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Understanding HR’s Role in Adding Value and Cost Savings to your Organization

Posted on August 21, 2013
HeliosWritten by Helios | Email author

CB022154As the overall economy continues to improve, employers are looking for additional methods to reduce costs while also finding ways to add value to the organization.  As an HR Business Partner who works with various clients across multiple industries, I find many organizations do not have an employee benefit strategy. Instead, organizations tend to review and modify their existing benefit plan designs or employee contributions and call it a day. This is only a short term fix to a long term issue.

While traditionally seen as a cost center, the HR Department can add significant value to the organization by reviewing the employee benefit strategy currently being deployed. A good benefit strategy provides support and validates the organization’s main strategic mission. If your organization does not have a benefit strategy, now is the best time for your HR Department and senior management team to brainstorm, define and implement one.

A preliminary step, before reviewing and modifying benefit plan designs and employee contributions, is for your HR Department to work with senior managers in your organization to craft a benefit strategy that works in conjunction with your overall organizational strategy.  Doing so means reviewing the following criteria:

1) Review Impending Laws: Are there any new laws (federal or state) that will impact what is being offered now or in the next one to five years? An example of this would be to review how the Affordable Care Act (ACA or Obamacare) will impact your organization now and in future.

2) Market Presence: Does your organization want to lead, follow or lag your industry or geographic region in regards to the benefits offered to employees? For instance, if your strategy is to provide employees the leeway to make decisions on their own, do your current benefits reinforce this notion? Will providing the industry standard of three weeks of vacation help you accomplish this or does offering unlimited PTO to your employees better accomplish your strategy of allowing employees to make their own decisions?

3) Assess the Current Environment: Is the organization providing any avenues for employees, outside of management and HR, to provide feedback on the current benefits? One avenue is to create an employee survey that requests feedback on the current benefits available to full time and part time employees.  There are multiple positives for creating, distributing and analyzing a benefit survey.  These can include: ideas for enhancing what is currently being offered; providing insight into the alignment of the benefit program and the current company strategy; establishing creative ways to distinguish the organization from your competition (both industry and geographically).

4) Identifying Areas of Risk: Will a subset of your population, such as identified smokers, lead to higher overall costs for your plan? Work each year to proactively identify emerging or high-risk employees, and at the same time, identify those who are low risk. Create programs to bring those high risk employees to a “normalized” risk rating, while also rewarding employees for being in the low risk category.

5) Partnering with Employees: What is being done to make employees aware of how their choices impact the type of benefits being offered? The organization should have regularly scheduled meetings with their employees to provide an overview of the total costs of benefits for the organization. At this meeting, you should review in aggregate why employee costs have increased, or decreased, year-over-year. Examples provided can include employees who utilize out-of-network providers, visit emergency rooms or health clinics regularly instead of visiting in-network physicians.

Once your benefit strategy has been set, by reviewing the criteria above, you can work with your HR Department to define the metrics necessary to quantify the value and cost savings to your organization.

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