It’s available to firms of all sizes.
As employers look for any and every means to control employee benefit expenses, an investment in outsourcing absence management has the potential to yield meaningful returns both objectively, in terms of costs and productivity, and subjectively, in terms of employee satisfaction. This solution is no longer available solely for the Fortune 1,000. It’s now an option for small and mid-sized firms and may also be a fit for your organization.
Among the numerous responsibilities of Human Resource teams, absence management is extremely time-consuming and perilous if executed incorrectly. There are a wide array of federal, state, county, and local statutes with which to comply, plus an ever-shifting landscape of constantly updating legislation, leaving government agencies and courts to interpret the statutes and regulations. To add to the complexity, company-specific absence procedures can lead to inadvertent and inconsistent application of policies and procedures that in turn could prompt allegations of discrimination.
The numerous types of programs involving mandated absences can also trip up an organization. Making matters worse, more than one type of mandated leave can be triggered at the same time. It’s not uncommon for there to be overlaps with short-term disability insurance and workers’ compensation return-to-work programs. Managing competing leave requirements, while staying within the law, creates an additional level of risk.
Types of Mandated Absences:
- Family medical leave – federal, state, local
- Military leave – federal, state, local
- State-mandated leaves – e.g., jury duty, state disability, pregnancy disability, domestic violence, organ donation
- ADA accommodation absences
- Company-specific leaves – e.g., personal, bereavement, paid sick time, extended family care, sabbaticals, education
One strategy to remain compliant in this environment is for an organization to continually strengthen current leave protocols and procedures and to retain full administrative responsibilities in-house. What many firms may not realize, however, is the administration and risks related to absence management can now be economically transferred to outsourcing administrators. While historically this was only a viable solution for very large firms, that’s now changed due to a combination of life, health, and disability insurers that have been acquiring absence management firms to broaden their in-house service capabilities, as well as quantum leaps in technology that have dramatically reduced the costs of outsourcing. As a result, an increasing number of small and mid-sized firms are choosing to outsource.
The greatest increase in outsourcing activities is by firms in the 50-249 and 250-999 employee bands.1 However, other employers are increasingly evaluating a continuum of outsourcing options. They range from “co-sourcing,” in which the firm engages an outside insurance carrier or technology partner to handle some but not all absence management functions, to fully outsourced management and administration.
Why is Outsourcing Absence Management a Good Idea?
Whether an organization chooses to take a partial or a total approach, a well-designed outsourced absence management program offers the opportunity to implement a consolidated, consistent application of leave policies across multiple business units and jurisdictions. Beyond the reduced compliance risk and exposure to penalties afforded by having access to each state’s unique laws and coordination guidance—especially when they overlap with federal legislation, the benefits for employers are broad.
Outsourcing administrators leverage powerful technology tools to measure, analyze and monitor absence metrics, which reduces HR staff workloads. In addition, employees’ experiences improve with better communication about the full offering of company-provided benefits, which in turn increases productivity due to lower absentee rates and decreased employee abuse of leave benefits. It’s no surprise then that interest in outsourcing continues to increase for firms of all sizes, and employer satisfaction with outsourcing vendors is high.2
Is it Viable for My Organization?
Although outsourcing absence management holds the promise of being a valuable solution, the evaluation process can be significant and time-consuming. Project complexity will vary based on factors such as firm characteristics (e.g., headcount, different operating jurisdictions, and centralized vs. decentralized management) and the number of programs qualified for outsourcing. Regardless of project scope, a systematic approach and a detailed implementation timeline is needed to make an effective evaluation.
The first step is to establish a cross-functional evaluation team with complementary areas of expertise. In addition to human resources, internal stakeholders will likely include senior management, finance, legal, and IT. External participants typically comprise the firm’s benefit consultant, outsourcing partners (e.g., carriers and/or technology firms), and any other impacted outside vendors (e.g., payroll administrators, workers’ compensation/disability insurers, or third-party administrators).
Next, the effectiveness of existing programs must be assessed by looking at current policies and process flows, as well as the sources and cost drivers of employee absences. The overall objective is to develop baseline data to compare outsourcing against the status quo.
The final step in the evaluation process involves formulating a business case and designing an operating model to outsource some or all programs involving employee leaves. This will include anticipated results for increased productivity, operational savings, risk-mitigation efforts, technology enhancements, and the effect on employees.
How Do I Bring a Program to Life in My Organization?
If management agrees the business case is compelling and decides to proceed, the operating model and timeline from the evaluation project becomes the implementation roadmap. To ensure the outsourced absence management program is successful, senior management must explain the rationale for the change, as well as the goals and expected outcomes. Providing employees with clear, detailed communication on policies, procedures, and training requirements, and leveraging technology to monitor performance metrics is essential to actively manage and fine-tune the program on an ongoing basis.
About the Authors
Michael Stallone is a Senior Vice President in the employee benefits practice at Relation Insurance Services in Walnut Creek, CA. He can be reached on LinkedIn, via email at [email protected] or via phone (925) 956-1640.
This article originally appeared on the BenefitsPro website here.
Footnotes
- The 2017 Guardian Absence Management Activity Index (SM) and Study
- 2016 Disability Management Employer Coalition and Spring Consulting Group
If you are considering making a career move to Ascension Insurance, Inc. (and I hope you are!), allow me to offer you the insider’s perspective from someone who has six months under her belt.
First, a little bit about me. Like most millennials, I want to be part of an innovative, cutting-edge organization. When the opportunity to join the Ascension Human Resources team came up, I initially felt as though I’d be taking a huge leap. I wasn’t actively looking for a new opportunity, and I was happily working from home, at a job I was good at and enjoyed. And to be honest, when thinking on the insurance industry, “innovative” and “cutting edge” weren’t the first words to come to mind. Besides, I knew it would take a lot to make me feel like driving into work, every day, again.
But after spending some time in the Ascension world, my perspective shifted. Ascension seeks out people who complement its company culture, so the interview process is thorough—mine comprised two phone interviews followed by two in-person meetings. One thing I noticed, which is what ultimately led me to accept the job offer, was present throughout the interviewing process: the employees’ caring attitude, at every level of the company.
A few weeks into my new role, I attended a sales-leadership meeting at our corporate headquarters in Walnut Creek, CA. Upon arriving, I was given a tour. Every person we ran into stopped and greeted me as they would a longtime friend. The President & COO, Ed Page, and the CEO, Joe Tatum, waved us into Ed’s office as we passed by. I introduced myself, but they already knew who I was, and asked me about my March Madness brackets. Later, at the sales meeting, Joe asked me, with sincerity and a genuine curiosity, what my thoughts were on key initiatives, pain points, room for improvement, and various other topics. Does that kind of welcome and soliciting of input happen everywhere?
Here are a few other things that have stood out to me in the last six months:
- People here really care about one another. They’re dedicated to each other’s success, and they work hard to help one another.
- We celebrate small victories on a day-to-day basis, which keeps morale high.
- Birthdays, work anniversaries, and/or retirements don’t go unnoticed by colleagues, who quickly become friends.
- If you’re lucky enough to work in the Overland Park, KS office as I do, you’ll never go hungry!
- Ascension IS cutting edge and innovative.
- Everything you do and every initiative you see through, results in a measurable, meaningful value-add that gets traced back to you.
- Even with 450+ employees, the executive team is accessible and transparent. I can pick up the phone and call any one of them. They know who I am, and they take the time to listen and help if necessary.
Many of my coworkers have been here for thirty, forty years, and that makes this a special place. We aren’t looking for warm bodies to fill roles here. We want “A” players, the best of the best. And once you’re in the Ascension family, you’re in. To me, that’s worth jumping in my car every day. To fully understand what it means to be a part of the Ascension family, you’ll have to join us and find out for yourself!
Click here to visit our Careers center and learn more about how you can join us!
Ascension is pleased to announce that we have been invited to speak and will be sponsoring a booth at HR West again this year from March 7th to March 9th.
Come see Ed Bray, SVP, Compliance, and Tuan Nguyen, AVP, present The 2016 ABC’s of Employee Benefits (annually published in Employee Benefit News) on Monday, March 7th from 1:50pm – 3:05pm where he will provide a checklist of employee benefit to-do’s for 2016!
Come see Ascension at our booth! Stop by for a chance to win some fun prizes, including $100 gift cards, and learn how we can we meet your wants, needs and expectations in this new world of employee benefits.
In addition to our session, the conference will feature 88 sessions, and speakers from companies like Pandora, Salesforce and Twitter. Find out about best practices and proven strategies of leading companies in the West that are paving the way for HR innovation. With tracks for startups, small business and technology, plus evergreen topics like employment law, recruiting and leadership, there’s something for everyone at HR West!
Check Out the Complete Session Lineup
HR West Also Brings You:
- Four world-renowned keynote speakers
- Recertification credit toward your SHRM-CP/SHRM-SCP and PHR/SPHR for most sessions
- An Executive Learning Lab led by TEDx presenter, Haas/Princeton professor (senior practitioners only)
- Innovative ways to donate unused vacation hours to the American Heart Association or a charity of your choice
- Community reception, networking lunches, speed networking and dinner meet-ups
The Premier HR Conference on the West Coast
NCHRA Members: $979
Join NCHRA: $1,146
SHRM Affiliate Member: $1,085
SHRM Member: $1,134
Non-member: $1,174
We would love to see you and are offering a $100 special guest discount to join us at HR West!
Use PROMO CODE: Guestofspeaker
Rates expire on March 3rd, 2016.
Congratulations on making it through one of the most legally and administratively challenging years in employee benefits history. But, as you know, employee benefits never sleep. Ed Bray, senior vice president of compliance with Ascension, provides the 2016 ABC’s of employee benefits – what he calls the annual “just tell me what I need to do” list.