a box with a laptop, a T-shirt, a hat, and a note that said, "Welcome to Alight."
Was there a specific vision or opportunity that you had in mind as you took the reins of a company that was really under so much pressure, like all of us were, in those first days of COVID?
Stephan Scholl:
Said another way, I wouldn't have joined Alight if it wasn't for the pandemic. Why? Because of the opportunity I just talked about. It takes tremendous will for boards and CEOs to go down now and do what I'm saying they need to do around helping their employees better, the will for the last two decades. I mean you interview chief information officers. Ask them where they spent their time the last 20 years. It's all about helping us drive revenue and drive client relationships. Where's the employee? COVID did finally highlight how fragile, how broken, and how much help employees actually need.
I was at a great event. I don't know how much I'm allowed to share this, but probably 70 of the captains of industry in the room here in New York at one of the big banks. Let me stop there, enough of that. I thought the agenda topic was just going to be real, just very boxed. Right away in the morning, what's standing in the way of our growth and success as companies? Common theme, employees, mental wellbeing, financial success, and health. Employees, employees, employees are front and center for every CEO in that room that I talked to.
Super refreshing, but also you could see the anxiety in the room. I knew this was going to happen, which is I can't believe I as a CEO have to step over the line. I say that a few times. "What do you mean by step over the line?" I have to get really personal with you. You're going to have to give me very personal data. This is the starkest dynamic of it all. CEOs have woken up to the fact employees are actually willing to do that. You're willing to give really important information as long as it serves me as an individual.
Josh King:
What would that be? Give me an example of-
Stephan Scholl:
All the notions of you went to see the doctor. What is your health report? High cholesterol, diabetes, pre-diabetic, muscular skeletal issues, the claims data that comes out of all the personal side of your house, your financial situation, are you getting divorced? I say this many times even about myself. We're all, as parents, only as happy as our unhappiest child.
Josh King:
True.
Stephan Scholl:
Every one of us, including myself, we're all dealing with home challenges with children. I have three teenagers, and I got two twin daughters. There isn't a day that goes by, doesn't matter what meeting I have, whether it's a board meeting or my largest client or my largest investor, that within that triad, my children don't come up in conversation in some way, shape, or form.
Josh King:
Absolutely.
Stephan Scholl:
We have to deal with that as a community, as a society, as the business world. I think that's what I get excited about. There is the resolve now for the biggest companies, the most important CEOs, the biggest investors in the world willing to tackle this topic.
Josh King:
So you're at Alight for about a year and, in 2021, you took the company public via a SPAC merger with Foley Trasimene Acquisition Corp. and its founder and chairman, Bill Foley, of course, becoming your chair. Bill's been in the press a lot lately for his accurate forecast that the Las Vegas Golden Knights would win a Stanley Cup within six years. Why were Bill and his team the right partners for you to find at Alight and go public?
Stephan Scholl:
Well, we could take the next half an hour on this and just talk about him because he is exactly that, a legend, a captain of industry. He is a rare breed in this world where he's financially-minded, and he understands investment banking world. He understands all the elements that every banker and investor would know, yet he's got brass-knuckled warrior operational experience.
He's been a CEO of Fortune 500 companies three times. He's run dozens of companies in different forms, whether it's wineries to Fortune 100 companies and everything in between. And then he just has the world of experience, and I built a really strong relationship with him. By the way, I was at the game five-
Josh King:
Congratulations.
Stephan Scholl:
... in Vegas, which was super exciting to be part and to see the decisions that he made along the way, very unpopular in some cases, replacing players or coaches along the way that weren't so obvious. When you see his playbook of decisioning and while today it looks masterful, it wasn't so obvious. Those are the things. It's the not obvious elements that I get from him when I see and talk to him about the Alight business and where we're headed and what we're doing.
Josh King:
I mean to the extent you're comfortable, share how he mentors you.
Stephan Scholl:
He also thinks long term. This pressure that people feel, whether you're private equity firms or investor about needing to feed everybody 30, 60, 90-day cycles or even a year, he thinks, "Think three to five-year terms." When we did our SPAC, a lot of that money we raised went to paying off our debt. It didn't go into the pockets of him or our investors. Some of it did, of course. But the majority, almost $2 billion went to paying off a lot of our debt. Why? Because it set us up for who we are today, a really well-established, profitable company, great cashflow opportunities.
That sets us up for making investments in the long term. So it's that kind of thinking that he continuously brings to the table. And then finally, he also helps me think about how does one plus one equal three? So the whole notion of taking our content that we have today around ben admin and 401(k) and pensions, the whole notion of platform and building our Alight Worklife was from the genesis of him and I talking about how do we completely upend this game that we're in.
Josh King:
Talking about one plus one equaling three, Stephan, two years ago, you announced a three-year plan for the company to, I'm going to quote you here, "Fundamentally change the siloed approach to benefits and human capital management by bringing together all aspects of employee health, wealth, wellbeing, and payroll all into one seamless integrated technology experience." What role did becoming a public company have in creating that vision?
Stephan Scholl:
Well, it continued to bring this discussion topic to the forefront because being public, the hundreds of millions of hits we got in terms of who is Alight, despite the footprint we had, we were still a well-kept secret despite the people we serve. So being public helped us just continue to get support from the community around our strategy, which is Alight Worklife is the front door, is the platform approach, and is what we're betting the company on in terms of the future.
Now, what that means is you take these really powerful systems of record and you integrate them into one common platform with Alight Worklife. You use analytics and AI and you build a beautiful experience and you build a personalized recommendation engine of one, so best of all worlds. Because we have, as I said earlier, the most powerful sets of data. Global payroll, think about what that means. If you ask a CFO of a major company, global payroll has become the system of record because you're paying people money.
So unlike HR, global payroll has really become a powerful system of record. We have that. You add it to the other pieces of how much money you have savings in 401(k) or pensions, your benefits administration. But as I said in the beginning of our discussion, those are all today multiple logins and screens. They don't come together anywhere to say to you, "You're not saving enough. You're making the wrong decisions. Why do you have a high deductible plan?"
So those decisions now get relegated into one common platform. If you think about what I'm really trying to break, today, it's a billion hits a day on Google for health-related matters. Think about that. Do you think Google is the right place to go on who's my best doctor?
Josh King:
It gets harder and harder, for sure. So much is written about how search has become frayed and manipulated and you want that single source of truth. Sometimes you wonder when hit Mayo Clinic and Mayo Clinic comes up first on that Google search, maybe I could get a better source.
Stephan Scholl:
Well, but we also know how Google makes money. Somebody paid for that. Who's the best doctor in New York City? Somebody paid for that. It's not a trusted source of information, and that's the back what I want to break, which is go to the trusted source. We have the employer's permission to ask you really personal questions on your data. We manage your data already, and it's been proven. All right? We look at all the sets of data that are out there.
60% of Americans can't retire when they want. Anxiety and depression are at an all-time high. By the way, that's for all age categories. Teenagers are at a rampant raise. Just the article last week in multiple news outlets around the rapid pace of teenage social media concerns, where do you go to get help for all that? So Alight Worklife is the front door to really helping drive that wellbeing notion, and it isn't Google as a front door for that.
Josh King:
So you're now in year three of this three-year vision. What have been some of the bigger obstacles you've faced over that period?
Stephan Scholl:
Undoing 40 years of history. It's a little bit like cloud when I was at Infor with Charles and the team when we went to other places and said, "You should take your manufacturing, take the core mission-critical systems of your business, give them to me, and I'm going to put them in the cloud. We're going to run it better for you." Everybody said, "That's not going to happen." Everybody said, "That's impossible. I can run it cheaper. I can run it better. It's more secure in my environment."
Fast forward five years, not even, what's happened? Is that a debate today anymore? No. Everybody's in the cloud. Everybody trusts the datasets. Everybody realizes it's more secure. The same is true on the employee engagement side. Having old systems of record that are stored away in somewhere where you can't get at it, being siloed, not having access to it in the right way, not consolidating it, not having employers and employees build a better relationship on helping make better planning decisions, those are all more history views.
The go forward is companies have to step over the line and help employees make better decisions, and the only way to do that, letting history be its guide, is to take all those sets of data that you have and really help them make better decisions on benefits enrollment. Where are you saving your money? The answer is, it depends on your age, how old you are, as an example.
Josh King:
So if you're asking all of these sensitive questions, just give us a little peek how a company like Alight manages the security and confidentiality of all that information that employers are allowing you to ask for and that you are getting and retaining.
Stephan Scholl:
We've been on a multi-year journey to move our infrastructure to the cloud. So, as we've told our investors and others, step one of the front door moved to AWS and is in the cloud. Our back ends, our infrastructure is moving in by middle of next year. So, this time next year, we'll be out of all our own data centers and infrastructure. So all the belief that Alight had prior to my arrival was we can run it better. We can run it more secure. So we're adopting the standards of the industry like everybody else has, and that is being cloud-ready.
We have a very large CISO security department that really plays a large role in all that. But, by and large, we're not unique. We're not different, and we're adopting the great standards that Andy Jassy, when I worked with him at Infor before he was CEO of Amazon, we built all those things together because we were one of the largest AWS clients in the world back in '12, '13, '14 at Infor at the time, so leveraging all that history today.
Josh King:
You've coined the slogan, the era of the employee, to reflect how the pandemic has reshaped the workplace and challenged all of our corporate cultures. How has Alight adapted to maintain this positive corporate culture, especially with the shift to remote work and the challenges faced really by half-empty physical campuses?
Stephan Scholl:
The theme continues to be the one that I believe for our own people, and I see it every day, there's not one recipe of being in office or not. That corporate culture, having a place to go to feel what Alight is all about, the notion of winning and growing, so how do we communicate with our population, is one thing that's changed, opening myself up to our employees, building the communication link, all-hands calls, being on video.
We're no longer go to the executive tower of company A or B. It's you, as a CEO, are much more out there to employees, and that builds familiarity and trust with employees. And then there's the higher calling. We've been able to hire some of the best people in the industry because they understand the vision of who we are and they love the rallying cry of Alight is the platform company that will be the standard bearer for helping employees in America and their families stay healthy and financially secure.
Nobody else has that statement of what I just said as an opportunity. People are looking for in their careers that opportunity to be part of something special. We've hired thousands of engineers. We didn't have that muscle three and a half years ago. So when I looked at the business of what I had, I completely broke it up into a commercial orientation, salespeople, so the Oracle culture of sales, the Oracle Infor culture of product, hiring thousands of people in our engineering department, service delivery, program management, customer service, being amazing at delivering on customer projects.
People want to be part of that type of culture and capability to actually execute on our vision because many people have great vision or have great delivery, but very few companies have both.
Josh King:
So you were talking a little bit about this accessibility that you've had to establish with your employees, and I'm curious what beyond the all-hands calls and being on video, what you think the most effective mechanisms are and how does it challenge you personally to deal with your own employees the way you might deal with your family or your kids? I mean you and I were talking before we started recording about your background.
Part of your heritage is Swiss, part of your heritage is German, all mixed up into this Canadian product. But you don't necessarily think of Swiss and German as necessarily open and empathetic. You've got to probably have a different muscle working than where your background suggests.
Stephan Scholl:
Yeah. I mean at the end of the day, I took this job because I truly believed that it doesn't matter what business you're in, what you're building, what you're doing, if you don't have the people side by side with you arm in arm with the same vision, you're just not going to make it. I mean people said all those words, but people actually didn't give it service. I think that's what's been different here with Alight, the people that we've had.
It's been whether I look at my family history with my grandfather being in the war and hearing him talk about, "I hope this never happens in your lifetime," and having him talk through the history that there's no winners in this type of dynamic. I mean there's just so many lessons learned from teachers. I wasn't the most successful young teenager. I had to be sent to a quasi boarding school that had a lot of structure.
I won't use the word, military, because it wasn't military school, but it was a place where I had to go to learn to live with 20 other kids at 13 years old and learn how to get along with everybody, learn the EQ skills. Everybody gives IQ so much credence, yet the difference maker in everything I've ever seen is the EQ stuff. I think that's more to the forefront than ever before today, especially post-COVID.
Josh King:
Last year, Alight announced the creation of an inclusion and diversity policy including a commitment to publishing all your internal data. What are some of the findings from your 2023 report, and how do DEI initiatives like this contribute to Alight's overall success?
Stephan Scholl:
Diversity matters. Back to your German, Swiss, Canadian, American, now broaden it to Indian culture. When you think about our global engineering capability and the diversity not just of male or female, but of different cultures in building our next generation product and having usability studies on what would resonate in our Worklife platform products, some of the most wow moments and decisions on how people would use it have come from different parts of the world, even though we deployed Worklife as a platform in the United States.
The notion of staying healthy or financially secure is a global phenomenon. Last time I checked, in Switzerland, there are people suffering from anxiety and depression and mental illness. People in Germany do want a second opinion, even though they say many times, "Whatever my doctor says goes." We're seeing a lot more of them saying, "You know what? I don't know if I should do back surgery or not. Where can I go get this information?"
That insight into people's psyche and Japan and the Philippines' input into the design or design thinking of the future of Alight, so all that D&I elements have played into what's a very American product but very global in terms of opportunity ahead of us.
Josh King:
After the break, Stephan Scholl, CEO of Alight, and I are going to talk about how the Worklife platform can help companies streamline their business processes, improve the employee experience, and succeed during these complicated times. That's all coming up right after this.
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Josh King:
Welcome back. Before the break, I was talking to Stephan Scholl, CEO of Alight, about taking the company public, his career, and the philosophy that all CEOs should adopt. We were talking about employee wellness before the break, and a 2021 report from McKinsey put spending on employee wellness at about $1.5 trillion across the globe. Why do you think so much of this money has not been spent effectively?
Stephan Scholl:
When you think of the process of what an employee has to go through between I don't feel well. I go to the doctor. The doctor makes a bunch of recommendations. You come back to the office. You log into your system to find what am I covered for? You go through that process, trying to get a second opinion. You try to understand something as simple as knee surgery. I mean you look at our system.
In Chicago, where I live, there's a dozen knee surgery doctors within about two blocks. One is 3,000, and one is 30,000, literally, that much of a delta in service. Some people think 30,000 is better than 3,000. I would tell you the person that does 3,000 does it so many more times, has the skill and the capability, and is actually better served. So the lack of information, the lack of ... It's not opaque.
This whole system of trillions of dollars of healthcare and Alight is the front door because we adjudicate whether or not you should do the surgery, whether you should do physical therapy instead, whether this doctor is better than the other doctor, whether you can afford to take the time off. Do you have the funds in place in your HSA 401(k) systems to afford to do it? Do you have support at home? Are you single? Are you married? So all those things come into the recipe to know whether or not you should go ahead with that procedure.
That's the complexity because it's all these little rabbit holes, and yet nobody brings it all together into one comprehensive scenario for you to make an educated decision. That's the thesis of why we're so aggressive on a platform approach to bringing it all together into one place.
Josh King:
I mean so many rabbit holes, Stephan, and sometimes the rabbit doesn't live in the same home for their entire life. A lot of people point to the pandemic as this paradigm-changing moment between employee and employer. But you put the timeline back to the change in the relationship between the two, from this career-long commitment to basically a tour of duty.
How did the evolving understanding of the importance of tenure both change the game, and why do you think the pendulum might be swinging back?
Stephan Scholl:
History repeats itself a little bit. I probably would use the Boeing example. If you go to boeing.com, it's a total rewards offering. The history of Boeing is that you used to be whatever it was, 20, 25 years ago, you'd graduate as an engineer and you'd be proud to work your entire career at Boeing.
Josh King:
On the triple seven program from beginning to end.
Stephan Scholl:
Forever, right? You were proud of that moment. And then something happened in the '80s and '90s and, well, beyond that, where you as an engineer would have multiple jobs. You'd go out and say, "It's Stephan Scholl. As CEO of myself, I'm going to go out and work at multiple different places." We all saw in the 2000s what happened there. People had three, four, five, six jobs. In the pandemic, people became in tune with how fragile the world actually is.
It isn't just about base pay and variable and bonus. It is about setting myself up for retirement now. When I'm a graduate from university, I want to work with my employer, like Boeing, and set myself up so that in 25, 30 years from now I can retire. Tuition reimbursement, I'm going to start a family. I want to have multiple children. I want to have education paid for. All those kind of elements that are what's called total rewards or the wellbeing side of things, it's all coming back into vogue.
I see many employers looking at that as a way to keep the attrition low. I would say for high-skilled areas like engineers, nurses as well, you're starting to see more programmatic approaches to the total picture versus just here's your doctor for dental help and knee surgery and so on. It's that whole picture.
Josh King:
So I want to geek out for a second and actually understand a little bit the employee experience. Everyone agrees that navigating employee benefits, whether you're starting a new job or going through the open enrollment season, can be overwhelming. Can you talk a little bit about how Alight's digital front door approach simplifies the process for employees to access all of these things that we've been talking about?
Stephan Scholl:
Yeah. Today, those are all separate systems. I mean even the notion of onboarding when you start, in triplicate, fill out form X for benefits administration. Oh, now then you go to a separate form. How much do you want to, on your payroll, deduct for 401(k)? Well, are you going to put money into an HSA? Well, how do I pick between a 401(k) and an HSA? HSA has a lot more flexibility in terms of tax capabilities, but it allows you to pull money out for healthcare. So depending upon your age and where you are in life, HSA may be a better product than 401(k).
High-deductible programs were meant very specifically for a certain category of employees, but everybody jumped into high deductible. Why? Because it meant that I was going to pay less monthly fees. But if you actually got sick, how many employees, hundreds of ... I see it every single day where employees can't afford the high-deductible plans. So what happens? They wait. They wait until the next January year cycle. It's called the Q4 phenomena.
It drives CEOs that I know batty because they sit here and say, "You're telling me an employee in September is sick on a high-deductible plan and is not looking to take further care because they're waiting until that high-deductible plan kicks in again in January 1st? Who would do such a thing?" People who can't afford the high deductible. So it's educating people on you can't afford high deductible. You should pay a little bit more in your monthly payments to really afford the low deductible. You should put more money into HSA or a 401(k).
Those kinds of decisions are right up front, and retirement savings are such a key part of this right up front, early days.
Josh King:
Alight recently had a display installed in the lobby of this very building showing the user experience when using Worklife. How does the company ensure that its technology platforms are as they can be, and what steps are taken to facilitate this smooth transition to clients when you get a new client win and they're going to switch over from whatever the interface used to be to your elegant version?
Stephan Scholl:
This is where the good side of Google comes in and Facebook and others. We took the social media blessing and a curse a little bit with social media, but at least the blessing part of it is how beautiful and intuitive the experience is. Our UX designers, I'm a technologist at heart and, given my history at Oracle and Infor, I always believed in the engineering side of making it usable and simple. So Worklife is when you log into it, you will see it is a beautiful, intuitive experience because it has to be.
Now, it has an incredible plethora of capability and content when you're getting into payroll calculations, 401(k) calculations, HSA. The list goes on. So the power is a little bit of an iceberg type dynamic, beautiful, intuitive when you log in. I think the big thing about platform that is important here is what we talked a lot about earlier, that it is personalized to you.
At the end of the day, what you see is unique to you as an individual, whether you're new at PWC, whether you're a partner who's been there for 10, 15 years, you get to see it one way. If you're new out of college, there's a different experience coming out of college for you. That's just the right way to treat people, which is somebody who has a lot of history and a lot of experience, different complexities than someone in their early 20s coming out of college.
Josh King:
How does AI make that easy or better for Alight?
Stephan Scholl:
Because we take all the datasets, so we know your age. We know based on the fact that your offer letter came to you, we know your birthdate on there. We know your history. We know when you apply for benefits. It has all that personal information. We know your income. We know your savings rates. We know the history of your health. Given all those datasets, we can make a lot of recommendations on what should be your deductible.
Based on your income and based on your health, you can go to a high-deductible plan because we see very low risk in paying the higher premiums because you can afford to actually pay for it if it did happen. But based on your history of health, you don't need to do that.
Josh King:
You were talking about Boeing a little bit earlier. I mentioned the 36 million employees that your company touches across the Fortune 100 companies, like Boeing. But how does the company tailor its solutions, let's say, to meet the specific needs and budgets of a much smaller business while still providing the high-quality services that you extol?
Stephan Scholl:
I'm glad you didn't use the word, mid-market, by the way. I've never met a CEO who says, "Hey, Stephan, I'm a mid-market provider."
Josh King:
I don't like that term.
Stephan Scholl:
They all want to be the next Boeing. They all want to be the next Target. They all want to be the next United Airlines. The list goes on. So what we've done is we've taken what works for the biggest, most important companies in the United States, and then we packaged it up, pre-configured it. We don't do a lot of design work. We don't do a lot of ideation. We package it up into pre-configured solutions and, therefore, because you're not spending a lot of time upfront, that means the implementation work is a lot quicker.
So, the cost of setting it all up is much easier. Integrating it is not that complicated. And then running it, we basically have it in the cloud, which is much more cost-effective. So, as we know, smaller companies are very effective at adopting cloud-based type technologies.
Josh King:
We compare small companies and large companies. Let's compare places like North America and other locales around the world. What role do you think employers should play in facilitating access to healthcare and quality mental health services, especially in perhaps lower or middle-income countries where access to these services may be more limited than they are here?
Stephan Scholl:
Outside of the financial perspective of what we do with our platform, the number one cultural trait I want us all at Alight to adopt is that we can be that platform of change around the world around the category of mental illness and anxiety. With NAMI, North American Mental Institute, I was the keynote speaker, and we were the award winner of one of the best companies in America providing these types of services.
Now, I said the word, America. The word, wellbeing, is an issue everywhere in the world. It doesn't matter. Even the Dutch, when I spent in Holland, the most socially responsible programs in the world, they still ... I was at some of the big banks who are our clients. We serve the largest pharmaceutical companies in Switzerland who will spend whatever it takes, are struggling with getting their employees to be productive and to feel a sense of accomplishment.
Mental illness and anxiety touches everybody around the world. We're still early in Europe in that category, but we have a large footprint, given who we serve with global payroll and some of our products there. But that is with Worklife, we just launched five, six months ago, our Worklife platform for international markets, that content-rich capability of providing the services.
I think what's really interesting, back to that comment I had about trusting your doctors. They're now looking to us, and we're actually providing services in the United States for those doctors giving a second opinion to people in Europe. I think that's fascinating. The notion of that a second opinion isn't language-based. It's skill-based, and it isn't about whether or not it's part of my union codes or they're in my territory or they speak my language.
Figuring out whether I need that type of help, whether it's a surgery, whether it's psychiatry type services, connecting this wonderful, capable system here in the United States to a global network through a Worklife platform is a tremendous opportunity that's never been done. That's never been done at scale anywhere in the world.
Josh King:
My colleague, Doug Foley, is the chief human resources officer of this company, Intercontinental Exchange. What kind of analytics would he give someone like Doug so that they know what our employees benefits are being fully utilized, underutilized, or if their needs are not be being met? Let's put ourselves in the chair of a CHRO.
Stephan Scholl:
So we have, across the companies, 230, 240 million interactions across multiple channels. You calling me. You're on your cell phone. You're in your laptop. The list goes on. We have all the analytics to analyze what were you looking for? What transaction did you do? What was the outcome of it? What questions did you ask?
So we kind of package it all up and say, "We didn't service your employees well because they started here on the phone or they started on a desktop. We're asking a bunch of questions. Why were they even asking these questions when it's so obvious that they could have gone to Worklife? Or the content wasn't rich enough to help them?" So we give a full complement of what was the experience like for your employees? What's top of mind for them?
I mean one of the big banks up in Canada who I met with had 10 million interactions last year, and the CEO was flabbergasted and said, "What are my employees asking for 10 million type questions? What do they want to know that I don't know what I'm giving them is good enough or bad enough?" I think that's what we're getting really good at is taking those 10 million interactions and synthesizing it to here's what you need to do on planning. Here's where you can spend your money better. Here are the service offerings around whether it's mental illness.
A lot of people move to rural communities. Talk about just a perfect storm of complexity, people moving to rural towns, mental illness, anxiety, depression, settled in, and the capability of resources-
Josh King:
To your providers.
Stephan Scholl:
Where do I find a provider? And then even what's worse, what's the most expensive place to go to get help? A hospital. So costs for some of our biggest clients are going through the roof, and the service level is horrible in many cases because that's not what hospitals are meant for. You need specialized services. So that perfect storm of what was a good deed and I always say no good deed sometimes goes unpunished, the idea that moving to rural communities backfired on many big companies because they weren't able to provide the support in these communities in these categories.
Josh King:
This perfect storm that may be brewing that I think you're touching on is less services, fewer providers, but need for so many more workers and so much more talent. A stat that I've heard you use a couple times comes from a report from Korn Ferry, that's NYC ticker symbol KFY, that by 2030, Stephan, there's going to be a global human talent shortage of over 85 million people.
How are you preparing at Alight for that potential shortfall, and how close are machine capabilities to replace so much of the human-driven customer service that's needed to take care of those folk?
Stephan Scholl:
Back to the analogies of digital disruption in how clients deal with their customers, we're in the ninth inning on that in terms of digital transformation. We're in the third inning, maybe fourth inning, of how we do that same vision for our employees. So that's the opportunity that, while it's a challenge, that gives the capability. I would say that the companies who put employees first for the next decade at least will be the winners, not customers.
The companies that put employees first will be the winners in this next Fortune 500 race. It's fascinating. I mean the stats are all out there. I don't have to repeat them. It is amazing how fragile Fortune 500 is. Everybody thinks they've arrived when they've hit the category of Fortune 500, but yet who's in and who's out in the last 15 years is more disruptive than at any time in our history. I think employees are at the center of whether you will stay in that category or not.
Josh King:
As we wrap up, over the course of the conversation, we've talked about the recent evolutions and the nature of employment, but what do you see as the next phase of the changing landscape of work?
Stephan Scholl:
It starts with a generation of teenagers, and if we don't do right by them with this social platform issues of TikTok and gaming ... It worries me just for my own kids. I have lots of CEO friends and there's not one who can't afford any school or anything to support them, and we're all throwing our hands up and saying, "What do we do?" COVID created a generation of individuals who are just that different. Now, I don't want to characterize it as completely wrong or it's completely right what they're doing.
I would look at it as it's a crisis for me in my own home front to figure out how do I get my teenage daughters and my son to be outgoing, the EQ side of things, socially engaging, sports-oriented, grit? At the end of the day, when I use the word, EQ, passion and perseverance comes from engaging with others around you and getting that grit. That doesn't come from TikTok. That doesn't come from your cell phone at eight, nine hours a day that is in front of us.
So if we don't solve for that as a generation across not just the United States, but around the world, I think we're going to be in an interesting place.
Josh King:
Acquisitions have been a major part of your growth at Alight. Are there targets, not necessarily specific companies, but areas you're looking to buy into? For example, at the time of the IPO, only 10% of Alight's business was international. You looking to find people overseas that are going to help you grow?
Stephan Scholl:
100%. I mean, listen, there's a two-pronged strategy. One is more content. So if you think about a two-pronged platform, which is the front door, the place to go, what would convince you to come to our front door? The best content in the world. It's like Netflix, building their own movies. You don't have a front door for drama or action or horror. It's one front door. But I tend to love action. Netflix builds their own content, but also takes third-party content from other movie studios. It's kind of that perfect scenario.
So same for us. We bought leaves management in December, in Q4. That little piece of content, which is when starting a family, having a baby, you go on leave and you come back. That process is broken in most companies. That little piece of work or capability, I should say, is such a powerful piece of content, again, validating our strategy on platform. And then the other last piece of acquisition would be on the platform side, more analytics, more of that large language-model type work and capability to continue to automate our experience and bring better data to the table.
Josh King:
So final question then, what's your message to companies that are updating their offerings ahead of this open enrollment season to ensure that employees can get the most out of the non-pay aspects of their benefits?
Stephan Scholl:
For our largest clients, we've implemented our platform. Use it. Adopt it. Meet people where they want to be met, which is on a mobile phone. I still am flabbergasted today in some of the largest companies right here in New York City who I'm meeting with this afternoon, in some cases, who are still hiding behind security issues on why they don't want to give access to mobile phones for some of these services. That's so old school.
There's enough capability, and it frustrates people when I say this because I'm calling people out a little bit sometimes. But there is no reason why you can't meet people where they want to be met, which is on a mobile phone, consolidating the experience. A lot of companies need to step up and do that this year because what we've done is give them the capability to do it, and we're here to help them get through that. But that's the opportunity ahead of them.
Josh King:
Meet people where they want to be met. Well, you've met us here at the New York Stock Exchange. We're so glad that you were able to come in and spend some time with us inside the ICE House.
Stephan Scholl:
Pleasure to be here. Thank you for having me.
Josh King:
That's our conversation for this week. Our guest was Stephan Scholl, CEO of Alight. That's NYSE ticker symbol ALIT. If you like what you heard, please rate us on iTunes so other folks know where to find us. If you've got a comment, a question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet at us @icehousepodcast.
Our show is produced by Pete Ashe with production assistance and editing from Ian Wolfe. I'm Josh King, your host, signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you.
Announcer:
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