HR & Bene�t Trendsthat actually matter

Five major trends taking shape this year and what you should do about them.

HR and benefits continue to lead the list of challenges facing employers in 2016. Benefit costs, compliance hurdles and technology decisions loom large for companies of all sizes, and the changing workforce will force managers to rethink long-held standards and processes. The following five trends offer a glimpse of what’s coming, along with actions you can take now to stay ahead of the curve and thrive in 2016.

The Trend

The convergence of two trends--Generation Z entering the workforce and the millennial generation baby boom--will fuel demand for increased workplace flexibility in 2016. Generation Z, or people born between 1994 and 2010, will enter the workforce starting next May. Research published by Forbes showed that this generation is even more entrepreneurial and flexible in their approach to careers than their Generation X parents. They value opportunities for growth and work-life balance over salary when selecting an employer. They are also more tech connected, which is key to supporting a flexible work arrangement. At the same time, Millennials, those born between 1982 and 2004, are increasingly starting families, which will likely strengthen their desire for flexible work arrangements and robust family leave policies. Today, only one percent of companies offer unlimited maternity leave, yet 64 percent of employees say they want it. Additionally, 76 percent of fathers go back to work in one week or less when they have a child. However, since more women serve as breadwinners in millennial families, this group will increasingly require parental leave for both parents.

Netflix led the way this year by offering an unlimited maternity leave policy. Adobe and Microsoft followed suit with their own expanded programs. Currently, only 13 percent of people in the U.S. have access to paid family leave. However, momentum is building for maternity benefit changes in the next year. The

FLEXIBILITY rules the workplace1

Family And Medical Insurance Leave (FAMILY) Act sponsored by Rep. Rosa DeLauro (D – Conn.) and Sen. Kirsten Gillibrand (D – N.Y.), would provide workers with up to 12 weeks of partial income when they take time for their own serious health condition or that of a child, parent, spouse or domestic partner. Although the FAMILY act is currently stalled in Congress, three states (New Jersey, California and Rhode Island) currently offer paid family leave and at least 18 other states are considering passing new laws.

When they are not satisfied with their current work situation, millennials will seek alternative work arrangements, such as telecommuting and freelancing in order to achieve work-life balance and be their own boss. Spurred by the rise of freelancing, the access to mobile technology, the impact of the recession and the desire to have flexibility, about 40 percent of Americans will be part of the “gig” economy by 2020.

The Takeaway

For employers, the flexibility trend is a double-edged sword. On the one hand, the gig economy presents an opportunity to hire on-demand, lower costs and have more competition for talent. However, also empowers top employees to demand flexible work arrangements and provides attractive alternatives should those options be unavailable from their current employer.

To compete for top talent and to better retain current employees in 2016:

• Review your company’s business model to determine whether you are at risk of disruption from a gig economy competitor. Are freelanced-based competitors offering a similar service for a lower price? Are competitors aiming to attract your employees with flexible work arrangements? If so, consider adjusting your pricing model or offering more flexible schedules for employees.

• Before creating a job posting to fill a new position, consider whether the role can be filled by a freelancer or outsourced talent. If you are hiring freelancers or independent professionals, make sure that you don’t run afoul of Department of Labor rules for classifying W-2 vs. 1099 employees or you could face fines and litigation.

• Review your technology capabilities and company policies and make they address the needs of part-time and remote employees.

• Review your organization’s family leave policies and see how they compare to others in your industry. Survey your employees to gauge their satisfaction with your policies and uncover any gaps you need to address.

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The Trend

Because of the ACA and other legislation, compliance can’t be ignored in 2016 and many employers will find themselves scrambling to keep up with the data, reporting and communications needs brought on by the new requirements. Employers will face increasing compliance burdens set to expand dramatically in 2016. Two of the biggest are the Affordable Care Act (ACA) employee reporting requirements and preparation for major changes in employee classification under revised Fair Labor Standard Act (FLSA) regulations. The good news is that many technology and service providers anticipated this need and developed tools to manage ACA reporting needs. These solutions will continue to emerge and evolve throughout the year.

COMPLIANCE gains urgency and support

The Department of Labor (DOL) is expected to issue its final rule altering white-collar exemptions from overtime pay in 2016, impacting employees and employers across every industry and sector. According to the DOL, 11 million employees will be impacted with likely job reclassification from exempt to nonexempt.

The Takeaway

This is one area that can’t wait. If you don’t have a plan for ACA compliance and reporting, you should immediately begin researching partners and technology to bridge this gap. The downside in terms of penalties and litigation risk greatly outweighs the cost of developing a workable solution for your organization.

• Employers with 50 or more full-time employees or part-time equivalents must submit ACA information reporting forms to the IRS on or before Feb. 29 by mail, or file electronically by March 31.

• Under the ACA, large employers must also complete Form 1095-C for each full-time employee and distribute to them by January 31. For more detailed information of ACA requirements, download, the “2015-2016 ACA Reporting,” white paper.

• Contact your HRIS or HR technology vendor to determine how you will compile the required data, populate the required forms and submit them to the IRS.

• Most employers covered by the FLSA will need to analyze employee classifications and make other changes by a likely 2016 effective date, which will be established in the final rule.

2

The Trend

In 2016, ACA penalties will go into full effect and companies with 50 or more employees will need to insure full-time workers. At the same time, carriers continue to raise their rates, sometimes by as much as 35 percent. In response to rising medical and pharmacy costs, employers will continue to promote health care consumerism by shifting to high-deductible health plans (HDHPs) and offering health savings accounts or health reimbursement arrangements that help employees pay their out-of-pocket expenses and allow them to keep funds that go unspent. Consumer-driven HDHPs work when employees have adequate information about their benefits and a selection of cost-effective health care services and providers. In 2016, employers and employees will have access to more tools than ever to help them shop for the most cost-effective medical services and make more informed decisions about their health care.

Additionally, benefit marketplaces, a special kind of private exchange, can provide employees unprecedented choice over their benefits package. With a benefits marketplace, employers can offer a selection of medical plans and voluntary benefits, which allows companies to serve more diverse employee needs and build employee empowerment. In the past, implementing a private exchange required significant resources and only the largest enterprises could afford one. But with the advent of SaaS solutions and cloud computing, costs have come down and new offerings targeted at smaller companies are now available. Employers can now assemble a robust set of plans and then invite employees to choose the plans that match their individual and family needs. To further control costs, employers can opt for a defined contribution model, giving employees a set amount to spend on benefits. Employees then go online during open enrollment and complete a shopping experience in which they put benefits into a cart, building their own customized benefits package. Private exchanges can improve benefits cost transparency. Employees can see how much money each plan costs, what their contribution is, and what the employer’s contribution is. To many employers, this is a huge step forward all by itself, since research shows 80 percent of employees have

CONSUMERISM grows and matures3

For more information on private exchanges, download “Paying for Employee Benefits.”

no idea how much their employers are contributing to their employee benefits. Defined contribution plans represent a shift in the approach to benefits procurement: employers shift from “buying” employee benefits to “funding” them. By funding benefits, the employer can move to a much more stable financial model, because the employer’s contribution formula is “defined” and clearly communicated to employees. In fact, a study by the Private Exchange Evaluation Collaborative found that 64 percent of employers that have moved to a private exchange said the move has saved money.

The Takeaway

Embrace consumer-focused benefits by developing a multi-year strategy for controlling health care costs—and don’t wait until right before your benefits renewal to do it. If your health insurance costs are rising significantly, discuss alternative benefit financing options with your health insurance broker or consultant. Planning at least six months ahead of your renewal will enable you to properly review your options, make an informed decision, and proactively communicate with your employees about any changes to their benefits.

Your employee benefits broker or consultant should:

• Proactively manage your benefit renewal process to help avoid the last-minute scramble and make more strategic benefit decisions

• Review industry, regional and national benchmarking data to assess how your company’s benefit costs, employer contributions and other key metrics compare to employers of your size and in your industry.

• Provide a detailed evaluation of each carrier’s proposal for Group Benefits, Retirement Plans, Executive Benefits and Voluntary Benefits. This should include a detailed comparison of carriers, plan designs, rate structures, funding arrangements and pooling levels.

• Determine the best funding option for your organization with a complete analysis of available options— including alternative funding vehicles, ASO, minimum premium, HDHPs and more.

• Ease your administrative and communication efforts surrounding open enrollment by offering online enrollment and other self-service tools for employees and managers

• Offer HR support tools to help with recruiting, performance management, PTO tracking, time and attendance, and other key functions

• Connect your organization’s benefits data with its payroll data to save time and avoid costly errors

• Analyze employee health care utilization to improve plan management and uncover health intervention programs that increase treatment adherence for chronic morbidities and encourage preventive care.

• Conduct proactive underwriting based on your census and claims experience. This serves as negotiation tool and helps secure better rates.

• Conduct a Network Disruption Analysis to assess the impact to employees before changing carriers or plans.

• Conduct a detailed Pharmacy Contract Review to ensure the best possible prescription contracts

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The Trend

Talent represents the greatest expense to companies, and healthcare benefits will only become more costly next year. In order to stay profitable and appease shareholders, companies will increasingly opt to hire freelancers, outsource key functions and reduce full-time workers. This puts more pressure on full-time workers to do more with a smaller headcount. It also adds more work for the HR benefits department. HR is expected to align with and integrally support the company’s business strategy and long-range plans. To be truly effective, HR must add value to the business by linking HR strategy with business goals, such as securing, developing and retaining the talent necessary to move the company forward. But while the role and importance of HR has greatly expanded, HR staffing has generally not, especially at small to mid-size companies. Companies in this size range still find themselves struggling to deal with increased human resources functions while staffed with only one or two—and sometimes zero—HR professionals. This makes it difficult to get the day-to-day work done, let alone find the time to focus on strategy.

OUTSOURCING and freelancing skyrocket4

Selective outsourcing, the name for outsourcing only part of a activity while continuing to do the rest of the activity in house, will continue to expand in 2016. Often, consultants contribute to strategic planning, introducing forward-thinking approaches and technology for your workplace. Selective outsourcing works well for tasks that are not core business functions, but which require specialized knowledge. It saves time and minimizes headcount while still providing access to specialized expertise. It can also boost morale by offloading tedious administrative tasks so employees can focus on core business functions and boost their strategic contribution. Outsourcing offers a strong opportunity within the HR department. Approximately two thirds of HR professionals say that selectively outsourcing administrative tasks and specialized knowledge alleviates the burden on internal staff and ensures appropriate and acceptable compliance with laws and regulations.

The Takeaway

Selective outsourcing can benefit your organization by providing diverse expertise and skill sets that you can access according to your company’s needs. To take advantage of this trend:

• Identify tasks throughout your organization that are essential for your business but considered too time consuming to complete thoroughly.

• Identify organizational roles that are responsible for these repetitive or specialized tasks

• Review your staffing strategy and determine whether some of these functions and roles can be better served through outsourcing. Revise your plan to accommodate outsourced or freelance positions and functions.

Selective outsourcing helps:

• Stabilize costs

• Lower risk

• Increase employee productivity

• Drive business results

Some areas in which selective outsourcing makes sense include:

• Compliance

• COBRA

• Premium Reconciliation

• Employee and Benefits Administration

• Recruiting

• Compensation

• Employee relations

To learn more about HR outsourcing, download the “HR Outsourcing Overview and Trend Report.”

The Trend

Data and analytics have been trending in HR for a few years now, with good reason: data helps you see trends, track progress, find problems and make informed decisions. For HR professionals, data will continue to be an important tool for decision making. According to the Deloitte Human Capital Trends Survey 2016, HR spending grew by four percent in 2014 over 2013, with much of this growth dedicated to technology. Nearly six in 10 companies are planning to increase HR spending in the next 12 to 18 months. In 2016, however, HR data will become even more integral to the business strategy. HR management will use data to inform workforce rewards and optimization, talent management, performance management, learning management, and employee benefit and compensation strategies. Todays analytical tools can use the data available through human capital management (HCM) systems to elevate HR from an administrative to a transformational role within the organization.

Data is also critical for ACA compliance in 2016. For employers with 50 or more full-time employees, the ACA will now require monthly tracking and reporting of substantial employee data. Complying with this law will require tax, finance, benefits and payroll data to be compiled in one place so that it can populate the required forms for submission to the IRS. Assembling the data from various systems can be both burdensome

DATA & ANALYTICS bring HR into the C-Suite5

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and error prone, so businesses will increasingly adopt HR technology in 2016. How will you determine the number of Full Time Equivalent employees you have within your organization? If you have good data and good technology, you’ll be able to calculate these numbers very easily. If you don’t, you’ll have some math ahead of you. One of the biggest trends for HR professionals in 2016 is a transition to integrated technology that combines HR management systems, payroll, and benefits. To simplify things (and your to-do list), you can move to an integrated solution that will automatically synchronize data across all areas of your employee administration. This saves you time and money. Rather than forcing you to spend tedious time moving and updating information between old systems, integrated technology moves data automatically and independently - leaving you free to focus on more strategic projects.

The Takeaway

• Find out what kind of data you can already pull from the systems you’re using. The easier it is to gather data for your employee census and related activities, the more you will find yourself using data.

• Think about the technology you use every day. Is it simple, streamlined, and logical? If you are always logging out of one system and into another, only to discover the data doesn’t match, you should look into digital systems for managing employee administration.

• Create a “wish list” of the data you would like to have. Research systems that will enable you to use data effectively and work more efficiently. Having an integrated solution and avoiding silo-ed systems can help you get the data you need, when you need it, because you won’t have to correlate mismatching information from multiple systems.

• Consider your benefits renewal process: before you renew your benefits in 2016, consider adding an employee survey to your timeline and using the data to select your new plans. You should also obtain benchmark data to validate how your company compares to its peers in key areas.

Next: Step it upHow can you prepare for this new consumer-centric, flexible and non-traditional world of HR and benefits—while still maintaining a productive, compliant workplace?

Use technology to connectSave time and reduce errors with CheckPoint HR’s integrated technology, where onboarding, enrollment, payroll and benefits information is entered once online and updated automatically.

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CheckPoint HR delivers an all-in-one solution that streamlines every part of the employee experience, from recruiting to retirement. With a team of experienced consultants, credentialed HR pros, and rock-star developers, we make your HR and employee benefit program work harder for your business.

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