
One way to attract and keep an outstanding workforce is to provide great benefits. That's no easy matter, however, especially for a small business. A business owner could dive into the research to find the best benefits that fit the budget and still appeal to today’s employees. Then, make a selection and build out the infrastructure for employees to enroll. Then, make sure the company complies with complex and frequently changing laws and regulations. And all the while be sure to protect sensitive employee data.
SMBs typically don’t have the resources and expertise to handle all of those functions in-house. They need a way to optimize the costs of administering benefits, save the time and energy of leaders and staff to use for core business goals, and gain access to experts who can help them navigate complex compliance issues.
One solution is outsourcing employee benefits management. A third-party provider could help:
- Handle administrative tasks.
- Provide automation to enhance consistency and cost efficiency.
- Mitigate risks.
One type of human resources outsourcing company, the professional employer organization (PEO), can offer HR support and help you mitigate risk. A PEO can sponsor the retirement plan and assume certain fiduciary responsibilities associated with it.
How Does HR Outsourcing help Streamline Operations?
In today’s job market, you have to offer attractive employee benefit packages. Job applicants look for and expect premium benefits. Once hired, employees are more likely to stay if they are satisfied with the benefits they receive. In one survey, 81% said they would remain with their employer for the next two years if the benefits met their needs. In contrast, only 51% said they would stay if benefits did not meet their needs.
Small businesses, though, often lack the resources to offer truly competitive benefits. A good benefits outsourcing strategy can help you address other benefits-related concerns.
Breaking through the size barrier
Large employers often have greater purchasing power, which may allow them to negotiate more favorable group benefit plans with insurance companies and other benefit providers. Small companies may not have the same leverage. But when a small company engages with a PEO, it can get access to big-company benefits.
Expanded benefits portfolio
SMBs may lack the resources to provide anything more than basic health insurance to their employees. Working with a PEO can give them access to a more comprehensive employee benefits option. For example, SMBs could offer comprehensive wellness programs that help attract and keep top talent.
By working with a PEO, an SMB can access for its employee’s options for retirement planning, supplemental insurance and other voluntary benefits. The PEO’s expert consultants help the SMB stay on top of emerging benefit trends without having to invest in internal research and development.
HR outsourcing companies may also provide integration solutions that gives employees real-time, self-service access to their benefits information and to decision-making tools that help them make more informed choices.
internal benefits management burden
The true cost of managing benefits in-house goes beyond the salaries paid to the HR staff members who handle the associated clerical and administrative tasks. Other costs can include:
- Recruiting, training and onboarding HR staff.
- Replacing them when there’s turnover.
- Providing them with employee benefits.
- Hiring or developing in-house expertise in benefits-related compliance issues or risk expensive compliance mistakes.
- Managing in-house HR software.
Outsourcing employee benefits management can free leadership to focus on the company’s core business activities. It can reduce time-consuming HR administrative tasks. And it can enhance resource allocation by redirecting internal capacity towards growth.
Streamlined operations through technology
An outsourcing company may provide access to a sophisticated HR technology platform. Such that the platform automates benefits-related tasks to save time and streamline by reducing paperwork and manual data entry. The system could also include an employee communication system to further streamline operations.
The technology could integrate with your company’s existing payroll processing and HR systems so that all your data works together. You wouldn’t have to duplicate efforts to enter information into your system.
Going beyond task processing, the system could also generate performance metrics and reporting that you can use to make strategic decisions—without the administrative overhead of setting up such a system on your own.
Navigating complex compliance requirements
Employers must stay on top of laws and regulations that apply to employee benefits, including the Affordable Care Act (ACA), the Employee Retirement Income Security Act (ERISA), the Consolidated Omnibus Budget Reconciliation Act (COBRA) and state-specific requirements. It’s a lot to ask of a small employer that doesn’t have the resources of a big firm’s HR department. But if you fail to comply with all the applicable rules, you might have to pay steep fines or penalties, or be on the losing end of a lawsuit.
An outsourcing company may have the specialized expertise to help small businesses navigate these compliance requirements and mitigate expensive mistakes. The outsourcing company may provide a variety of risk mitigation tools and resources, including:
- Benefits compliance best practices
- Automated benefits administration and reporting.
Financial Aspects of Outsourcing Employee Benefits Management
We have been showing how outsourcing employee benefits management helps small businesses obtain access to cost-effective, competitive benefits while reducing their administrative burden. Now, let's dig into more of the financial considerations.
More predictable cost management
When you use an outsourcing firm, your benefits administration costs may become more predictable. Budget forecasting and planning could become easier. Benefits management firms achieve this predictability by:
- Using transparent pricing models.
- Fewer unexpected costs that can arise with benefits administration errors.
- Cost efficiency from the outsourcing provider’s scale and expertise.
- Service level agreements that can help establish consistent and defined performance expectations.
Elimination of hidden costs
Costs for employee turnover, compliance penalties, technology maintenance and recruitment are significant but often overlooked. Outsourcing employee benefits management helps by:
- Enhancing employee satisfaction to help with retention.
- Using expertise and technology to mitigate risk.
- Providing access to a sophisticated technology platform in the cloud, so you do not have to invest in or maintain an in-house technology infrastructure.
- Accessing competitive benefits for talent recruiting.
Scalable benefits management
Most small businesses hope to grow. An HR outsourcing firm is most valuable if it can grow with you as well as adapt to unexpected changes. Scalability is important. Look for a firm that can:
- Scale benefits program up or down based on workforce changes.
- Add new locations or employee categories as needed without adding to the system’s complexity.
- Administer a seasonal workforce.
- Coordinate temporary-employee benefits.
Simplified Benefits Management
TriNet provides you with simplified employee benefits management, offering small businesses advantages typically enjoyed by large companies. With TriNet, your company’s size won’t limit the benefits and perks you can offer to attract top job applicants and support a happy, productive and loyal workforce.
We make benefits administration easy—including plan election, technology, payroll deductions, enrollment and compliance support. We help simplify your benefits enrollment process and the available benefits decision support tool can help employees pick the benefits that best fit their situation.
You can get access to our expertise and best practice guidance to navigate through the complex compliance landscape. Use the resulting time savings to grow your company and focus on core business goals.
Want to know more? Download the free eGuide on the true cost of employee benefits packages.
This article is for informational purposes only, is not legal, tax or accounting advice, and is not an offer to sell, buy or procure insurance. TriNet is the single-employer sponsor of all its benefit plans, which does not include voluntary benefits that are not ERISA-covered group health insurance plans and enrollment is voluntary. Official plan documents always control and TriNet reserves the right to amend the benefit plans or change the offerings and deadlines.
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