Government contracting is a highly competitive sector, and many organizations in this field struggle to attract and retain highly qualified employees. Most human resources leaders can attest that offering a benefits package that will appeal to prospective employees is not always easy when working within a strict budget. Unfortunately, this common problem becomes bigger as benefits costs increase and employees’ expectations grow.
The Exclusive Requirements Of Government Contracting
Although balancing competitive benefits with budget constraints is challenging in all lines of work, the characteristics of government contracting make it particularly difficult. Government contracting requires a specific skill set that often includes security clearances, industry knowledge, and technical expertise. People who tick all these boxes know their market value and expect to receive appropriate compensation in return.
In contrast with the commercial sector, HR leaders have to deal with compliance mandates, federal regulations, and contract requirements. Some contracts stipulate a specific fringe rate, which only adds to the burden. Many other factors are also at play, with procurement officers scrutinizing every cost in the contract.
Effective Approaches to Benefits Design
Good benefits design requires more than a solid strategy; it also requires creativity. Organizations can achieve better results by thinking about benefits as investments in the stability of a workforce rather than simply an expense.
Many organizations adjust their benefits design yearly, but these changes tend to be reactive. A proactive, longer-term strategy that encompasses the next few years can be far more effective while giving you time to phase in changes gradually. This can also put you in a better position to negotiate with providers and predict the cost of your benefits.
Making Smarter Decisions
Data analysis plays an outsized role in effective benefits management. Utilization patterns are just one part of the puzzle; human resources directors also need to consider cost projections and demographic trends when looking for ways to better optimize their plans. A good place to start is by considering which offerings are making the most significant contribution to recruitment and retention.
Another important analysis to carry out is which benefits employees are using the most. For example, if you note a low utilization rate for your dental plan but a high one for your wellness program, you can allocate your resources more effectively and better meet your employees’ needs.
Alternative Funding Models
Many businesses opt for a fully insured health plan. Although this keeps things simple, as most employees understand how these popular plans work, it is not usually the best approach for government contractors. Instead, self-funding and level funding arrangements are often more suitable due to their greater flexibility.
They can also result in significant cost savings. They may be more complex on the management end. However, contractors appreciate that they can retain their unused claim reserves instead of being forced to surrender them to the insurance carrier.
A level-funded plan is often a good choice for a mid-sized government contractor because it offers predictable monthly payments similar to those seen with traditional insurance. However, a rebate may be obtained should claims end up being less than projected. In some cases, this can lead to significant savings over traditional plans.
Proper Communication Can Save Money
No matter how well-designed a benefits program is, it will not be effective if employees do not understand its value. This is why organizations should focus on communicating benefits to their workforce clearly and consistently. Employees who know how they can use their benefits not only appreciate them but can also make better decisions about their healthcare, which can improve productivity.
In many organizations, most conversations surrounding benefits occur during annual enrollment. However, government contractors should focus on developing year-round communication strategies and regularly educating their employees about topics such as preventive care and using their telehealth services. This can reduce claims and improve health outcomes.
Compliance Considerations
One of the most frustrating aspects of government contracting is the numerous regulatory frameworks that must be adhered to. From general employment laws and SCA requirements to FAR regulations, benefits programs need to focus on much more than cost efficiency.
Therefore, HR leaders must work closely with compliance and legal teams to establish that their benefits plans do not violate regulations. Otherwise, they could face significant penalties.
Technological Solutions
Regarding benefits administration technology, modern platforms that streamline enrollment tend to get most of the attention. However, for government contractors, modern technology’s unparalleled analytics capabilities are perhaps even more valuable as they can lead to long-term administrative savings.These technologies mean that HR teams can spend less time on paperwork and more time on specialized tasks.
Partner With the Government Contracting Benefits Professionals
At Business Benefits Group, our consultants possess nearly thirty years of experience working with government contractors of all sizes. This experience has given us a deep knowledge of the exclusive pressures faced by those in the government contracting sphere and enabled us to offer customized solutions that can balance cost control and compliance concerns with competitiveness.
Contact us today to schedule a consultation and learn how we can help build a more secure future for your organization and employees while respecting your budget.