Executive s Guide to 2016 Employee Benefit Trends

Transcription

1 Executive s Guide to 2016 Employee Benefit Trends

2 78% OF CEOS VIEW INCREASING REGULATIONS TO BE THE TOP THREAT TO BUSINESS GROWTH. In 2015, we saw many new challenges affect the way organizations manage one of their most important assets; their employees. In a constantly changing environment made up of new rules and regulations, daily advances in technology, rising healthcare costs, and increased access to data and information, business executives must focus on three key areas in 2016: CONTAINING COSTS On average, over $350 billion are lost every year due to engaged employees. REMAINING COMPLIANT According to the Department of Labor, 95 percent of employers are out of compliance. ATTRACTING & RETAINING TOP TALENT Only 45 percent of HR executives are very confi dent they will have access to the right talent. THE IMPACT ON YOUR BUSINESS Now, more than ever, business executives need to creatively, strategically and pro-actively think about how they can effectively manage their human capital to increase organizational health. This guide will help you navigate key trends spanning fi ve integral areas of your organization, including compliance, benefi ts administration, HR technology, employee benefi ts, and culture and performance. 2

3 TREND 1 Compliance: Not Simply A Priority A Must 4 TREND 2 HR Administration: Transform Your Data Through Technology 6 TREND 3 HR Technology: Improve Employee Engagement And Compliance Through Effective Technology 8 TREND 4 Benefits: Customization Is The New Normal 10 TREND 5 Culture & Performance: Designing A Culture That Fuels High Engagement 12 Conclusion 14 About The Author 15 3

4 Compliance Not Simply A Priority A Must According to KPMG, 69 percent of U.S. CEOs list compliance as one of the most important issues to have an impact on companies, second only to global economic growth (73 percent). Navigating laws and compliance demands will continue to be a challenge for executives this year especially since it s an election year. With recent changes to the deadlines for 1094/1095 Reporting, the delayed Cadillac tax, and changes to DOL regulations and FLSA status, business executives must take measures to prepare and educate organizational leadership and personnel in these areas. While regulation and change may be daunting for organizations, taking a proactive approach is paramount to effective compliance management. The tax will be adjusted annually to the Consumer Price Index (CPI) plus one percent initially and then CPI. Assume Employee A enrolls in self-insured family coverage with an aggregate annual cost of $30,000. With the current threshold limits for family coverage, the administrator would be liable for a Cadillac tax assessment equal to $1,000. The delay is a relief for employers already burdened with Affordable Care Act reporting and requirements, but many experts believe that most, if not all, employers will eventually be covered by the Cadillac tax. Cadillac Tax Delayed Two Years The Cadillac tax, an annual 40 percent excise tax on rich health insurance benefi ts that exceed threshold limits, will be delayed until January President Obama recently signed off on legislation that would also make the tax permanently deductible to employers, which is a welcome change from the original legislation in which the excise tax was nondeductible. Rich in this instance refers to any healthcare coverage exceeding $10,200 for individuals and $27,500 for families, although the projected limits will likely be higher by the time the tax becomes effective in % 69% Percent of CEOs list compliance as one of the most important issues to have an impact on their companies. 4

5 If the Cadillac tax had not been delayed, employers would have needed to analyze their benefi ts after the new year in order to give themselves enough time to prepare for the Cadillac tax in Now that employers have been given two more years to prepare, it is advisable to wait and see what the future of the Cadillac tax holds to determine next steps. This approach will be especially important during the upcoming election cycle, when there will continue to be attempts to reform or repeal the Cadillac tax. Although there is now additional time to understand the applicability of the Cadillac Tax, it is important to remain fl exible and analyze current benefi ts strategy to get a better picture of the impact that the Cadillac tax could have on your company. The Fair Labor Standards Act (FLSA): Measuring The Significant Impact of Proposed Exemption Reform The Department of Labor proposed a provision to the Fair Labor Standards Act, which would reform the white collar exemption from minimum wage and overtime pay for all hours exceeding 40 in a week. If approved, the minimum salary to qualify for the overtime exemption will increase from $23,660 to $50,440 (annually), and the minimum threshold for highly compensated employees to qualify for the overtime exemption will increase from $100,000 to $123,500 (annually). Should these rules be adopted, approximately fi ve million more Americans would become eligible for overtime pay because they would lose their current exemption. Before the proposed rules are fi nalized, HR and payroll departments must analyze the exempt status of each employee and identify which, if any, salaries will be affected. Some employers are simply increasing salaries to meet the new minimum threshold, but for employees in the middle of the new threshold, fi nding a solution is more complicated. Many options involve increased payroll costs and, in some cases, increased benefit costs. It is imperative that employers be proactive in their analysis of current compensation strategies to properly budget for the possible increases associated with these changes. IRS Extends Due Dates For ACA Form 1094/1095 Reporting The IRS recently announced the deadline for providing 1095-C (and 1095-B) statements to individuals is extended from February 1 to March C (and 1095-B) statements now due to individuals by March C (or 1094-B) transmittals now due May 31 (for non e-filers) and June 30 (for e-filers). KEY INSIGHTS To prepare for key dates and keep up with constant changes, implement a compliance calendar and checklist to limit compliance risks. 5

6 HR Administration Transform Your Data Through Technology With the explosion of big data and analytics, companies have access to more data and information than ever before. Unfortunately, data alone isn t enough it s the ability to predict employee behavior and recognize trends, such as employee retention patterns, that truly produces value. Successful organizations are developing processes for leveraging data and extracting key insights to implement strategic change across the organization. Many savvy organizations have migrated this practice to HR administration in the form of modern HR software. From tracking payroll to aligning business goals, software makes it easier to compile employee information, allowing HR departments to extract insights and make informed, strategic decisions to improve processes that directly affect compliance matters. With constant changes in technology and the increased demand for HR executives to wear more hats, there s a movement to harnessing data and creating human capital dashboards. Implementing a human capital dashboard allows your organization to measure work performance and identify problem areas more effi ciently. harnessing human capital metrics provides executives with better insight into employee performance, allowing them to make more strategic business decisions and ensure company goals are aligned throughout the organization. 6 Uncovering Value Within Your Data A two-year study from Deloitte Consulting found that although organizations spend more than $14 billion on HR software, fewer than four percent can perform predictive analysis on their people, and only 14 percent perform statistical analysis at all. The study also investigated the fi nancial performance of the businesses in the top 14 percent of the research, and found they were able to make better data-driven decisions about hires, promotions and salaries. A mix of predictive analytics and standard HR metrics is the key to creating the most effective human capital dashboard for the company. Predictive Analytics Employee Reviews Surveys Big Data Analysis Standard HR Metrics Cost Per Hire Turnover Retention Rate Absence Rate Annual Leave Revenue Per Employee

7 Before setting up a dashboard, HR executives should survey senior executives to understand what human capital metrics matter most for driving business strategy forward. HR executives should also consider the type of dashboard that would benefi t stakeholders the most. Certain organizations may prefer layouts that display the same human capital metrics company-wide; other organizations may benefi t from layouts that are individually customizable for each employee. Visual components, such as bar graphs or pie charts, can also be used to provide detailed information in an easy-to- digest format. When built with executive business goals in mind, a human capital dashboard is an indispensable tool for HR and organizations as a whole. Most company leaders will agree human capital is the most important and expensive investment, and there s much to be learned (and gained) from employee data. Although organizations spend more than $14 billion on HR software, fewer than 4% can perform predictive analysis on their people. KEY INSIGHTS $14B Organizations spend $14 billion on HR software. 14% Percent of organizations that perform statistical analysis. 4% Percent of organizations that can perform predictive analysis on employees. 7

8 HR Technology Improve Employee Engagement and Compliance Through Effective Technology With the rise of mobility, HR executives have turned to benefi ts administration technology to support important compliance initiatives while maximizing employee engagement. Self-service platforms put the bulk of benefi ts management directly into the hands of the employees, allowing them to view their plans at any time, in any location. The software helps build a stronger commitment between the employer and employee, and provides better education of company benefi ts overall. Intuitive HR technology platforms also offer a seamless educational environment for employee job development, which helps boost job satisfaction, innovation and performance. Additionally, giving employees advanced access to their benefi ts affords the HR department time to focus on initiatives that add value to the company, boost team morale and address problem areas. Before implementing software, it s important to compare and evaluate several platforms based on the following criteria. Mobile Access According to Pew Research Center, nearly two-thirds of Americans are smartphone owners. smartphone users seek instant gratification, so it s only natural for employees to prefer access to payroll, time off and benefits from their smartphones in real-time. HR mobility is helpful for speedy vacation time approval, submitting expense reports while on-the-go, and accessing benefits and payroll from remote locations. User Friendly Design It is important to compare functionality vs. ease-of-use. Implementing an intuitive, user friendly platform makes it easier for employees to use the tool, ultimately saving HR resources. A straightforward benefits platform helps drive adoption and ensures HR systems are being used properly. 8

9 Support/Service Most employers know that a system is only as good as its implementation and ongoing support. HR executives should ensure the platform provider can provide support and solutions. Where applicable, consider partnering with internal IT departments to offer ongoing support. Conduct a Needs Audit Prior to implementing a platform, conduct an internal audit to determine which features align with organizational needs. Most providers sell multiple in bundled packages, so preparing an audit will allow you to strategically select the appropriate implementation for your organization. Switching Platforms There s much to be considered if switching platforms is necessary, especially in terms of data. Understand the platform s process for moving historical data from one platform to another. Additionally, it s important to align with key departments, stakeholders and senior leadership. Giving employees advanced access to their benefits affords the HR department time to focus on initiatives that add value to the company. Today s HR executives wear many hats, and administrative tasks can consume a great deal of time that would be better spent on talent management, job performance and other functions that significantly impact the bottom line. Additionally, implementing the right HR platform empowers, educates, and aligns employees making HR technology a key contributor to effective human capital management. 9

10 Benefits Customization Is The New Normal Effective human capital management in 2016 will require more customization, attention to detail, and creativity when developing an employee benefi ts program. Today, retaining top talent requires much more than a competitive salary and a 401(k) match modern employees look for unique company benefi ts that emphasize fl exibility and ease Work-life balance. To gain a competitive advantage in recruitment, company leaders should consider these costeffective options when creating a custom company benefi ts package. Voluntary / Worksite Benefits Health, dental and vision insurance coverages are considered core benefi ts, and voluntary/ worksite benefi ts generally include any benefi ts that employers may offer outside of the core group (such as short- and long-term disability coverage, accident insurance, critical illness coverage, etc.). Voluntary / worksite benefi ts are individual-style benefi ts usually deducted from payroll and used to offset out-of- pocket medical costs. Worksite benefi ts are more popular and critical to the overall plan that employees desire. Consider establishing plans that complement core benefi ts to increase your coverage offering. 10 Strategies Behind Selecting the Right Healthcare Plan Senior executives and HR executives may want to consider self-funded employee health insurance to better manage healthcare costs. Under self-funded plans, employers take on the fi nancial burden of funding their own health plan, giving them more control over benefit administration, healthcare customization and health plan reserve capital. A high-deductible health plan (HDHP) also offers employees more control over healthcare costs by lowering insurance premiums. For employees in good overall health, HDHPs are viable because they avoid overpaying for health insurance that is rarely used. An assessment of overall staff health can help business leaders decide which plan best serves the organization s employees. In fact, many organizations have designed programs that promote and incentivize health initiatives. Collecting data from these programs can assist leadership as they search for the healthcare plan that appropriately balances employee needs with cost-effi ciency. KEY INSIGHTS Instill processes to better understand your team and set the standard for your ideal benefits program. Once you understand what s important to your workforce, work with a consultant to get it work for you.

11 Private Exchanges A valuable resource for HR, private exchanges are online insurance marketplaces where employees can choose coverage based on individual needs. Employers determine their contribution amount, then offer a variety of health plan options for employees. Employees may use the employer s stipend to purchase a health plan that addresses specifi c needs. Typically, this approach offers more variety and freedom to employees while simplifying administration. This shift can reduce overall healthcare costs for companies because employees can avoid paying for unnecessary benefits, and ultimately, companies may be able to avoid the Cadillac tax. Flexible Hours / Telecommuting Options In a survey from Indeed, 51 percent of the respondents stated that fl exibility in work hours was a top reason they were interested in a new job. Mobility has given employees more freedom to work from remote locations, and employers can provide leeway by cutting out commute times and in-office distractions. Flexible schedules and telecommuting options offer improved work-life balance for employees with families, pets and/or an active lifestyle outside of the offi ce. Skyrocketing health insurance costs and shrinking company budgets have encouraged company leaders to get more creative with customized company benefi ts packages. In 2016, tailored company benefi ts will be essential to creating a healthy, dynamic work culture. Custom benefits that complement a dynamic work culture is key to transforming comparable benefits packages into competitive ones. 11

12 Culture and Performance Designing A Culture That Fuels High Engagement As modern businesses become more transparent, it s important for executives to play a central role in building a work environment that supports high employee engagement. Executives (in growing companies especially) must set the vision and facilitate a culture that sets a solid foundation for continued growth. To understand what gets employees to interact and feel connected to the company, it helps to get straight to the source. A high engagement workplace will always be in style, so here s a list of do s and don t s for creating an environment that sustains a positive work culture. Make Organizational Changes Where Needed Ask for employee feedback via surveys, focus groups, social media communities and employer-employee conversations. Even if an employee s suggestion is out of the employer s scope, being receptive to feedback encourages employees to be open with management and invites employees to take an active role in workplace improvement. 12 Support Career Path Development The Bureau of Labor Statistics recently found that between 2.7 and 2.8 million employees quit monthly. A high turnover rate is largely due to a lack of empowerment and potential for professional growth. Successful leaders create a culture that invests in employee growth and education programs. Focus on Shared Organizational Values, Instead of Skill Alone Successful organizations are altering formal interview processes to assess values (in addition to skills) to determine if prospective employees align with core organizational values. For current employees, core value workshops can be held to ensure employees have the right approach to aligning with corporate vision. Core values guide work behavior and determine how employees conduct business, so it s essential for leaders to ensure employees share similar values.

13 Don t Assume Money is the Sole Factor in Driving Employee/Recruit Decisions Inclusion, peer engagement and camaraderie will ultimately determine if your employees go the extra mile. Employees who earn the trust, respect and cooperation of their colleagues are likely to outperform groups that lack working relationships. Leaders must establish an environment that fosters collaboration to build a more connected work culture. Don t Let Hard Work Go Unnoticed Large or small, achievements should be recognized by both leadership and peers. Encouraging peer recognition gives a stronger sense of teamwork and freedom to appreciate hard work. Positive feedback clarifi es employer expectations, making it easier to achieve continued positive results in the future. The Bureau of Labor Statistics recently found that between 2.7 and 2.8 million employees quit monthly. A lack of a high employee engagement in the workplace can create a void between leadership and workforce, hindering business goals and organizational performance. When employees work in an environment that drives engagement, productivity is maximized, maximizing effi ciency and performance. 13

14 Conclusion In 2016, business executives must address pressing human capital management concerns and adjust to an evolving corporate landscape. Leveraging insights provided by the human resources department can help executives fi nd long-term economical solutions to three major challenges: Containing costs and maximizing the HR budget Remaining compliant with changing employment regulations Attracting and retaining top talent as competition increases With our help, senior executives and HR personnel can be benefi t from the fi ve key industry trends discussed in this guide. By bringing their partnership with HR to the next level, executives can build a company that works seamlessly toward company goals without losing sight of the bottom line. 14

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