Participate in our 2016 HR/Benefits/Payroll Technology and Services Survey


HR Technology Advisors is conducting our 2016 National HR Technology survey for the small to mid-sized employer market. We conducted this survey two years ago with great success and we are doing it again. Much has changed since then. This survey will help benefits brokers and employers gain an understanding of the following:

• What employers are using for technology (HR/Benefits/Payroll/Time and Attendance/ACA)
• Satisfaction levels with their vendor
• Who is looking for new solutions
• Who they are moving to and who they are moving from
• What employers are looking for from a capability standpoint
• Who is deploying employee self-service via web and mobile
• Vendors employers are using for ACA Tracking
• And more…..

With old brokers and new brokers leading with some technology solution, many giving solutions away for free, we think it would be important to:

• Know what your clients have
• Know what your clients want
• Know who is shopping
• Find out what vendors employers are really using versus listening to the sales pitches from the vendors.
• Provide your clients with valuable market information

If you are a broker and want to participate you can do so by clicking on this link. There is a fee to sponsor the survey and personalize it for your firm. Considering all the money and time brokers are spending on evaluating and paying for technology this is worth it.

If you are an employer and would like to participate send me an email or give me a call. Contact information is below. I will send you a link to take the survey. A summary of the results will be provided when we close the survey.

Participants will be eligible to win a $500 Gift Certificate.

Brokers Click HERE to Participate

Contact information: Joe Markland – 508-530-5043 jmarkland@hrtadvisors.com

How well do you know your customers?


In today’s environment where information is readily available and leveraging the web and mobile to provide service is an expectation, personalizing that service is also expected. When I buy an airline ticket I am asked how I would like to be informed of any changes (email, text, phone call). When I check into my preferred hotel chain they have my preferences and personalize my service. For some reason this type of personalized service hasn’t become the standard in the benefits business, or at least to the level of other industries.

I often reference the Wellness Newsletter I got from my broker giving me tips about pre-natal care. As a 54-year-old male this is not relevant and the email itself not only did not address my needs but in some way reflects poorly on my broker. It made me think he is really not that organized. Not only was the newsletter not relevant to me, but what my broker also does not know is that I already subscribe to a Wellness Newsletter directly from another online company. This newsletter sends me the information that relates specifically to someone my gender and age and is delivered at the frequency I want in the method that I want. I did not need a Wellness Newsletter.

On another occasion a broker I know provided an online HR Library to the HR person of an employer where the outcome was not what was expected. This HR person was on a committee for a company that also provided HR content on the web and she found many flaws in the product the broker delivered. It started with good intentions, but the outcome was not what the broker intended. Should the broker have known the HR person was on such a committee?

I can go on and on. People putting in enrollment systems to clients that already owned one but didn’t know it? Building benefit websites for employers that already had a regularly used intranet. I am not just pointing the finger here at others. In my own organization we struggle with the same issues when serving our clients.

All this reminds me of some stats I saw from a book published by Jack McKean titled, “Information Masters: Secrets of the Customer Race.” In the book he cites the following:

“Only 2% of the knowledge that organizations have about their customers is actually used.”

“Only 5% of the body of knowledge about a client is available digitally and indeed only 20% of the knowledge is recorded at all.”

What is amazing is that this book was published in 1999. The stats may not be the same today but it in many cases it is close to the truth. And of course this is not reflective of you and me. We are better than this.

It takes a lot of work to create a personalized service experience. You need technology to store and manage the data. You need a methodology to gather information and keep it current. You need processes in place to automate certain functions. You need people either on staff or through an outside resource to plan and execute such a strategy. It is a herculean effort.

In today’s environment most brokers provide service to the employer which could include HR, finance or the business owner. This has its own challenges but at least gathering information to personalize the service for a few people is somewhat manageable. Imagine the effort if we move to a consumer centric world where the services need to be personalized for the employee. What is the broker’s role in this environment? What would be the cost in time, technology, and resources, to deliver the experience consumers expect in today’s world.

From the employer’s perspective they have the same challenges. The expectations of how they are going to support their employees is changing. The needs of a 26 year-old with significant college debt are much different from a middle-aged employee preparing for retirement who may have health issues. These employers may not have the resources, technology, or capital to move their HR to this new level.

Many brokers say they provide such services but I have not seen it. Many do provide great service but not in the personalized way I am talking about. Relative to their peers in the current environment they may superior. But what happens when someone comes along and raises the bar? This happens often in many industries.

As someone in the technology consulting business I am seeing firms behind the scenes beginning to develop new models of service. Models that don’t exist today in the benefits world that can raise the bar. And it can raise it in a way that gives these firms a distinct competitive advantage that is not easily duplicated. Like providing benefits advice to a millennial on a Saturday afternoon via video conferencing. Some of these firms are traditional brokers but others are coming in from outside the industry. Those outside the industry love disrupting current business models. The health care business, and by extension the benefits industry, is a primary target because the capital running through it is so high it invites disruption. People want a piece of a very large pie.

Many brokers rely on relationships and are pretty sure their clients are loyal. I once saw a statistic that said that most companies think about 80% of their clients would be loyal. When employers were asked how loyal they were to their vendors the answer was 20%. This is a huge disconnect between perception and reality. One way a relationship can be severed is when a competitor brings in a better idea or better service. Companies like Zenefits displaced $63 million in commission business from many brokers with loyal customers. One told me he lost a 20-year relationship to Zenefits. So new ideas can be powerful.

I am not going to pretend to have all the answers. And I certainly look in the mirror when writing this because I am somewhat talking to myself too. But I have seen technology and models that can start the process to personalizing service for employers and employees. I have spoken to some companies that have started the process. I have seen the revenue models too. I don’t know when this “tipping point” will happen, but it will, because it is possible and the market wants it. And the opportunity is there for those who want to provide such services, but one must start. So my advice is to start. And start today because it is a big challenge.

Are You Too Comfortable to Change?


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.

Don’t Sell Lawn Tractors When They Want Landscaping


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.

The Launching of Our New Company – ProHCM – A return to our Why


When we (my brother Jerry, and soon after, my current partner Don Rowe, and I) started our business in 2001 I remember thinking about how noisy the benefits technology market was. There were so many benefits type technology vendors calling on benefits brokers that most people’s heads were spinning. The mantra of the day was “use my technology” and you will have a competitive advantage. And the vendors would sometimes directly say, but more often simply imply, that “if you don’t use my technology then I will partner with the broker down the street and take your business”. I really hated that sales strategy though it worked for many. The vendors capitalized on the brokers fear of losing business. 

When it came to things like benefit websites I wondered if anyone would ever use them, or more so, if anyone cared if anyone used them. I remember one broker telling me he was spending $100,000 per year on benefit websites. I asked him why he was wasting so much money when you can buy the same thing for $10,000. He said, “it doesn’t matter, it helps me win business”. Is that what this market was all about? I didn’t want any part of that. Here we are 15 years later and 76% of employees still don’t understand the term co-insurance, so I guess nobody is looking at them.

Our mission was never to just sell technology. What we really wanted to do was use our knowledge of how to apply technology to solve a business problem and our knowledge of the HR technology space to help employers simplify the administration of their Payroll, HR, and Benefits and expand employee self-service. This would free up time in HR, enabling staff to work more strategically and have more time for their employees. It would also deliver a communication and administration system to help employers bring new products and information to their employees. Over the past 15 years we have helped over 1000 employers find and implement HR technology solutions. Technology was the tool but our goal was to help get better outcomes. We really wanted to make things better for employers and employees.

It had also been our vision to help employers help their employees create better work-life balance and be happier at work and/or at home. If you are going to work hard to get through life I guess you deserve to be happy. I often tell the story of an employee of mine, a 23-year-old single mother, who one day called me crying because she could not get to work. Her car did not pass inspection because her tires were bald and she did not have the $500 for new tires. I proceeded to give her my credit card to buy new tires so she could get to work. I imagine my father, who with my mother, raised seven kids and often worked three jobs six and a half days a week had his share of stressful days, though he did not show it. And I wonder if he had an outlet when things got tough. He did this for 40 years. I don’t know how he did it.

I am not telling this story to let you know how nice a guy I am because I know this type of story plays out regularly in businesses across America. The bigger story is that most employers know that employee happiness and stress impacts productivity. And as an employer you hate to see hard working dedicated employees struggle to make it through a day. Life is not easy and one’s personal life and business life often conflict.

One problem is that over time we somewhat strayed from our initial vision. In Simon Sinek’s book, “Start with Why” he says your How’s and What can change but your Why’s should not. Unfortunately, we slowly strayed from our Why and became a technology consulting business and not a business that actually helped employers simplify their world and help the end employee create better work-life balance. Today the term being used is employee “well-being”. While many employers were buying technology with good intentions, many of them did not have the capacity to leverage the technology in a meaningful way. They may have improved HR operations to a degree but the outcomes had fallen way short of their goals. The technology was supposed to be a means to the end but it became the end. We advised employers on technology but our business did not follow it through to the very, very end. Did the employer ever reach their objective? Most don’t.

The other day I met with my staff to discuss our vision, our Why. I asked some people why they think we as a business, exist. One of my employees said, “to make brokers lives easier”. Another said, “to give brokers a competitive advantage”. It was enlightening and said a lot about where the business has drifted. I told them I do not wake up every day hoping to make brokers lives easier or to give them a competitive advantage. We think we what we do can provide a competitive advantage but that is not our Why. It is not what drives me or my partner. We also did not start the business to simply advise clients on technology or sell software. We started because we wanted to help employers help their employees.

Working with brokers is our How! Making it easier for them to help their employer clients and the employees is one of our tasks, our What’s. But it is not our why. The initial thought was that if we can pool resources and work collectively with local companies (Brokers and HR consultants) that shared the vision we could deliver a great solution to the market. We could centralize buying power and services. We could work with brokers to deliver the onsite local service. Sure we could leverage technology along the way but that was not the end. The technology is simply another tool, or resource, no different from my staff or the staff of our broker partners, to help employers create a better HR world for themselves and their employees.

For most workers they probably don’t go to work because it fits with their Why. If you are living paycheck to paycheck one’s Why is to do whatever it takes to pay the bills and support one’s family. A noble cause. I am pretty sure my father was not thinking of his Why. He just did what he had to do. In today’s environment employees are also more financially strapped with large college loans, increased health care costs, some still suffering from the housing crisis, and flat wages. For many, things are worse, not better.

   
The opportunity and need to help employers and their employees is greater than ever. The technology has advanced to become more user friendly and more engaging to employees. The number of vendors providing products and services in the HR area has expanded and range from new HR technology, to employee loan programs, online EAP programs, wellness, and more. And the daily use of mobile technology by individuals has exploded. However, the challenges for employers in the HR area are also greater as more laws, a more complex workforce, and emerging technologies have made HR even more chaotic with even less time available for change. They need help and not just someone who drops technology off at the front door. As many may have heard me say before, employers are needing landscapers not just lawn tractors.

So in 2015 we decided to re-focus our business and return to our initial vision, but this time we are doing it a little different. We are now laser focused on delivering better outcomes by providing services, not just technology, for employers and their employees. We don’t want to sell technology that nobody uses or deliver programs to employees that few ever use. The focus is on delivering the outcomes that will make a difference in their work-lives. We want the HR person to have less stress. We want employees who need help with some financial issue to have an outlet. We want the CEO to have actionable data. We want employees to understand their benefits. We want them to use their technology in an optimum way. We want to help.

To accomplish this, we felt we needed to combine centralized services with local services. We needed to add the staff with the skills but also needed the scale, and buying power. And we needed partners who share the vision and are as vested in delivering great outcomes as we are.

This new organization is called ProHCM. We view ProHCM as a franchise model of a national HR/Benefits/Payroll technology and services company with brokers as vested owners and service providers in their markets. ProHCM is a collection of Human Capital Management experts working together to deliver products and services that will guarantee better outcomes. It is a team effort.

So to those brokers out there that want to be a part of something unique, join us to create some better days for HR and their employees!

The Health Insurance Balloon is About to Pop


If you are reading the headlines about Obamacare lately you can’t miss the articles about how 2017 is going to bring significant increases in health care costs. Here are some of the headlines:

“The Pennsylvania Insurance Department says insurers have proposed premium increases averaging 23.6 percent for individual coverage for 2017.” (NY Times)

“Obamacare 2017: Health Insurance Costs are Ballooning – Texans’ Premiums Will Soar By Over 55%”

And according to the Wall Street Journal premium increase proposals for some states are as follows:

NY Times List

As I had mentioned in a previous blog these increases are not sustainable. That being said, I think the health care balloon is about to pop. And this is not just the exchange plans. It is the health care balloon which includes all plans. Let me explain.

Those in the health insurance business are familiar with the term “squeezing the balloon”. The implication is that when you try to control health care costs in one place it often pops up somewhere else. The cost of health care doesn’t go down it just moves from one place to another. The balloon gets squeezed but does not shrink. In fact, the health care cost balloon keeps on getting bigger and bigger.

For the past 20 or so years benefits brokers have been trying to help employers manage costs but have seen little success. For the most part there is very little a broker or an employer can do because there are simply too many things outside of one’s control to control costs over time. So the whole industry has mastered the art of helping employers find better risk pools. PEO’s try to attract employers by moving firms into a larger risk pool. Smaller and smaller employers have been moving to self-funded plans. Now we see “Captives” which is essentially a methodology of creating another risk pool. The idea for many of these employers is to get smaller employers out of small group community rates.

This idea of having all these different risk pools is quite interesting. Even the insurance companies create different risk pools. They have their individual insurance pools; their small group pools; and their large group experience rated pools. They put these employers in different buckets and mange those buckets. It almost seems like within a single insurer they have their own death spiral going on. By segregating their risks eventually, the smart companies or individuals will find a way to get into a better risk pool leaving the bad risks in another pool.

It is my belief that the government, and maybe society in general, will not let this persist. There are already complaints about the “game being rigged” resulting is income disparity. In some ways the health insurance game is heading in the same direction too, with different groups of people having much different experiences. I will not get into risk and underwriting here because it really doesn’t matter. If a large part of society can’t get affordable health insurance it is everyone’s problem.

The day may be coming where there may no longer be a place to hide. In a recent NY Times article Kurt J. Wrobel, Chief Actuary of Geisinger Health Plan stated:
“Our rates for Medicare, Medicaid and employer-sponsored insurance have been relatively stable, but those products have to bear the cost of our losses on exchange business,”

Geisinger requested a 40% increase for their exchange plans for 2017. If they don’t get it they have to make up for the losses somewhere else.

This health care cost problem is not going away. In fact, it is getting worse. I often tell my staff that when you see a problem staring you in the face, do something about it. The health insurance problem is staring us right in the face, right now, and if the industry doesn’t do something about it then someone else will. That someone in the U.S. is the government.

Many have said that the reason incomes are flat is because employers have been bearing the brunt of the health care cost increases over the past 5 years. Health care cost increases are consuming dollars that could be used to raise wages. Employees have been also getting hit with higher contributions for health insurance. Flat wages plus higher health care costs equals a negative income.

This problem is coming to a head. The balloon has no more capacity. Will 2017 be the “tipping point” that will force changes in unprecedented ways? I think so and there may be no place to hide.

Understanding the Benefits Broker Role in a new HR Ecosystem


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.