Quick look: The IFEBP reveals 40% of companies are outsourcing their benefit functions, due to ongoing challenges, such as managing benefit complexity. For many, the influx of industry changes has become overwhelming to manage and ultimately, derails from core company goals. This collective call for support gives brokers and PEOs an opportunity to work together to help clients ease their HR burden and prolong business growth.
Managing employee benefits has become more complex over the years, which is why more companies are choosing to outsource these functions. A recent survey conducted by the International Foundation of Employee Benefit Plans (IFEBP) estimates one-third of companies have increased outsourcing of benefit functions in the past five years. Among the most common outsourced benefits include:
- Employee assistance programs (EAPs) – 80%
- Flexible spending accounts (FSAs) – 75%
- Retirement benefit payments – 59%
- Health savings account (HSA) administration – 54%
Handling benefit implementation is quite the undertaking, particularly for small- and medium-sized businesses (SMBs), as their HR departments are typically limited to a representative of one. Therefore, business leaders are turning to brokers for advice on ways to save on costs without compromising the value of their offerings.
And, in turn, as challenges continue to rise, it’s become an advantage for brokers and their clients to receive expert services and support through a professional employer organization (PEO).
Why more employers are outsourcing benefits
There have been many significant changes over the past several years, such as voluntary resignations, dispersed workforces, and new state and federal regulations, which has led to a re-evaluation, and, in some cases, a complete overhaul of how benefits are planned and implemented.
The time and attention required for effective benefit management is one of the many functions of a HR department. Add to it the responsibilities of recruiting, retention, payroll, and compliance, among others, and the signal for help has become necessary to maintain a company’s success moving forward. In addition to managing benefit complexity, the survey’s top reasons for outsourcing benefit functions include:
- Expertise (78.6%)
- Risk (62.3%)
- Technology (51.6)
- Costs (35.8%)
- Changes in staffing levels (20.5%)
- Other (7.9%)
Each of these areas require more from SMBs and leave them stretched thin as they also face HR concerns such as:
- Rising healthcare costs (50%)
- Absence and disability management (39%)
- Benefit laws and compliance regulations (31%)
- Employee engagement (30%)
- Communication of benefits/changes (25%) to deliver competitive offerings and maintain compliance.
The advantage of a comprehensive benefit plan through a PEO
With the increase of benefit function outsourcing over the past five years, it’s no surprise an increase in PEO awareness and utilization has increased as well. Rather than piecemealing a HR plan together through separate vendors, there’s the value of a comprehensive, customizable HR solution through a PEO partner to consider.
Brokers making the client-PEO connection set themselves apart from the competition and elevate them to a more advisory role. As more SMBs decide to outsource, working with a PEO partner alleviates the most pressing concerns by providing the following:
Wide range of benefit offerings
To stay competitive, employers must go beyond offering standard benefits. While health and retirement plans still top the list, the inclusion of voluntary benefits is necessary as well. These include but aren’t limited to:
- Financial wellness programs
- Tuition reimbursement
- Pet health insurance
- Flexible work schedules
When working with a PEO partner, SMBs have access to premium benefits with quality providers at cost-effective rates. They work collaboratively to determine the benefits most relevant to each company. And since the demand is constantly changing to align with current workforce demographics and industry trends, benefit planning remains an open discussion and HR plans are flexible enough to adapt.
Minimized risk and liability
According to the IFEBP survey, risk is the second highest reason why outsourcing benefit functions have increased. Maintaining compliance is a tricky endeavor, and each industry has its own set of workplace safety regulations to follow. By staying current on new and updated employment laws and creating workplace best practices, a PEO minimizes company risk and the costs and time associated with it.
Also, as a PEO partner, ExtensisHR provides mobile-friendly technology which allows business leaders to handle HR-related tasks from wherever they are. Data syncing and reporting synchronizes goals and performance, improves cost management, builds HR sustainability, and more.
Therefore, SMB leaders can make decisions based on their own data rather than solely relying on what’s trending in the industry. Plus, they can adapt to problems more quickly to prevent larger ones from occurring.
Certified team of HR experts
Changes in staffing levels is another listed reason why businesses are looking for benefit assistance. With the rise in layoffs and voluntary resignations happening across all industries, many companies are pressed to do more with less.
With the support of a PEO partner, SMBs can rely on a dedicated team of HR experts who are familiar with their company’s specific needs. Rather than retraining or updating new HR personnel, a PEO is well-informed and anticipates what’s next to present potential strategies.
Lack of employee benefit participation is often costly. By regularly updating employees about benefit options and making the enrollment process easier, it increases employee engagement and benefit utilization; therefore, resulting in a greater investment payoff and a competitive advantage for SMBs during recruitment and retention.
The outsourcing answer that puts people first
HR requires full-time attention in order to be effective. Therefore, delegating HR responsibilities has become a key part of a company’s overall growth strategy. However, not everyone offers the same level of service.
Big-box PEOs rely on automated ticketing systems and generic responses, prioritizing quantity over quality. Whereas, with ExtensisHR’s people-first approach, the focus is on collaboration and customization when creating HR and benefit plans.
We help brokers and SMBs differentiate themselves by expanding their offerings, saving on costs, and driving results. Contact ExtensisHR today to learn how we can support you.