Misalignment of values can lead to sub-optimal performance

Consulting and outsourcing companies can help businesses take care of their employees. Their expertise can revolve around the functions of the human resources department, which could include HR compliance audits, recruiting, job description and handbook development. But some in this space are expanding their offerings to include values and vision workshops.

“A company’s values should be the starting point of every strategic discussion, change initiative and performance discussion,” says William F. Hutter, CEO of Sequent.

Organizations that realize continued success are often those that have core values that serve as the foundation for their strategies and practices. This is considered “operationalized values,” and they are often the driving force behind a high-performing organization.

However, not all companies are able to clearly define their values, and that can often lead to gaps and misalignment that means the company isn’t able to operate optimally.

Smart Business spoke with Hutter about how companies can define their values and vision.

Why is it important that a company defines its values?

Values are important because, when push comes to shove in a difficult situation, the company mission won’t guide the decision — it will be the values of the organization and the leadership that determine the outcome. It is important for every person within an organization to be aligned with the values of the company. The ability of a company to define and communicate its values becomes a stake in the ground for everyone. It can really impact a company’s mission and make it come alive for everyone in the organization.

Unfortunately, many companies aren’t able to clearly define their values. They may instead respond by defining the value proposition of their products or services. But that really misses the mark. Values are principal-centered beliefs that essentially draw the lines between good and bad, right and wrong. Values are reflected by the integrity of the organization.

How can a company define its values?

When defining company values, consider the following questions:

  • Are goals set with the involvement of employees and in alignment with the values and vision of the company?
  • Are employees regularly reminded about the ‘why’?
  • Who do you think defines the culture of the company?
  • How would your customers or clients define the culture of your company?
  • Do individuals have the authority, initiative and ability to develop and manage their work?
  • Do leaders hold individuals accountable for working cooperatively toward common goals?

What are operationalized values?

Operationalized values are the driving force behind a high-performing culture. That happens when there is alignment between the core values of employees and leaders, and a dialog about those values exists between both groups.

Without communication, however, there can be value misalignment and gaps. Sometimes both groups can be blind to the reasons why those gaps exist. This is often when it’s wise to bring in a consulting company to uncover the reasons for the misalignment.

How can a consulting company help a company define its values?

Consulting and outsourcing companies have developed offerings to help companies create alignment with a bigger purpose than just the daily grind of business. Third-party consultants have fresh eyes. They get to look at things dispassionately, above the day-to-day activities, and see across the whole of the organization in a way that leaders often can’t.

The pace of business can be relentless and it is often difficult for leadership to stop and consider the organization as a whole. Third-party consultants can step in and give business owners a chance to see the organization in a new way. Taking a step back and seeing the entire organization can present an opportunity to improve how a business is run.

Insights HR Consulting is brought to you by Sequent

The cost of employment lawsuits and how to avoid them

Employment lawsuits have risen more than 400 percent in the past 20 years, according to Bloomberg Law reports.

The publication also found that if an employment lawsuit is filed against the employer in federal court, statistically there is a 16 percent chance that the employee will win more than $1 million and an almost 70 percent chance the employee will win at least $165,000. The average lawsuit award is in the area of $500,000.

“It is essential that employers have good policies in place that protect the company against lawsuits,” says Kellee Perez, an Account Executive at Benefit Innovations Group. “Ownership and management needs  a clear understanding of how to apply these HR policies so that the company can make informed decisions when a situation arises. The impact of a single lawsuit on a business can be devastating.”

Smart Business spoke with Perez about best practices to avoid being hit with an employment lawsuit.

What has driven this dramatic increase in the number of employment lawsuits?
Wrongful terminations or employees who feel they have been treated unfairly are a huge factor, in addition to the lack of a properly updated employee manual. As HR policies change within a company or at the state and federal level, it’s critical that there be a mechanism in place to revise manuals accordingly.

When that doesn’t happen, it leaves both employees and management uninformed about the proper response for a particular circumstance. A growing number of changes in employment law has also led to more lawsuits. In addition to the Affordable Care Act, other pieces of legislation that affect labor laws have been recently tweaked and/or adjusted. This results in changes that need to be accounted for in a company’s employee handbook.

Where do companies go wrong in adhering to employment law?
Unlawful pre-employment practices, or practices that are not formally documented, can create problems for employers.

Without a concrete process in place, a company could easily fail to get authorization for background checks, drug testing and other screening processes that are typically undertaken. The lack of documentation, either before or after the process, could also lead to unlawful pre-employment questions that leave a company vulnerable to a lawsuit.

Misclassification of employees is another area of concern. An individual who is classified as an independent contractor is restricted in terms of what duties he or she can perform on behalf of the business. But in many instances, an employer will have this person doing more than what is listed in the signed agreement.

Individuals who work under a 1099 are exempt from taxes and other items that apply to someone who works under a W-2. The company may not be doing this maliciously, but it’s still illegal and puts the company at risk of a lawsuit.

What can companies do to avoid employment lawsuits?
First and foremost, employers need to establish clearly understood HR policies and procedures in a handbook that everyone has access to. The next step is to set up a system by which this handbook will be updated whenever policies change.

In the meantime, employers should conduct an audit of their HR practices to identify areas of need or items that need to be enhanced or updated. This may differ from items of legal compliance. Perhaps there is a policy that doesn’t apply to the company anymore. The handbook should represent the company’s current function as closely as possible.

Another strong recommendation, even for companies that feel they are well-equipped to manage their HR functions, is to hire an expert consultant. This person would specialize in administrative HR duties and provide high-level support to the administration of an HR department.

By outsourcing this responsibility, it frees up personnel to handle other important tasks. At the same time, it places a person whose job it is to monitor changes in policy in position to do just that. That significantly reduces a company’s risk of an employment lawsuit.

Employment lawsuits are very expensive, but they are also avoidable. Employers who take the proper steps and work with trusted partners to oversee their HR functions will reduce the risk of a lawsuit.

Insights HR & Consulting is brought to you by Benefit Innovations Group

Close the leadership gap with a knowledge transfer strategy

Over the past few years, the rapid pace of baby boomers retiring has threatened the transfer of organizational knowledge from one generation to the next. That’s forcing many companies to address the growing gap in their leadership pipeline.

“Leadership development has become an even more vital process for companies,” says Midge Streeter, director of talent management and culture at Sequent. “A leadership development strategy reduces turnover of high-potential leaders and transfers information from one generation to the next, allowing companies that do it well to be highly competitive.”

Smart Business spoke with Streeter about organizational leadership trends and how companies can prepare and retain its next generation of leaders.

What are the characteristics companies should look for in potential leaders?

Companies should map their business strategy to their hiring practices to ensure alignment with their succession plan so that new hires have the required competencies to drive the business forward. Those competencies vary depending on the business, its size and its needs, but there are commonalities. For instance, good leaders are socially and self-aware, can build strong relationships and can develop other individuals in an organization.

How can companies address leadership gaps as more baby boomers retire?

With a sense of how the brain drain will affect their business, companies should review their succession plan and look for weak spots. Determine who is retiring, when and what areas within the organization could be most vulnerable to the upcoming retirement. Do that while looking three to five years into the future. Identify, prioritize and engage potential retirees, even those who don’t have direct reports because they still have organizational knowledge. Ideally, these near-retirement baby boomers will become mentors to high-potential employees and then transfer knowledge.

A deep and unexpected recession caused boomers to stay in their jobs longer, which delayed the opportunity for Generation X to take ownership of additional responsibilities. Gen X is small compared to the other two generations, but companies should consider how to bring those employees along because they need to be ready to lead.

What are the signs that someone isn’t as capable of leadership as first believed?

Usually, those who struggle in leadership roles aren’t able to effectively communicate to their direct reports. The main challenge new leaders face is leaving their old role behind. They often think they have to get all the work done themselves as they did as an individual contributor. That makes it hard to delegate. Leaders need to focus on coaching and bringing their direct reports along so there’s a distribution of workflow across the whole team. Once that’s recognized, the leader can be coached and his or her skills can be improved.

How can companies retain those who they want for leadership positions?

Talented, high-potential leaders are leaving organizations after 18 to 24 months, which is frustrating for decision makers and expensive to the bottom line.

To stave off this trend, it’s important that millennials feel that their voices are heard and the company is providing development opportunities. They want to be coached and mentored and have a chance to show their capabilities. When that happens, they tend to stay. It’s all about bringing them along by offering stretch projects and giving them the leadership development opportunities they’re looking for. Conveniently, it’s reported that 75 percent of millennials want a mentor and 60 percent of boomers have been sought out by millennials for guidance. Companies could benefit by taking advantage of this tendency.

Millennials are aware that they’re a hot commodity, which is why many are leaving their employers so soon. The reason for the high turnover is not typically an inadequate salary, but a lack of development opportunities. Those organizations that develop the next generation of leaders are going to reduce their rate of turnover and compensate for the brain drain. It will also position them to recruit the best-of-the best and outperform the competition.

Insights HR Consulting is brought to you by Sequent

The digital transformation in retail means broad, continuous change

For the past few years, the talk in retail has centered around the omnichannel concept, which is the idea of providing the same experience for customers no matter the buying channel. Customers expect to buy anything from anywhere at any time and have it shipped anywhere they want. This primarily digital transformation is perpetually reshaping how retailers think about their business and their supply chain.

“If digitization is not top of mind for retailers, it should be,” says Beth Thomas, executive vice president and managing director of Consulting Services at Sequent. “It’s a big undertaking involving changes with people, processes, distribution channels and technology. Companies need visibility of their inventory and a plan to tie systems together between stores, warehouses and online. Digital culture continues to change how retailers operate.”

Smart Business spoke with Thomas about what retailers must do to keep pace with consumer expectations.

What do consumers expect from retailers as more buying shifts from in-store to digital?

Consumers today either don’t want to meander around stores doing their shopping or they don’t have the time to shop. They’re doing their research online so that by the time they get to a store they know what they want and its price — if they even go to a physical store. Consumers also want to browse and shop seamlessly on any connected device and have their orders shipped the same day.

Click and collect, for example, is a service that’s making headway in London. Consumers can order products online and have them delivered to lockers rather than their homes or a retail store. Similarly, courier services within the city use bike messengers to deliver same-day orders to many locations. The level of convenience has improved greatly for consumers as retailers are forced to find novel ways of staying ahead of their competitors.

As consumer spending and behavior adapts to this increased focus on quickness and convenience, retailers must organizationally prepare to support this new service model.

What changes should retailers expect to make to provide the best service for consumers?

Retailers must consider how adapting to consumer demands will impact employees. They’re going to need training and onboarding as part of a digital internal strategy to keep them apprised of changes and processes. Organizationally, determine how employees can best keep up with demand through efficient execution using new tools and data. They have to understand their role and what their daily workflow looks like in the new way of retail. It’s a major change management issue that requires a sound strategy to do properly.

Otherwise, the areas within implementation that will require a great deal of attention are the strategies for supply and inventory, and technology.

Consider the customer experience with every decision. Learn how customers are buying and what they expect from the experience, then map a strategy to those behaviors. For example, not long ago consumers weren’t able to buy something online and return it to the store because those purchasing streams involved different merchandisers, buyers, etc., and the systems couldn’t keep track so the products were inconsistent. Now customers expect it.

Planning the stock and inventory is going to become more important now that delivery is on a shortened timeline. This requires consideration of distribution models that ship from the store, strategically placed distribution centers around the country, or through third-party platforms. Retailers need to have visibility in a network-wide inventory that supports this process.

What should retailers keep in mind as they adapt their processes?

These adaptations are part of a strategic initiative that can’t really ever be considered finished in the traditional sense because it’s rapidly changing. It needs to be seen as perpetual improvement. Success is contingent on having an efficient supply chain that’s demand driven because consumers want to buy anywhere, any time and have their purchase shipped anywhere.

There’s a long way to go until the full cross-channel customer experience is realized. If that goal is not top of mind, it needs to be.

Insights HR Consulting is brought to you by Sequent

Employee engagement: The best kept secret that all top companies know

What do powerful brands and successful companies have in common? They are investing in employee engagement as one of their top strategic initiatives.

“It’s a process, not an event,” says Beth Thomas, executive vice president and managing director of Consulting Services at Sequent. “It’s part of their everyday culture.”

She says many companies are missing the boat thinking employee engagement is just another HR “pie in the sky” effort. However, it is being statistically tied to increased key performance indicators.

“HR leaders are banging the employee engagement drum and business leaders are not listening. Employee engagement should be the top goal of all companies, and it is for some of the most successful in the world.”

Smart Business spoke with Thomas about the importance of employee engagement.

Why is employee engagement important?

For years we have been saying employees are a company’s competitive advantage. Treat them right or someone else will. Some $300 billion is lost in productivity each year from disengaged employees. One retail company revealed that for every one-tenth of a point it boosted employee engagement, its stores saw a $100,000 increase in operating income annually, not to mention better customer loyalty. Staggering numbers, encouraging advice, and yet 90 percent of business leaders have no employee engagement strategy or are not actively engaged in it.

Still, many business leaders have no clue what employee engagement is, nor do they see it as something they need to be bothered with. However, experts and companies that are proving them wrong disagree.

Top companies and brands say that employee engagement is the top initiative that helps create their brand, drive success and recruit and retain top talent. If their customers see that their employees are happy, it creates a loyalty to the brand and increases sales. Culture can make or break a business.

What should be included in a company’s engagement effort?

For most executives, success is defined by profit or revenue levels, brand equity or percent of market share. To truly understand the key drivers for business success, however, it’s critical to examine and measure the impetus: employees. They are the ones who make the products and serve customers. They are the face of a company’s brand.

There is one thing all employee engagement efforts have in common: They understand what employees are thinking. That happens not just by using an employee engagement survey, but by creating a sustainable culture in which having a voice matters, where employees feel they can express what they are thinking not just once every year, but every day.

Managers should be trained on how to engage employees every day. Some companies use social media to connect more closely with employees — for instance, through online ‘campfires’.

What can companies expect from improved employee engagement?

Studies measuring the impact of employee engagement have found better results in nine performance outcomes:

  • Customer ratings.
  • Profitability.
  • Productivity.
  • Turnover.
  • Safety incidents.
  • Shrinkage.
  • Absenteeism.
  • Patient safety incidents.
  • Quality (defects).

Employee engagement is not an HR initiative. It is a business initiative. Companies that understand this are the ones that are most successful.

Marketing is also tied to culture and brand because the customer experience is fueled by the brand promise, which is closely aligned to the employee culture.

How to improve employee engagement varies by industry, location, company size, how much money and resources an organization has to invest into developing its culture, and its philosophy around employee engagement. It’s not one size fits all, but if better performance, higher productivity, industry recognized brand and increased profits are important, wouldn’t you want to dedicate time, resources and focus on it?

Insights HR Consulting is brought to you by Sequent

Consultants augment staff, transcend politics to achieve results

Recessions have a significant impact on businesses. Companies whose revenue is negatively affected must sometimes cut deep as they try to close budget gaps. As the market recovers, they find they need help running operations or with project expertise, but they may have reservations when it comes to hiring soon after such uncertainty, which is where consultants can be a tremendous benefit.

“Some companies struggle to effectively reach their performance, project or critical initiative goals after a staff reduction,” says Beth Thomas, executive vice president and managing director of Consulting Services at Sequent. “That’s where consultants come in. They offer a point-in-time solution to a problem, often transcending office politics, without adding to overhead.”

Smart Business spoke with Thomas about how consultants can help companies solve immediate problems and be better prepared to handle them in the future.

What’s wrong with how some companies view the role of a consultant?

Not all consultants provide quality work, which can give consultants in general a bad reputation. ‘Squatters,’ as they’re sometimes called, are consultants that charge too much and don’t transfer actionable insights. Often they come from companies that send in teams of inexperienced people that lack the experience to solve the problem they were brought in to address.

They give a bad name to the consultants that have been practitioners — business owners and high-level executives — and bring that experience to their consultative roles.

How can qualified consultants help companies that aren’t in a position to hire additional staff?

Experienced consultants have the expertise needed to solve problems quickly, which saves companies money. Experienced consultants have learned lessons that can save their clients weeks and months of analysis. They know what works and what doesn’t.

Being an outsider also means consultants are able to stay out of internal political feuds that can stall initiatives with personal and not empirical problems. An external change agent creates a political safe zone for ideas to be heard and considered. It can be hard for people within a company to do what’s right in an environment of layoffs and major operational or strategic shifts as they may withhold what could be considered an unpopular opinion for fear of losing their jobs.

Consultants can operate with sufficient political cover. They are objective and can say what’s wrong with a business without the consequence of getting fired.

Employees and even executives can become deaf when they’re hearing the same things over and over. Consultants offer a fresh perspective. Whether he or she confirms or criticizes an approach, that objectivity can get people to listen.

Staff augmentation is a welcome service consultants can provide. Sometimes a company just needs an extra hand in the short term. Consultants plug holes left after a company downsizes or has lost key contributors. This can be an inexpensive and safe solution compared to hiring a full-time staffer, especially if the company isn’t confident it has successfully weathered the economic storm.

While consultants can fill gaps where a company’s internal knowledge base is insufficient, they can also help build expertise in a company. For instance, a company lacking project management expertise can work with a consultant to train people, building up knowledge so it’s not necessary to hire consultants in the future.

What are the signs it’s time for a company to bring in a consultant?

Bring in a consultant before a critical initiative kicks off. That’s the time to evaluate resources and ensure the company has the talent to meet its objectives.

It’s better to know before the outset of a critical project that there is a talent gap than to lose momentum because there aren’t enough horses to pull the cart. And companies that are unsure they’re headed in the right direction can use someone from the outside to validate or challenge a plan so the company has the confidence to move ahead full force.

Insights HR Consulting is brought to you by Sequent

Changes to Ohio law allows employers to control health insurance expenses

Traditional health insurance carriers are naturally profit-oriented. Their revenues must, like all businesses, cover their expenses. The Affordable Care Act (ACA) has changed the financial model for health insurance carriers by pegging medical loss ratios for large group plans at 15 percent. That has required insurance carriers to rethink their business model because they’ve still got to make money and pay expenses, so they’ve done just about the only thing they can to compensate: raise premiums.

To help companies cope with the increase in health insurance premium costs, the Ohio Department of Insurance (ODI) has updated its 20-year-old regulations for everyone’s advantage.

“When Ohio decided not to establish a state health insurance exchange, it created an opportunity to build a better mousetrap,” says William F. Hutter, CEO of Sequent.

“There had been legislation on Ohio’s books that allowed an organization to form a multiple employer welfare arrangement, which can essentially bind employers together to form a way to provide health coverage. There is now an entity, which companies can join, that allows member companies to participate in a nonprofit health plan that creates a direct relationship between membership, premiums and expenses.”

Smart Business spoke with Hutter about how Ohio’s new regulations create opportunities for employers to mitigate their health insurance expenses.

What do you expect will happen to premiums in the coming years?

This year brings significant changes for small employers because all health insurance plans will need to meet ACA guidelines. Health insurance providers will need to produce pretty big numbers to maintain revenue under the ACA medical loss ratios, or they will need to skinny down operating expenses. They’ll likely choose to increase insurance premiums.

What options do businesses have to mitigate premium increases?

ODI realized it needed to update its regulations because the existing laws were out of touch with the new financial model of health insurance. It sponsored legislation along with other key participants that laid the groundwork for new rules that allow businesses to participate in a multiple employer welfare arrangement.

Ohio businesses can now enjoy greater transparency into their health insurance expenses that most health insurance carriers won’t provide.

The multiple employer welfare arrangement has the potential to reward employers that monitor the health of their employees, provide wellness programs and incentivize employees to adopt healthier habits by reducing health insurance costs.

This model also creates transparency, allowing employers to see their health coverage expenses, understand why they’re going up or down and take actions to positively affect the rates. These insurance pools offer economies of scale without pooling the risk. Each member company is in its own risk bucket.

How can companies take part in a multiple employer welfare arrangement?

A company would need to work with an entity that manages a multiple employer welfare arrangement. The company’s employees would complete a personal health care survey, which will provide a rating based on the health of the group.

The result is that the company pays for its own risk but the transparency allows a company to do something to lower its costs. Members of the health fund arrangement are incentivized to help employees be healthier —by offering health screenings and wellness programs, for example — and healthier employees are generally more productive and have fewer absences.

This program makes the most sense for companies with 100 or fewer employees. Any company with more than 50 employees will experience the full impact of the ACA, which includes the administrative, regulatory and reporting requirements. Companies that join a multiple employer welfare arrangement can have much of that burden lifted.

Insights HR Consulting is brought to you by Sequent

Change management best practices help companies realize ROI

Change can be difficult. When change is set in motion on a large scale, such as across an entire enterprise or department, managing that change is critical to the success of the initiative.

“Executing a successful transformation requires the support of leadership, a plan, and the time and resources necessary to see it through,” says Beth Thomas, executive vice president and managing director of Consulting Services at Sequent. “Otherwise, it’s impossible to realize the return on investment the transformation was designed to achieve.”

Smart Business spoke with Thomas about executing a successful business transformation.

What challenges do businesses face when trying to execute a transformation?

There are several pitfalls companies encounter when attempting to implement large-scale change. The more common among them are:

  • Executive sponsorship. There must be support for the transformation from the top. Executives rally support among other executives, managers and directors to maintain accountability for the change.
  • Vision. Companies that stumble through change often do so because they don’t have a clear vision or strategy to achieve their goal. It’s crucial to have a road map that outlines the processes and partners needed to implement change.
  • Resource allocation. Many companies fail to allocate the resources needed for the change. That can mean money, but it also means personnel. There should be representatives from all departments and specialties to provide input on how change can be implemented among the different departments.
  • Proper tools. You need the right technology or change will be difficult. For instance, if you’re trying to apply a system designed for manufacturing to the retail environment, change will be difficult if not impossible.

What are the steps companies can take for a successful change initiative?

Every transformation has it’s own personality. While there are basic, tried-and-true steps on the path to a successful transformation, you’ll need to customize the approach to fit your business. These are the best practices that work in many transformations:

  • Assessment. Review your resources and create a strategy upfront to understand what the change will look like for each area it’s impacting and have a plan for its implementation.
  • Alignment. Ensure your leaders are on the same page publicly and behind closed doors. They must take ownership of the transformation to inspire others to follow.
  • Engagement. You need a group of influencers to carry a consistent, positive message out to the entire company. This creates a community of support, which is essential for change to take hold.
  • Education. Helping each person understand what the change will mean for them and how they fit in to the new world matters. People feel more comfortable when they understand their role and responsibilities during and after the transformation.
  • Communication. If the truth of the change process isn’t communicated to your associates, they’ll make up stories. Misinformation causes anxiety, leads to disengagement and increases the risk of employees leaving. That retention issue is even more of a threat with top talent.
  • Support. Once a transformation is underway make sure people feel supported. Create a support network through which employees can get help or have their questions answered.
  • Sustainability. You want to ensure the transformation sticks and people don’t revert back to the old way once the initial thrust of change has ebbed. Create a program through which associates can be made aware of updates and improvements, and that ensures new hires are indoctrinated into the new way of doing things. This provides a means through which the elements of the transformation can be revisited to make sure the improvements are sustained.

Adapting these best practices to your company’s change process will result in a high level of success and practically guarantee ROI. Otherwise, it’s almost certain your transformation will fail.

Insights HR Consulting is brought to you by Sequent

Looking ahead to see what’s on the horizon with the ACA

As the Affordable Care Act (ACA) continues to roll out, there are requirements that will take effect in 2016 and 2018 that companies must contend with. There are measurement periods that will define who among a company’s employees are eligible for benefits and a coming Cadillac tax that will be an expense to contend with, among other changes.

Smart Business spoke with William F. Hutter, CEO of Sequent, to understand how the new regulations will affect companies.

What upcoming ACA requirements should companies understand?

Companies, if they haven’t already, should be working on establishing their measurement period, which is used to determine how many employees are eligible for health care benefits based on the hours worked. Failing to establish a measurement period means defaulting to a 30-day period. That is extraordinarily complex, because it means every 30 days an employer must look back to see who within the variable workforce has become eligible for benefits.

Contending with the tracking and look-back dates through the measurement period can be challenging. Once a company establishes that certain full-time equivalent employees, through the measurement period, have met eligibility requirements, there is an administrative time frame to get employees covered — an enrollment period. Those employees will maintain eligibility for health care benefits regardless of the number of hours they work. The employer must keep coverage in place at least until the next look back.

If a company defaults to a 30-day look-back period, employees in this scenario who lose benefits, because they fall below the minimum hours needed to receive benefits, become COBRA eligible. If the employer doesn’t extend benefits to those employees, it can be fined monthly.

There is a chance to define the look-back period before January 2016. Consider a 12-month period that coincides with open enrolment and plan years.

Another change is that large employers must extend coverage to 95 percent of their benefit-eligible employees. Prior to the ACA, companies could choose to make a class of employees ineligible for benefits — all of one department or location, or all hourly people, for instance.

Companies can’t class-out employees anymore unless the class is less than 5 percent of the company’s employee base. It can be any 5 percent, but it can’t include someone who is eligible for benefits. And it has to be a cluster of employees who are similarly situated.

What is the Cadillac tax?

The Cadillac tax, effective in 2018, is a 40 percent nondeductible excise tax on high-cost employer-sponsored health plans imposed on the total cost of coverage that exceeds certain thresholds. The purpose is to reduce the tax-preferred treatment of employer-provided health care benefits. It will also help finance the expansion of coverage under the ACA.

The tax is on coverage that exceeds $10,200 for individuals and $27,000 for a family. Those figures represent the total annual premiums paid by the company and the employee. It will impact flex spending accounts, which are typically funded by employees but are considered a company plan. Any amount of money employees defer into the account is tallied into the total cost. If a company funds a Health Savings Account (HSA), the company contributions into the HSA are also counted, as are the costs of wellness programs.

The Congressional Budget Office estimates that this new ACA tax will amount to more than $80 billion over the next 10 years. This is an annual, employer-paid, non-deductible tax.

Companies must begin to develop a strategy to mitigate the effect of this additional tax on health care benefits. The first thing to do is to meet with a good adviser and determine the total cost of the company health care plan so it’s clear where the company stands against the threshold amounts. Then do some forward-looking projections on the impact of that expense.

The best thing you can do is anticipate. Understand what the rules are. Become very informed and get really good guidance from specialists. Interview three or four advisers, then make your decision to work with someone. If you don’t do the proper reporting, there can be significant fines for administrative errors.

Insights HR Consulting is brought to you by Sequent

Empower employees, improve accuracy and decrease HR workloads

Most businesses are using self-service technology to reduce transactional activities and save time. In the human resource world, this mechanism allows employees to update their address, keep contacts up to date, enroll in the company benefits plan, or otherwise review or change their personal information.

“It’s a tool to help offload those basic tasks from your HR department so they can focus on more strategic initiatives,” says Brian Donovan, Managing Director at IntegreatHR Technologies.

Self-service systems also improve the accuracy of employee data that companies must maintain. Rather than having HR representatives interpreting employee handwriting from forms then keying that data into an isolated system, employees companywide enter their information straight into an enterprise system.

“Employees also appreciate having access to their information and serving themselves,” he says. “It has, in some cases, been a morale booster because they can manage and access their information themselves rather than go through a gatekeeper.”

Smart Business spoke with Donovan about self-service technologies and how they impact businesses.

What does self-service technology look like and how do employees interact with it?

Self-service is a function or feature of whatever technology the company has chosen to run its HR payroll and benefits administration. Employees are typically logging in through a browser, which allows them to access their records while at the office or off-site. There’s a mobile application, or at least a mobile-responsive website, that allows employees to access the appropriate features.

What are the more notable benefits companies can derive from these systems?

Self-service systems can quickly guide employees to the tools and information they seek. This enhances the efficiency of payroll and HR processes, and can allow a company to offer additional services by providing links to external vendors and information.

It can reduce HR expense by cutting the time spent handling routine administrative matters and performing data entry, significantly reducing the amount of paper forms, distribution and processing, and virtually eliminating printing of forms.

These systems allow management to communicate consistent messages to employees on a regular basis, or as needs arise. It provides an unprecedented opportunity to deliver relevant, media-rich information to each person in an organization. Information that was once centralized can now be delivered to everyone in the organization through an HR website without HR intervention.

What size or types of companies stand to benefit most from self-service?

Just about any size workforce can benefit from self-service. Small businesses, for instance, can struggle to keep the detailed volumes of HR information organized and updated. Having fewer resources means carrying a greater workload, so self-service can offload some of that remedial work and allow HR staff to focus more on critical initiatives for the organization.

Larger organizations have so many employees that they need a solution like this in place just to keep up with all the changes and give employees access to information.

What are the keys to effective implementation of self-service?

When considering the implementation of a self-service system, first determine the most critical functions you want to allow your employees or managers to do. That will help you talk with a provider about what will give you the biggest bang for your buck. For example, a HR or payroll manager might be getting 50 requests each week for pay stubs. Instead of fielding each request, those managers could send employees through the self-service portal to retrieve it themselves.

Also, it’s important to have a plan in place to roll out the new technology, communicate its availability and explain why the tools are there.

There are systems with built-in tutorials that can help employees navigate the capabilities. As with any technology, having a good communication and training plan is important.

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