Managing employee benefits is a significant task for businesses of all sizes. However, small and mid-sized companies can find it particularly tough due to limited resources and rising employee expectations.
In the past few years, benefits administration has grown increasingly complex. Changes to healthcare legislation and the increasing diversity of benefits options have transformed what was once a straightforward task into something that can only be conquered with careful attention and specialized knowledge.
The Unexpected Costs of Subpar Benefits Management
Inefficient benefits administration processes can lead to direct and indirect costs for businesses. For example, administrative errors related to enrollment or claims processing could cause a company to be hit with compliance penalties, unexpected premium increases, and employee turnover. While some of these issues can be fixed, it often comes at the cost of lost productivity.
When HR professionals spend time troubleshooting benefits problems, they will have reduced capacity for other tasks that can boost their bottom line, such as talent development and organizational planning. This substantial opportunity cost is often overlooked in ROI calculations.
In addition, the workforce’s perception of the company’s benefits administration directly influences their overall satisfaction and engagement. When employees cannot fully understand or access their benefits, they will typically undervalue them, which means the company will not get a good return on its investment in employee retention.
Regulatory Compliance: An Ever-Moving Target
It can be challenging for small and mid-sized businesses to keep up with the constant stream of regulatory changes and establish compliance at all times. For example, the Affordable Care Act introduced a long stream of reporting requirements that are still changing; add to this ERISA, COBRA, and the many state-specific mandates that are in effect, and the job of remaining compliant can cause HR teams that are already stretched thin to reach their breaking points.
Unfortunately, the financial repercussions of failing to stay compliant can be steep. Although the monetary penalties are heavy enough on their own, often reaching thousands of dollars per violation, small businesses can also deal with potential legal exposure and damage to their reputation. One overlooked filing deadline or misunderstood requirement could lead to costly consequences that significantly impact the bottom line.
The Technology Gap
The cutting-edge benefits administration platforms many large corporations enjoy are out of reach for most small and mid-sized businesses. This technology gap creates inefficiencies that tend to compound over time. Paper-based enrollment, manual reconciliation of premium bills, and scattered communication channels can add a greater administrative burden and errors that could have been avoided.
Thankfully, technology solutions have become more accessible and affordable for smaller businesses in recent years. For example, many cloud-based benefits administration systems offer scalable options that can grow with a company, streamlining workflows and improving data accuracy. The return on investment regarding reduced administrative hours alone is often enough to justify the change.
Strategic Benefits Communication
Even the most carefully planned benefits package will lose substantial value if employees don’t understand how to maximize their benefits. Thorough communication strategies can be helpful, supporting higher participation rates and employee satisfaction.
However, effective benefits communication requires more than annual enrollment meetings. Small and mid-sized businesses should aim for engagement throughout the year via multiple channels and customize their messaging to differing employee demographics. When employees make better decisions that support improved health outcomes, the organization benefits, thanks to improved productivity and reduced absenteeism.
A Strategic Advantage
The most successful small and mid-sized businesses are transforming benefits administration from a purely transactional effort to a strategic advantage. This shift requires viewing benefits as a cost center and an investment in the business’s health and performance.
Strategic benefits administration aligns offerings with the business’s objectives and employees’ needs. It leverages data to identify trends, measure program effectiveness, and support continuous improvement. Most importantly, it creates space for innovation by freeing HR teams from administrative burdens to focus on initiatives that make a difference for the business.
The Advantage of Outsourcing
In-house benefits administration is undoubtedly challenging, and many successful small and mid-sized businesses are turning to external partners for support. Working with specialized benefits consultants provides access to expertise and resources that would be prohibitively expensive for such companies to develop internally.
The right partner will not just provide technical knowledge; they also have the advantage of working with a strategic perspective that can only be gained from working across multiple industries and businesses.
This means they can negotiate more effectively with carriers, identify opportunities to contain costs without sacrificing quality, and secure compliance with all applicable regulations.
Master the Art of Benefits Administration With Business Benefits Group
At Business Benefits Group, our team of experienced benefits consultants offers personalized strategies that address your business’s specific needs. These strategies cover everything from streamlining administrative workflows to designing communication programs that support greater employee engagement. Reach out today to schedule a consultation.