The Benefits Administration Complex

One of the emerging trends identified in NelsonHall’s 2010 “Targeting Benefits Administration” market analysis is the pending globalization of benefits administration and health management programs. While provided benefits vary by culture and country mandates, total benefits costs are of concern to every employer.

Global payroll and the integrated employee data it can facilitate has been a theme for a while now in HRO and payroll outsourcing. Total labor cost has many elements, and benefits, wages and salaries are the biggest drivers of on-role employee expense. Once the tools are in place to establish today’s workforce status, the next challenge is to better manage the investment and prepare for tomorrow’s needs.

For example, balancing total relative compensation equity and a locally compelling employee value proposition requires extensive internal and external data, as well as depth of knowledge in changing regional workforce trends and issues. An HRO service provider that supports integrated global employee data, enhanced reporting and analytics with up-to-date sources of in-country and regional knowledge can be a value added strategic partner for internal HR operations. 

Health care costs are continuing to rise, and premiums are expected to be up 14 percent this year in the U.S. Use of consumer-driven health care programs is still growing, and increases the need for effective communications, decision support tools and flexible spend accounts. Also, look for the use of flexible benefits plans to increase as employers adapt to not only global but also multi-generational diverse workforces.

Even when employees are in a country where the employer does not directly fund health care coverage, labor costs are driven up through expenses related to paid absences as well as through the additional staffing or contingent workers needed to maintain coverage. A disruptive amount of absences can lead to increased turnover and decreased customer satisfaction and financial results.

As I have mentioned in prior blogs, health in general is a growing employer concern. We are seeing more proactive programs that cross from managing health expense for insurance and illness into employee wellness and workforce productivity. The opportunity this represents is huge, but not without risk for employers and service providers.

All of the points above, and more in the full report, demonstrate the increasing complexity of even basic benefits administration. There is going to be less and less room for plain old operational benefits administration that is little more than automation of paperwork and record keeping.

Buyers, look beyond operational cost, as important as that is, and select a service provider that can also offer true total benefits outsourcing. HRO and benefits providers, have you made the investments, expanded your geographic footprint and service offerings, and fully tapped the knowledge sources of your employee and supplier networks to become the partner of choice in the new world of the benefits administration complex?

Linda Merritt, Research Director, HRO, NelsonHall

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