For HR professionals, benefits administration is becoming more and more important to consider.
In a world of remote work enabled by video calling, satellite internet, and computer remote access software, employers can recruit from a wider pool than ever. But at the same time, candidates can choose from a wider selection of potential employers. Businesses are more reliant than ever on benefits as a competitive edge.
That could mean HR teams are spending too much time on all the admin involved. But with the right tools, benefits administration can be quick and easy for both HR and other employees. Let’s look into why benefits administration is important, what it involves, and what HR professionals need to know to do it effectively.
The importance of benefits administration
In an increasingly competitive job market, attracting top-tier talent is harder than ever. So is retaining it.
A competitive benefits package is essential to attracting and retaining the best talent, but putting that into practice every day can feel like a job in itself.
Slow or ineffective implementation of the benefits program can reduce the positive impact it has on your hiring and turnover. If the program isn’t suited to employee needs, it’s not going to be effective. And if the program is expensive to run—including spending on the likes of health insurance, or the time cost of running the program—it’s going to be hard to convince leadership the program should go even further.
Benefits administration solutions will help you offer the best program in your sector, and run that program efficiently while ensuring compliance at all times. That, in turn, will help you hire better candidates and reduce employee turnover with a standout benefits program.
What is under benefits administration?
So, what does good benefits administration involve day-to-day?
1. Crafting benefit packages based on employee preferences
HR professionals might spend days or weeks setting up a new employee benefit because it seems like a good idea, only for it to go unused by many employees.
Benefits like wellness programs aren’t going to be very exciting when staff really want hybrid or remote working options. Rather than spending money on a meditation workshop, companies could invest in remote access and give teams more flexibility in working from home.
If you’re not sure what benefits employees would like, ask. Make employees part of the process initially and do regular reviews on what’s working. This can help you gauge what’s going on in the company, what’s working, and what you could switch out for something more effective.
2. Communicating benefit options, changes, and updates clearly
It’s easy for communication around benefits to slip through the cracks.
HR professionals need clear processes and plans around how they’re going to consult with staff on benefits and communicate those changes accordingly. Sometimes these will be internal changes on your part, and sometimes those will be out of your control as third parties, like health insurance providers, update their offerings.
This is one area where an employee self-service portal with benefits information can help. Staff can see the most up-to-date information each time they log in. It can also educate new hires about the benefits as part of their onboarding process, so they feel the full benefit of working at your company as soon as they start.
3. Enrolling employees in benefit programs and confirming eligibility
Onboarding new employees is one of the most important things HR professionals do, and it requires a high degree of personal attention.
Let employees review benefits information at their own pace. After they elect coverage or sign up for benefits, confirm their eligibility and enroll them in the program.
4. Administering 401(k) plans and offering retirement resources
Traditional pension benefits are a no-brainer for the employee: there’s no risk on their part. A 401(k) *with employer matching* will help you stand out in the eyes of many candidates.
Early-stage startups will usually offer employee stock ownership plans (ESOPs) as part of their compensation. These are more high-risk than pension plans, but there’s a very high reward if the company does well.
Appealing to a broad base of candidates and employees could require juggling all of these benefits, which can get out of hand in a big company. Payroll software with free 401(k) integration can streamline the process of administering retirement plans.
5. Evaluating providers to form accurate negotiations
It’s not so hard to define what benefits might work for your company, but that’s only half the battle. HR professionals need to evaluate all the different partners and providers for any given service, each of which will have their own set of pros and cons.
Making the wrong choice here can lead to you paying too much for a service that doesn’t do enough to attract good candidates and keep your best employees around.
Determine which employees are using which benefits. You can bring that data to negotiations and renegotiations with providers about what services you need and what you’re willing to pay for them.
6. Managing health insurance plans and collaborating with providers
While running a benefits program, HR teams need to offer health insurance plans that stand out and stay on top of changing requirements.
Basic coverage will include visits to the doctor’s office and the emergency room, and some companies will include vision and dental as extras. This is usually reserved for full-time employees, which may or may not be the right decision for you. Some companies extend their benefits to part-time employees once they’ve passed a probationary period.
7. Forming strategies for cost management and budgeting
Without good cost management strategies, good benefits can become costly. And good cost management can’t happen without up-to-date reporting. Compare benefits usage to your benefits costs, and adjust your plans accordingly.
8. Handling vacation, leave, and time-off benefits
As your company grows, managing time off becomes more of a challenge. It’s not just vacation days but also holidays, sick leave, personal leave, bereavement leave, and more.
A robust benefits administration program will include processes to handle time-off requests and time-off accruals.
9. Ensuring compliance with laws and regulations
HR professionals want to offer great benefits, but there are all kinds of compliance and regulatory issues to consider.
For example, some states require that employers enroll employees in a state-mandated retirement program or offer a qualifying plan.
3 types of employee benefits
We’ve seen that there are many factors to consider with employee benefits, but they break down into three main types.
1. Employee health and wellness programs
- Fitness subsidies: Reimbursement or discounts for gym memberships or fitness classes.
- Mental health support: Providing access to counselors or Employee Assistance Programs (EAP) for stress management and mental well-being.
- Mindfulness and meditation: Providing resources or sessions to teach mindfulness techniques.
- Ergonomic workstations: Providing standing desks, ergonomic chairs, or other equipment to improve physical well-being at work.
2. Retirement and financial savings options
- 401(k) plans: Employer-sponsored retirement savings plans, often with the company matching contributions.
- Roth 401(k) plans: Similar to traditional 401(k) but contributions are made post-tax, allowing for tax-free withdrawals in retirement.
- Pension plans: Defined benefit plans that provide a fixed, pre-established benefit for employees at retirement.
- Employee stock ownership plans (ESOPs): They allow employees to become shareholders, often at discounted rates.
- Life insurance: Term or whole life insurance policies, sometimes with an investment component like cash value.
3. Additional employee incentives and advantages
- Sign-on bonuses: Sign-on bonuses are one-time payments to new hires as an incentive to join the company.
- Childcare assistance: Subsidized childcare services or on-site childcare facilities.
- Remote work options: The flexibility to work from home or other locations, either regularly or as needed.
- Wellness programs: Incentives for healthy behavior that can reduce sick days, such as gym memberships or wellness retreats.
- Employee discounts: Reduced rates on the company’s products or services, or partnership with other companies for discounted rates.
- Professional development: Courses, workshops, or conferences that help employees improve their professional skills. That could be sales, management, or another type of training.
- Flexible scheduling: Allowing employees to set their own hours within certain limits, helping with work-life balance.
- Unlimited vacation: A policy that allows employees to take as much vacation time as they need, within reason.
- Paid parental leave: Paid time off for new parents.
The benefit of benefits administration
Benefits aren’t just a perk—they’re essential to attracting and retaining top talent. But in a growing company and a diverse workforce, you need to cater to all kinds of needs. A good benefits administration program will help you keep on top of the work involved, so you can focus on proactively improving it over time.
These views are made solely by the author.