Nov 12, 2015 ยท 7 minutes

TriNet is a company caught between two worlds. There are plenty of small service companies full of accountants who do startups’ books, taxes, and handle benefits for them. (We use one, for instance.) Compared to them, publicly-traded TriNet is a giant.

And then there’s a surge of SAAS platforms – like Zenefits – founded in the last few years that have way more funding, more sex appeal, and seek to make everything HR-related automated and appified. (Even if Zenefits is one of the latest unicorns to be marked down by Fidelity.)

Depending on your position TriNet is either a goliath or a quaint throwback to the way the industry used to operate.

What’s clear is that the entire market is underserved, and CEOs of fast growing companies need someone to help them navigate an incredibly confusing landscape of ever-changing laws. Who you hire can make the difference between compliance and tens of thousands of dollars in costly mistakes.

Take it from me: Our first trusted and highly-recommended service-provider got something wrong, cost us essentially an employee’s headcount worth of penalties and legal costs, and evaporated before they could repay it. When you are a resource-constrained startup, that can be devastating.

In this sponsored hotseat Q&A, TriNet’s VP of product management Pravin Kumar discusses TriNet’s place amid the boutique services and high-end SAAS world and why millennials get an unfair rap in the workplace.

Everything HR related was a boring space that suddenly got hot with the unicorn investment in Zenefits among other activity. What changed?

The reason why things didn’t change for a long time is healthcare is incredibly complex. Every state has different rules and the only platforms that could support that, for a long time, were SAP or PeopleSoft. The last seven years have transformed what was just a services business to a SAAS platform combined with services. We’re not pure SAAS, and we don’t think we ever will be. That’s just not how HR works.

What do you mean that’s now how HR works?

If you are a five person startup in SF, let’s just say you have a CEO based here, an employee in Colorado and one in New York. Just making sure you are ACA compliant is tricky. If something slightly goes wrong, the CEO will get out of their depth completely. They can call us and say, “Hey what do I do here?”

You always need to call someone. And the scenery is always changing. San Francisco is thinking about putting in a minimum wage law. Up until now, it was always by state. That’s really going to be a challenge for some companies.

Also, when we talk about HR we are talking about people’s lives. Their children become sick, or their spouses become seriously ill. Things can’t go wrong.

In the next three to five years, there’s going to be way more action on the regulatory front on all of this. Other than the ACA, the push around minimum wage laws are a reaction to the fact that nothing has really been done on that front for a long time.

One of the biggest stories in HR in our industry is this pressure to move all those “gig economy” workers to full time employees. Does any of that impact your business? If it’s done wrong it can create a PR headache in the case of Instacart or even help kill a company in the case of Zirtual.

It’s a big issue. I was just talking to a company that wants to take 250 “contractors” and turn them into employees because they are worried the government is going to come after them.

How do they do that?

That’s a good question. It’s something new. There’s the on-boarding process which we can help them with. That’s the easier part. But they also have to have a plan on how this hits their balance sheet.

Let’s get back to HR. TriNet is somewhere between looking like a giant if you consider it a service provider, but quaint if you consider it a software company. Do you worry that you are too much in the middle? Do you worry a company like Zenefits will just get more startups, because it’s new and modern and has a high valuation? In other words, because it’s the kind of company many of those startups aspire to be?

We do see each other in the market, I won’t say we don’t. But this is a huge space. If you look at companies with between five to 500 employees across all verticals in the US, there are 55 million employees in such companies. Some of those are in industries we can’t be in, like construction. You have to be self-insured there. So take those out and it’s still 37 million employees. We have 300,000 on our platform. If you put all vendors like us together, you have 1 million to 1.5 million on any platform. It’s a hugely under-penetrated space.

We think some of the funding rounds in this space are actually raising awareness for the category.

As for startups, we aren’t worried. HR is hard and you have to get it right. If you look at the forums or on social media, you see reports of frustrated people on hold for four hours with one of our competitors. We measure things like that all the time. You have to be super careful at customer response times. We know how hard it is to get that right. Being cool isn’t the only thing you have to get right.

There’s also the point that we take the risk on behalf of our clients. Every two years a manager has to take a harassment training course and we actually force companies and managers to do it and track them. We hunt them down and make sure they take it. When we negotiate with benefits companies it’s on behalf of 300,000 employees. We are the largest premium payer in the United States. We file taxes under our federal tax ID. We have skin in the game. We are legally responsible for the tax returns and everything on the financial side. This is the big difference.

There’s a lot of talk about how HR departments within companies need to adjust their practices for millennials. Do you have to adjust your product for them? Also, I’m sick of the whining about millennials. We get it already. They all were raised getting trophies. But there are great things about millennials too as employees.

Every generation calls the generation before lazy, no good, and entitled. I don’t put a whole lot of stock in that. They were brought up in an age that was extremely challenging. They had huge student loans and came out of college to a challenging job situation. There’s a lot of criticism of how many are living in their parents’ basement, but look at the situation they were put in.

Millennials are way more entrepreneurial. We believe we will be selling to them more in the future. They are ready to start their own stuff. We want to understand their needs and what they are looking for. The way they use services is very different. They don’t like talking to people. We have to deliver services the way they want to use this company. You can’t call them up and say, “Hey I am working for TriNet, can we meet at 10am so I can give you a demo?” You have to drive them to the Web site, where they want to get educated on their own and if they are interested they can call us.

We’ve started making all of our services tablet-first, because most of them are accessing us on a tablet, when they are in a more laid back mode. Before it was during the day on a computer. It’s a sign that this kind of software is in their lives more – that they are really using it to run their businesses.

There’s also performance reviews. Millennials want more feedback, and they want it all year round.


SPONSOR MESSAGE: Cloud-based HR partner for growing startups. Learn more at TriNet.com.