Benefits Administration Outsourcing – When to Outsource

Should my company outsource benefits administration? It’s a legitimate question to ask when considering ways to streamline your business operations. Human Resources departments are often considered overhead, so outsourcing one or more responsibilities in this area can open up that highly valuable department and improve ROI.

Outsourcing Benefits – A Definition

Before considering whether or not to outsource benefits administration, let’s get a general understanding of what we perceive as outsourcing. When deciding to outsource employee benefits, a company partners with an outside firm to take on specific human resources responsibilities, such as payroll and/or benefits administration. The outside firm acts as an extension of your existing HR department, relieving them of these time-consuming responsibilities in order to focus on managing processes, meeting compliance requirements and improving the quality of the employee experience with the company.

Advantages of Outsourcing Benefits Administration

Selecting an outside firm to manage benefits administration means you’re bringing in HR experts willing to share their best practices with your employees, ensuring they understand and appreciate their own benefits package. With the right information, employees make more informed decisions regarding benefit options from the start. Not only that, but they’re more likely to appreciate the benefits they’re able to get, as well as their employer who’s providing them.

Additionally, outsourcing a certain set of tasks gives your existing HR department the ability to evolve into a more efficient and effective team, regardless of the resources available to them. They can focus on the tasks best handled internally while making the employee experience their top priority. HR teams already have enough on their plate, and benefits outsourcing provides them with the flexibility to turn their focus back to their employees.

What to Expect as You Transition

Deciding to utilize a benefits administration outsourcing partner requires an initial period of transition as the outsourcing firm learns about your company and prepares a customized solution based on your existing operations. This cooperative period allows you to leverage the services offered by the outsourcing firm in the most effective way.

Outsourcing vs. Co-Sourcing

Outsourcing benefits is a rapidly growing and popular option for companies with limited resources that are looking for an efficient and cost-effective solution to managing their benefits. But it isn’t the only option. For companies that wish to stay more involved with the benefits administration process, but still need additional help, co-sourcing is worth consideration. Co-sourcing often means the company retains access to review and make changes to existing processes handled by the outsourcing firm, while the firm manages things like benefits enrollment, new hire onboarding and data transfers. Co-sourcing also allows for an existing HR employee to become an “internal expert” on the processes managed by the outsourcing firm, handling time-sensitive and high-priority issues directly.

What to Look For in a Benefits Outsourcing Company

There are a variety of outsourcing firms that offer services you can customize to the needs of your company. Make sure when researching firms, you ask the right questions, such as:

  • What is your benefits strategy today? In the next three years?
  • Do you work directly with my employees or solely through my HR department?
  • What specific dynamics are most important to you across HR and your organization?

If your company has reached a point where you’re considering benefits administration outsourcing, make sure you do your research to find a partner that will not only educate and support your employees through the benefits process, but will improve the efficiency of your HR department so that everyone has a high-quality experience as a co-source.

At Hodges-Mace we leverage a variety of technology and service options to implement positive changes to a company’s delivery of benefits. To learn more, download our benefits management brochure below.

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