“Companies have been moving that way as HR has become more complex — it’s no longer an HR person sitting in an office planning parties. There are complicated employee and compliance issues to address,” says Liz Howe, Director of Business Development at Benefitdecisions, Inc.
“There are so many different laws being passed at the state and federal level that it can be a challenge for any HR team to keep up,” Howe says.
Also, classification of employees has become a growing concern in recent months. Not many small and midsize businesses have the expertise to handle all of these requirements, especially considering that compliance laws change so rapidly. That definitely leads to compliance issues — the federal government estimates that 92 percent of companies are out of compliance with COBRA. That’s particularly a problem among companies that handle it themselves.
Is outsourcing HR cost-effective?
Outsourcing is an affordable way to get the specialized expertise that you don’t need on a daily basis. Maybe they can have someone on-site one or two days a week and, for more complex issues, have the ability to get answers from someone who is a certified Senior Professional in Human Resources.
Why does outsourcing HR make sense for companies moving away from a professional employer organization (PEO)?
It’s a nice next step for companies that had been in a co-employer relationship with a third-party administrator. The PEO environment is popular with small businesses and startup companies that don’t have any claims history, so they would have expensive insurance and benefits. A third party shares the employees, pays them and manages benefit administration. Usually at around the five-year mark or 100 employees it’s good to move away from the PEO environment.
Outsourcing HR can be a good transition in that you don’t have to go out and hire a full HR team. You can take back control of your employees, but you’re still outsourcing the day-to-day, transactional HR functions.
What else can outsourcing provide that companies might not be able to handle in-house?
While you can always hire someone with expertise in any certain area, outsourcing can take care of day-to-day functions like building processes and procedures, writing policies and handbooks, benefits administration, compliance and reporting.
Additionally, you can get assistance with strategy — succession planning, compensation analysis, performance reviews and HR technology evaluations. All of these strategic areas are very specialized and you would potentially need one person to focus on each of them. Many smaller companies don’t want to invest that much into HR. It’s a cost that doesn’t provide quantitative value to the organization. They would rather focus on growing their business and selling their products or services. •
“It’s not something you try and then decide whether you maintain it. A good program requires a well thought out strategy and budget,” Howe says.
As for the wellness program itself, it should function outside of your health insurance provider so it doesn’t need to change if you switch carriers. Programs should include biometrics screenings — basically a blood draw. Conduct screenings at the workplace to make it easy for employees to participate.
You could bring educational support in to the office — a nutritionist to host healthy cooking demonstrations, a fitness instructor to conduct stretching and yoga. The idea is to change behavior, and making it fun makes it easier. Furthermore, the same data can drive strategy related to the medical plan design;
When employees are hired or leave a company, the process typically involves HR staff inputting or changing information in a variety of places.
“HR is adding them or removing them from payroll, typing in information and sending it to the insurance provider, and using seven to 10 different systems to handle the various tasks,” says Liz Howe, director of Business Development at Benefitdecisions, Inc.
Companies are alleviating that burden by automating processes through benefit administration systems.
“They recognize the burden that HR people face. And employees are becoming more technologically savvy and want information at their fingertips,” says Howe.
Smart Business spoke with Howe about benefit administration systems from both employer and employee perspectives.
What are the advantages of benefit administration systems?
From an employer standpoint, HR personnel can easily see who is enrolled in benefit plans. These systems help eliminate errors because the plans are entered into the system once, along with employee and employer contributions. So when an employee enrolls, there’s no question as to whether he or she has a dependent or not, for example. Because everything is computerized, that also eliminates paperwork.
Once employees are enrolled, HR can reach out to carriers with information about who has enrolled and at what level — employee and spouse, employee and family. With a benefit administration system, all those characteristics are readily available.
For employees, they can point and click to find out exactly what will be deducted from their paychecks and the coverage available in their plans.
How detailed is the information provided?
It varies. You can have one focused solely on benefits, with employee information, plan description, plan summary, deductions, and employee and employer contributions. Other systems can have a total compensation statement built in, showing employees how much their benefits cost the employer.
Benefit administration systems also can house HR information such as designation, education, paid time off — anything typically tracked by HR. These systems are scalable to the company’s size and needs.
Have there been any recent developments?
The big push at the moment is toward having mobile apps to allow employees to enroll and make changes online through their smartphones. They can enter the system from home, or if they’re at the doctor’s office and need a group number, they can retrieve that on their phone.
Health care reform, and the state insurance exchanges, will probably lead to some other advancements.
What would keep a company from implementing a system?
Security is a concern that makes some companies hesitant. But companies use the Internet already, so they just need to ensure their connections are safe.
There also may be employees who don’t have access to a computer on a regular basis, although many of them do have a smartphone. Employers can place a computer kiosk or iPad station in a centrally located area for employees to enroll and check information.
Of course, there are always people who don’t want to use an electronic system. Those cases can be managed the old-fashioned way, although it’s not recommended. If you move to an electronic system, it’s best to make a complete switch.
What training is involved?
Every company does it differently. Usually, HR has specific training on the administrative aspects. Supervisors are trained so they can educate their staffs on how to use the system. Employees who need extra help can get one-on-one sessions with instructors, although sometimes that isn’t necessary. Benefit administration systems tend to be very user-friendly and easy to understand from an employee perspective.
Implementation can be a bit tricky. However, over time you’ll see how many errors are eliminated and how much time is saved. No one ever says they were disappointed in the results, they say they can’t believe they didn’t do it sooner. ●
Insights Employee Benefits is brought to you by Benefitdecisions, Inc.