Bundled HR Service Solutions vs. Best of Breed Providers

The HR BPO market had forecasted growth from $20.8 billion in 2004 to $31.3 billion in 2009, reflecting an 8.3% compound annual growth rate. The estimated revenue is $28.69 billion in 2009. (Source: Robert H. Brown, “Gartner Research – Sourcing options Grow as the HR BPO Market Matures”, July 26, 2006) One of the primary reasons for this sustained growth is the value that both employers and HR service providers recognize in outsourcing non-core business functions to third parties. In the down economy, the number of employers evaluating HR outsourcing as a cost cutting measure has increased dramatically. This ranges from employers who have never outsourced any function of HR to employers who seek a fully outsourced solution. Financial buyers see outsourcing non-core transactional functions as an opportunity to streamline HR processes to reduce direct and indirect costs. Outsourcing provides employers and employees access to the latest technology and communication tools which align the HR function with the overall business strategy. It provides a platform to consistently achieve better quality around managing human capital in an efficient and cost effective manner. Some employers feel that the benefit of outsourcing is even more effective when it can be managed through a single source HR service provider who offers multiple HR services in a bundled, comprehensive offering while other employers find more value in partnering with specialty providers who focus their services in one main area of HR.

Over the last few years, many HR service providers have expanded their serving offerings beyond their core business to adapt to demands of a growing market. For example, 401(k) providers now offer payroll services or a staffing company may now also offer benefits brokerage services. A PEO offering non co-employment solutions via an ASO arrangement is yet another example. In several instances, strategic alliances are formed as non-competing HR service providers align in order to accommodate the multiple and/or changing needs of their client via a bundled “menu of services” type offering. Other HR service providers have chosen to acquire additional companies instead of partnering to strengthen their offerings. Still, other HR firms choose to build additional offerings through their own internal resources and HR industry expertise.  The question then becomes: Do the benefits of a consolidated offering truly outweigh those of “best of breed” providers?

Perceived Benefits of Consolidated HR Outsourcing Offerings:

1. Integration and streamlined processes. With HR technology being at the core of many HR service offerings, several transactional processes can be automated. This is especially true if all HR processes are managed within a single system or by a common vendor. An example of this would be when an employee is terminated, a COBRA notification is automatically sent because the payroll provider and COBRA vendor are one in the same. Another example may be when an HRIS system has the functionality to initiate an electronic job offer to a candidate and through process workflow an automated alert for instructions to complete a drug/background check is initiated to the screening vendor and the pending candidate. In many instances, employers are able to eliminate headcount or reallocate duties as manual processes become automated and less error prone.
2. Multiple service offerings allow for the most competitive pricing structure. A bundled offering includes the benefit of economies of scale. The more revenue that a vendor earns, the more leverage a company has for negotiating volume discounts. This also holds true for guaranteeing higher service-level agreements or contract terms.
3. Simplified employee experience. Having one point of contact or one system to access for managing multiple requests or transactions creates an efficient employee experience. This heightens employee productivity and increases employee satisfaction.
4. Ease of vendor management. Coordinating with multiple vendors is time consuming and creates risk when dealing with time-sensitive and sometimes compliance-driven processes. A single vendor approach creates efficiencies and reduces errors. An example is a consolidated invoice for services.

Perceived Benefits of “Best of Breed” multi-HR Vendor Approach

1. Quality of service delivery. A specialized vendor that offers one core service tends to offer a higher quality experience because they are not focused in any other area. Many times this allows for custom solutions designed with the client in mind rather than a “boxed” approach. An example would be an HRIS vendor that delivers a function-rich system that is configured to the needs of each customer vs. an out-of-the-box software application.
2. Access to expertise. Specialty vendors seek a competitive advantage by deploying the best possible industry experts to meet the unique needs of their clients. An example of this would be a health and welfare consulting firm that specializes in servicing employers with self-funded benefit plans.
3. Ease of transition to begin or end vendor relationship. Implementation of a multi-faceted service offering can be a very time consuming project which may create comprised success due to deadlines. Focusing one just one functional area creates a higher success probability because a project isn’t dependent on competing projects. Additionally, if a consolidated vendor is performing well in one area and poorly in another, the entire relationship may be compromised. An example would be an employer terminating a benefits consultant relationship due to poor service and being forced to change HRIS systems because of the bundled offering.

If challenged with making a clear distinction as to the best approach for your company, I suggest asking a few key questions:

• What do you value more – quality or simplicity?
• Are you solely interested in saving on hard dollar costs or do you the see a greater opportunity for indirect savings by increased quality relationships and delivery?

If you are leaning towards a consolidated approach, I suggest asking detailed questions around the service integration. Qualify which resources are actually internal or if some are outsourced partnerships. With this, clarify defined responsibilities of the service provider vs. the employer and more importantly who holds the liability. If a specialist approach seems more fitting, ask for specific examples of success stories from their clients who were able to achieve measurable benefits that could not otherwise be realized in a consolidated approach. Contact us today for a free consultation. www.gocentripetal.com.

Does a PEO Make Sense For Your Company

The recent legislative changes that impact employers including healthcare reform, tax incentives for hiring unemployed workers, and the extension of the COBRA subsidy have many employers feeling overwhelmed and more confused than ever. The function of managing human capital can be daunting as it is critical to the overall success of a business. This also includes the risk that employers bear in the form of lofty penalties for non-compliance with federal and state employment law. One strategy for mitigating this risk and shifting some of the burden associated with managing HR is outsourcing with a co-employer or PEO. This solution can provide immense value to a company for several key reasons. A PEO is a complex co-employment solution that involves many moving parts which can be confusing when trying to determine the quantifiable value or if the PEO can meet the unique needs of the business. Information is power and fully understanding the dynamics of co-employment will not only ensure a good decision on the front end but will also allow the business to take full advantage of its inherent benefits.

What is a PEO?

A Professional Employer Organization is a contractual co-employment relationship between an employer and a PEO provider that involves shared responsibility and risk for the management of employees. The employer and employee are commonly referred to as the worksite employer and worksite employee. The worksite employer maintains operational control of the day-to-day operations of the business while the PEO absorbs the employer into their client pool and assumes the responsibility of HR administration, regulatory compliance, payroll and tax filing, worker’s compensation, and employee benefits. Ask these key questions to determine whether a PEO may be a potential fit for your company.

1. Are you challenged with obtaining affordable quality medical benefits for your employees?

The size, demographic makeup, and overall health of your employee population are the main factors that impact how much an employer will pay for health insurance. If these factors are unfavorable in the eyes of insurance carriers, you might be forced to pay higher premiums to obtain coverage. If your company experienced a renewal increase which exceeded 11% in 2009, the national average renewal increase, a PEO may provide a hedge for controlling future increases in healthcare costs. A PEO allows your employees to obtain insurance at the premium rates that are dictated on the entire PEO’s client population as opposed to your company’s group as a stand-alone entity. In a sense, you are able to leverage and access a larger group of employees or risk pool that can absorb the risk with less financial impact because of the size of the group.

Consideration: It is important to note that many employers are joining the PEO for this same reason, so it is imperative that the PEO partner you are considering is doing a good job at managing their new client risk population. If a surplus of bad risk is added to the group health plan, the renewal will correspond accordingly. The premium savings you were expecting to realize may not occur and potentially be worse than what you could have obtained as a stand-alone entity. Employers who join the PEO are joining the PEO for the same reason that you may for a year or two, but consider all of the other companies that are also joining the PEO for the same exact reason. Eventually, you will become the healthier risk in the pool yet you will be paying the same rates as the unhealthy groups. In the evaluation process, you should ask for the PEO’s renewal increase for the last 2-3 years to determine how well they are managing their client risk pool. It may be helpful to understand the dynamics of the relationship that they have with the carrier who insures the group.

2. Have you experienced significant Workers Compensation claims within the last 2 years?

Similar to health insurance, a PEO allows an employer to access a larger risk pool which essentially dilutes the exposure for the smaller group. If your company has had recent worker’s compensation claims which have negatively affected your experience modifier and caused premium increases to renewal of the policy, utilizing a PEO may be a strategy to consider as a way to hedge future increases. One reason that the PEO can serve as a hedge is that claims can potentially affect an employer for up to 3 years. In addition to this benefit, the PEO offers risk resources, which may not be available to a smaller organization who has expertise in developing a risk management strategy and safety plan. This will create a safer work environment and potentially prevent future claims or injury from occurring. Implementing a risk strategy will benefit the company from a long term perspective and will protect your business regardless of how long your company stays in the PEO relationship. A PEO is also a great cash flow tool to control unexpected eorker’s comp underfunded premiums that are discovered at the time of the audit. In a PEO model, premiums are collected on actual payroll dollars instead of estimated payroll dollars thus allowing a much more predictable cost control model.

Consideration: Risk tolerance varies from PEO to PEO. So if you have had claims, the PEO is going to want to know about them in the application process. They will request loss runs and may want to do a site visit of your facility to see how the operation is being managed. Be careful to fully disclose what losses you have experienced to avoid future rate increase from the PEO if they are able to discover the losses once you become a client. It is also important to note that when your company decides to leave the PEO relationship and you seek to obtain your own worker’s comp coverage, you lose the experience that you had while in the PEO. You are rated by the carrier with a new experience modifier as if you were a new business with no prior worker’s compensation history. This fact may work in your favor or against you depending on if your experience has been favorable or not.

3. Do you have high turnover or have you experienced a recent layoff?

In a PEO arrangement, your employees are absorbed within the PEO’s customer base or pool from a tax and that PEO assumes tax filing liability as the “employer of record” in the eyes of the IRS. The SUTA, (employer paid state tax used for unemployment) rate that your organization pays to each state where you file may be a higher rate that the rate of the PEO. These rates vary by state and change from year to year. If you are able to gain a favorable and hedge SUTA liability under the PEO by employing your company with a larger group with a lower SUTA rate, the savings could be significant. The PEO also assumes responsibility for changes to the rates on a state by state basis. If you employ people in multiple states keeping up with this can be administratively cumbersome and expose you to liability and the penalties associated with late or inaccurate tax payments.

Consideration: If your SUTA rate is better than the PEO’s, you are helping them lower their rate for the rest of their clients and paying more than needed if you were not on a PEO. Usually the SUI limits are met fairly early in the year; in fact, the average wage amount where SUTA is capped is $9K, however this amount varies as does the tax rate. If you decide to join a PEO, make sure that the PEO honors the SUTA caps and will track when each employee meets the limit. You should verify this in the service agreement; otherwise you could end up paying a much higher amount of SUTA without realizing it. Additionally, it is important to note than when you leave the PEO and begin to file SUTA under your own tax ID, the state will look at your organization as it would a brand new business that has no prior unemployment history. Unless the PEO’s SUTA was higher than this or you were overpaying without realizing it, your SUTA expense will more than likely increase. This also applies to FUTA and Social Security taxation.

4. Are your internal HR resources or staff bogged down with time-consuming HR administrative processes?

If you are in a rapid growth mode, the amount of paperwork needed to recruit, hire, compensate, manage job changes, and terminate employees can be overwhelming. It may be the job of a full-time employee or perhaps it has BECOME the job of a full time employee! These tasks are non-revenue producing and can be outsourced to a PEO who deploys HR technology that can automate many of these processes. This HRIS technology is otherwise not accessible or affordable for purchase or deployment internally. Not only do you gain access to the technology, but also the accredited HR resources and staff that the PEO employs. These HR professionals BECOME your HR staff or augment an existing staff. The HR expertise now readily available to you comes at the fraction of the cost of hiring a Director level HR person. In addition to the technology, the access to HR expertise, the PEO also acts as shelter for HR compliance via the co-employment arrangement. As a new client, the PEO provides a compliant employee handbook that each employee acknowledges understanding and acceptance of company policies and procedures surrounding employment. All “new hire” paperwork must be completed when the employer joins a PEO. This includes I-9 verification which is a potential exposure area that the worksite employer no longer assumes. From an ongoing perspective, the PEO maintains management over employment related requirements such as new hire reporting, FLSA, FLSA, EEO, ERISA, COBRA, etc. In addition, they provide documented processes to avoid lawsuits around discrimination, wrongful termination, and sexual harassment to name a few. Administratively, the PEO’s HR representatives also do much of the heavy lifting as it relates to benefits enrollment and administration. With the right PEO partner, HR staff is truly an extension of the employer’s staff in which the employees view no differently than if the employee were an internal HR manager.

Consideration: Read the PEO’s service agreement very carefully or have it reviewed by outside counsel. There are gray areas as it relates to stipulations around whether the PEO or worksite employer controls certain processes and responsibilities and moreover, where the liability falls. Common examples of this surround terminations, drug screening, lawsuits for non-compliance, job classification, and workplace safety. Also, determine how much and what kind of access you have to the HR resources of the PEO. Will they be onsite or just available via phone? Is there a limit to the time spent with the employer or is their time only allocated for certain functions?Are you billed an additional fee for special projects that may be out of the normal scope of the relationship?

If you answered yes to one of these questions, evaluating a PEO is worthy of further analysis. With the increasing complexity of business decisions in the economy today, it is important to understand all the facts and to choose the RIGHT PEO. For assistance with this determination and potential vendor selection process, rely on Centripetal Consulting Group. We recognize that this business choice is a strategic decision that may promote the growth of your business. Our goal is to keep our clients focused on running their business and maximizing the value of their human capital which in turn increases your business value to your customers. For more information on the services provided by Centripetal Consulting Group, click here.

HR Events 2010

HR events are in full swing! SHRM and HR Technology Conference are just a couple shows that you’ll want to check out this summer/early fall.

SHRM (www.shrm.org)

The annual SHRM conference takes place June 27-30 in San Diego. Not only does SHRM have some dynamic and engaging speakers this year (like Steve Forbes and Al Gore), there is a ton of one-of-a-kind tracks part of the MEGA sessions. Here’s a day-by-day guide of the events you should check out:

Saturday
Mid Morning Seminar: Strategic HR: Delivering Business Results

A great way to “kick off” the SHRM event. As we come out of the recession and get “back to business” HR will be called upon, once again, to help drive the business to the next level. This seminar focuses on the impact of HR on the bottom line.

LaJolla Tour

If you have been to LaJolla you know this is a must do. If not, here is the description from the Conference Planner:

“La Jolla is a must-see when visiting San Diego, as well as being one of the most exquisite areas in the country to live. The first stop is the Birch Aquarium at Scripps. Overlooking the Pacific Ocean, this beautiful facility presents undersea creatures in realistic habitats, and allows guests to experience the frontiers of marine science through interactive museum exhibits featuring the latest research at Scripps Institution of Oceanography. Following the Aquarium, guests will enjoy exploring the special boutiques, galleries and designer studios, viewing the coastline, or beach combing on their own at the famous La Jolla Cove. All of these are set against a stunning backdrop that is often compared to the French Riviera for its aesthetic appeal.”

Military Recruiting Workshops

In the mid afternoon there are three sessions related to recruiting and retaining returning military personnel. Very interesting and important topics.

Sunday

Executive Session: Silo Busting

An interesting and timely topic. The presenter is from the Wharton School and will be discussing why silos form and how to break them down.

Super Sunday Session: Health Care Reform & HR: One ‘Check-Up’ You Shouldn’t Miss

Health care is obviously on everyone’s mind and this session will help you analyze the impact of HCR on your organization.

Sailing in Style

A 49-passenger Catamaran sailing around San Diego harbor. Count me in.

Monday

Early Morning Session: Keeping Up With the Current State of Recruiting

Companies are beginning to hire again and more and more channels are available to source candidates. This session looks like a good primer on the state of the market today.

Mid Morning: What every HR Manager should know about strategic planning.

HR must get better at speaking and articulating strategy.

Mid Afternoon: Going Green in the Workplace

The Obama administration is certainly driving green initiatives. It’s a good idea to get prepared.

San Diego Tour: Cooking Class and Wine Tasting in Little Italy

Italian food and wine…enough said.

Tuesday

Making the most of your talent management

A real life case study from an HR professional about how they made talent management work for their organization.

Talk Your Way into a Million Dollar$: The “ATES” of Controlling Rising Medical Costs

Another real life case study from a company that saved two million dollars on their health care costs.

How to Develop Butt Kicking Leaders

Leadership skills are more critical than ever.

Wednesday

The World in 2030: Answer Tomorrow’s Global Challenges Today

A good way to close the event – with a look to the future.

HR Technology Conference & Expo (www.hrtechnologyconference.com)

The 13^th annual HR Technology Conference will be held in Chicago September 29-October 1.  In addition to the hundreds of exhibitors and product announcements, there are some interesting sessions/tracks worth noting:

• Oracle Shows Its Next Generation HCM: Unless you attend Oracle’s private user conference, you’ll see for the first time the new HCM demoed by Gretchen Alarcon, Oracle’s VP of Global HCM Product Strategy.
• Naomi Bloom Debates Gartner’s Jim Holincheck: The world’s two leading experts on HR technology will face off on the hottest issues of the day.
• The Shootout: Our signature event is now a full track with four sessions, each featuring two vendors demoing their live software to a tough scripted scenario — so they can’t just show you whatever they please. That makes The Shootout very different from the marketing demos you could get in your office or even be asked to pay for at other conferences! 
• Twitterversity: Bring your fully charged WiFi-equipped laptop to get hands-on Twitter instruction from famous Punk Rock HR blogger Laurie Ruettimann, joined by Gen Y and Gen X HR practitioners as her roving teaching assistants to help you one-on-one.
• Talent Management System Vendors — Leaders and Laggards in Customer Satisfaction: Hear how hundreds of current users really feel about their vendors and their products before you make a choice. The second annual report from Bersin & Associates will again debut at the conference, this time naming the top and bottom rankings.
• Getting the Most Out of Workforce Planning: A panel of leading-edge HR practitioners — of course from Google and Microsoft, but also from Ameriprise — will tell you how to launch, manage and derive value from a Workforce Planning system and make it integral to your organization’s success.
• The Best How-To Advice on Social Recruiting: Everybody’s talking and writing about using social networks like Twitter, LinkedIn and Facebook for recruiting, but almost nobody has got it right.
• Five Other Panels:
  • Fourth Annual Talent Management Panel with Knowledge Infusion CEO Jason Averbook, focusing this year on how TM has failed at some companies and how to fix.
  • Being Global with Karen Beaman, Founder & CEO of Jeitosa Group, with senior executives and experts who are already there.
  • Job Boards – Valued 21st Century Partners or R.I.P? with Recruiting guru Gerry Crispin of CareerXroads, featuring a passionate argument from staffing leaders and insightful vendors on the future of job boards.
  • Social Learning – What Is It? Why the Buzz? Are There Results? with expert Jeanne Meister and four CLOs exploring this latest phenomenon.
  • Blogger Insights with Kris Dunn, VP HR at DAXKO, and The HR Capitalist blogger. Learn about Social Media from the people who live it.
• Dave Duffield: Returns to the HR Technology® stage with his client, Flextronics International.
• Expert Discussions: Five Industry Analysts host separate group discussions and Q&A sessions based on their favorite subjects.
• Expo: Certain to be the world’s largest again this year. Dozens of new products will be introduced. Plus, many vendors bring their CEOs, giving you product insights you can compare and act on.

Getting Out of a PEO

Many small to mid-size employers have looked to PEOs as an affordable HR outsourcing solution for managing liability and controlling the cost of health care and worker’s compensation insurance. The events of the past year have prompted employers to re-think whether co-employment will still offer the same benefits it once had. One of the questions lingering is how new legislation around health care reform will affect PEOs and their clients. There is a case to be made that administratively the PEO will help employers track the new changes in legislation such as tax credits, new HSA limits, and employee enrollment in the new health care exchange. However, is this really a benefit to the employer or to the PEO? Who is the “employer of record” in the eyes of the IRS? Will the PEO be receiving the tax credit or the employer? Will the size of the employer even be considered since participation in a PEO pools several employers together? How will this affect the penalties and/or tax credits? The way regulatory authorities (such as the DOL, IRS, Department of Health and Human Services) treat PEOs has always been a bit uncertain and inconsistent and now, with the upcoming health care reform changes, it will only create more confusion.

In addition to the unknown future for PEOs, many employers are no longer benefiting from lower health insurance premiums like they once did. In years past, many PEOs were able to offer health plans that were less expensive than the national average and could guarantee renewals that were lower than the trend (10-13%). This past year proved that this no longer the case as many PEOs delivered renewals upwards of 35% to their clients.

If you are an employer that is wondering whether the PEO relationship is still a good solution for your business, consider these four questions carefully to determine whether the value of the PEO is worth the expense and furthermore how to craft a plan of action for leaving the PEO. Often it is very difficult to determine your true costs so seeking outside help may make sense and mitigate any confusion.

Questions to Ask When Evaluating Leaving a PEO

1. Am I being serviced from an HR perspective so well that, without the PEO, I would have to hire someone internally to replace them?
2. Can I obtain similar health coverage at a comparable rate outside of the PEO?  How do the last few years’ renewals with the PEO compare to the national average?
3. Can I obtain similar Workers Compensation and EPLI (Employers Practice Liability Insurance) coverage outside of the PEO at a comparable rate?
4. Will my SUI (State Unemployment Income) rate be higher or lower as compared to that of the PEO?

If you are unsure about at least one of these questions, a cost analysis is definitely worth conducting. In many cases, an employer may be getting a good deal in one area yet could be overpaying in another.

The cost to consider is a fee that many PEOs call Administrative Costs or an Admin Fee. This fee could be shown as a flat per employee per month rate or it could be shown as a percentage of the total payroll and combined with other cost components such as SUI or Worker’s Compensation. The Administrative fee is where the bulk of the profit margin lies for the PEO and when the services are bundled, it makes it easy for the PEO to shift costs so they remain profitable.

In order to get a full understanding of the financial impact of moving away, ask your PEO to break out each cost area separately: Benefits, Workers Compensation, EPLI, SUI, and Administrative fees. You then have a basis to compare costs as a stand-alone group outside of the PEO. The only sensible way to compare is to look at the total cost WITH the PEO versus the total cost OUTSIDE of the PEO. The only cost that will remain constant in or outside the PEO is employer-paid FICA and FUTA taxes.

The Five Cost Components to Shop

1. Health Insurance and other related benefit products including STD/LTD, Life Insurance, Vision, Dental, COBRA, FSA, and HSA
2. Workers Compensation/EPLI
3. SUI – this rate will be the manual rate for a new business in each state
4. Payroll/HRIS services
5. Fractional HR or the cost of hiring an HR resource

If you are utilizing the PEO’s 401(K), add this to the list items to consider.

The timing of the transition away from the PEO must be considered because of tax implications to both the employer and employees. Making a change later in the year will have a greater impact because more employees will have met their Social Security wage requirements and employers will have met their SUI and FUTA limits. Employees will have to adjust this when they do their tax return because they will have an overpayment. The tax duplication payments need to be deducted from any savings if you are looking to make a mid-year switch.

Also, an employer’s unemployment experience rating adjusts as if the employer were a new business in each state that it has employees. This could have either a positive or negative impact on the employer and should be considered in the financial analysis as well.

Evaluating getting out of a PEO and actually making the transition can be very confusing and time consuming. Centripetal Consulting Group can help you alleviate the guesswork and complete the financial analysis. Depending on the outcome, we can help transition you off the PEO and help select vendors from our network of over 100 top-rated HR outsourcing providers.  Contact us today for a free consultation. www.gocentripetal.com

Finding the Right Applicant Tracking System

Finding the Right Applicant Tracking System

With the economy beginning to finally show signs of upward mobility, employers are slowly beginning to hire again. There is a surplus of candidates on the market, and without an easy and automated process to manage candidate flow, the recruiting process can become increasingly more challenging. Do you feel like you are spending too much time with the wrong candidates and not enough time with the right ones? Have you ever lost a top candidate to a competitor because the candidate fell through the cracks or your process wasn’t timely enough?

These inefficiencies are costing your company real dollars each and every day. Although the “human touch” may never be completely eliminated in the recruiting process, technology can certainly help you become more productive and decrease your time to hire. Not only will an Applicant Tracking System (ATS) eliminate redundancies in data entry, it will also allow you to match skill set, experience, education, and geographic location quickly, thus giving you an edge in a competitive marketplace.

Once you have decided that you have the need for an ATS, look for these key features in a vendor:

Profile Creation: Allows candidate to create career preferences such as salary range, desired position, location, skill set, etc that are viewed by potential employers. This profile can be edited and activity can be tracked by the candidate. Resumes can be attached to this profile.

Scheduler: Tracks all aspects of your recruiting including calling candidates, arranging interviews and follow-ups, and taking notes from phone calls. Allows you to share tasks, manage status of activities, and link hiring managers to potential candidates. Managers are able to update HR when milestones have been met with work-flow capability.

Remote access and Smartphone Integration: Provides better time management by helping you get things done without being in the office. Grab information from any secure online connection including applications that are downloadable to smartphones. Share and collect information, schedule interviews, and monitor the process from anywhere you can reach the internet.

Keyword/Data Search: Saves the time it takes to sift through every detail of a resume or cover letter. Can search data fields and email attachments for specific keywords to best match employees.

Saved searches/hot lists: Sorts by characteristics such as open job orders, locale, position, or years of experience. Save customized searches for future reference so you don’t need to re-enter the data.

Online application with job screening questions: Requires candidates to answer qualifying questions for quicker filtering of candidate pool. This could range from compliance based questions that are answered via drop down menus to behavioral based questions that allow you to screen for personality and cultural fits.

Automated Candidate Communication: Ability to send system generated emails to candidate communicating profile receipt, acceptance and rejection of the profile, and interview process status. Create emails and send to multiple people at once including the candidate, hiring manager, department head, etc. directly from the system. Keep track of correspondence with potential candidates.

Reporting capabilities: Provides details on candidates and suggests which ones are the best for the job. Documents response rates and helps you determine if you’re getting an ROI through your ATS. Provides capability to track successful hiring sources including recruiting agencies, job boards, or internal referrals. Capability to facilitate EEO reporting and ensure compliance if applicable.

Customizable fields: Creates fields for specific departments, contact managers, job responsibilities, and other items unique to your organization. Allows you to easily search for specific information when you need it.

Promote job openings: Can publish open jobs to company Web site and fee-based job boards.

These are basic functions that are core to most applicant tracking systems on the market today. Depending on the complexity of your needs, function rich systems could include employee assessments in conjunction with the system.

To maximize integration, you may want to consider an HRIS system that includes an ATS within it, as opposed to buying a separate ATS system. At the very least, make sure to select an ATS that can create an export file for upload into your existing payroll or HRIS system. This will eliminate the timely data entry process involved with on-boarding as well help you to build a skills inventory which will help your organization to promote internal candidates as part of your total recruiting strategy and succession plan. Robust HRIS systems with Applicant Tracking  will also store job descriptions, include job requisition creation with workflow for approval and job offer letter creation and approval processes.

If your organization is considering implementing a system to better manage your recruiting efforts and would like to explore the options available, contact Centripetal Consulting Group to learn how we can help.

Making Work Opportunity Tax Credits WORK for YOU

One of the major current initiatives in Washington DC is creating a “jobs bill” to incent small and mid-sized business to begin hiring. Much of the discussion surrounds tax credits for hiring additional workers above and beyond the headcount before the effects of the recession . Among the recommendations are exempting businesses from the 6.2% social security tax if they hire unemployed workers and tax credits of up to $5000.00 for hiring and keeping unemployed workers for a minimum of one year.

What will the legislation look like?

We’ll it’s anybody’s guess given the infighting between the Democrats and Republicans. But you don’t have to wait for the politicians to figure it out……….. If you are a small or mid sized business, there are credits in place today that can provide real cost savings to your company. One is the Work Opportunity Tax Credit (WOTC).

Up to 20% of all new hires qualify for some federal, state or local tax credit. Unfortunately, many companies are unaware or don’t apply for the credit and as a result millions of dollars of potential savings are forfeited each year.

The Facts

Who is eligible?

As with most government programs, the requirements for eligibility are detailed and complicated. In general, these groups apply:

• Short- and long-term recipients of Temporary Assistance for Needy Families (TANF) benefits
• Veterans who are disabled or unemployed, or receive food stamps
• Ex-felons hired within one year after conviction or release from prison
• Individuals age 18 to 39 who live in empowerment zones, enterprise communities or renewal communities (“designated communities”)
• Disabled individuals referred after completion of a qualified vocational rehabilitation program
• Summer youth employees age 16 and 17 who live in designated communities and work at least 90 days between May 1 and Sept. 15
• Individuals age 18 to 39 who receive food stamps
• Individuals receiving Supplemental Security Income (SSI) benefits
• “Disconnected youth” age 16 to 24 who aren’t in school, employed or readily employable due to a lack of basic skills

Each group has specific requirements so it is not a given they will automatically qualify. For example, unemployed veterans must have been discharged from active duty within five years before the hire date and have received unemployment compensation for at least four weeks during the one-year period ending on the hire date.

How are the credits calculated?

The credit reduces the employer’s wage deduction dollar-for-dollar. The reduction is required even if you can’t take the full amount of the credit in the current year and must carry it back or forward.

For most targeted groups, the maximum credit is 40% of first-year wages up to $6,000 (a maximum credit of $2,400). For disabled veterans, the maximum credit is 40% of first-year wages up to $12,000 (a maximum credit of $4,800).

And for summer youth employees, the maximum credit is 40% of first-year wages up to $3,000 (a maximum credit of $1,200).

For long-term TANF recipients, the maximum credit is 40% of first-year wages up to $10,000 (a $4,000 credit), plus 50% of second-year wages up to $10,000 (a $5,000 credit, so there’s a maximum credit of $9,000 over a two-year period).

Formerly known as the welfare-to-work credit, this credit was combined with the WOTC a few years ago.

The maximum WOTC is available for employees who work 400 hours or more during their first year of employment. A partial credit equal to 25% of qualifying wages is available for those who work between 120 and 399 hours.

How do you get the credit?

Forms need to be completed and filed when hiring a qualified employee. When the employee works the requisite number of hours, the employer claims the credit on the company’s new income tax return.

Sounds complicated? Well, this is a government program we are talking about. But here’s the good news. There are third party companies who will manage the entire process for you on a success fee basis only. They take a percentage of the credit if the credit is approved – and they handle the entire administrative process. No upfront costs, no processing fees, they only get paid if you get the credit.

Centripetal Consulting Group can help your organization connect with the right vendor to manage the process for you. To learn more and start saving, contact us today at 214-306-9760 or visit our website at gocentripetal.com.

The Value of Automating Benefits Administration

With the cost of healthcare still on the rise and the decisions that await around healthcare reform, it only makes sense to take a step back and look at all aspects of healthcare expense, not just the insurance itself. Employers have attempted to control medical rate increases by making benefits cuts or outright elimination of benefits, increasing cost-sharing to employees, and adopting consumer-driven health plans with HSA’s or HRA’s. There can be inherent dangers in these approaches including decreased employee satisfaction, which can ultimately lead to voluntary turnover of good employees.

I suggest taking a look at the soft costs associated with the administration of the benefit plans as a strategy to mitigate this expense. Depending on the size and complexity of your organization and benefits offerings, up to 25% of your total spend could be tied up in the transactional costs of benefits administration. This warrants considering process improvement or retooling as a means to controlling this cost. Regardless of the size of an organization, deployment of the right technology will dramatically improve open and continuous benefits enrollment by reducing errors, speeding up the enrollment process, and increasing employee education and satisfaction around the health plans offered. Organizations of all sizes report the benefits of automated enrollment to come in the form of: Time Savings, Increased Productivity, Improved Data Integrity, Greater Employee Satisfaction.

An enrollment system will automate manual or redundant, paper-based processes, engage employees with self-service tools, and enable employers to access benefit participation patterns. Several methods for automating the benefits administration function are available to even the small market. I suggest exploring each and discussing options with your benefits consultant or an outside HR Consultant to determine what works best for your organization.

Issues to Consider When Automating Benefits Administration

1. Deployment of Employee Self-Service – The technology application that you choose must have a self-service functionality that is easy to use, includes workflow capabilities, and is accessible via the internet. If you properly train employees on how to use the benefits enrollment portal thoroughly most employees will complete it successfully the first time. Studies also suggest that more than half will do it at home with a spouse, thus making them more productive at work. Data accuracy is also improved when enrollment info is entered at the employee level as opposed to the administrator level. The more participants that have access the better. The use of kiosks should also be considered for those employees who may not have the internet readily available. Expanded reporting and survey capabilities also give added bonuses to employers who successfully deploy ESS.
2. Technology Integration – A stand alone benefits administration portal gets you halfway there but to truly maximize efficiencies, I suggest a fully integrated payroll/HRIS/Benefits application. Payroll data tends to be the most accurate data set in any organization, so it makes sense to build benefits technology off this data to ensure utmost accuracy for employee contact information, eligibility, premium deductions, and termination. Many systems also include interface capability to the insurance carriers. This type of integration allows for ONE point of entry for all payroll, HR, and benefits related information. This created a more efficient, less error prone process. Integration eliminates profit leaks with terminations and eligibility because all employee data is resident in a common place that connects with the carrier.
3. Expense – Who should be responsible for this cost? In many cases there are three different parties involved with the process: the insurance carrier, the insurance broker, and the technology provider. You as the employer are clients of all three. I suggest putting them in touch with each other to see what makes the most financial sense for your organization. Many times brokers will absorb this cost as a value added service. The carrier may be willing to cut you a deal to retain or attract your business. Thirdly, the technology provider may have extensive experience with your carrier and may be willing to reduce this cost because less work has to be done on the front end. At the end of the day, it is worth the financial investment and time up front to create the carrier feeds and maintain connectivity especially if you plan to stay with that provider for several years.

Wellness: Should our company be doing something about it?

Currently, 62% of employers offer some type of wellness plan, whether that is as simple as discounts on gym memberships or as comprehensive as a multi-faceted points-based program. Regardless, an employer must view a wellness program as investment in the employees, not in the health insurance plan itself.

1.  How does an employer decide whether it makes financial sense to implement a wellness program?

Factors such as demographic makeup, company culture, and the overall wellness implementation strategy including structure and design, will determine the ultimate “return on investment.” Employers should expect to pay between $4-$15 per employee per month on a wellness plan Companies with high turnover or lower paid workforces tend to directly benefit the employer the least; however, as more and more companies adopt wellness initiatives, the less that this will hold true.

First, the employer must be willing to adopt a top-down approach to implementing the wellness program and be willing to make a push to change to the company culture with an emphasis on healthy living.  Leaders determine culture.  If caring for yourself and others is part of what the employer values personally, it only makes sense to include wellness as part of company culture as well.

Secondly, an employer must understand the goal of the wellness plan before you can expect to see any results. “Bad” behavior drives risk; risk drives illness and disease; diseases drive healthcare costs. The only way to change the course of this cycle is to change behavior. An employer should not expect to see a dramatic change in the first couple of years. The only real way to measure success is in risk factor reduction.

2.  How does an employer maximize participation in a wellness program?
An employer must begin in the data collection phase of a wellness plan to experience long-term success. It is here where an employer identifies the current risk within the company by examining a multitude of data sets including clinical data obtained through claims or self-reported lifestyle data, health risk assessments (HRA), and biometric data. From here, an employer can determine the most critical areas to impact as the plan is designed.

Employers must then effectively market and communicate the wellness plan to employees AND families when integrating wellness plans. Often, the dependents are the more costly members of the employer’s health plan. Make the communication material as positive and personal as possible. It is vital that support from the executive team is evident in this communication and marketing. Employees follow what is done, not said.

Offering incentives will maximize participation.

Some employers feel that mandating certain requirements to maintain health care eligibility is the most effective way to force the hand in wellness participation. Others feel that offering voluntary incentive based plans is the safer path if you are trying to avoid discrimination liability and hope to boost employee morale as well.

The most effective plans include a variety and combination of incentives that will appeal to a broad employee base.
The most effective incentives are those that are tied to the health plan, such as premium discounts and contribution to flexible spending accounts or health savings accounts associated with high-deductible plans. It is also important that the employee be able to measure their wellness success and milestones. This can be achieved through point based systems as well as effective web tools to evaluate progress.

It is important, however, not to discriminate when implementing certain incentives. To date, the only real measure is placed upon insurance premium reduction. An employer cannot incent  in excess of a 20% cost reduction for participation in the wellness program.

3.  What does the future hold for Wellness programs?

If you understand the fundamentals of what is behind the rising cost of healthcare, one can only speculate that government will begin to highly incent employers via hefty tax credits to enforce employer sponsored wellness plans.

In fact, 16% of gross domestic product is spent within the healthcare sector. This number is rapidly rising and in part is due to the declining health in the US. The only way for this number to stabilize is to change the behavior of the American people at large.

The largest portion, over 60%, of Americans are insured under employer health plans. Similar to other benefits, such as retirement plans, it seems logical that the government will intervene and place the wellness burden in the laps of employers of America to enforce these much needed programs.

Marketing Your Employee Benefits Plan

According to a 2007 study, more than two-thirds of employers feel that their employees don’t fully comprehend the value and costs associated with their insurance benefits. At the same time, two out of five employees say they don’t know which options are most appropriate for them and their needs and would like additional education and assistance with planning their benefits program. Clearly communicating and marketing employment benefits can greatly help both employees and their employers. Such efforts convey a message that the employer is attempting to help employees manage their health and well-being, resulting in positive recruiting efforts and employee retention.
Most employees have a general understanding of the healthcare but are not well versed in specifics such as the cost to the employer. It is shocking when they learn that their employers spend 20% to 40% of the employees’ wages on benefits. Issues such as cost sharing and consumer-driven health plans add to the confusion. While recent studies indicate healthcare premium trends are finally on the decline, employees are still experiencing increased co-pays, deductibles and premium contributions. There are several ways employers can most effectively communicate employment benefits:

1. Open Enrollment is an employer’s opportunity to highlight their benefits program each year. An employer’s Benefits Broker/Consultant can facilitate this process by holding open enrollment meetings, webinars, and developing user-friendly communication pieces highlighting the benefit programs.
2. Highlight benefits in employee newsletters and offer “lunch and learns” to provide constant communication with employees.
3. Develop and maintain a benefits portal within the corporate Intranet or HRIS, providing a resource where employees can access up-to-date information regarding their benefit programs.
4. Implement an online enrollment benefits management system whereby employees can: a) Access their account and view/update their benefits enrollment information. b) Hyperlink to carrier and vendor websites in order to view physicians and claims. c) View list of FAQs to help employees understand how to best utilize their benefits, i.e. how to access a doctor and/or obtain a referral.
5. Provide new hire orientation meetings for all newly eligible employees.
6. Train your Human Resources team to ensure they can clearly communicate the value of the entire benefits package to your employees.
7. Hold a Health Fair every couple of years. A health fair provides a venue for employees to interact directly with the carriers and vendors. It is a non-threatening environment for employees to obtain information about health & wellness, prevention, and additional resources available through their health plans.

Both employees and employers can feel the negative effects of insufficient communication and marketing of employment benefits. Employers can face difficulty with respect to employee recruitment and retention. Employees, in turn may suffer from poor morale if they feel their company undervalues them, contributing to a negative work environment. Conversely, when a company shows it cares about its employees, both parties can greatly benefit from the advantages of open communications and a well-informed, strongly motivated staff. Proper marketing of the benefit plan is critical to communicating the real value to the employees. If done properly, the employer will reap increased overall employee satisfaction.

Training Employees – Why it is More Important than Ever

Companies have found that investment in human capital in the form of training and development yields high returns. The ones that recognize the value of their employees and place a new emphasis on education and training are becoming more competitive, successful, and profitable as a result. According to a study conducted by Knowledge Assessment Management, companies in the top 20 percent of those who spend money on training receive higher returns in the stock market. Is it possible that knowledge is equal to profit?

According to an article in T+D Magazine a knowledgeable workforce may ensure a company’s survival. The article profiles four companies that survived the economic impact of September 11, 2001, and a business climate marked by recession and corporate scandals. These companies—Southwest Airlines, Viacom, Dell, and Guardsmark—all consider employee training an investment in company growth and stability. Rather than cutting back their training budgets during hard times, these companies chose to invest in the development of new skills and knowledge within their workforce. In doing so, these companies showed a commitment to their workers and gave them the educational background necessary to increase productivity and effectiveness in their respective markets. The workers, in turn, supported these companies and ensured their survival through a difficult chapter of American business history.

Experts in this field can work with your leaders to help instill the importance of a motivated and engaged workforce. That is critical to achieve success when the economy improves.

The face of business is changing at an alarming rate. Technology advances, globalization, workplace diversity and the list goes on. And all this in a weakened economy! Every industry sector and each departmental division within a company is confronting the same reality. Which outcome a company and its people will experience is directly focused on their commitment to training and development.

The new paradigm for training requires us to view it as an inseparable part of performance improvement and management. Once viewed in the eyes of management as a nonessential support tool, training and development has become an integral part of business strategy and aligned with business results. Training is a process that involves dynamic interrelationships with the other functions of the organization, especially supervisors, managers and performance management systems.

A number of trends in training and development are occurring as the marketplace changes and companies strive to achieve these levels of performance in a time when corporate dollars are not spent on training. As they watch their budgets shrink, HR and corporate training professionals are looking for cost effective training options that can still get the job done without an expensive price tag.

This economic downturn is actually an excellent time for companies to focus on maximizing internal talent and resources by means of an improved training program. Spending time and resources now to train employees will help motivate them to be ready to move forward successfully when the economy gets better.

Qualified Instructional Design firms can help you maximize your talent pool by ensuring that your succession planning and talent management processes are setting you up to emerge successfully when the economy takes an upturn.

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