Paycor – Case Study

paycor hr software

History of Paycor

Bob Coughlin had spent the first part of his career at Automatic Data Processing Inc. (ADP) selling payroll software before moving onto other industries. When he kept running into old ADP clients, telling him about how customer service had gone downhill, he knew he had an opportunity. In 1990, Coughlin started Paycor with the objective of differentiating themselves through great customer service.

Today, Paycor partners with 40,000 small and mid-size organizations across the globe. Their cloud-based HR software is designed with industry-specific focuses for education, healthcare, manufacturing, nonprofits, restaurants, and retail. They also provide role-specific solutions for CFOs and other HR professionals.

Human Capital Management Software Industry

The Human Capital Management (HCM) Software industry has experienced annualized growth of 10% over the past five years. This $9.9 billion industry has been propelled by the increase in corporate profits, which companies have used for investments into software upgrades and in-sourcing.[1] The industry’s strong profit margins have also encouraged new entrants into the market. New startups have raised more than $500 million in funding over the last five years.

As the industry continues to grow at an annual rate of 7.8%, companies will shift their focus to small and medium businesses. In the US, businesses that employ less than 500 individuals account for 99.7% of the 5.6 million employer businesses. Due to their size and restricted capital, these smaller companies are incentivized to find low-cost ways to manage HR in-house. Industry incumbents will also focus on this market as their existing target customer segment becomes saturated. Other trends driving growth include the migration of existing companies to cloud-based software and the adoption of software as a service (SaaS) model.

Industry Competitors

The HCM software industry has traditionally been dominated by large software companies that focus exclusively on HCM. These industry leaders include Workday, ADP, Ultimate Software, and Intuit, who all collectively own 60% of the market share by revenue. The remaining market share is composed of smaller HR-focused software companies and or other dominant software companies who have HR product offerings. For example, SAP is one of the largest Enterprise Resource Planning (ERP) software players who have a separate HCM offering called Success Factors.

Paycor Business Model

Paycor is an HCM software company that serves small and medium-sized businesses. Their products and services span across almost all human resource functions including payroll and tax, applicant tracking system, benefits administration, learning management, time and attendance, and reporting and analytics. The industries that they focus on include Education, Healthcare, Manufacturing, Nonprofit, Professional Services, Restaurant, and Retail.

As a SaaS company, Paycor generates revenues through monthly subscription fees for its service. Fees are structured around the number of employees and the product features or modules that the client wants. For example, it may be $99 per month for 10 employees for the basic package versus $149 per month for 15 employees and benefits administration.[2]

Paycor’s clients, which are small and medium-sized businesses, benefit from HCM software as it streamlines its HR processes to provide efficiency and compliance. For this target segment, HCM SaaS is valuable for handling the necessary HR tasks where outsourcing is too costly. Furthermore, as the labour market becomes increasingly competitive, there will be an increase in administrative overhead for talent management. This only further supports the need for a cost-effective and efficient way for HR to manage all its functions.

Paycor Success Factors

Paycor competes in a segment of the market that has historically been under-served the dominant players in the industry. Large HCM software companies build their business and operating model around servicing multi-million dollar clients who have thousands of staff. These companies have the capacity within their organization to implement the robust systems that these companies provide. Small and medium-sized businesses do not have the same resources and their immediate needs are simpler. Having grown the business for this segment, Paycor is positioned to be able to deliver both the product and services that meet this segments’ needs.

Having focus on certain industries also allows for Paycor to develop a product offering that fits better for their clients; their teams can build and release product features for these industries at a faster pace, allowing their clients to adopt new features and realize benefits quickly. Products offered by the industry dominant players are built to cater to a wider audience, which can alienate the unique needs for certain business types and how these small businesses grow.

Take our free personal annual plan course today!

Paycor – Looking Ahead

Over the next five years, Paycor will need to position itself as the preferred small and medium business HR software partner. They can do this by focusing on specific industries that are experiencing growth in net new businesses. In the current competitive landscape, there are too many companies that provide similar product offerings with very little differentiation. Furthermore, as large companies both inside and outside the HCM industry, such as Workday and SAP respectively, expand their product offerings into the small and medium business space, existing players will have their competitive advantages competed away. By focusing on a certain industry through partnerships, Paycor can become the HR market leader in that industry.

[1] Dan Cook, “HR & Payroll Software,” IBISWorld, August 2019, accessed April 28, 2020.

[2] Prices are illustrative examples and are not actual Paycor prices

Related posts

Differences between Millenials and Gen Z in the Workplace

Differences between Millenials and Gen Z in the Workplace Key Takeaways   Millennials and Gen Z prefer to be in…

When Billy has a problem with Susie AND with Bobby AND with Janie...

This week I was approached by a guy who I hadn’t seen in years.   He immediately cornered me and told…

Are You A Good Person?

Today I want to share some basic wisdom.  Wisdom about living life at work and at home. Our default is…

Ready to get started?

Learn how to get people right with our practical curriculum taught by instructors with real-world experience.

PLI-Cert_Leadership Fundamentals_
Scroll to Top