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A new owner recently purchased the company and was interested in hearing about strategies for increasing profits and streamlining the newly acquired business. His corporate attorney recommended he talk with Aliere Advisors because the attorney noticed they were operating with an unbundled HR strategy and exposed to a significant employee litigation risk. On top this, the oil market had just taken a major hit and reducing costs was a high priority.
After the initial assessment with the CEO and CFO, it was clear that operating with an unbundled HR strategy was both costly and distracting. It was diverting management time away from improving operations and core business functions. Several things pointed to this being the wrong solution for the business. We’ll discuss the top three.
First, there were employees scattered across six states. Operating in multiple states placed a big burden on the company to manage the workforce. More money, managers, and HR staff were committed by the company to the problem of HR administration and compliance. Unfortunately, many HR matters were still getting elevated to the CFO. Despite the best efforts of the management team, things were slipping through the cracks, with potentially crippling consequences.
Second, the company had a colorful (poor) history with Workers’ Compensation claims. Most were small, but it indicated a negative pattern had developed. A history of claims scared underwriters to the point of raising their rates. The company thought that since the claims were minor, there was nothing to worry about. This couldn’t be further from the truth. Nobody in the company was properly managing the safety program and, as a result, their costs were out of control and trending higher.
Third, their current practice of employee benefits was completely out of sync with their benefits objectives. No one had defined a clear goal of what they were hoping to achieve by offering employee benefits. As a result, the plans they were offering and the money they were spending were completely mismatched.
A poorly designed benefits program resulted in disenchanted, disgruntled employees, increased turnover and a virtual waste of money with no true return on the investment.
The first step in developing a solid bundled HR strategy was to undertake an assessment of the business objectives and the current situation. Next we reviewed viable alternatives and began the process of data collection so we can get accurate rate quotes from vendors. We obtained summary information about the company operations, their current spending on HR and benefits, the Workers’ Comp policy, claims history, employee benefits, safety program, and a complete census.
From there, we began the underwriting process with four different vendors. As expected, one vendor declined to quote, and the remainder required some hand holding through the process. When the quotes came back, one seemed to be a clear winner. However, they had conditions. The vendor was concerned about the history of accidents in the workplace.
To get the lowest price, the vendor requested to send a member of their safety personnel to do a walk through of the operations. Going forward, the vendor required that the client accepts the vendor’s assistance in developing a new safety program to prevent these accidents. The new safety program would cost the client nothing and was a big win-win for both parties. The vendor was able to minimize exposure to risk and protect their work comp rates. On the other hand, the client was able to partner with a vendor who had much greater knowledge of safety procedures and training on how to keep their employees safe and their claims low.
After the client and the vendor had come together on the issue of safety, we moved on to a discussion about benefits strategy. We helped them to define better objectives of offering employee benefits.
The client wanted to provide good benefits that were affordable that would attract and retain great employees. Their current plans were very rich in coverage and not surprisingly quite expensive. The employer covered a good portion of the cost but couldn’t afford to contribute more. Even with the company contribution, the plans were still very expensive for many of their employees.
We worked together to select plan options that offered a good amount of coverage but that employees could still afford. These less expensive plans greatly reduced the client’s overall cost of providing benefits and came with an increase in employee participation.
The client walked away with savings that not only covered the cost of the bundles HR service but also yielded an additional $250,000 in profit for the company. This was due to the new bundled HR strategy combined with the fact that we got the health insurance costs significantly lower than what the client currently had in place.[/fusion_text][/fullwidth]