Managing Employee Benefits: 3 Critical Issues to Consider
The time is right for middle market executives to assess the administration of their benefits systems and to ensure optimal function for employees while also advancing the firm's strategic goals. With nearly all of the plan regulations and reporting requirements of the Affordable Care Act now in effect, it's clear that managing employee benefits is among the most complex and time-consuming tasks faced by middle market companies today.
According to a National Center for the Middle Market study, titled "The State of Healthcare in the U.S. Middle Market," the cost of providing healthcare is one of the biggest challenges that midsize executives deal with, a fact backed up by more than ninety percent of surveyed execs. In order to take control of what has become a widespread problem, there are three key issues for firms to consider.
Employee feedback. How does your firm gather feedback from employees, former employees, and even prospective employees regarding your benefit system's alignment with their needs? There are a number of specific topics surrounding benefits, and touching on as many as possible can help a firm to develop a better overall picture of how employees view benefit offerings and processes. Given that benefits are seen by employees as a substantial component of overall compensation, surveys of present employees and departing employees can reveal their opinions concerning important compensation-related ideas. Making improvements based on this feedback can help attract and retain strong performers.
It may also be helpful to survey people who have merely applied to the company. Applicants can provide valuable insight into how the firm is perceived by outsiders. This could also help HR improve their communication with prospective employees about benefits.
Tracking usage. How does your firm interact with its employee benefits providers to assess the actual usage of plan features and processes? Companies need to track specific benefit components to measure the amount of usage that they get from employees. For instance, healthcare-related benefits, such as wellness programs, subsidized fitness-club memberships, on-site fitness centers, and even on-site medical clinics, generally survey well with employees, but they result in wasted money if they do not reach a critical mass of employee use. Similarly, if there are financial-education or financial-service components offered by the firm's retirement-plan administrator, are employees using them enough to make the offerings worth the cost?
Research gathered with the help of benefits vendors is necessary to ensure that there's no disconnect between a company's perception of benefit usage and the reality of a firm possibly wasting money on these benefits. Research can also shed light on whether the quality of initial orientation and/or ongoing communication for employees about plan benefits needs improvement on the part of the vendors or on the part of the firm's HR employees.
HR activity. Which benefits-related duties should the firm's internal HR personnel actively handle? This consideration is more critical to middle market firms than to the largest corporations because of the central role that these smaller HR departments must play in driving company performance through high-value strategic tasks. These tasks include recruiting, overseeing employee training, performance evaluation, career development, and building effective compensation programs.
There are some tasks, however, that are better served by outside vendors. For example, complying with the HIPAA patient-privacy law is made easier when an outside vendor handles employees' protected health information. By leaving certain employee-benefit administrative duties to others, HR departments can focus efforts on minimizing the silo mentality that often hampers the necessary coordination between a firm's benefits vendors and internal administrators for payroll, HR resource management, and other tasks.
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Rob Carey is an NCMM contributor and a features writer who has focused on the business-to-business niche since 1992. He spent his first 15 years at Nielsen Business Media, rising from editorial intern to editorial director. Since then, he has been the principal of New York-based Meetings & Hospitality Insight, working with large hospitality brands in addition to various media outlets. Circle him on Google+.