Why Benefits Matter When Picking an HR System

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The HR technology market is booming, and more small and mid-sized employers are adopting software to manage the employee life cycle.

By Alex Tolbert

There are more tech options for small employers than ever before, and each solution varies in features, functionality, and go-to-market strategy. Some HR systems sell directly to employers, while others are provided through value-added resellers, like benefits brokers.

Some employers might be wondering if there is an advantage of using a system provided by a broker. Ultimately, it comes down to the complexity of benefits. Because this part of the HR ecosystem is so complicated, there are risks associated with choosing a system that hasn’t been vetted by a benefits broker.

Another way to think about it is through the lens of accounting software. Most businesses find it valuable to consult their CPA when it comes to choosing an accounting solution, and choosing benefits is no different.

But why are benefits so complex, and why does this matter when it comes to HR tech?

Benefits complexity for small and mid-sized businesses

First, health insurance and benefits are highly regulated, which is why most employers work with a broker in the first place. Because the compliance needs are so high, a licensed, trusted advisor is essential.

Second, there are a lot of different benefits strategies out there. Brokers employ a variety of plan designs and funding options to ensure employers are getting the most value for their benefits dollars. This complexity has traditionally been difficult to manage outside of paper-based enrollments, which created a different kind of administrative hassle.

Third, benefits are often an employer’s second-largest business expense, aside from payroll. In modernizing the benefits administration process, it’s important to make sure the HR system can properly manage the large investment you’re making in employees’ benefits.

So how can you tell if a system is robust enough in its benefits functionality? Using a system vetted and approved by your broker is best. If you plan to do the vetting on your own, though, here are two important questions to ask.

Does the system have true benefits administration functionality?

Some HR systems don’t allow employees to make benefits elections in the platform. Rather, employees have to make their elections on paper, and HR manually inputs the information into the system. It’s worth asking — does the system really have a true benefits administration feature, or is it actually just an online filing cabinet? If the system says it is “integrated” with a different software product that does benefits administration, it likely doesn’t have a benefits administration feature that is going to work for you. Instead, what it has is probably more like what Dropbox or Google Drive would give you in terms of a place for you to go and manually upload employee paper election forms.

Who supports the system?

Is the system broker-supported, or is the HR department responsible for managing benefits renewals and employee elections? In most cases, small and mid-sized businesses find more support in this area to be really beneficial.

Ultimately, benefits matter a lot to the entire scope of the HR ecosystem. This is why a system vetted by a benefits broker typically produces the best outcomes, as they can ensure the system is up to par on the functionality your organization needs.

Alex Tolbert is Founder and CEO of proprietary benefits and HR platform BerniePortal. Launched in 2008, BerniePortal has more than 115 licensees across the country and helps employers solve transactional challenges such as onboarding, payroll integrations and PTO tracking, as well as benefits administration and COBRA. Tolbert is a nationally recognized expert in the health, benefits and HR technology space and his book, “Online Benefits Technology: The Strategic Broker’s Guide” was published in 2017.

HR stock photo by ADragan/Shutterstock

The post Why Benefits Matter When Picking an HR System appeared first on SmBizDaily.

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