It has been said that you shouldn’t kick a dog while it’s down, but this is business, and business is a zero-sum game. Several days ago, Bloomberg News published an article about the troubles facing Zenefits, the employee benefits start-up darling. Although the article detailed some of the regulatory and behavioral issues facing Zenefits it missed the larger flawed business strategy evident in the details of the piece.
The Zenefits strategy to disrupt the employee benefits industry was based on two assumptions: 1) a benefits broker simply quotes and “sells” insurance, something that can be easily automated; and 2) offering free technology that streamlines employee benefits management would give Zenefits a unique advantage. The idea seemed sound enough: by doing more than a typical benefits broker, businesses would flock to Zenefits. However, neither of these assumptions is true.
There are benefits brokers who simply quote and sell, but there is a whole spectrum of benefits brokers, with a significant number of them acting as trusted advisors to their clients. These benefits brokers provide extensive advice on benefits design, human resources, compliance, and benefits technology. Some benefits brokers even act as a back office for clients that can’t justify a full-time human resources department.
You can and should automate your employee benefits management, but if you choose Zenefits you will lose the advice and experience of your trusted advisor. Zenefits can’t hire top quality brokers because its business model will not allow it to pay them what they are worth. Zenefits, instead, hires lower wage inexperienced employees to replace your trusted advisor. There are no trusted advisors at Zenefits, just a bunch of boiler room salespeople and software engineers with little experience or knowledge of the complexities of employee benefits. Seen in this light, and contrary to popular belief, Zenefits is offering you an inferior product.
Zenefits has nice tools, but there is nothing unique about them. There are many other technology companies competing with Zenefits. But, Zenefits is free, you say. Visionary tech savvy benefits brokers are integrating similar technology and services into their business models to provide their clients with the same experience as Zenefits but without the downside.
My company, Comprehensive Benefit Services, is a great example of this. We’ve collaborated with several technology and service companies to provide a seamless human capital and employee benefits management system to our clients at no cost. We simplify your life so you can focus on your business.
There is nothing revolutionary or disruptive about Zenefits. Zenefits is just capitalizing on the fact that there are a lot of poor quality brokers out there. If you feel compelled to consider Zenefits, you don’t need Zenefits, you just need a better broker.
If you’re looking for a way to streamline the management of your human capital and employee benefits without sacrificing a relationship with a trusted advisor, email me at mdmowski@comprehensivebenefitservices.com or call me at (952) 237-6956.