Category Archives: Uncategorized

Webinar Invite – Taking HR to New Heights


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For those employers interested, we are conducting a Webinar about HR and HR Technology that can change the way you think about HR. We guarantee you will hear a perspective on the market that will get you thinking. We have done this live and employers have said, “You made 4 or 5 points that I have never heard before.”

The market is changing and the opportunity to “Take HR to New Heights” exists. The problem is most employers don’t get there because of all the obstacles in the way. We analyzed the market and identified 54 obstacles to success. This webinar will expose those obstacles and provide an action plan to take HR to New Heights.

If you would like to attend please click on this link. REGISTER NOW . This is reserved for employers or partners of ProHCM only.

Webinar Announcement – Introducing HR/Benefits Technology 3.0 – A Whole New Technology Engagement Strategy for Benefits Brokers


I am conducting a webinar for benefits brokers that introduces HR Technology 3.0. If you are a broker and interested in attending click on this link here . The dates are June 3rd and June 7th at 12:00 EDT. This will be a good one that I have been developing for some time and have done a lot of research. If you are in the benefits business then I think this will be valuable.

Here is my overview.

Just when you think you’ve figured out the HR/Benefits technology marketplace, the market changes and a whole new HR Ecosystem arrives. What you thought was right just a month ago may no longer be as HR Technology 3.0 is upon us. With $2.1 billion in new investment capital coming into the business, it is going to come in like a storm. It is an opportunity for benefits brokers to approach prospects with a whole new idea that is intriguing, forward thinking, that can deliver outcomes in the HR area that few employers have realized.

In this webinar we are going to introduce HR Technology 3.0 and paint the picture of how brokers can bring this to market. We will even role-play the sales presentation that we think can create the wedge needed to upend existing relationships. The agenda is as follows:

What is HR/Benefits Technology 3.0?
How this changes the broker/employer conversation
What technology vendors will be the winners and losers?
What is the broker’s role in this new world?
Role play of a prospect presentation.

Zenefits CEO Resigns – In Comes the A Team


If you haven’t heard the news yet Parker Conrad, Founder of Zenefits, has resigned as their CEO. He has been replaced by David Sacks, the Zenefits COO and a Zenefits investor, who was a past executive at PayPal. You can see the announcement here along with a letter from the new CEO to the Zenefits employees here. http://www.buzzfeed.com/williamalden/zenefits-ceo-parker-conrad-steps-down-after-compliance-failu#.ragvaZeXZ

While the resignation of Parker Conrad may be a surprise to some this doesn’t surprise me at all. It is not uncommon for investors that pour $500 million into a company to eventually put in their own management team who may have more experience in running larger organizations. In this case you have a rapidly growing company in a very regulated environment whose CEO was not afraid to openly challenge regulators, call out his competitors on his website (unusual behavior in my opinion), and find a way to get into a lawsuit with a large competitor, ADP. I don’t know Parker Conrad personally and only met him once, so I won’t speculate as to his motivation, but as a business owner myself I don’t know how getting a lot of people “shooting back at you” would contribute to the growth of an organization. I would think it would be a big distraction. Let’s give Parker credit though. He is an outsider who came into the benefits business and started the fastest growing benefits brokerage firm ever.

In the letter to the employees David Sacks states, “I believe a new set of values are necessary to take us to the next level. Effective immediately, this company’s values are: #1 Operate with integrity. #2 Put the customer first. #3 Make this a great place to work for employees.” Those are his words not mine. It is clear that while Zenefits was seeing record growth their culture was not aligned with what the new CEO and others on the management team along with their investors more than likely had in mind.

So what is next for Zenefits? I have said in the past that the Zenefits investors were not going to wait around until things blew up. It is their job to protect the investment whether it is their own money or the money from investors that contribute to various venture capital funds. So what we have is capitalism in motion. And what comes after version one of something is version 2. And version 2 will be better. Zenefits will get much better. I think they will become one of the most efficient small business benefits brokers/technology companies in the industry. Their value proposition is strong and in great demand. They simply have to get better at it.

In addition to a new CEO the firm has added some notable members to their board including Peter Thiel, co-founder of PayPal. I have referenced Peter’s book “Zero to One” in a few of my past articles including Market Disruption is Coming to the Benefits Business and at it will Come from the Outside Not In”. Peter is focused on being different but not simply for the sake of being different. One of his quotes from his book is “All failed companies are the same: they failed to escape competition.” Zenefits will continue to try and avoid competition. I encourage people to read his book because it will certainly shed some light into the type of person and experience Zenefits is adding to their board and management team.

One thing I found curious is how the two articles I have read on this topic referred to Zenefits as a technology business for small businesses. In fact, David Sacks is quoted as saying, “I’m glad that Zenefits is one of the fastest-growing business software companies …. we help them (small business) achieve something larger than themselves, by making it easier to hire, onboard and manage employees.” It doesn’t say they help employers provide financial security for their employees by providing great benefits programs. The benefits advisory services still appear to be secondary to the Zenefits main purpose though don’t count on them keeping their head in the sand. I am sure their management team is well aware where their revenue comes from and will see even greater challenges in the event that small group commissions get reduced or even go away.

One interesting observation is that one of the main investors in Zenefits is Fidelity. Yes, the same Fidelity that recently entered the benefits business as a broker as an addition to their 401K business. I am sure their investment business is not that connected to their new benefits brokerage business but maybe there is more to it than one may think. Fidelity wasn’t in the benefits business and now they are in directly and through an investment in Zenefits. Is this a coincidence?

Zenefits is here to stay and is going to be bigger and better. And don’t think firms like Namely, Gusto, Paychex, and even ADP don’t take note of who is running Zenefits, who their investors are, and who is on their board. They know because it is their job to know. But Zenefits is not the only one. I hate to reference one of my recent articles again (well not really) but it was only a few weeks ago where I wrote, “Fidelity Enters the Benefits Business – Why Many Others Will Follow”. More non-traditional benefits brokers will be entering the business, and they will be doing so in droves. If you are a traditional benefits broker, I think you need to know.    

Fidelity Enters the Benefits Business – Why Many Others Will Follow


You may have seen the press release announcing that Fidelity has entered the benefits business as a broker. According to the Boston Globe “Fidelity will act as a broker, selling the plans of traditional insurance providers and competing against hundreds of other agents and brokers for that business.” Fidelity has been in business since 1946. Most know them as an investment company and 401k administrator but fewer know that they are also a benefits outsourcing firm and even have payroll services. Yet, in spite of being in these businesses for years, they decided to get into the benefits business now. One has to wonder, why now? And after Fidelity, who is next?

If you are a benefits broker this is big news but should also be viewed as another “shot across the bow” sending a signal to the market that this is not business as usual. First we have Zenefits – now Fidelity. Though these companies are very different and entered the brokerage business from different market positions and with different value propositions, I believe the market conditions driving them into the business are somewhat similar. So what are these conditions.

Employer desire to simplify. Employers are getting overwhelmed with technology, new laws, new benefits, and a changing workforce. They are looking for simpler solutions from fewer vendors. Both Zenefits and Fidelity are promising simplicity by combining things that have been delivered in silos in the past.

Demand for more and better outsourced services. Employers will be looking to outsource more services, especially in the SMB market, as the HR world gets more complex. Zenefits says just enter your new employee data and “we will get them on benefits. We will get them on payroll.” Fidelity already provides a broad range of HR, Benefits, and Payroll services and is now adding more.

Advance of Defined Contribution Plans (aka Private Exchanges) –We have all seen the articles on Private Exchanges. Fidelity has already developed the service infrastructure to support employees who are already making financial decisions with more options (401K). If I am an employee and now have five medical options will I have a place to call if I need some help to decide which of the five I should pick? Fidelity has the tools and the call centers to provide these services.

Financial Wellness in the Workplace – According to some statistics up to 40% of employees lose productivity at work due to financial stress. With defined contribution plans employees are given even more options often creating more stress. And we all know there is a lot of cost shifting onto the employee going on. The problem with such plans is they are too narrow in their scope. Most decision support tools take into consideration employee benefit decisions but leave out other parts of an employee’s financial life. Isn’t there a relationship between the medical plan deductible I should choose and whether or not I maximized my 401K contribution? Should I buy more Life Insurance or should I have a 6-month cash reserve first? In most peoples lives the type of car they drive is somewhat related to how big their mortgage is. You get the picture. Things that should be related are presently disconnected in the typical benefits model. Fidelity, by combining financial counseling or decisions with other benefits decisions delivers a more holistic approach to the decision process thus creating a higher probability of a better outcome for the employee. For the employer this employee may be more productive. Joe Laurin, who runs the health marketplace business at Fidelity, said in a telephone interview. “The real distinguishing point is this ability to bring the health and financial wellness together.” (Bloomberg)

The Broker Commission is in Play

One of the problems in the market is the employers are looking for simpler solutions, better technology, with “white glove” outsourced services, but they often don’t have the budgets. Zenefits has shown that the market is willing to change their broker to get these products or services. The benefits commission is in play and the whole market knows it. You won’t read this in any press release and most likely not from any Fidelity representative but this is a market reality that few talk about. That is of course, other than Parker Conrad, CEO of Zenefits, that will talk about it all day.

So Zenefits, Namely, Gusto and now Fidelity enter benefits brokerage business. They are not alone. I know local payroll companies and HR consultants that have gotten into the business too without the fanfare of these bigger firms. Why? Because benefits brokers compensation ranges from $25 – $50 PEPM while Payroll companies get $7-$10 PEPM – HR Tech Companies $5 – $8 – Benefits outsourcing firms – $7 – $14 PEPM – and HR Consultants fight for $150 – $200 per hour. I hear employers, and many times their brokers, complain about the service from their payroll company. I can guarantee you this, if they made $35 PEPM versus $8 PEPM their service would be much better. The reality of the market is that many employers will see a reallocation of their HR spend from their benefits broker to other service providers as a way to fund the technology and white glove outsourced services they desire. And if they don’t know they can do this someone will point it out.

What can other brokers do?

I have read many articles about how brokers need to “sell their value”. Value is not only a function of the product/service that the broker is providing but also includes the price for that service. This is the elephant in the room that nobody wants to discuss. How can one discuss value without price? I like the kid who plows my driveway. He even gets out of his truck and snow-blows places his plow can’t get to. But I also like that he charges me $40. If he charged $100 he would still be a great snow-plower. He just wouldn’t be mine.

These other vendors that provide products and services that are now in greater demand think what they offer is of great value too. Nobody is questioning whether the benefits broker delivers a valuable service. What is in play, and people are now challenging, is the price for that service. This is the real catalyst that will continue drive companies into the benefits business. To compete, traditional brokers will either need to sell their “value” with their price on the table relative to what these new entrants are providing, or start providing some of these new products and services that seem to be in greater demand. Think about a call center on nights and weekends. Brokers will want to silo off the benefits brokerage service but these other vendors are going to make every effort to no longer let that happen. The only thing that will slow this down would be a total market move to fee for service.

Fidelity is the tip of the iceberg. More press releases from companies that provide some solution in the HR, Benefits Payroll technology or services space will be coming in droves. Zenefits made noise. They are new and interesting. Fidelity is a whole new ballgame. All the comments about Zenefits can’t be applied to Fidelity. Zenefits was version 1. Most brokers are hoping they would go away. But what usually comes after version 1 is version 2. And version 2 is better. Now we have Fidelity – and things will get better.

I am just like Tom Brady


Recently, I found out that I am just like Tom Brady. Tom Brady is a quarterback. I was a quarterback in high school. We are/were both quarterbacks. Therefore we must be equal. Well, that was the logic used on me a few months back when I spoke to the owner of a benefit brokerage firm about using an HR/Benefits technology consultant.

Joe QB 2

He said he just hired a person, so he was all set. I know the person he hired. I am not going to say I am the Tom Brady of technology consultants, but relative to the experience of this person it is a fairly close comparison.

I know what it feels like to have your service or even yourself become commoditized.

As a technology consultant, I get calls all the time from brokers asking what I think about this or that vendor. I follow it up by asking what they are looking for and the answer almost always comes back as “a competitive advantage.”

Brokers too are complaining that their business has become commoditized. It is hard to differentiate yourself when you provide advice or some service. Just recently I was at my dentist getting a crown and before the dentist started she asked if I had any questions. I only had one and that was, “Are you any good at this?” I hoped she was.

While websites like Yelp or Angie’s List are resources for people to share their opinion on some product or service, there aren’t many people out there sharing their opinions on such sites about their benefit broker. And we aren’t Tom Brady, who has a many more opportunities in front of a few more people than you and I to demonstrate our differences or skills. Creating a differentiator to open new doors when you are an adviser without a big venue to display your talents can be a challenge.

I think this explains why many brokers are looking for some technology as the differentiator. It is much more tangible. You can put videos and pictures on your website. You can go to meetings and do demos. And after you get the client you can set up some system and hope that client is tied to you. But, from my perspective, this provides a false sense of security. As we all know, technology gets old. Today’s market leader will be outdated in six months. So then you are stuck with yesterday’s technology. And most brokers don’t know how their technology really compares to that of competitors. They move from being a good or great benefit consultant to a bad technology salesperson. Their shortcut to differentiation becomes a liability, not an asset. I have seen this way too many times.

Shiny new toys

Getting new business is tough. Having something new and shiny to open doors can be tempting. But the apple was shiny, too. From my perspective as a technology consultant there are opportunities everywhere to be different and solve real problems. As employers adopt new technologies they will need help implementing, integrating, optimizing, extending, communicating and training.
There are companies around the world whose businesses are all based around servicing some other product or technology. BASF didn’t make the product, “they made the product better.” That opportunity exists in the benefits business. However, developing the service model and then marketing it takes a real lot of hard work and is not as easy a selling the shiny new toy. But as the old saying goes, if it were easy then everyone would do it. And everyone has the shiny new toy.

Tom Brady and I are/were both quarterbacks, but that is where the comparison ends. I guess if I put on a Patriots uniform and ran out on the field with the team some may think I was a professional football player, until of course, I had to perform. So, I, like many of you, need to find better ways to differentiate or even ways to simply display my skills. The opportunities are out there. Don’t let the shiny new toys distract you from finding the real solution.

The Demise of Small and Mid-sized Benefits Brokers is Greatly Exaggerated


There is the belief out in the benefits world that the small to mid-sized benefits brokers will either struggle to survive or not survive at all. With Obamacare, Private Exchanges, ACO’s, new competitive threats, it simply will be too difficult to change one’s business to succeed, or so some believe. I disagree. Not only do I disagree but sometimes the market changes in a way where small to mid-sized businesses may be better positioned for success.

Let’s start with the idea in general that small to mid-sized firms won’t survive. Why would this be the case in the benefits business but not in any other industry? There are small law firms, accountants, restaurants, hardware stores, and breweries. Heck, I am managing my in-laws independent pharmacy that continues to be profitable year in and year out. And my business bank is a local bank that has only one location. Sure, there are some industries like large manufacturing where the barrier to entry is real high such as the automobile business, energy, or aircraft manufacturing. But that is not the case with the benefits business. It is primarily a service industry and I have a hard time thinking of a many service type industries where all the small firms were displaced by the larger ones. I have seen both larger and smaller firms displaced by firms with newer technology, but let’s leave that for another article.

According to the census bureau there were 6, 634,155 businesses in the U.S. in 2010. Of those 3.8 million were firms with less than 10 employees, 10 – 99 had 1.3 million, 100-500 had 1.65 million, and for companies with 500+ employees there were 1.1 million firms. What these stats are saying is that the majority of employers are small to mid-sized businesses (less than 500 employees) therefore the majority of a benefits brokers customers and prospects are also small to mid-sized employers.

Small to mid-sized employers are proud of what they do. In fact, many believe they do whatever it is they do better than their larger competitors. If you were to ask the average small to mid-sized business owner how they are better they would say things like “we provide more personalized service”, or “we can adapt faster to client’s needs or market changes”, or “we are more vested because we own the business”. You see most businesses in general are more like the small to mid-sized broker than they are like the larger broker. Think of this for a second. If everyone did business with only the largest companies in any industry both you and your prospects or clients would be out of business. A small business owner may appreciate that perspective.

In some situations small to mid-sized firms have an advantage. A good example of this is how quickly firms have responded to the competitive threat of Zenefits. It is my experience that the mid-sized independent brokers have been able to respond faster than the larger ones. When Zenefits says we will “help you with payroll” many larger brokers say “we aren’t touching payroll”. While independent mid-sized brokers are making changes quickly to meet the demand larger firms are asking permission of their attorneys and compliance people. It doesn’t matter whether you are big or small we don’t get to make the rules of the game and sometimes the market will go in a direction that may make certain firms feel uncomfortable.

This article is not taking sides. Small and large businesses can be displaced. Whether you are big or small you need to provide something that is valued in the market. But, you don’t get to make all the rules. Big brokers can’t say, “We don’t want to do that”. Well they can but they won’t get the business. Smaller firms have to find ways to deliver what larger firms do or find other ways to differentiate themselves. And when you are talking to a small to mid-sized prospect ask them how they are different from their bigger competitors. When they say that they provide more personalized service, adapt faster to market changes, aren’t afraid to take chances, etc… just say, “well I’m just like you”.

Aetna buys bswift: Why benefit brokers must pay attention


More news from the technology front: Aetna acquires bswift. Last year, it was Towers Watson buying Liazon, now Aetna and bswift, and next year it will be someone else. Under the radar a little bit was the Oct. 16 Hodges-Mace announcement of their SmartBen acquisition. It doesn’t carry the cache of Aetna or Towers Watson, but it was still a market move. Is this just beginning of the dance where everyone needs to choose a partner? And what does this mean for the benefits market and the benefits broker?

For some, this acquisition may be strange. Aetna buys a company that provides technology used by their competitors. The bswift enrollment platform handles enrollment for many employers that don’t have Aetna insurance. Towers Watson bought a company distributed by their competitors, other brokers. What most people aren’t realizing is that the world has changed. In many industries companies that compete in one market segment may be partners in another. If you view this acquisition in the old world where competitors don’t work together you may see it one way, but in a new world it may look a little different.

My message to brokers on this is to start thinking differently. Those who don’t will get left behind. The rules of the game are changing and you don’t get to make all the rules.

I have been fortunate to have worked in some capacity with Mark Bertolini, CEO of Aetna, and Rich Gallun, CEO of bswift. Both are outside-the-box thinkers. Aetna has invested billions in technology preparing for what they view as a consumer-centric health care model. They want to reinvent the patient experience. To quote Bertolini, “We’re going to begin to change the health care industry by giving people tools they can put in the palm of their hand.”

Here is another quote from Bertolini that would make brokers pause. When asked about the future of health care, Bertolini responded: “There wouldn’t be plan designs. You wouldn’t need them. What you would do is invest in all those things that are necessary to keep people healthy.” You can see a full overview of the Aetna model by viewing this presentation from their 2013 Investor Conference.

More than a business move

Some may think this is an acquisition of a benefits enrollment platform by Aetna. But I see this as another step by Aetna to execute on a plan to compete effectively in a new health care world. A world where consumers are in more control. Where provider systems are engaged in a patients wellness and not just proving treatment after the fact. A world where health information and communication is moved via Web and mobile.

In this case, bswift made a strategic move into the consumer centric world through their private exchange technology with individual rating and decision support tools. Now it has paid off. This made them attractive to Aetna. Congratulations to bswift for a job well done.

So what does this mean for benefits brokers? A few weeks ago I wrote an article titled “Does Apple’s HealthKit signal the end of employer-based insurance?” Some may not relate Apple’s investment to the Aetna acquisition of bswift; however, I think they are related.

Apple is clearly one of the top consumer technology vendors in the market. Aetna is driving consumer centric health care. They are pieces of the same puzzle. It is a puzzle benefits brokers need to pay attention to because the market is changing around them. A carrier buying an enrollment vendor says one thing, Aetna’s and Apple’s investments mean something different. In a not-so-obvious way the health care world is changing in a way that most brokers are not recognizing. Consumer-centric; mobile; doctors as wellness facilitators; employers out of the risk business? Maybe. So get ready.