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Zenefits pivots, expands partner ecosystem with partnership program and new product

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Zenefits in October 2017 announced a major change in its strategy. It now intends to become the technology backbone for the employee benefits industry by linking carriers, brokers, companies, and employees with its Zenefits Certified Broker Partner Program and Zenefits Ben Connect. This will allow Zenefits to cooperate with brokers rather than compete against them.

The Zenefits Broker Partner Program was launched with the announcement of a partnership with OneDigital, the largest employee benefits-only distributor in the U.S.. This is expected to be the first of several partnerships with national and regional brokerage firms. The program will enable Zenefits to marry its software and technology with local broker service and expertise by creating strategic channel partnerships with select partners.

The company also announced the launch of Zenefits Pay Connect, a new product that enables leading payroll providers to connect to the Zenefits platform and provide integration with third-party payroll solutions. Pay Connect will give companies the ability to simplify the collection, review, and approval of payroll data through a simple workflow. Customers can choose to keep their current payroll solution and still take full advantage of the Zenefits People Platform. Pay Connect also improves the experience for existing payroll integrations with payroll providers such as Intuit Quickbooks, ADP, and Paychex.

Zenefits’ initial business model consisted in providing employers with free HR software in return for becoming their employee benefits provider and pocketing commissions. An unlicensed de-facto employee benefits broker and TPA, Zenefits ran afoul of several U.S. state laws and antagonized incumbent brokers and agents. Set out to replicate Uber or Airbnb’s success in the insurance space, Zenefits raised $600 million of venture capital but soon found itself the target of  investigations by several U.S. insurance regulators, in California, Washington, and at least five other states. It subsequently fired its founder and CEO and embarked on a courageous pivot that should align the firm’s stated mission with its core competency, namely HR software.

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