Marcia Passos Duffy
If your company has recently grown or has added new hardware or software and your information technology department is working its fingers to the bone trying to keep up with the demand for help from end users, it may be time to consider an MSP, or managed IT service provider.
“With the shortage of qualified IT professionals in the marketplace at the moment and the increased technology demands from compliance issues, IT departments are finding themselves stretched thin,” says Gary Matsuda, co-founder and executive vice president of Agile360, a technology consulting and engineering firm based in Irvine, California. “Companies that find themselves in this position ought to consider outsourcing IT functions by using an MSP.”
Smart Business spoke with Matsuda about MSP and how it can help companies take control of their IT departments without losing control of their information.
What can an MSP do for an IT department?
MSPs offer a variety of core infrastructure services that generally fall into one of two categories: reactive services or proactive services.
The large majority of MSPs provide help in the reactive category. This could include hardware and software monitoring and troubleshooting, application support and tuning, and general help desk duties, such as password resets, printing issues, etc.
In the ‘proactive’ category, MSPs can provide consulting on larger issues, such as patch management installing security measures and basic upkeep of the operating system and application software. An MSP can also provide help in strategic IT planning through quarterly business reviews with the business or application owners. In these review sessions, the previous quarter’s issues are summarized and topics revolving around performance and efficiency are discussed.
In addition, some MSPs provide co-location services, including fully redundant data center infrastructures with managed physical or virtual servers on a monthly rental basis. These co-location servers can be located in different geographical regions and, with data replication technologies, can provide a key component of a company’s business continuity solution in case of a disaster or system malfunction.
When should an IT executive or business owner consider an MSP as an alternative to hiring more IT staff?
An MSP solution works very well for many small- to medium-sized businesses that are finding it hard to keep their IT staff lean and efficient. When a business grows and adds employees, it usually requires more IT staff to support these end users. By hiring an MSP to handle the core IT services, the business does not have to keep adding IT staff and deal with all the training and retention problems that go along with it.
Contracting an MSP could be a sensitive issue within the IT department and needs to be positioned in the right way. Your IT staffers need to realize that they are not being displaced, but that the MSP will help offset the added workload and allow them to focus on more strategic IT initiatives.
Could hiring an MSP save money?
Yes, and the cost savings can be significant when you consider that the average salary for qualified IT professionals in Southern California can range from $60,000 to $100,000-plus a year. Many MSPs offer ‘block support’ contracts, which are prepaid hours of support. These also come in different levels from advanced senior level IT support for complex issues to more basic remote administration duties, such as the ‘help desk’. The prices per hour or per block will vary accordingly. That said, if a company’s IT environment is chaotic, it may require some prerequisite costs to stabilize the environment in preparation for a hand off to the MSP. But assuming that the IT situation is under control, the savings can be significant.
Are there security risks associated with hiring an MSP for co-location services?
Depending on the level of management and administration delegated to the MSP, security risks are not too different than if a company were to move its services to a co-location facility on its own. That said, you do need to trust that the provider has a good hiring process with background and other checks and qualified personnel.
There is a lot of concern today regarding disaster recovery, particularly because of more stringent compliancy issues. How can MSPs help companies with disaster recovery?
Any good disaster recovery or business continuity solution will have a second data center in a different geographical location, but having a second site is usually cost-prohibitive for many small- to medium-size businesses. It is very expensive for a business to have its own computing resources in a different location on a standby basis, which requires a huge capital investment in rack space, network, servers, operating systems, power, cooling, etc. MSPs can eliminate the capital outlay required to support a secondary data center by providing managed servers on a rental basis, moving the expenses to the operating budget. As an added benefit, with the proper data replication and management tools in place, the second site can also be used as a development/test environment.
Using an MSP’s co-location services is an excellent alternative to fulfilling a disaster recovery plan. Disaster recovery is a hot topic now because of the compliance-related tasks a business needs to fulfill in order to adhere to its documented business continuity plans.
GARY MATSUDA is the co-founder and executive vice president of Agile360, www.agile360.com, a technology consulting and engineering firm based in Irvine, California. Reach Matsuda at (949) 253-4106 or email@example.com.
Companies often expect new hires to “hit the ground running,” but are businesses giving employees the resources and guidance to do this? According to a recent survey developed by Robert Half International, companies may be hindering new employees from performing at their best by not providing them a formal orientation program. The survey was conducted by an independent research firm and included responses from 492 full- or part-time workers 18 years of age or older employed in office environments.
“Only a small percentage one third of the workers we surveyed received any kind of formal orientation program from their company,” says Phil Willingham, senior regional vice president of Robert Half International, the world’s first and largest staffing service specializing in accounting, finance and information technology.
Smart Business spoke with Willingham about the importance of a formal orientation program and the key elements of a good plan.
Why is it important to have a formal orientation program for new hires?
Eighty-seven percent who underwent a formal orientation said that it helped them prepare for success within the organization. A formal orientation program increases the likelihood that employees ramp up more quickly because they feel supported and guided during the first days with the company. Employees who receive a formal orientation feel comfortable in their roles more quickly and achieve a sense of belonging. These attributes provide a good foundation for work productivity.
From the company’s perspective, providing a formal orientation helps get the new hire up to speed quickly and helps with retention, which reduces the high cost of turnover.
Why don’t more companies have a formal orientation program in place?
It could be an expense issue or a perceived expense issue. Or it may be time constraints. Growing companies are often stretched thin and unable to dedicate the necessary resources to develop a formal orientation program, which takes planning to put together.
What is the advantage of a formal orientation program versus an informal one?
Many companies already have some kind of informal orientation in place that may be effective in helping the employee feel comfortable. However, the value of a formal orientation program is in its consistency: It provides employers with an opportunity to reinforce the company’s values and set expectations, and it also lays the groundwork for keeping the company’s message consistent.
Not having a formal orientation program doesn’t necessarily mean employees won’t be successful. But the first days of work at a new company leave a lasting impression. The more thorough the orientation, the better new hires can acclimate quickly, learn what resources are available to them and gain a sense of the corporate culture.
What are some key elements of effective formal orientation programs?
At the very least, supervisors should give new hires a tour of the office, introduce them to their colleagues and explain security procedures. Make sure you invite senior management to meet with the new employee; an appearance by an executive or other company leader adds credibility and weight to the session. If this is not possible, a high-quality video could be a good substitute.
The first couple of days are also a good time to discuss the history of the company, explain the corporate culture and give some basic tips on what the new hire can do to succeed in the company. This is also a good opportunity to talk about short-term expectations (what is expected within 30 to 90 days which can also coincide with a training schedule) as well as the long-term vision (what is expected of the employee in the span of one to five years).
The important part of a formal orientation is that the message is coordinated and consistent throughout. The ideas conveyed in the orientation should reflect those expressed during the recruitment process and how the company presents itself to the outside world, as well.
The first days also need to include a meeting with the Human Resources Department for formalities such as giving the new employee a handbook, information about benefits, vacation time, etc. It is also important to give the new employee a list of key contacts in the company which can help speed up communication when an issue or a question arises.
A good orientation program is an ongoing process. Managers should ensure the orientation process doesn’t end when a person leaves the formal session. A mentoring program is an excellent way to provide ongoing guidance and support beyond the first few weeks on the job.
PHIL WILLINGHAM is senior regional vice president for Robert Half International in Houston. The company has more than 350 staffing locations in North America, Europe and the Asia-Pacific region, and offers online job search services at www.rhi.com. Reach Willingham at (713) 339-1060 or by e-mail at firstname.lastname@example.org.
Selecting and maintaining the right employee benefits plan is a daunting task for most business owners. There are many considerations including tax and legal issues, affordability, and plan administration. Selecting the right professional to represent your company is a crucial first step in your plan development. A good advisor provides full service throughout the year and delivers custom employee communication materials, human resource tools, creative and cutting-edge programs, claims data analysis services, and more.
“Obtaining competitive quotes for coverage and handling claims problems is only a part of what you should expect from your employee benefits advisor,” says Keith Kartman, a senior sales executive with JRG Advisors, the insurance brokerage and consulting firm managing the Chamber-Choice program.
“You need to understand exactly how the broker-client relationship works and why choosing the right advisor is crucial for your organization.”
Smart Business spoke with Kartman about the hallmarks of a good benefits plan and some red flags that indicate that you may need a change.
What is the hallmark of a good employee benefits plan?
First and foremost, you want to select an insurance advisor who is recognized by the insurance marketplace and who will invest the time to understand your business. The advisor who listens to your company’s goals and who can translate these goals to a responsive marketplace will provide your company with the most competitive employee benefits program.
Could you explain some of the important value-added components that should be part of the employee benefits program?
- Benchmarking data and trends. Statistical data can help you establish benchmarks based on similar companies and what they are doing in terms of company benefits. This will help in comparing your benefits program and financial objectives to similar companies the same companies competing for your labor force and consumers.
- Wellness initiatives. Understanding the impacts of lifestyle behaviors, having access to health-related information and participating in programs such as smoking cessation, exercise or preventive screenings all contribute to employees leading healthier lives. Managing a measurable, rewards-based employee wellness program delivers immediate and long-term results. Statistics show improved employee morale and productivity, reduced claims costs, and proactive health risk management as positive results for employers who champion wellness initiatives.
- Intranet site. Employees and their covered dependents need easy access to benefits information. When this information is available 24/7 online, at the work-place or at home, employees are more aware and can better appreciate their employers’ sponsored benefits. Companies can create a customized intranet site that contains business, human resources and benefits information; links to carrier sites, provider directories and administrative forms all in one place. Online access makes finding solutions and plan management easier for all parties involved.
What are some red flags that show that a benefits broker is not providing adequate consultation?
Employers need to be working with their broker on a proactive basis. Any lack of communication between the two parties is cause for concern. The broker should not only help with claims and service, but also be available to offer administrative support, troubleshooting and other assistance.
Another red flag is if the business owner is only talking to the broker at the renewal date. Conversation needs to be ongoing throughout the year, ideally in quarterly meetings. Formally prepared and scheduled meetings allow the benefits advisor to learn of any new benefit needs, refinements and considerations, or areas that employees need addressed.
What should an employer do if an insurance broker’s service or a carrier is not up to par?
Typically, there is no contract involved, so insurance brokers can be changed at any point throughout the year. Is your current broker well compensated but providing little more than an annual visit at renewal? If so, consider the added value that your company should be receiving.
The key to maximizing the relationship with a broker is to know what to expect, and that you need more than the annual spreadsheet of quotes and benefits plans. A quality broker-client relationship is a proactive, results-oriented partnership that ensures the best long-term value and service for the company and its employees.
KEITH KARTMAN is a senior sales executive with JRG Advisors. Reach him at email@example.com or (412) 456-7010.
“The ROI for training and educating a work force is not always transparent,” says Diane Richards, associate vice president of human resources for National University, “but there are effective ways to measure human capital development.”
Smart Business spoke with Richards about the benefits of investing in human capital and how business owners can best measure their return on investment for employee higher education and training.
What are some of the key benefits to investing in education and training?
The number one benefit for both the company and the worker is workplace satisfaction. Employees who feel that the business cares enough to pay for further training and education have greater loyalty and higher morale, resulting in better retention. In this tight employee market, it generally costs a business twice as much to hire a salaried employee than to keep one.
Human capital development is also important for attracting good employees, since education and training are ranked high among candidates today as critical factors in job selection. In the same vein, advanced training and education increase the possibility of promotion opportunities, which often increases retention.
In what forms do employee training and education take?
Training and education do not necessarily have to take place outside the company. Some of the best training scenarios can happen internally through mentoring programs and workshops held within the business. Many Fortune 500 companies already have these management training or ‘grooming’ programs in place. That said, it is effective to train both in-house and through other avenues, such as seminars, networking and formal courses at a college or university.
How can a business ensure that it gets a good return on investment?
Profit in most companies is seen only as financial, but the profit gained in the marketplace by well-trained and knowledgeable employees is often harder to track.
One way to measure is to give the employee on-the-job exercises and projects that test the learning obtained. This way, the manager can see how the employee applies the knowledge gained. Setting challenging goals is another way that managers can gauge how an employee has benefited from a course or seminar.
Another way to measure ROI is through an after-course assessment done by the employee. Measurement does not have to wait until after the course is completed, but can be done while the employee is being trained, taking a course or pursuing a degree.
How can a manager track the ROI during the time the employee is taking the course or receiving training?
Ask the employee to bring back concepts learned to share with the rest of the department in a presentation. Ask the individual for periodic updates. If appropriate, ask the employee to use the business setting as a proving ground for concepts learned. There are many creative ways in which lessons learned in the classroom can be applied directly to a current business problem.
Even a one-day seminar can have a positive influence on the work unit. Make sure that every time employees go for training of any kind that there is some method for the employer to assess what they have learned, and possibly ask what they can contribute via a presentation to the work unit.
What advice do you have for an owner or manager who is considering sending employees for further training or education?
The first thing to do is to assess the business’s needs and tie them to the employee’s strengths and challenges. What will the business need from the perspective of people-power down the road? How will this course or degree help the business get to that goal? The idea is to have the training or education position the employee better for what the organization needs to meet its goals.
Second, investigate education options. A course or degree may be the best route, or it may not. Perhaps an internal seminar would be a better alternative. The idea is to make sure that the method of instruction is appropriate for what the individual and the organization need.
The bottom line, I believe, is that the employer needs to be aware that human capital development is important even critical to a company’s success. Every employer has an obligation to its work force to have a safe working environment, competitive wages, and so forth. Part of that obligation is to ensure that the work force is well trained to not only do the job, but to do it well.
DIANE RICHARDS is the associate vice president of human resources for National University. Reach her at (858) 642-8191 or firstname.lastname@example.org.
Part-time and nontraditional employees historically have been exempt from the insurance coverage offered to full-time employees because many businesses have not wanted to incur the expense of time and money to manage the coverage.
Options are available that will offer some basic insurance to uninsured employees of all kinds with little or no cost to the employer, says Rick Galardini, CEO of Pittsburgh-based JRG Advisors.
Smart Business spoke with Galardini about the alternatives available to help businesses make sure all of their employees can access insurance.
What are some examples of nontraditional or uninsured employees?
They can be working part-time in an office or they can be part of a work force that is seasonal, such as workers at resorts or in landscaping. Workers in restaurants, such as wait staff, often work four to five hours a day and are not considered full-time. Many nurses in nursing homes also work part-time. Some workers are just under that 30- to 40-hour workweek, are not considered full-time and, therefore, not eligible for benefits.
These examples, although found among employers of all sizes and industries, are particularly noted with small or start-up companies that simply cannot afford to insure their employees, whether considered full-time, part-time or nontraditional.
What kinds of insurance can businesses offer their uninsured full-time, part-time or non-traditional workers?
Medical, dental, vision, disability, life insurance, and accidental death and dismemberment insurance all can be offered.
‘Worksite’ products are popular because employees can choose from a variety of insurance plans right at the work place, and because they are less expensive than traditional group insurance. Worksite products are not full-blown insurance, and insurance companies do not pretend that they are. But they provide some coverage that will help the employees in case they are hospitalized, need to go to the doctor or need dental work.
What is the employer’s role in providing worksite insurance products? And what is the benefit to the business?
The employer can pay for whatever portion of the premium it wants or none of it. Employees pick the type of insurance they want from a menu of plans. There is a payroll deduction from the employee’s paycheck, pretax. It’s all managed using software or an online Web site provided by the insurance company.
The benefit to the employer is the ability to offer affordable coverage to its uninsured employees, which helps attract and retain all employees. Additionally, employees go directly to the broker or insurance company for benefits questions or concerns, keeping the employer out of the human resources game.
And what is the benefit to the uninsured full-time, part-time or nontraditional employee?
Given the option of having no insurance or some insurance, many employees will take the latter. It is a comfort for these working employees, who are a big percentage of our uninsured population, to have an insurance card in their wallet. There is also an element of dignity involved in having insurance, as opposed to being completely uninsured.
RICK GALARDINI is the CEO of JRG Advisors. Reach Galardini at (412) 456-7013 or Rick.email@example.com.
Robert Half International, the world’s first and largest staffing services firm specializing in accounting and finance, identified five jobs positioned for growth this year. The information is based on research from the company’s 2007 Salary Guide, actual candidate placements and discussions with hiring managers throughout the United States.
“Today’s marketplace lends itself to many opportunities for experienced accounting and finance professionals,” says Andrea Dunn, division director for the Columbus office of Robert Half Finance and Accounting. “Those that get the best compensation tend to be professionals who can combine strong strategic decision-making with good communication and technology skills.”
Smart Business spoke with Dunn about the opportunities available for experienced accounting and finance professionals in today’s marketplace.
What are the top accounting and finance positions this year?
Those specialties that will see the greatest gains in base pay include compliance professionals, internal and external auditors, financial analysts and public accountants.
Employers are looking for accounting and finance professionals with a broad range of abilities, including strong strategic decision-making, communication and technology skills.
Why are these professions so popular?
It varies, depending on the specialty. For example, compliance executives with U.S. Securities and Exchange Commission reporting experience are needed to help companies meet ongoing corporate governance requirements. Internal auditors, particularly those who possess the certified internal auditor (CIA) certification, are being hired to help improve internal controls and meet the compliance mandates of such regulations as Sarbanes-Oxley.
Firms are also hiring financial analysts to assist with budgeting and forecasting activities and to identify how their organizations can become more profitable.
Accountants who are CPAs and have at least three years of experience, including in public accounting, are needed for projects ranging from maintaining general ledger accounts and preparing financial statements to developing budgets.
What is the breakdown of growth and average base pay for the top five accounting and financial specialties?
- Internal auditor National average starting salaries for internal audit managers at large companies (more than $250 million in sales), for example, are expected to climb 5.8 percent this year to a range of $77,500 to $101,500.
- Compliance executive Starting salaries for chief compliance officers at large companies are predicted to rise to $132,500 to $181,250, a 14.4 percent increase, and to $111,000 to $145,500 for those at midsize companies ($25 million to $250 million in sales), up 9.3 percent.
- Financial analyst Demand for these professionals is especially acute at the management and senior levels. Base pay is expected to jump 5 percent for managers with small companies (up to $25 million in sales) to between $55,750 and $70,000, and 5.6 percent for senior financial analysts at large companies to $58,250 to $73,750.
- Staff accountant The greatest gains in initial compensation for staff accountants are expected to take place at large companies, with starting salaries rising 5 percent to between $41,250 and $52,500.
- External auditor Professionals who possess three to seven years of experience and the certified public accountant designation are particularly valued. Senior external auditors with small firms (up to $25 million in sales) will see starting salaries increase 5.2 percent to a range of $48,750 to $63,000.
What advice do you have for job seekers?
First, job seekers need to understand what skill sets are in demand and highlight strengths in their résumés and during job interviews. Take other steps, such as pursuing additional coursework and relevant certifications, to enhance expertise in these areas.
Second, candidates should seek out firms where they’d like to work rather than waiting for want ads to appear, because many companies are seeking to fill positions that aren’t yet advertised in the paper.
Third, make sure you vary your search. Try to look online, at industry events, and at informational interviews. During the interview process, stress to the hiring manager how you’ve used your expertise to save time and money for the companies in which you have worked.
The survey was developed by Accountemps, the world’s first and largest specialized staffing service for temporary accounting, finance and bookkeeping professionals. Conducted by an independent research firm, the survey includes responses from more than 1,400 CFOs from a random sample of U.S. companies with more than 20 employees, and 536 full- or part-time office workers.
“While other perks are important, what really matters at the end of the day is that the manager personally thanks employees for a job well done,” says Phil Willingham, senior regional vice president for Accountemps in Houston.
Smart Business spoke with Willingham about the importance of recognition and what employers can do to make sure that employees know that their work is being appreciated.
Why was the simple thank you ranked high among the nontangible incentives?
Workers are most motivated by recognition of achievements. Employees want to know that their input makes a difference and is valued. A simple thank you is a sincere form of appreciation that an employee’s work is not taken for granted. It is important for managers to know that this simple gesture can make a huge impact and have a positive influence on morale.
How much appreciation is appropriate when it comes to giving recognition?
Giving praise for the sake of giving praise is not a good practice. It should be genuine and heartfelt. Managers also need to be careful about favoring one employee over another. Well-deserved praise needs to be spread out among employees.
Another good way to appropriately praise is to praise entire teams or departments for work well done. This is particularly effective if done publicly in a meeting, in memos or via the company newsletter.
Why the need for so much recognition?
Businesses today are having an increasingly difficult time finding qualified professionals. There is a shortage of talent across many industries. Retention is a challenge that businesses want to minimize. The easiest way to retain workers is helping to make people feel valued for their work. In the war for talent, companies have to recognize that employees have a lot of options, so doing things other than just providing a job is important.
What should managers do to recognize the accomplishments of their staff?
The survey shows that saying thank you is the most effective way. Other types of recognition are also important, such as making sure that tenure and anniversaries are publicly announced and celebrated.
I’ve also seen a trend where managers have taken this idea to a more personal level and connected with the employee by being attentive to what the employee likes to do outside the workplace. In this way, the gift or recognition has a personal touch to it. For example, if a worker is an avid rock climber, perhaps giving them a gift certificate for equipment or a book on the subject. Tying the recognition gift to something the employee is passionate about shows that the manager cares.
What other ways can managers increase the level of recognition and communication?
It’s not all on the manager’s shoulders. The employer can also encourage employees to motivate and cheer each other on. It is the manager’s job to create a sense of community among the employees that he or she manages. Push them to go to lunch together, brainstorm ideas (which shows employees they are ‘in it’ together and that the manager doesn’t have all the answers), come together to solve problems, provide mentors to employees (demonstrating that you care about their future), and recognize employees by making them a mentor to a less experienced employee.
In addition, having a formal and systematic approach to the employee review process is critical.
Are there times when employees ought to recognize their managers?
Absolutely. Managers should be recognized for significant work milestones, tenure, production performance and other accomplishments. However, employees need to be careful, since their gestures of appreciation may be viewed by other workers as wanting to gain favor with the manager. One way to avoid this is to include all team members in the recognition.
PHIL WILLINGHAM is the Houston senior regional vice president of Accountemps, a division of Robert Half International. Reach him at (713) 623-4700 or firstname.lastname@example.org.
“Very often, managers think that it takes a lot of money or expensive perks to motivate employees,” says Chuck Cave, vice president for Accountemps in Cleveland. “However, we have found the two greatest motivators have nothing to do with money: recognition and communication.”
Smart Business spoke with Cave about the importance of recognition and how employers can create a culture of open communication and appreciation of employees.
Other than a simple thank you, are there other ways managers can thank their staff?
A thank you always works well; so does a handwritten note or an e-mail. That said, however, while recognizing the accomplishments of an employee on a one-onone basis is important, it is also imperative that people get recognized in front of their peer group as well. One way to do this is during a staff meeting, or an e-mail that copies the peer group and top executives in the company. This has the added benefit of motivating others in the company to excel, particularly if they like public recognition for their efforts.
What should employees do if they feel they are not getting enough praise or communication?
Employees are often reluctant to be open about what they need. However, during any one-on-one meetings with the manager, when he or she says: ‘Is there anything you need from me?’ that is the opportunity to bring up the need for more recognition. The employee needs to be prepared to give examples of good work that have gone unrecognized. Clearly, this is a topic that employees don’t often feel comfortable addressing. However, employees need to realize that there are times when managers are caught up in the fast pace of work life and will neglect to recognize accomplishments among staff. Good managers, however, know the importance of recognition.
What are some ways that managers can increase the level of communication and appreciation with their staff?
Money may not always be there in a company to shower employees with bonuses, lunches, networking events and other perks. However, nonmonetary tools that are always available are good communication and recognition. As our survey pointed out, these tools are probably the most effective in helping keep employees motivated and happy, which is the key to retention.
Recognition and communication go hand-in-hand. Many times, employees want more communication because it’s during these talks with the manager that recognition often happens.
One way managers can gain a higher level of communication with their employees is by blocking off time to meet with them throughout the week. Not every manager can meet with every single employee every week (and if there is a staff of 60 people, it is next to impossible to do this). However, if a manager has the typical six to eight people who are reporting to him or her, then time-blocking can be effective. For example, once a week the manager can meet on a rotating basis for an hour with one employee. After six to eight weeks, the manager would have met with everyone on staff.
The number one reason cited that employees decide to leave a company is because of their relationship with their superior. Communication and recognition can go a long way in creating a work environment where an employee wants to stay. And as the labor market continues to get tighter and tighter anything a manager can do to create a healthy work environment and culture helps with retention.
What other ways can managers better express their appreciation for their employees?
One powerful way is through a mentoring program. It sends a strong message to the mentor that his or her experience is valued enough to formally pass it on to the next generation of workers, and it expresses to the employee that he or she plays an important enough role in the company to provide a mentor.
Another way is to pull a department together to brainstorm ideas. This sends the message that what employees think is important. It also has the added benefit of encouraging dialogue and helping to set a common goal for everyone to reach. Again, this sets up a positive environment for recognition all around when the goal is accomplished.
CHUCK CAVE is the vice president for Accountemps in the Cleveland area. Reach him at Chuck.email@example.com or (216) 621-4253.
Health insurance coverage has become a heavily regulated environment that while it has made life complicated for health insurers has made great strides to protect the consumer. Still, a business owner needs to be careful about selecting the right health insurance provider to make sure that the health care coverage is the right fit for the business and its employees.
“Despite it being a heavily regulated environment, a business owner should not throw caution to the wind when selecting a provider,” says Lisa Davies, senior director of corporate compliance for AvMed Health Plans of Gainesville.
Smart Business spoke with Davies about the key issues facing health care at the moment, and the steps a business owner can take in selecting the right health care provider.
Could you name the key issues facing health insurance companies and how they affect businesses?
From my perspective, there are significant challenges related to staying in compliance with state and federal rules, laws and regulations.
In Florida, both the AHCA (Agency for Healthcare Administration) and the DFS OIR (Department of Financial Services Office of Insurance Regulations) receive regular reports from health plans and also perform routine audits of those plans.
On the federal side, insurers who hold Medicare Advantage and Part D contracts are subject to oversight by HHS OIG (Health and Human Services Office of the Inspector General), CMS (Centers for Medicare and Medicaid Services) and its contractors.
Additionally, since Florida insurers must be accredited by an external quality organization (such as National Committee Quality Assurance), health insurance companies need to meet or exceed standards for excellence in operations and support processes and procedures of the plan.
What kind of impact do all these regulations have on the consumer?
They have a very positive impact, as they benefit from having a partner whose operations and performance are closely monitored by any number of external parties.
How can a business go about choosing an insurance company in this environment?
Businesses should either have a strong internal component of their operations or engage a knowledgeable partner, such as a broker or consultant, to assist them with the process of making a selection. Additionally, they should either meet with prospective partners or be active participants in the broker or consultant review and selection.
That said, there is at least one caveat about selecting a broker, particularly for small businesses that need to rely on brokers to buy their insurance products. There have been significant problems in this state with unlicensed brokers. Therefore, business owners need to make sure that the broker they are using is reputable and agency licensed. Do this before you get into a relationship with a broker and find out too late that a business is not covered adequately.
How can a business make sure that a health insurance company complies with all the rules?
As we discussed, health insurance companies function in a very heavily regulated environment. Deficiencies of companies that fall short of meeting their regulatory or accreditation requirements will appear in publicly available reports and plan rankings.
Plans that continue to be poor performers are subject to sanctions, and penalties such as suspension of enrollment, and administrative supervision or plan closure for extreme cases. This is something that can’t be hidden from public view since all of these reports are publicly available. If a plan is not meeting regulatory requirements, the first thing that happens is that agencies will suspend enrollment.
Should a business perform due diligence before selecting an insurance company?
Here are three critical steps.
- Develop a questionnaire that may be used in the pre-selection process. Ask for supporting documentation from the plans. Include in your request the health insurers Code of Conduct; description of the Compliance plan and program; and the formal Notice of Privacy Practices and Confidentiality procedures.
- Look to financial performance rating companies such as AM Best or Weiss for their evaluations of stability and financial strength.
- Visit public and professional sites where information is made publicly available. In Florida, we have several excellent sources for this type of objective data. These include www.floridacomparecare.gov, which provides information on quality of care, member satisfaction, coverage areas, accreditation status and more.
LISA DAVIES is the senior director of corporate compliance for Santa Fe HealthCare and AvMed Health Plans (www.avmed.org) based in Gainesville. Reach Davies at Lisa.firstname.lastname@example.org or (352) 337-8782.
Many business owners use an insurance broker for buying commercial insurance. While business owners may feel secure knowing that their business is covered, the litmus test of a policy’s adequacy is when a claim is filed.
But how does a business owner tell one insurance broker’s services from the next? They may end up basing their decisions exclusively on price or an attractive package deal.
“Insurance is often treated like a commodity, but selecting an insurance broker should be done with the same care as selecting an accountant, banker or attorney,” says Rob Kempa, a commercial insurance broker with Westland Insurance Brokers with offices in Irvine, San Diego and Temecula.
Smart Business spoke with Kempa about tips on how a business owner can determine if an insurance broker is good fit for his or her business.
What are the hallmarks of a good insurance broker?
At the very least, an insurance broker should assess your risks, tailor an insurance program that will protect those risks and provide recommendations to improve the insurance program to transfer the risk via risk management processes that include buying an insurance policy.
Insurance brokers that go above and beyond these basics are a true asset to a business owner.
What are some of the things that make an insurance broker stand out from the pack?
A good insurance broker will help business owners consider risks that they would not normally consider and help them foresee problems that could jeopardize the company in the future.
Clients ought to expect that an insurance broker behave like an attorney, a banker or another trusted adviser rather than simply a salesperson.
A good insurance broker is often very involved in advising clients on the ever-changing landscape of insurance trends, policy and coverage changes. A good broker should also make sure that clients are in compliance with ever-changing laws and regulations, so that if a business is inspected everything will be in order. The broker can achieve this by hosting seminars and workshops within the client’s company about pressing issues, such as compliance with OSHA and reviewing a company’s safety programs.
A good insurance broker can also communicate with clients through e-mail or a newsletter about insurance issues that can affect businesses.
What are some red flags that a business owner should be aware of when selecting an insurance broker?
Beware of insurance brokers that emphasize only price and savings. While you may save money in the short-term, the premium savings can be eradicated if there is ever a claim not covered due to a gap in coverage.
Also, be wary of brokers who do not have experience insuring companies that are similar to yours. Brokers or the insurance companies they represent need to understand the industry that you are in if they are to completely understand all the risks that need to be covered.
Do not take a cookie-cutter proposal.
Make sure that the broker has analyzed your business and is giving you custom-designed services.
Lastly, make sure that the insurance brokerage firm you select has adequate resources to properly manage your account. Make sure the broker has a highly qualified staff to support your servicing needs. The broker should represent many high-quality carriers that can support your company in the ever-changing marketplace.
What are some tips when seeking a good insurance broker?
Get recommendations from your other trusted advisers, your business associates, friends or your chamber of commerce.
Interview at least two to three prospective brokers, similar to the way you would interview a prospective employee. Research the history of the broker.
Make sure the insurance broker has experience insuring a company in your industry. How long has he or she been a broker?
Make sure that the broker is not acting as just a salesperson, but takes on the responsibility of becoming your risk manager and insurance adviser.
Do not make your decision based on price alone, but ask the broker to provide a line-by-line assessment of the coverage so that you can easily review and compare with other brokers.
Ask for references and a list of clients, and call them.
Make sure the carriers the broker is presenting are A-rated AM Best carriers. This can easily be checked by visiting www.ambest.com.
Make sure the broker can provide full brokerage services not only property and casualty insurance but also employee benefit, personal lines and safety management. By selecting a full-service broker, this will give you the convenience of working with one firm rather than many.
ROB KEMPA is a commercial insurance broker with Westland Insurance Brokers (www.westlandib.com), a full-service commercial and group insurance company with offices in Irvine, San Diego and Temecula. Reach Kempa at email@example.com or (619) 584-6400, ext. 3216.