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Human Resources Startup Zenefits Is Laying Off Almost Half Its Employees (buzzfeed.com) 76

Posted by msmash from the cutting-jobs dept.
An anonymous reader shares a report: Zenefits will lay off 45% of its employees in an effort to slash costs, according to an internal memo this morning that was obtained by BuzzFeed News, a stark acknowledgment by the embattled human resources startup that its onetime expectations for growth were vastly inflated. Roughly 430 workers will be cut, including 250 in Zenefits' San Francisco headquarters and 150 in its office in Tempe, Arizona, leaving the company with about 500 employees, according to the memo and a person briefed on the matter. That's about a third of the size it was a year ago, when it ousted its founding CEO, Parker Conrad, over revelations that it flouted state regulations for selling health insurance. Thursday's announcement, coming on the morning after the one-year anniversary of Conrad's departure, is the third round of layoffs -- and the largest -- to hit the company since the crisis began.
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Human Resources Startup Zenefits Is Laying Off Almost Half Its Employees More

Human Resources Startup Zenefits Is Laying Off Almost Half Its Employees

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  • Poetic Justice (Score:5, Insightful)

    by Anonymous Coward on Thursday February 09, 2017 @01:27PM (#53833575)

    When it comes time to shed employees, corporate HR usually has a mysteriously low (if not the lowest) termination rate, despite being overloaded with redundant workers that have very little to do with the actual production of things. I think their self-entitled protectionism is only second to CEOs and politicians who can vote for their own pay raises.

    Kind of sucks to be the #1 target of your own collusive practice, doesn't it?

    • >> corporate HR usually has a mysteriously low (if not the lowest) termination rate, despite being overloaded with redundant workers

      Firing workers is a lot of work for HR. There's payouts, COBRA, threats of lawsuits, job placement workshops, etc. It's actually a busy time for them.

      • There's payouts, COBRA, threats of lawsuits, job placement workshops, etc. It's actually a busy time for them.

        When I got laid off from my job in early 2009, I expected to transfer to a different contract. When I went into headquarters, the HR paperwork said I was being separated from the company. When I pointed this out to the HR person, she started hemming and hawing. When I asked about all the contracts that the company picked up and announced in the previous six months, she admitted that those contracts got cancelled and the company was facing a financial crunch from spending $500K on moving into a new building.

    • The human resources department is always the first out of the for and headed to the bar for happy hour.

    • Actually, I saw the opposite with our HR department. This is a large (very large) computer company. We don't even *have* a HR department on site for over 3,000 employees.

      Most of the HR functions were foisted upon management and the HR department is almost nonexistent.

      At one time, they had a fully staffed office. It's used for storage now.

      A lot of the tasks were either outsourced or moved down to Costa Rica for cheap labor.

  • I found their problem (Score:4, Insightful)

    by Actually, I do RTFA ( 1058596 ) on Thursday February 09, 2017 @01:29PM (#53833589)

    it ousted its founding CEO, Parker Conrad, over revelations that it flouted state regulations for selling health insurance.

    In today's world, you don't sack the CEO for flouting regulations. You do it brazenly, and then complain that regulations are hurting your business model (See, Uber, AirBnB).

    • The real pros though make sure one or two other people do it even worse, so when those idividuals are burned at the stake* everyone goes back to thinking everything is just fine. Call it the "Martin Shrekelli" effect.

      (* and by "burned at the stake" I of course mean there are a lot of angry social media posts for a week or two before they go back to consequence-free living with the millions they still made.)

    • Re: (Score:2)

      by Puls4r ( 724907 )
      There's a reason for that. Large companies are incredibly good at putting startups out of business. The barriers to entry into just about any business are incredible nowdays, between the competition and the regulation.... and the regulation that's been written BY the competition. Uber and Lyft are a perfect example of businesses that are 'illegal' in many places because of regulation put in place by lobbyists and local monopolies. Sort of like what the Cable and Telephone companies do.

    • Re: (Score:2)

      by mjwx ( 966435 )

      it ousted its founding CEO, Parker Conrad, over revelations that it flouted state regulations for selling health insurance.

      In today's world, you don't sack the CEO for flouting regulations. You do it brazenly, and then complain that regulations are hurting your business model (See, Uber, AirBnB).

      Ironically enough, this is the fate Uber (and possibly AirBNB) have in store.

      Despite flaunting the rules, Uber is losing money hand over fist. Even in places where it's legal like the UK they aren't making any money.

  • Friends with Zenefits (Score:2, Funny)

    by Anonymous Coward

    wasn't what it was cracked up to be

    • Re:Friends with Zenefits (Score:5, Informative)

      by Motherfucking Shit ( 636021 ) on Thursday February 09, 2017 @04:03PM (#53834511) Journal

      All kidding aside, this is the company where being drunk on the job and having sex with coworkers on company property became such a problem, they had to send out an official memo [cnbc.com] telling their employees to stop getting drunk and fucking each other at work. At an HR company!

      • All kidding aside, this is the company where being drunk on the job and having sex with coworkers on company property became such a problem, they had to send out an official memo [cnbc.com] telling their employees to stop getting drunk and fucking each other at work. At an HR company!

        Sounds like a clever bit of free advertising to me. I imagine job applications rocketed after the 'leak' of that memo.

        "So, Mr Jones, what do you feel you could bring to the zenefits table?"

        "Well, I'm certainly excited by the drunken-sex-in-a-stairwell opportunities."

  • cocaine, hookers and casinos are involved. And a chair throwing incident (or at least baguette throwing)

    Yesterday's Fling story was way more interesting. This one is pretty much "meh".

  • How is HR going to fire people, if you fire 1/2 of the HR people? They won't have time to process all that paperwork.

    • Re: (Score:1)

      by Anonymous Coward

      They will if they work unpaid overtime. Pulling together!

    • Re: (Score:2)

      by Nidi62 ( 1525137 )

      How is HR going to fire people, if you fire 1/2 of the HR people? They won't have time to process all that paperwork.

      Easy. 1st person gets fired. 2nd person processes 1st person's paperwork, then gets fired. 3rd person processes 2nd person's paperwork then gets fired as well. So on down the line. Problem solved.

      • Re: (Score:1)

        by Anonymous Coward

        How is HR going to fire people, if you fire 1/2 of the HR people? They won't have time to process all that paperwork.

        Easy. 1st person gets fired. 2nd person processes 1st person's paperwork, then gets fired. 3rd person processes 2nd person's paperwork then gets fired as well. So on down the line. Problem solved.

        I'd prefer an O(log n) algorithm.

        • From the group of possible people to be fired, everybody partners up with another employee and whoever has the lower employee id does the paperwork for the other employee who will be let go. If odd number of employees the person left out of pairing process keeps job. You can also have people with the higher employee id stay or have them flip a coin to mix things up.

          O(1) since it's a constant amount of time no matter how many many people get fired.

      • Re: (Score:3)

        by lq_x_pl ( 822011 )
        Like deconstructing a human linked list! This is amazing.

      • Re: (Score:2)

        by paiute ( 550198 )
        In 1925, Casey Stengal was playing for the Worcester Panthers. He was also general manager and a player. When he wanted to move to Toledo, he fired himself as manager, released himself as a player and resigned as president.

        • That doesn't make sense, at least in that order. Once he resigns as manager he has no authority to release himself as a player.

          • Re: (Score:2)

            by paiute ( 550198 )
            He was the president of the club. Once he resigned as GM, the power over players reverted to the president.

    • Re:Has anyone cleared this with HR? (Score:4, Funny)

      by TWX ( 665546 ) on Thursday February 09, 2017 @01:58PM (#53833777)

      How is HR going to fire people, if you fire 1/2 of the HR people? They won't have time to process all that paperwork.

      Simple. You outsource it to an third-party HR firm.

    • "How is HR going to fire people, if you fire 1/2 of the HR people?"

      Just as IT people have to train their Indian replacements, these HR people have to fire themselves.

  • Weird company... (Score:5, Insightful)

    by Moridineas ( 213502 ) on Thursday February 09, 2017 @02:21PM (#53833955) Journal

    I work at a small company (~30 employees) total that's been around for around 35 years. We don't have anyone dedicated to HR, it's just part of the jobs duties for one of the founders. About two years ago I heard bout Zenefits and went through a sales call with them.

    The sales guy sounded like he was about 21 years old, didn't know anything, and was a total Bro.

    Everything in the call was like "Ohh man, you're still doing it that way, bummer! That sucks man, check this out..."

    "Yeah, what we're doing is rethinking HR from the ground up, and we're like Amazon disrupting all those legacy companies out there! We're so innovative you won't believe!!" (no, actually you're just fancy insurance brokers....)

    "Yeah man, I hear you, , right man??"

    It was an incredible turnoff.

    I do think that HR, benefits management, payroll, etc., is totally ready for disruption and a good product, but Zenefits definitely is not it.

    • The sales guy sounded like he was about 21 years old, didn't know anything, and was a total Bro.

      For selling something as non-technical as HR services, isn't that kind of to be expected? Would kind of be silly to have a CPA or a PhD in economics calling small startups. On top of that, I'm guessing approximately every client they have is fellow 21 year oldish bros who don't really know anything, leading their own startup tech companies in silicon valley.

      The real question is why haven't all of us quit our jobs, gone to silicon valley, and launched startups that do something people have been doing for

    • Re: (Score:2)

      by radish ( 98371 )

      I have used Zenefits, it's fine. Certainly better than most of the in-house benefits systems that I've used at larger companies (from an employee point of view). Nice slick web site which lets you do pretty much everything you need in one place.

    • No offence, but how or why the fuck would you want to disrupt payroll?

      You can mis-manage a company in every single way for years at a time, paying taxes late, exasperating suppliers and pissing off customers, but the first pay day when things go wrong and your staff aren't paid you're dead.

  • To fire all the people in HR and outsource that function..... It's worked for other companies!

  • I miss FuckedCompany.com (Score:5, Informative)

    by bigdady92 ( 635263 ) on Thursday February 09, 2017 @03:11PM (#53834251) Homepage
    That site was one of the best places to go for company meltdowns, layoffs, rumors of acquisitions, malfeasance, and other shenanigans. There's nothing like it nowadays.

  • I'm not sure if it's intentional but wouldn't "Zenefits" translate to "Zero Benefits"? to most folks? Why would anyone want to hire a company called that? Also I seem to recall when you start your company name with "Z" you often end up at the end of the phone book so there's potential that you're doing accounting fraud or something questionable so you want to be the last company folks call? Anyhow, wierd...

    • Your startup isn't a startup unless it has an unpronounceable and/or incomprehensible name.

    • Zen + Benefits. didn't you hear that anything Zen is cool? What is the sound of one pink slip dropping?

      Also, the googles means alphabetical order is less important than a single name that's unique. So we get zenefits.

    • Re: (Score:2)

      by mjwx ( 966435 )

      I'm not sure if it's intentional but wouldn't "Zenefits" translate to "Zero Benefits"? to most folks? Why would anyone want to hire a company called that? Also I seem to recall when you start your company name with "Z" you often end up at the end of the phone book so there's potential that you're doing accounting fraud or something questionable so you want to be the last company folks call? Anyhow, wierd...

      Actually to most people it would be a portmanteau of Zen and Benefits.

      Of course my experience with benefits/HR outsourcers is that they dont provide any benefits. Here, pay full list price for this outdated laptop... yep, fuck off, I'll go to Amazon. But we've got cheap gym memberships... yeah, 1 pound off at some craphole gym in Birmingham thats still more expensive than local gyms, what are savings.

      Also, no-one uses the phone book any more. It's all about your page rank (and even just showing up on

  • Hiring discrimination made easy (Score:1)

    by Anonymous Coward

    I used them to do a bunch of the onboarding paperwork for new hires, like getting them set up with insurance, 401k, payroll, etc.

    One feature they showed me was that I could estimate the cost of adding someone to our health insurance without actually doing it. Just plug in their age, gender, home zip code, and ta-da. When I asked what the use case was, they said it was for "Hypothetical situations. Definitely not for hiring decisions, but there's nothing to enforce that and we'd have no way of knowing if you

  • Tempe, Arizona - awesome address for a HR company in my opinion :)

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