Do We Need An HRIS?
Success in the human resources profession requires fast and easy access to information — and that requires an automated HR information management system. Too many times companies think they are too small of an organization to justify an HRIS.
To this, I must say that a company is never too small to automate processes. If a company develops sound processes early on, they are poised for growth and may potentially be able to avoid or prolong hiring additional resources in the future.
Selecting an HRIS is a major decision. Getting approval for such a system is often difficult as well.
To start, HR managers should assess and outline how activities are currently being performed within the organization, and, in particular, within the HR department.
An HRIS generally should provide the capability to more effectively plan, control, and manage HR costs; achieve improved efficiency and quality in HR decision making; and improve employee and managerial productivity and effectiveness.
When conducting an analysis, I suggest looking at looking at the business challenges that you are trying to solve FIRST as opposed to the features and functions of a particular software application.
The following questions are designed to assist HR professionals in putting together the facts, the figures, and the business case to convince senior management that the expenditure for an HRIS makes sense.
- What information are people requesting?
- How do you, line managers, the chief executive officer, and the chief financial officer obtain needed personnel information?
- How long does it take you to respond to a new request for information?
- What HR management needs are not being addressed and handled properly?
- How effective is your support to the budgeting and planning processes?
- Where do you stand in complying with COBRA, ERISA, FLSA, OSHA, and other statutes and regulations?
- What tasks are you being asked to do today? How well are you performing these tasks?
- What programs, services, and management support must you provide to help your organization meet its goals?
- What are the major tasks that you intend to accomplish and the results you plan to achieve in order to have a successful HR operation?
Answering these questions will provide you a solid foundation for evaluation of various HRIS products on the market. Because there are so many HRIS providers including in-house, outsourced, hosted, non-hosted, hybrids of these etc., it may make sense to look for an additional resource outside the company to help with your evaluation.
What Business Owners Need to Know About Their 401(k) Plans
The Employee Retirement Income Security Act (ERISA) imposes special legal requirements of fiduciaries of 401(k) plans. Many business owners are unaware of the dangers they face under
ERISA and the implications of being a fiduciary.
Who is a Fiduciary under ERISA?
The plan sponsor (which is usually the employer) and any trustees are fiduciaries. Additionally, many business owners use employee “committees” comprised of non-trustee employees who conduct an oversight function with the ability to select a new provider or investment menu. These committee members are considered fiduciaries. ERISA defines a fiduciary as anyone who:
1. Exercised discretionary authority or control over the management/disposition of plan assets
2. Renders investment advice for a fee
3. Has discretionary authority in the administration of the plan
What are the Duties of a Fiduciary?
1. The fiduciary must act solely in the best interest of plan participants and their beneficiaries.
2. The fiduciary must act for the exclusive purpose of providing benefits to the participants.
3. The fiduciary must use the care, skill, prudence and diligence under circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use. This is called the “Prudent Expert” standard. In other words, the fiduciary has a duty to act solely in the interest of the participants, and to prudently select and monitor plan investments.
There can be no “side deals” that benefit the fiduciary. For example, if a bank offers to reduce the business owner’s interest rate on their credit line in exchange for moving or keeping the company’s retirement plan with the bank, and the business owner accepts the offer, then he/she has violated his/her fiduciary duties.
The Risks of Being a Fiduciary
The fiduciary is personally liable for breaches of fiduciary duty. In recent years, several cases have had sanctions or judgments that often are in the seven figure range.
In summary, a plan fiduciary who breaches his/her fiduciary duties to the plan:
- Is personally liable for any breaches of fiduciary duty
- Must make up any plan losses and lost opportunity costs
- Must pay participants’ attorneys’ fees
- Is often subject to stiff DOL civil and criminal fines and IRS excise taxes
There are many ways to mitigate your liability as a plan fiduciary. Talk to your investment adviser or retirement plan broker for best practices in this area especially with regards to ways to limit your exposure.
