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Benefits outsourcing: Choosing the right vendor

Years ago, employers recognized that the repetitive and administrative tasks for benefits took away from their focus on core business objectives directly impacting the bottom line. As more companies enter the benefits outsourcing market, the choices and the process for selecting the "right vendor" become more complex.

Which vendor should you choose? What functions should you outsource? Savvy employers are more aware of due diligence and engaging outside consultants to answer these questions and help them in their vendor search.

As the market continues to mature, more companies outsource their benefits administration. Employers are becoming better consumers, with more education and higher expectations of their service provider. With more competition, service providers must continue to develop higher quality solutions, while meeting the constantly changing needs of customers.

The benefits of benefits outsourcing
Employers are choosing to outsource benefits administration for many reasons. Outsourcing provides an organization with access to industry experts, top-level technology platforms and streamlined processes that can reduce costs. It also frees up time internally for organizations to focus on more strategic initiatives.

With the opportunity to outsource so many different pieces of the HR puzzle, how do you determine how many vendors are necessary? There is no magic number -- it really depends on your organization's needs.

According to the 2005 HR Outsourcing: Trends & Insights survey conducted by Hewitt Associates, "organizations that feel fewer vendors would be better believe that consolidation would result in less employee confusion, better integration of service and easier coordination, less time dedicated to vendor management, and increased leverage/buying power."

Before you jump into the outsourcing arena, it's important to clearly identify what your organization wants out of an outsourcing relationship by determining and prioritizing goals. A bit of preparation and research will help you determine what the best type of outsourcing structure is for your business.

What to consider when searching for an outsourcing provider
Does the vendor offer high-quality services and enhanced participant tools?
Make sure the vendor has demonstrated benefits process expertise and a strong track record of experience. Ask what kind of tools they can provide to make the administration and maintenance easier on your end - and for your employees. The vendor's people need to be able to answer all of your questions and be knowledgeable of their services and the industry best practices.

Does the vendor have a good reputation and financial stability?
Check references and follow through on due diligence to determine if a vendor is reputable and well recommended by their current customers. If their current customers are not satisfied with the vendor, that's a red flag. The vendor's financial state is also an important consideration. A vendor with financial stability will be able to grow and improve their offerings with the changing market to keep up with customer demands.

Does the vendor understand the long-term objectives of your organization?
Determine if the vendor will be able to accommodate your organization's future changes and growth. Look for a vendor that wants to form a partnership with you -- not just provide you with a cookie-cutter solution that can't be customized to meet your organization's changing needs. Take a broad look at your organization's needs - even if you are just starting out by outsourcing one process. Consider the vendor's capabilities and scope of services. Do these fit your needs now and in the future if you want to outsource more processes? Will your organization eventually outgrow the service provider?

Does the vendor understand the values and culture of your company?
The vendors you select need to have an understanding of your organization's values and culture. Ensure that you mesh well with the people you'll be working directly with on the vendor side. Holding face-to-face meetings with vendors during the selection process is a great way to get a feel for their fit with your organization.

Does the vendor have a seasoned service team and quality improvement processes, such as Six Sigma, in place?
You'll want to find a vendor that believes in working on continuous improvement to refine the outsourcing relationship to streamline processes and ultimately reduce time and costs associated with managing benefits administration for your organization. Find out if they have a formal ongoing quality improvement process in place or if quality assurance is done only on an informal basis.

Risks of not making the best choice for your company
Ask a lot of questions in the process of selecting an outsourcing provider. It's important to choose the right vendor, because the wrong choice comes with many risks to your company, including:

• Missed deadlines, ineffective project management and late implementation.
• Lowered employee satisfaction due to confusing communications, complicated enrollment processes and ineffective Web site tools.
• Increased administration costs due to increases in support needed by the employer's HR department or benefits manager.
• Incomplete or total lack of reporting.
• Lack of service accountability.

Ceridian's outsourcing solution
Ceridian is a leading provider of HR and benefits services. We understand our customers. And, with a leading service team, customer satisfaction is our top priority. Our vision is to change the world of work for all employees, one company and one employee at a time.
Six Sigma monitored processes ensure highest quality, seasoned service. Implementation teams track project timelines to exceed implementation deadlines, and most important of all, Ceridian takes the time to understand your company's needs and does not box you into inflexible solutions.

Look to Ceridian as your trusted outsourcing partner and let your employees and managers gain faster access to better information. We can help you spend less time on repetitive, administrative transactions. Your organization will be able to profit from the numerous automated functions that allow you and your employees to get back to the work that directly contributes to your organization's bottom line.

Contact your Ceridian representative to learn more about Ceridian's array of benefits administration solutions.