Zenefits adds more features to save businesses from loads of ‘admin crap’ (exclusive)

Zenefits has managed to do the impossible — get people excited about back office operations.

The hot startup has added a whole slew of new features to its platform, creating a robust set of tools for managing benefits, payroll, and human resources.

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“We found that a lot of people were using us instead of a traditional HRIS [human resources information system], but the main things missing were vacation tracking and reports,” cofounder and CEO Parker Conrad said in an interview. “We are building more and more core HRIS features, because our philosophy is that doing all these things in one place dramatically simplifies your life.”

Zenefits’ new features include additional tools for on-boarding and off-boarding employees — both cases involve a lot of paperwork and manually updating various systems.

Administrators can now automatically generate offer letters and agreements, and add/remove employees from payroll and benefit plans with a few clicks. New features include employee handbooks, IP assignment agreements, and welcome letters. This puts Zenefits in competition with HR services like BambooHR, SilkRoad, and Workday.

As Conrad mentioned above, existing customers asked for paid time off (PTO) tracking. Now employees can request vacation through Zenefits, which will automatically email the manager for approval. The system tracks everyone’s balances, accruals, and liabilities, and presents a calendar view of who has time off when to prevent overlaps.

All these functions traditionally required a lot of paperwork , spreadsheets, and labor to keep synced and up-to-date.

Conrad experienced this first hand at his previous startup SigFig.

“We had no HR person and so all the admin crap floated to the top,” he said. “I ended up having to deal with it, which I deeply resented. I would much rather do something else. I went through a list of things I hated dealing with at that last job, and Zenefits is now building features one by one so other people won’t have to.”

Employees self-manage their accounts by updating their information when there is a change. When information is changed in one system, Zenefits automatically updates it on others and makes the necessary changes for deductions, tax withholdings, and insurance plans, etc.

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“Most HRIS systems are static, they aren’t connected to anything else. So when you update information in one place, it doesn’t update in others,” Conrad said. “If you move or get married, that has to be changed with HR, payroll, medical insurance, life insurance, etc. It is a huge administrative headache that requires a full-time staff. With us, it all happens automatically.”

I have witnessed plenty of entrepreneurs getting gooey-eyed when talking about Zenefits mainly for this reason — it automates operations (for free) that would otherwise require paid employees, and it saves a significant amount of time and effort. Zenefits’ system has detailed information about tax codes, insurance policies, and regulations, and all the nitty-gritty, important stuff that most entrepreneurs would rather avoid dealing with.

Reporting was another highly-requested feature. Zenefits can now be used to create custom reports with data about turnover, employee contact information, etc.

Conrad said Zenefits’ sweet spot are companies with between 50 and 300 employees. It currently has 300 customers in 37 states, and it only launched 7 months ago.

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Zenefits is basically a management layer that sits on top of other existing systems. It is free because it makes money as an insurance broker. Brokers play a key role in the world of corporate insurance — they help businesses buy and manage insurance policies, offer consulting services, conduct risk assessments, manage benefit issues, assist with claims, and more, and they collect a monthly commission.

“This is the great hack in our business model,” Conrad said. “Insurance brokers make way too much money for the value they provide. We say switch to us and we will do way more for you than other insurance brokers will do. About 50 percent of our customers are moving to us as their broker. We can get them set up in 30 minutes, it is a no brainer.”

The software integrates with existing payroll and benefits systems, or helps businesses choose plans and get set up. From there, everything can pretty much happen online.

Zenefits participated in Y Combinator’s Winter 2013 class and raised $2.1 million from Venrock and Maverick Capital as well as General Catalyst and angel investors including multiple YC partners, Box cofounder Aaron Levie, Quora cofounder Charlie Cheever, Twitter exec Elad Gil, and others.

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The company is based in San Francisco.