By Mick Constantinou, Advisor, Employee Benefits
Connelly, Carlisle, Fields, & Nichols, A UBA Partner Firm
With the biggest pieces of health care reform looming on the horizon, companies are asking themselves two main questions:
- Is our current human resource information services (HRIS) platform equipped to handle the new requirements of the Patient Protection and Affordable Care Act (PPACA)?
- Are we managing multiple databases and redundant processes in benefits administration, human resources, payroll and finance/accounting (silos)?
In the new era of PPACA, some companies will realize the inherent inefficiencies and costs associated with their internal silos and the risks these silos present in terms of quantify and qualify the impacts of PPACA. A Towers Watson study determined that 63 percent of organizations are reengineering key HRIS/payroll processes and seeking to increase alignment of their human resource strategy with their business strategy.
According to Tim Padva, CEO of CheckPointHR, “While some costs are unavoidable, top executives are often surprised to find out how much of the HR budget is spent unnecessarily. No company sets out to waste HR dollars, but without realizing it, most end up doing exactly that.”
The management of payroll, human resources and benefit processes is generally fragmented, which leaves many employers operating in a chaotic environment plagued by:
- Utilizing multiple platforms and databases.
- Inefficient manual processes.
- Communication challenges between employers and vendors and employers and employees.
- Lack of visibility into the total spend for payroll, human resources and benefits.
This was confirmed by a Price Waterhouse Coopers (PWC) study, which found that enterprises could save from 18 percent to 32 percent by optimizing their silo approach into a continuum approach. The same study found that small to midsize companies spend 43 percent more than larger companies (per employee per year) to handle payroll, workforce administration, time and attendance and health and welfare.
Mr. Padva continues, “This does not mean advocating a reduction in benefit plan quality, shifting excessive costs over to employees, or eliminating HR programs. In fact, when a thorough analysis is completed, companies are often able to broaden plan options, increase employee satisfaction and return money to the business.”
Access to consistent, accurate workforce data across silos also is important for determining the impacts of PPACA, regardless of whether an employer decides to “play or pay” in 2014 and beyond. The health care reform law creates a number of new compliance requirements that will impact employers and employees, such as:
- New employee counting guidelines (full-time, part-time, seasonal)
- Employer reporting requirements
- Employee notice requirements
- Nondiscrimination requirements
- Automatic enrollment
- Fees (penalties) and “Cadillac” taxes
Transforming process and database silos into an integrated benefit administration, human resources and payroll platform optimizes organizational efficiency (direct, hidden, and opportunity costs) and prepares decision makers for the important conversations that should be taking place during 2013.