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 by 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 for 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 to 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.

Markland is president of HR Technology Advisors, LLC. Reach him at jmarkland@hrtadvisors.com.

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