I live in the Northeast where the last winter was just brutal. We had so much snow that roofs were caving in. It seems like half the houses in my neighborhood had leaky roofs. The leaks always happen where rooflines meet or where pipes connect. The water gets in and then freezes, expanding the boards or pipes where they connect, and then when the ice melts the water flows into the house. The weakest points in the construction is where things connect. The same goes with technology. The weakest part of any technology solution is where systems “integrate” or connect. We consult employers on HR/Benefits/Payroll technology, and the most common problems, by far, result from systems that don’t integrate at all or more often are poorly integrated. Or from some service provider that is “disconnected” from the technology. I will get more into that later.
Anyone who has heard me speak before will know that I think “integration” is synonymous with fumble or problem. When someone says we “integrate with” and it is easy, I say run for the hills. They are lying to you. This week after dealing with even more of the same issues it made me think of the leaks in my house last winter. Where things connect there are leaks. In a relay race the baton is dropped. In football snaps and hand-offs are fumbled. And those football fans out there know turnovers kill you.
Let me give you some examples of what I am talking about.
In one situation an employer had their payroll system integrating with their benefits system (two different vendors). Everything was going fine until the employer bought a new company. The employer added this new division to their payroll system thinking “integration” meant the new division would be added to their benefits system. Well, integration is a very loosely used term. So, for 30 days the employer was adding new employees to the payroll system that weren’t being added to the benefits systems. After that was fixed it was found out that the new employees weren’t going over to the carriers on their EDI files. Leaks were everywhere, and it created chaos. If the employer had one system that handled the payroll and benefits, there would not have been any problems.
A benefits broker and one of his clients decided to come up with some unique employee contribution plan for medical insurance. It was creative. However, when they called their benefits enrollment vendor the vendor could not handle those contribution rules. These rules had already been communicated to employees. Their benefits system that had been in place for over year no longer worked. The broker blamed the vendor. I know benefits systems, and I don’t know of one benefits enrollment vendor that could handle this type of contribution calculation. The consulting process was “disconnected” from the technology. Fumble! The employer had to turn off the enrollment system and go back to paper enrollment. Had the broker and the employer engaged the technology vendor during their planning this could have been prevented?
These types of problems are everywhere. I can list 100 places where there can be possible “leaks” because things are not connected. In example 1 above the technology was not totally integrated. In example 2 the advisor did not connect the advice with the ability to administer the advice that was provided.
A few years ago I was flying from Chicago to Colorado Springs, and I sat next to a guy who was the VP of HR for an 1,800 person firm. After we got speaking he told me that in the HR area he had 17 different relationships. Between technology vendors and service providers he had 17 contracts, 17 places to call if there were an issue, 17 bills, and 17 logins. It was a mess. His mission was to eliminate as many systems and vendors as possible. There simply are too many moving parts. And this is a 1,800 person firm.
Think about the number of vendors an employer may have in the HR/Benefits/Payroll areas. I will give it a try.
(Technology Solutions: 1. Payroll Administrator/Technology 2. Time and Attendance Tech. 3. Benefits Enrollment Tech Vendor 4. Recruitment Technology 5. Expense Management 6. Performance Management 7. Training 8. Intranet provider)
(Advisors: 9. Benefits Broker 10. 401K Consultant 11. HR Consultant)
(Service Providers: 12. COBRA Administrator 13. FSA Administrator 14. Life Carrier 15. LTD 16. STD, 17. Medical 18. Dental 19. Vision, 20. Voluntary products 21. Wellness Vendor 22. EAP)
This is 22 different vendors, and I can think of more. Now we are seeing all kinds of additional products entering the market including financial wellness programs, employee discount programs, employee gifting programs, college planning services and many more types of companies hoping employers will offer their services to the employees. Many of the programs, when rolled out, fail, because the employers are already overwhelmed and for the employee there is information overload.
Employers want to simplify. I put in a benefits enrollment system for an 11,000 person a few years ago who said she wanted the cheapest option because she will be replacing it in a few years anyway with a single HR/Benefits/Payroll systems. If larger employers with lots of staff want to simplify, then what would one imagine smaller employers with less staff will want to do.
It is not just the technology though, and this is a very important point. Disconnected service providers or advisors also create problems. I am going to pick on benefits brokers for a minute here because most of my reading audience is brokers. I have seen benefits brokers put benefits enrollment systems into employers that had already purchased but not deployed an enrollment system from their payroll company. I have seen voluntary products sold that don’t fit on most enrollment systems. Recently I had a broker put in an ACA solution for a client that did not know their existing Payroll/HR/Accounting vendor could provide the solution. Brokers are regularly advising on technology without the knowledge to properly advise. Now we see brokers investing in HR and Payroll systems with little knowledge of how these things work. This will cause leaks. Leaks are problems that will get brokers fired.
These same stories apply to 401K consultants, HR Consultants, and many other service providers or advisors that don’t connect their advice to the technology. Let me ask this question. Should a broker that is advising a client to offer voluntary products understand the technology that the employer may already be using to administer their benefits? Should a 401K Consultant?
As this HR/Benefits/Payroll world gets more complex, operating in silos will contribute to the problem. The benefits consulting process cannot be independent of the client’s technology environment, payroll, and even other products an employer may be offering their employees. The opportunity exists for service companies to solve this problem for employers, but to do so will require a level of skill and knowledge that few companies have. Organizations running into this market without the knowledge, skills, or proper training are only contributing to the problem. As stated earlier, this can get you fired.
In my company we are building a program that I will call the “No More Leaks HR Program.” We are working with benefits brokers and HR Consultants to help them gain the knowledge, develop the skills, and train their staff to do this effectively. Someone needs to quarterback this whole HR/Benefits/Payroll technology and services world for employers. Someone needs to eliminate or connect the silos. This is not something you decide to do on a Monday and deliver on Friday. This is not a “value-added service.” It takes work, planning and training to do this right. But the rewards for being great at this can be tremendous.