Tag Archives: HR Technology Advisors

What Sport is Your Benefits Business Playing?

Posted on December 19, 2019 | Leave a comment

NOTE: This was written in 2016 but don’t think I ever published it.

With firms like Fidelity entering the benefits business, others like Zenefits and Gusto raising tens to hundreds of millions of dollars, and the national firms continuing their rapid pace of acquisitions, one must wonder whether the benefits game is changing in a bigger way. Is all this money resulting in an improvement in the business? Are the rules of the game changing? Not only the rules, but one must understand what league they are competing in. And if the rules and competition change can one continue to compete? Is the price to compete greater than many firms can afford?

In business as in sports it is important to understand the rules of the game and what league you are playing in. How you staff your team and how you play the game will change as the rules and competition changes. And as we all know we don’t get to make all the rules and control how the competition plays the game.

To compete in an individual sport like golf you need a single talented person. In basketball, you need anywhere from 7-10 skilled people. In baseball, the number is around 12-15 while in football you need 20-25. At lower levels of competition, you generally have athletes playing more than one position. In high school football, I played quarterback, safety and was the kicker. In college I was the 5th best QB so I became a safety, and my kicking skills were such that nobody would have ever called me a kicker. At the professional level, you have very specialized skills and the number of skilled athletes you need to win is even higher. Some NFL teams even have two kickers, one to kick-off and another to kick field goals. At the professional level, you need 40 – 50 quality players.

In some businesses, all these rules also play out. To compete at the highest levels, you need more players with more specialized skills. Smaller firms have fewer employees often playing multiple positions. I heard this the whole last quarter where people would say, “I’m too busy, call me after the first.” So, their 2017 plans are on hold because they could not handle fourth quarter business while planning their 2017 or even starting their marketing or sales efforts. They are playing baseball with 5 fielders and don’t recognize it. Others however, in larger firms, have staff making their 2017 plans and do have the time to start their marketing and sales efforts. They have 9 players and a bench creating a competitive advantage.

How many benefits brokers wear the hat of the sales person, the finance person, marketing, and even service? In these firms, it is not possible to deliver the results that larger firms can deliver simply because of number of resources and skills needed to compete. Some larger firms also struggle because they have the numbers but because of their structure they don’t properly leverage their size or skills properly. I once spoke to a producer in a national benefits firm creating her own brochures. Certainly, not an effective use of time or skills. I am also quite sure the marketing piece did not have a professional quality.

I always felt that lead generation or telemarketing is a very different skill than sales or benefits consulting, yet in many benefits firms the person who dials for dollars is the same person that makes the sale and then does the consulting. They play the QB, safety, and kicker. And speaking from my own experience, most often not very well.

I started creating a list of all the things a benefits firm can do for themselves, their customers, and the employees of those customers, that would be of value that most brokers simply don’t do or struggle to do. If I were to start a benefits firm from scratch today this list would be my opportunity to be different in the market. At this time my list has 54 items on it. I know many benefits firms across the U.S. yet I can only think of one firm that is executing on many of the items on my list. A few others have the ability to do so but more than likely lack the vision. So, I believe the opportunity still exists.

With new entrants to the market looking to disrupt the current benefits community and driving desire to win I don’t think my 54 items will be a secret forever. The bar will get raised and raised again, in a way that the price to compete is more resources and more specialized skills. This often means more money. It can be equivalent to the difference between playing high school football and professional football. My quarterbacking skills would not have won me any games against the pros.

The benefits game may be changing faster and in more ways than people think or see. Sometimes these things sneak up on you and if it does you could be caught off guard, ill-equipped to respond competitively. There will surely be changes coming to the healthcare market from the Trump administration. These changes may be much different than most anticipate.

This benefits game may no longer be a golf event where a single skilled player can compete. It may not even be a basketball or baseball game where 5 and 9 players are adequate. It may require the army of a professional football team with 53 highly skilled players. The increased competition in sports and business is all around us.

You can choose to compete in places where there is less competition. Many assume this is in the small group market but there are a number of new competitors going after that business too. You can sell your business. You can also choose to build your team. To do so you can raise money and hire a team like Zenefits and Gusto. To do this you will need a unique product or value proposition that can scale. You can grow organically like a Fidelity or a Paychex but that takes capital, risk, and time. Alternatives would be sharing resources with your peers as we do at N4one.

So stop stocking your shelves with new technology tools or looking for that new idea at some conference. The technology vendors want to sell to everyone so you won’t end up with anything unique. And I couldn’t imagine finding some grand idea at a conference. I certainly wouldn’t share our secrets at some conference. Even if you found some grand new idea, getting this idea to market effectively will require resources that many benefits firms don’t have. The place to start is with a vision and a plan. Or you can call us at N4one. We have created a plan. Built an army. And we have 54 things or more we are doing that most others are not.

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Posted in Employee Benefits Distribution, Health Care, HR and Benefits Technology

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What is the Speed of Your Benefits Business

Posted on July 31, 2017 | 1 comment

I often wonder why the benefits world is so slow to advance new ideas and new technology. I have been in the business for over 30 years yet have seen very little evolution relative to other industries. In my personal life, almost everything has evolved. The way I do my banking, communicate with friends and businesses associates, book an airline ticket, turn lights on and off in my home, pay at Starbucks, or get around a city, have all changed. Things are easier. Yet, for the most part, the benefits business is almost still the same as it was when I got in the business in 1986. Up to this point lack of change has not significantly impacted those in the business. I think that is about to change.

I started my career in finance at General Electric where the CEO, Jack Welch, was good at putting things in perspective. One quote has stuck with me and that is as follows:

“If the rate of change on the outside exceeds the rate of change on the inside, then the end is near.”                                  Jack Welch

Since I have been running a business I have heeded that advice. We try hard to change with the times and it isn’t always easy. I would say it is never easy. But we haven’t sat still.

With all the attention to health care and health insurance in the U.S. I have spent a great deal of time researching the market so that I can make an educated guess as to where the market is headed. What I have seen is that the outside world, (outside of the current benefits market including carriers, brokers, TPA’s etc..) is moving much faster than the inside world. If you only looked on the inside; at broker and carrier conferences; read benefits magazines or blogs; or listen to one’s buddy in the business; you would miss what is going on outside. The outsiders don’t care about the insiders. Unlike the past 30 years, new technologies, new business models, significant capital, a populace looking for better solutions, and government debt that is unsustainable, are the catalysts for change that exist today and not at any time in the past. Things are different.

A changing health care market is right under everyone’s nose yet many don’t see it. The Apple Watch, an Amazon Echo, Bitcoin and Blockchain technology, Artificial Intelligence and machine learning (highlighted on 60 minutes) all can be the foundation for huge changes. Never mind simple things like video conferencing, online chat and text messaging, and bots.

A few years ago, some benefits organizations started pushing Private Exchanges as some new idea. I wasn’t buying it. I sold similar plans in 1987. Many think they are offering some game changing idea, but most are simply different packaging of the same thing.

In the benefits business, small brokers may not have the capital to make the changes needed to keep up with the outside world. Many larger firms appear to be building moats around their businesses hoping the outside world won’t touch them. And as the old saying goes, it takes a long time for a big ship to change its course. The outsiders will just go around or over the moat anyway.
One doesn’t need to invent everything to have a sustainable business in a changing market. You may be able leverage the tools or resources invented by others to compete effectively. But all this change is not easy. Yet we all know that “Hope” is not a strategy.

So, look around and not just at your competitors or at some broker conference. When your Apple watch gives you your pulse. When you talk to your Amazon Echo. When you video chat with your son or daughter. When you turn on the air conditioning in your house from work. Wonder why this isn’t happening regularly in the benefits business. Is the outside moving faster than your inside? If so, well hoping Jack Welch is wrong is probably not a good strategy.

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Posted in Agency Operations, Employee Benefits Distribution, HR and Benefits Technology

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Are You Too Comfortable to Change?

Posted on August 12, 2016 | Leave a comment

I don’t hide the fact that I think the benefits world is going to change. And when giving presentations I often refer to a quote by Steve Case from his book the Third Wave that states “Incumbents often fail because they underestimate the speed at which the future is approaching.” But something became evident today when talking to a broker about some of the changes going on in the industry when I realized that he simply did not want to change. More likely he didn’t want to take risks. Not everyone is a risk taker. In fact, very few take big risks.

I have heard at least once, or maybe a hundred times, that benefits firms are struggling with organic growth. The thing about the benefits business is that it is getting commoditized. I hear it all the time. I don’t always hear it from the business owners or the producers living off of a block of business and referrals, but I do hear it from the young producers who are dialing for dollars and knocking on doors. They are begging for differentiators but often the owners are living in a different world. And from the owners’ seat many don’t see the different challenges between what the veterans and what the rookies are facing as it relates to the competitive market.

To be competitive in today’s world it is important to change. To have a unique value proposition that is not easily duplicated is important. But change often requires taking risks. As Mark Zuckerberg says, “In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”

The thing is few want to take risks. I have pointed out new competitive threats many times to brokers who did not act until they lost business. In fact, over 50% of our new clients lose business after hearing about a competitive threat and not taking action. Losing business is a pretty big motivator. Yet most won’t act until they feel the pain.

I had one broker tell me his clients or prospects didn’t want one of the new HR technologies. I couldn’t imagine every firm in his market thinking the same thing. Anyways, what I didn’t tell him was that the reason I was calling him was because I was working with an employer that told me she decided not to choose him as a broker because of his technology strategy. Brokers often know why they lose clients but often don’t know why they lose prospects, which was the case here. Do you know why you lose prospects?

I have had people read my articles and ridicule me because of the message. Often I am just pointing out that there are some out there who say the benefits business is going to change. Zenefits, Gusto, and Namely are changing it. The CEO of Aetna says it is going to change. The government may also want it to change. All are a threat to the status quo. Sometimes I think that people don’t want to know these things. It is like having a lump in your side and you don’t want to check it out because you may think something major is wrong. If you ignore it, it will go away. Well, I don’t think so.

Change doesn’t happen because you wake up one day and say “I’ve changed”. And change doesn’t happen because you stock your shelves with a few more products or services that are easily attained by anyone. I see many people “pretending” to change but not really changing. And I say, “not really” because the changes I imagine brokers need to make aren’t easy. Many brokers are choosing “easy”, thinking they have made big changes. If the change doesn’t make you feel uneasy. If it doesn’t appear to be very risky, then many will do it, and they do. Then you are not unique.

Personally I think there are big opportunities in the benefits business. I would say more so that I think there are big opportunities in the human capital management business of which the benefits is a piece. But to capitalize on those opportunities one must change. And this change requires taking risk. Big risks.

So you can stock your shelves with new toys. You can do all the sales training in the world.  But what if insurance commissions were cut in half on January 1st?  What if the government made individually based health insurance tax deductible? What if Zenefits, Gusto, Namely, and Paychex are right and employers will switch brokers for HR and Payroll technology and services? That would require the type of change I am talking about. And if some of these things happen and you “underestimate the speed at which change is approaching” could you survive?

I don’t want to over-generalize but I think we have an industry where taking big risks isn’t the norm. Protecting the status quo is. But there are big opportunities for those that really want to take some risks and Challenge the status quo. Feel a little uncomfortable. Work a little harder. And have a lot of fun along the way.

I am going to finish by saying our new business, ProHCM is all about challenging the status quo. It is taking a big risk. It is different, very different. We are betting on and preparing for a future that may be approaching faster than most anticipate. I am looking for the blue oceans. So I will finish with a quote from another FaceBook employee, the COO, Sheryl Sandberg, “If you’re offered a seat on a rocket ship, don’t ask what seat! Just get on.” It could be fun.

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Posted in Agency Operations, HR and Benefits Technology, Zenefits

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Don’t Sell Lawn Tractors When They Want Landscaping

Posted on August 7, 2016 | Leave a comment

I have written many articles and have spoken at many conferences about HR/Benefits/Payroll (HCM) technology and services and how the coming changes are going to impact the benefits business. I often have used a lawn tractor/landscaping analogy to make it easier for the audience to understand some of the key points in my position on the market. Yet, just the other day, a person who I have spoken to several times in the past, made a statement to one of my salespeople that would indicate that he really did not understand the concepts I was espousing. So I have decided to put these concepts in print so it is accessible at any time. If you have heard me speak before or read some of these blogs it may get redundant but at least I warned you. This may also get long but I do want to cover all the details.

One of my first articles around this concept was when I wrote an article about Zenefits titled, “If You Want Results Like Zenefits You Need to Mow the Lawn”. My key point was that I felt brokers were viewing the attraction of Zenefits the wrong way. On the surface it may appear the attraction was free HR Technology in exchange for the benefits business. When I looked at their marketing I concluded that what they were selling was the idea of making HR easier. They were promising “worry-free”. I like to say they were selling life preservers to people drowning in HR administration. And the analogy I used was that if I wanted to mow my lawn I could either buy a lawn tractor or lawn mower, or I could hire a landscaper. If I hired a landscaper I would go to work and then come home and my lawn would be done. A landscaper would sell me “worry free”. When I hire a landscaper I am buying a service, not technology. On the other hand, if I bought a lawn tractor I would need to fill it with gas, learn how to drive it, and mow my lawn once or twice a week. Lawn tractor is a technology purchase while landscaping is a service purchase.

In the HCM technology and administration market I think there are different types of buyers. There are those that want to buy technology to manage their HR and there are others that simply want someone else to do it. One may want a lawn tractor and the other wants a landscaper. Or you could be like me that uses a lawn tractor to mow my lawn but a landscaper to fertilize, do spring and fall clean-up, and plow my driveway in the winter. Employers may use technology for some things and want to outsource other services. Or they may mow their own lawn until they go on vacation and have someone mow it while away. Different people have different needs.

The comment the person made to my salesperson was that he thought at my company we only represented one technology vendor and he wanted to represent the market. I guess what he did not understand was that at HR Technology Advisors we provide different services. We have a technology consulting business, where we help employers find the best technology (find the best lawn tractor) but we also have a landscaping business. To stick with my analogy, if you were to have a landscaping business you would need lawn equipment. And you may need to choose between a John Deere, Toro, or whatever else is in the market. You may also have more than one. For larger lawns you use a John Deere commercial stand-behind 50-inch lawn tractor but for smaller lawns with tighter spaces you may use a Toro 20-inch push lawnmower.

Recently we launched a new business, ProHCM, to put the focus on the services. The best way I can describe it is that at HR Technology Advisors we helped over 1000 employers find the best lawn tractor (HCM Technology solution) through 40 different vendors. We have been agnostic. ProHCM is our landscaping business. If an employer simply wants someone to do the work, we can do it. We can manage their payroll, support HR, or do whatever it takes to help the employer in the HR area.

However, we also have a lawn equipment repair business. In the process of consulting employers on technology, one option is to fix what they have. So, we help employers fix their current technology. And if you were start a lawn equipment repair business it would be smart to learn how to fix the lawn tractor that is most widely used. You will get more customers that way. In our business that is ADP. When we fix ADP for an employer we aren’t helping ADP. We are helping the client who has already purchased ADP.

In the HCM technology space there is a big disconnect between the technology sellers and the buyers. The sellers are essentially selling technology with Payroll services but the buyers are thinking their getting a landscaper too. They think that they are buying services well beyond what is being sold. This has created another gap in the market that few are seeing. It is actually this gap that prompted the forming of ProHCM. So part of ProHCM is to provide services to fill the gap between what the client thought they bought and what they really bought.

I often show the example of how we add content to an employer’s HCM platform to help communicate benefits better to the employees. The HCM technology vendors provide benefits communication technology but they don’t provide the service of adding the content to the employer’s system. And they also don’t create the carriers content. So we have a service that adds benefits content onto the HCM platforms. It is a service. Once again, we aren’t helping the technology vendor, we are helping the employer communicate benefits to their employees.

Then there are the employers that have bought their lawn tractor (HCM Technology) but don’t know how to use it very well and need help. Recently we had an employer using ADP technology whose payroll person quit. They had the ADP lawn tractor but the person internally who mows the lawn quit. Our service supplies them with a person to process their payroll using their technology until they hire someone new to pick up the work again. They needed a landscaper to mow their lawn using the lawn equipment they already purchased. Once again, if you are going to provide the service of managing someone else’s payroll what system would you get to know first and best? You would know the one that more employers are using. If you were to write an app for a smartphone wouldn’t you write one for the iPhone? It would be smart. Apple has lots of customers.

The services under a landscaping business can vary tremendously. Some people just mow lawns. Others will edge, trim hedges, fertilize, and do fall clean-ups. Some will also handle sprinkler systems and others have landscape architects available to do design work.

In the HCM technology and services business the same is true. There are those who provide benefits outsourcing and others that provide HR outsourcing services and payroll too. Some like Zenefits, Gusto, Namely, and Paychex have added benefits advisory services to their menu. Smaller employers will more likely look for a single source for these services to make it easier, but also it is often cheaper to do it all under one roof too. Simpler and cheaper is often a popular formula for business success. It attracts lots of customers.

Some brokers don’t want to provide all the services. That is Ok, as long as it is Ok if a certain percentage of the market is no longer considered a prospect. I think more and more small to mid-sized employers will be looking for a single, or fewer sources, to manage their HR. And we all know that there are many larger employers who are understaffed and need help too. From my perspective, as the HR world gets more complex, the demand for these outsourced services will expand.

Some brokers have partnered with some payroll or HR company down the street. I think that there is a difference in how a buyer would perceive the value from a firm that brings in all kinds of third-party vendors from those that “own” the outcome. There is a difference in selling someone else’s stuff versus selling your own. I wrote about this in my article titled, “An Arms-length May be the Distance Between Winning and Losing”. First, there is the accountability thing. Second, it is often more expensive to buy these services in pieces versus buying them together. Many firms, and not just the Zenefits and Gusto’s of the world, provide lower prices for some products or services if the benefits BOR is included. Brokers have been doing this for years with benefit websites, HR Libraries, HR call centers, benefits enrollment systems and more. It is not Zenefits that created the great “giveaways” in the benefits business.

ProHCM provides the services that brokers may not want to provide such as answering a payroll question or providing an employee to manage their HCM technology when someone quits. There may be a time when the broker may need to provide a service more core to the benefits business that on their own can’t afford to provide such as a benefits call center on nights and weekends. I could go on and on with examples of services needed today or in the future that may require an investment and scale.

I guess the last point I will make is that selling lawn tractors is much different than selling landscaping. Think of what you say when selling me a lawn tractor versus selling me landscaping. Pause here and think about this. It is much different than selling landscaping. If you were to sell me landscaping would you take me out to the driveway and ask me to see your lawn tractor or to “demo’ it? No. They don’t care how you mow the lawn. They want it done right.

At ProHCM we have multiple lawn tractors for our landscaping business. One for smaller employers and another for larger ones. When someone hires us to find the best HCM technology we don’t show them our landscaping business. When someone wants landscaping we don’t demo lawns tractors. I don’t think there is a conflict. They are simply different. I don’t think someone who has a landscaping business thinks that someone who sells lawn tractors is a competitor or vice versa. They understand the difference.

I would contend that the biggest problem Zenefits had was that their sales pitch sounded like they were selling landscaping but they then delivered lawn tractors. Some people will accept and run their own technology but many others will need help. Those employers either not capable of running the technology and those expecting more services would not have been happy. Zenefits will get it right in time.

So when someone says that we favor ADP I would disagree. We provide services to help the client that may have the ADP lawn tractor. We help the employer, not ADP. We could help someone who has Kronos too, or Ultimate, or Ceridian. Though I am sure ADP others appreciate the fact that we help keep their customers happy. And if you were to start a service business to fix or support some technology it would be a sound business decision to provide a service around the technology that more employers are using. If you were to start a landscaping business, you would need to choose your equipment. If you choose to use a John Deere that would not make you a John Deere salesperson. You would be selling your landscaping.

When it comes to the next prospect meeting and technology comes up make sure you know whether they really want technology or if they want the services. Or maybe they want both. And it would be important to understand what services they need.

I hope this is helpful. This lawn tractor/landscaper analogy may not apply to every situation but it works for me.

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Posted in Employee Benefits Distribution, HR and Benefits Technology, Zenefits

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Understanding the Benefits Broker Role in a new HR Ecosystem

Posted on June 15, 2016 | Leave a comment

This was written for Employee Benefit Adviser Magazine. The link to the article on their blog is here.

When the iPhone first came out in 2007 there were no apps other than what Apple provided; no third-party products like phone covers, car chargers, headsets, or wireless speakers. If you dropped the phone and broke the glass you couldn’t take it to the local mall to have it repaired.

Here we are nine years later and there are over 1.5 million apps. There are add-on products sold online, in pharmacies, convenient stores, airports, and all kinds of other retail stores, that make the phone more useful. If you wanted to write an app for the iPhone there are skilled programmers available around the world. And if you dropped your phone there is some person at the local mall who could fix it.

The majority of these products and services are not provided by Apple. They are provided by some person or company that one day made a decision to capitalize on the success of Apple and build something that users of Apple products would value.

According to the Financial Times, “technology ecosystems are product platforms defined by core components made by the platform owner and complemented by applications made by autonomous companies in the periphery…the core firm’s product has important but limited value when used alone but substantially increases in value when used with the complementary applications.”

In the HR/Benefits technology world the same rules apply. There is a core product and there are periphery products and services. A core product with an advanced ecosystem will have much more value. If you are an advisor in the benefits business it is important to know which products are core and which are periphery. If you are providing services it would be important to know how your service fits into the HR/Benefits tech ecosystem.

Many benefits brokers are not recognizing these HR technology ecosystems. Many think the benefits technology vendor they have chosen is its own ecosystem or the center of the clients HR world. At one time people thought the Earth was the center of our solar system too. This belief caused many problems with keeping the calendar, sailors navigating at sea, and keeping track of Holidays.

Thinking that benefits technology is the center of the HR Ecosystem also results in problems. Benefits aren’t easily administered or communicated. Systems delivered by brokers often aren’t easy to use or have issues with “integration”.

Working in a vacuum delivering siloed software creates the problem.

The HR technology market is in the midst of big changes. The market leading vendors are making efforts to grow their ecosystems to create more value for employers and employees while also creating space between themselves and those that want to take their business.

If you are a benefits broker it will be important to recognize this market change. You need to make decisions as to who you think the winners and losers are going to be. You would need to think about how what you do will fit into these HR ecosystems. This could impact everything from the products one sells, advice one gives, and the services one provides. Private Exchanges, benefits administration and communication are all impacted by how the HR ecosystem evolves and how these products/services fit in.

When it comes to benefits technology I always remind brokers that it is important to understand the tools of one’s profession. Understanding how technology impacts the benefits business does not make someone a technologist. It makes someone a better broker.

HR Technology is going through an evolution much like the cell phone business except we are 7 years behind. A few years from now there may be fewer vendors with much bigger ecosystems.

Providing some product or service that enhances the value of the right core HR technology solutions is an opportunity that can become very lucrative. At a minimum understanding the “tools of one’s trade” is a requirement to simply being a better benefits advisor. Either way, pay attention, because the HR/Benefits technology world is about to change.

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Sometimes I Feel Like George Costanza

Posted on August 4, 2015 | 1 comment

I was reading an article published on one of the online benefits magazines where the author wrote something that I almost totally disagreed with. As I read it I was thinking to myself, “that point is wrong”, and then “that point is wrong too”. Yet the comments at the bottom of the article coming from what I would imagine are mostly benefits brokers seemed to all agree with the author. I couldn’t believe it. Not one comment challenged the author. I couldn’t tell if the author truly believed what she was writing or if she was simply writing what she thought the audience wanted to hear. Regardless, there were many there to heap praise and say, “Great article. I wholeheartedly agree with you.” I started to feel like I was George Costanza of Seinfeld. Seinfeld buffs may recall the episode where George concluded that if everything he instinctively thought turned out to be wrong then the opposite of his instinctive thought must be right. Am I George Costanza here? Are all these brokers right and I am wrong? Is the way I think hurting my business or is there a lot of Groupthink going on? Should I do the opposite of what I think, like George Costanza?

The title of this blog is Challenging Everyday Thought. That doesn’t mean I like to say the opposite of what people are thinking just to be the antagonist. I think it is just my nature. As an athlete I always encountered competition. Someone was always trying to beat you. As a pitcher I was trying to fool batters. I was always thinking “what is he expecting me to throw”? And then sometimes I would do the opposite. In business one has to assume the same. However, while in sports having a losing season may be disappointing, having a losing season in business can be critical. Especially when it is a small business and the business is yours. So I am always thinking of ways to remain competitive in my business. A way to be different. If everyone is thinking the same thing then how can one possibly be different? I once saw a quote by Ben Franklin that said,

“If everyone is thinking alike, then nobody is thinking.”

So maybe it is not that everyone is thinking the same thing. It may be that technically nobody is really thinking at all. There is no great revelation when you say something everyone already knows or thinks.

I have referenced Peter Thiel and his book Zero to One in the past and in his book he says that when he interviews people he always asks following question, “What important truth do very few people agree with you on?” He asks this question because he is looking for people who think different. Those that are going to challenge the status quo and change the future. As we all know the future will be different.

I like to think outside the box but more important I think there is danger in Groupthink. As a business owner I can’t afford to fall into a pattern where I don’t anticipate change. Think Blockbuster Video, Circuit City, and Kmart here. Because the world will change, those that anticipate change may be better prepared for the future.

You can apply this thought process to the benefits business. Just ask yourself the following:

  • What if employers really don’t want to provide health insurance for their employees?
  • What if most people don’t want choice?
  • What if employers don’t value a brokers services?
  • What if Zenefits is right, and employers value what they do more than what you do?

Imagine a broker going into an employer with a new value proposition which is the total opposite of what others do. Many, many, brokers sell the value proposition of helping employers manage their risk and claims to lower health care costs. They provide wellness programs and other tools to try and reduce costs. What if you went into an employer and said, “Mr. Employer, managing your health care costs is almost impossible. Not only do you have turnover in your employee population but you are not in business to worry about managing the health of your employees. What if we developed a program to get you out of the health management business while still maintaining your competiveness for employees? Is this something you would be interested in?” This market approach is almost the exact opposite of what every broker in America is doing.

You can go through this thought process in other areas of the benefits business. Think about your business today and then think the opposite. Is the opposite a likely or unlikely event? I ask myself these questions every day. To quote Peter Thiel once again (maybe you should read his book) “What secret is out there that the world has yet to discover?” He believes there are many secrets out there and if you find one that a market will value then you can bring great success to your business. What I do know is that those secrets aren’t in any blog or in any PowerPoint Presentation. And if you are thinking just like the next guy then maybe you really aren’t thinking at all. So maybe being George Costanza for a day is not a real bad idea. It may be the key to a successful future.

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Posted in Employee Benefits Distribution, HR and Benefits Technology

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Can Your Benefits Business Endure?

Posted on June 29, 2015 | Leave a comment

I spent the past few weeks traveling across the country meeting with different benefits brokers when I had a question asked of me that required some thought but produced what I think may be an interesting observation. The question was “What brokers are investing in changing their businesses the most to meet the changing demands of the benefits marketplace?” I speak to many brokers and work with many more and as I thought closely my answer came out as follows: “The brokers changing the most are those that plan on being around in 10 years. It is those that want to perpetuate their businesses independently rather than prepare their businesses for sale.” I could actually visualize the business owners of these firms that I was referring to as I was answering the question.

In my business I contract with brokers and one of the things I try to figure out is whether the broker I am speaking to is going to survive and thrive, sell, or fade away. I don’t know if one of the options is to exist as is in perpetuity. Can a broker survive but not thrive, sell, or fade away for a period of 5, 10, or 15 years? Will “as is” be an option?

The question also reminded me of a quote I saw in Peter Thiel’s book Zero to One that stated, “For a company to be valuable it must grow and endure”. The most important question you should be asking yourself is “will this business still be around a decade from now?” He is not asking whether the business will look different but will it even be around. Using this idea I thought about some of the questions one needs to ask oneself including:

  • Will health insurance still be purchased through an employer plan?
  • Will benefits brokers still be the main distribution source?
  • Will the carriers still be paying commissions? If so at what rate?
  • Will the current insurance companies still be around?
  • How will people (employees) be accessing their benefits information?
  • Will there still be claims analysis tools, underwriting, and where will wellness be?

–          What will health insurance plans look like? If they exist.

There are probably many other questions I could ask.

If you honestly answer these questions or at least make an educated guess then the future of the benefits world will be much different than it is today. If the industry is different how will your business be different?

What I am finding in the marketplace that the national firms are working hard to change. Obviously if they are publicly held companies then there are many people in the organization that want growth or at least compensated for growth. Other organizations that are changing include ones where the owner had brought in a son or daughter into the business. Organizations where the owner is less than 45 years old also see then need to be around 10 years from now. I don’t want to put everyone in the same box as we know there are exceptions to every rule but these are trends that I see.

The behavior of those that plan to be around is much different from those planning to sell or those wanting to hang on until retirement. Those planning to be around are investing in the future. They are making strategic decisions based on the long term and not just short term. They are building a culture that is not complacent but one that is dynamic where people can think different. They lead not follow.

Others have a plan of “Hope”. They hope the world doesn’t change. They hope that they can survive as is. They hope carriers don’t reduce commissions. They hope Zenefits goes away. They don’t invest in the future but actually reduce expenses to save money. They make minimal changes, usually following some other firm rather than think outside the box and plan for the long run.

So now I have written another article on change. I had one broker ask me what I would do if I were a broker. Good question. I don’t write these articles without taking my own advice. Or should I say take the advice of Peter Thiel. The answer to this question will be revealed in my upcoming webinar titled, “Upping the Benefits Game – Introducing Ideas Most Brokers Aren’t Thinking About”. Benefits brokers are welcome to attend this webinar by clicking on the following link to register. http://www.hrtadvisors.com/AboutUs/HRTWebinars.aspx

I guess I will finish with a quote from Henry David Thoreau who said, “Never look back unless you are planning to go that way.” I think it is safe to say that the future of the benefits business will look nothing like the past. So ask yourself, can your benefits business endure? Will it be around in 10 years? If so what will it look like? It is time to ask and answer those questions. Then take action.

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Posted in Agency Operations, Employee Benefits Distribution, HR and Benefits Technology, Zenefits

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Getting Handcuffed with Benefits Technology

Posted on March 19, 2015 | Leave a comment

Today I saw a presentation from a new HR-Benefits-Payroll technology vendor that I thought is pretty cool. It looked great. It is web, mobile, and social. It could even send text messages to employees. It has nice colors, pictures, and looked real user friendly. It is a true end to end solution. The system could manage all employee data from recruitment to retirement. Or some would say from hire to fire. Employers love it. At least some do. Yet I know that in a few months there will be something better in the market and in another 6 months something better again.

Today I also got two calls from benefits brokers asking about some benefits technology vendor they just saw wondering what I thought of them. I get these calls every day. For some I know their goal is to have some lead benefits enrollment system that will help them “tie their client to them” so that it would be more difficult to get fired. Or at a minimum they are looking to use technology as a competitive advantage. As I had written in my article titled “There is a Ghost Lurking in the Benefits World” (https://joemarkland.wordpress.com/2014/09/02/there-is-a-ghost-lurking-in-the-benefits-broker-world/) these brokers are looking for that silver bullet. However, while the broker is trying to tie the clients to them what is really happening is the broker is getting handcuffed to some technology vendor. They get stuck in some long contract with some ongoing monthly expense only to find out the solution they are handcuffed to doesn’t generate new business and is very quickly yesterday’s idea.

There are a few things I know about benefits technology. First, all clients don’t buy the same solution. They don’t buy the same health insurance. They don’t buy the same computer equipment. And they don’t buy the same benefits enrollment system. In fact I see few employers buying stand-alone benefits enrollment systems at all. At HR Technology Advisors we recently did a survey and found that of the top 15 benefits enrollment systems being used today only 2 are stand-alone benefits enrollment systems. The other 13 are leading HR and Payroll vendors that have benefits enrollment as a part of their system. Only one vendor has more than 10% market share. See my article “The Coming Obsolescence of Stand-Alone Benefits Enrollment Systems.” https://joemarkland.wordpress.com/2013/12/23/the-coming-obsolescence-of-stand-alone-benefits-enrollment-systems

While not all brokers are looking to tie their clients to them with technology, most will admit that they are looking for a competitive advantage. The problem with this strategy is that the result is often the opposite. They actually leave themselves competitively vulnerable. I had one of my broker clients tell me the other day that their competitor just signed a contract with a specific technology vendor. My advice to him was to let the other broker be handcuffed to one vendor. While your competitor enters the race with the 8th fastest horse you can bring in the top 5 and increase your chance of winning. What producer wants to enter a prospect meeting with the 8th best anything?

I realize that just because a broker signs with one vendor does not necessarily mean they sell only that vendor. The problem though is that they often feel an obligation to “get their money’s worth” so they end up pushing that one solution and become blind to alternatives. They do seminars and webinars on that one solution. They train their staff on how to “sell” that one solution but don’t train them on how to become better at being a ‘trusted advisor” around technology to their clients. The producers bring this solution to clients and prospects with the belief that they have the best thing only to quickly find out there are many good solutions in the market. As we all know technology changes fast. Unless you bought your car, TV, cellphone, or computer in the last 12 months the odds are you aren’t using the best technology.

There are so many great technologies in the market and so many good things brokers can do for employers with technology there is no reason to limit yourself to one. We know all clients don’t want the same thing. Today’s technology will be yesterday’s technology in 6 months. No one vendor has cornered the market with some great idea though some vendors will certainly try to convince you that is the case. The good thing is you can be even more competitive by having more options. So be careful for what you wish for. While you seek that idea that will tie your clients to you, you may be the one that gets the handcuffs.

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Posted in Employee Benefits Distribution, HR and Benefits Technology

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An “Arms-Length” May Be the Distance Between Winning and Losing

Posted on March 4, 2015 | 2 comments

The benefits world, much like many other industries, is constantly changing. You don’t have to look far to see other industries that have been impacted by new technologies (cell phone business) disruptive distribution models (Uber in the “taxi” business), or sometimes simply changes in buyer preferences (healthier food – Whole Foods). In the benefits brokerage business you have firms expanding services into HR and Wellness, payroll firms like Paychex entering the benefits business, and new entrants like Zenefits disrupting the market providing free technology and services in the HR and Benefits areas. The thing about competitive markets is that you don’t get to vote on what the market wants or what your competition may do. You have to recognize the market changes and make strategic business decisions on how to position your firm for this new environment.

Change is tough and not everyone wants to change. Some move forward with a strategy of “hope” that the changes are only temporary and the world will return to normal sometime soon. Others simply sell-out. Then there is the broker that reacts to the market by creating all kinds of partnerships. As one broker told me, “I really don’t want touch this HR and Payroll stuff. I prefer to stay an arms-length away.” To me arms-length sounded like he really did not want to “own it”. If things got messed up he can blame the other guy. Arms-length is a safe position.

The thing about arms-length is that clients and prospects recognize this lack of ownership. There is a difference between “we” and “they”. I was on a sales call with one broker who was talking technology to his client and he kept on saying “they” when referring to the vendor. You can tell the employer was thinking “why don’t I just do business directly with “they” and why do I need you”. Needless to say this broker did not get the business. This arms-length position resulted in a loss.

I had one of these new brokers call me one day soliciting my benefits business. She promised to provide free technology and offered to handle all my employee questions if I were to make her firm my broker. This made me recall a conversation I had with another broker about providing an employee benefits call center. He basically said he did not want to provide such a service because he did not want the liability. I thought to myself that as an employer I did not want the liability either. My employees come into me asking questions about their benefits and I wish they could just pick up a phone and call someone else, maybe a benefits professional.  I provide benefits but don’t ask me the details.

As your business world changes sometimes it may take you places that are out of your comfort zone. You can choose to go there or not. If you don’t want to go there then you can’t expect those companies that want such products or services to be your prospects. And while there may be some things you can bring to the market at an arms-length there may come the time when “they” needs to become a “we” simply to remain competitive. An arms-length may be the distance between winning and losing.

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Posted in Agency Operations, Employee Benefits Distribution, HR and Benefits Technology

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It’s Time to Ban the Term “Value Added Service” from the Benefits Broker Business

Posted on October 23, 2014 | Leave a comment

I hear the term “value added service” used in the benefits world all the time. Brokers always tell me about their value added services. What does value added service mean anyway? For most it implies “free”. We all know that nothing is free. I think it is time to bury this term. In fact I think it actually has negative implications in many ways so let me tell you why.

I googled the term “value- added service” to see how firms would define it. One definition I found came from a website www.wisegeek.com. They defined the term as “options that complement a core service offering from a company but are not as vital, necessary or important.” I guess that sounds right. For most benefits firms “value-added service” means, “I am going to give you something for free that I generally don’t do.” And I agree with the above definition that says it is not as necessary or important. The problem with what I see many benefits brokers doing is putting this label on things employers feel are important. If I am an employer and have something important to me who would I get it from, a vendor that makes it a core service or one that labels it a “value-added service”? If it is important then I would hope whoever I buy such a product or service from is good at it.

Value-added services for most brokers are listed on the last pages of their proposals. It is the fifth tab from the left on their website. It is the final 5 minutes of a sales presentation. It is presented with a level of importance that is, well, not important. To me value added service is like buying a hamburger at a Chinese restaurant. They don’t really want to sell hamburgers but for those adults with kids that don’t like Chinese food they do have something for them. If I wanted a hamburger I would go to Five Guys and not a Chinese restaurant.

In the benefits world some things that many brokers have labeled as value-added services are really becoming core to what a benefits broker should be doing. I won’t get into what I think all these services are but if the employer feels the services are vital then they will dismiss the firm that labels the service as “value added”. It will appear as unimportant. If a broker can’t make it a core service then maybe they shouldn’t be providing such a service at all. And if another broker is offering such a service as a core service then your labeling it as “value-added” may be detrimental to making a sale.

So there you go. The term “value-added service” shall be forever banned in the benefits world. And I will add that as a consultant to brokers this advice is not a value added service. It is what I do all day.

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Posted in Agency Operations, Employee Benefits Distribution, HR and Benefits Technology

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