Companies often do themselves a disservice when they rely exclusively on

decision support tools to determine their benefits mix. How so? “They start

with basic assumptions regarding the levels of coverage employees prefer,”

explains David Marini, Vice President & Managing Director of ADP’s new

Strategic Advisory Services. “But they overlook the extent to which

communication and education could influence those preferences. As a result,

they wind up choosing needlessly costly levels of coverage.”

ADP’s new advisory group was formed to guide large employers (1,000

employees or more) in creating a more cost-effective benefits mix, with

potential savings in the millions of dollars.

Key source of savings: educating employees on the benefits of

high-deductible health plans

A key source of savings, according to Mr. Marini, lies in educating employees

on the advantages of high-deductible health plans. “Most of them are healthy

and don’t go to the doctor much,” he explains. “Yet they choose expensive

health plans that cover 90% of every visit.”

New ADP® advisory service aims to help clients achieve a lower-cost,higher-value benefits mix

Spring 2012 Vol. 22 No. 1

On-DemandWebcast Practical Guidance on

Wage and Hour

Compliance: What

Do You Really Need

To Know?

See page 3

Page 2

• Twelve small business trends for 2012

• ADP recognized by three nationwide“best of” lists

• Survey suggests that 40% of employees don't fully understand their benefits options

Page 3

• ADP Mobile Solutions addingsmartphone access to benefitsinformation

• Practical Guidance on Wage and Hour Compliance: What Do You Really Need To Know?

• ADP study suggests companies may be overestimating the effectiveness oftheir talent management programs

Page 4

• 2012 FUTA taxes to increase in some states

”“ADP finds opportunities

where communication

and education help

make employees better

consumers of health

care. Done properly, this

can potentially save a

large employer millions

of dollars a year.

Last paper-based edition!Subscribe today to receive future issues of the ADP Advisorvia emailThis is the final issue of the ADP Advisor in hard-copy format. Future

issues will arrive via email as a concise summary with clickable links

to each article. You’ll also be able to download it in PDF format from

www.ADP.com.

As in the past, the ADP Advisor will update you on enhancements

to your ADP services, providing news and best practices in HR

and payroll. n

The electronic version is easier to file and forward to colleagues. Make sure you receive it by navigating now to www.ADP.com/Home/Advisor.

Enter your email address in the “Subscribe” field.

The emailed version of the ADPAdvisor is a concise summarywith clickable links to each article. Don’t miss a single update. Subscribe today!

continued on page 4

David MariniVice President & Managing Director

ADP Strategic Advisory Services

ADP Advisor®

www.adp.com

2

ADP recognized by three nationwide “best of” listsLast year, ADP was named to three nationwide “best of” lists:

• ADP ranked 7th on the InformationWeek 500 list of the Most Innovative Business Technology

Organizations — an annual list of the top business technology innovators in the United States.

• ADP was named to Forbes’ list of the World’s Most Innovative Companies — a ranking of the

top 100 “leading-edge corporations deemed most likely to succeed now and in the future.”

• ADP ranked among the top 20 in Training magazine’s esteemed “Training Top 125” — an

annual ranking of organizations that provides extraordinary employer-sponsored workforce

training and development. n

Twelve small businesstrends for 2012ADP TotalSourceSM, ADP's professional employer

organization, provides small businesses with a

comprehensive outsourcing solution that helps

reduce the cost and complexity of employment and

HR management.

ADP recently published a list of 12 trends that small

employers may encounter in 2012, together with

brief mentions of how TotalSource can help cope

with many of these trends.

The number one trend? Employee loyalty is down

(despite the poor economy, 32% of U.S. workers say

they’re seriously considering leaving their current

employers) and companies are finding it hard to

attract and retain key employees.

The good news for small businesses? Non-financial

factors strongly influence employee motivation and

engagement. And ADP TotalSource clients have

access to many training sessions, including sessions

on retention, rewards, and recognition.

Other entries in the list of trends to anticipate:

• Flexible work arrangements are on the rise — and

workers are willing to sacrifice for more flexibility.

• Employees are tasked with more responsibility in

choosing and managing their benefits.

• 401(k) and Individual Retirement Account (IRA)

savings are down, increasing the risk that

employers will fail their year-end non-

discrimination testing.

To download the full list of 12 Trends for 2012, visit

www. http://www.adp.com/tools-and-resources/case-

studies-white-papers/peo-case-studies.aspx

ADP TotalSource is the largest professional

employer organization in the United States,

operating more than 50 offices in 24 states, and

serving more than 8,900 client companies that

employ more than 251,000 work-site employees.

As a client you will have an experienced ADP

TotalSource Human Resource Business Partner

who leads a team of experts in HR administration,

benefits, payroll, risk management, and safety and

regulatory compliance to assist you with all of your

employer needs. n

For more information, call 1-800-447-3237 or visitwww.ADPTotalSource.com.

Survey suggests that 40% of employees don't fullyunderstand their benefits optionsNeed for increased communications, decision support tools, and mobile applicationsA key reason companies offer benefits is to encourage employee loyalty by increasing the

perceived value of their compensation package. Yet in a recent survey conducted by the ADP

Research Institute (ADPRI), a specialized group within ADP, HR decision makers estimated

that only 60% of their employees fully understand their benefits options. A squeeze on

employee communication budgets appeared to be one contributing factor:

• 66% of midsized employers reported having no employee communications budget

• 36% of large employers had no employee communications budget

Decision support tools — typically software applications accessed through a company

portal — help employees compare health care plans and determine which ones best meet

their needs. A majority of HR respondents felt that such tools increase overall employee

engagement and understanding of benefits, yet the majority of large and midsized companies

don’t provide them:

• 72% of midsized employers don’t provide

• 51% of large employers don’t provide

Mobile access to benefits

information was deemed

important by approximately six

out of 10 HR decision makers,

yet fewer than half of surveyed

companies currently provide

mobile access (46% of

large companies, 39% of

midsized companies).

These findings have serious implications for how companies communicate one of the most

important parts of their employees’ compensation.

The ADP HR/Benefits Pulse Survey on Employee Benefit Tools was conducted by the ADPRI.

Survey respondents were evenly split: 251 midsized companies (50-999 employees) and 250

large companies (1,000+ employees). n

To download a more detailed summary of the survey results, visit www.ADP.com/pulsesurvey1111. To view anarchived webinar on the survey findings at no charge, register at www.HR.com/stories/1319204936640.

Fact Sheet – ADP HR/Benefits Pulse Survey (#652), Aug. 26, 2011

Type of Decision Support Tools Offered

ADP study suggestscompanies may beoverestimating theeffectiveness of theirtalent managementprograms “A majority of companies rate themselves high

in talent management effectiveness, but very few

are actually benchmarking their performance

against peers and don’t have the data to support

that assessment,” said Tony Marzulli, Vice

President, Product Management, ADP Talent

Management Solutions.

Mr. Marzulli was commenting on a new study

conducted by the ADP Research Institute (ADPRI)

entitled Talent Management 2011: Perceptions

and Realities. Surveying HR decision makers at

602 large U.S. enterprises with 500 or more

employees, ADPRI found that while 75% think

that their companies are on par with, or better

than, their peers in terms of talent management

maturity, only 46% actually benchmark Key

Performance Indicators against their peers.

Nearly half of the companies surveyed (42%)

do not have a formal talent management strategy

in place, and only 38% have a strategy that

addresses all five key areas of talent management:

1. Development/learning

2. Performance management

3. Recruitment

4. Compensation management

5. Succession planning

Given that 75% of respondents feel their

strategies are on par with, or above, their peers,

this suggests a potential disconnect between

perception and reality among companies that

consider themselves high performers in talent

management, but do not benchmark the

effectiveness of those strategies against

other companies. n

To download a free copy of the full study, visitwww.ADP.com/talent_management_2011study.

3

ADP Mobile Solutions adding smartphone access to benefits information You’re at the optometrist’s office and fall in love with

those designer frames. Is there enough in your

Flexible Spending Account (FSA) to pay for them?

With new enhancements to the ADP Mobile Solutions

app, you can find out using your smartphone. You can

check your FSA account balance, vision plan coverage,

and more.

Available as a free download from the iPhone App

Store, the ADP Mobile Solutions app runs as a native

application on Apple® mobile devices. It is also

available as a mobile Web application for Android™

and BlackBerry® devices. Once securely logged in,

employees can track their time and see pay

statements, check their retirement savings, or

view company news and a corporate directory.

The most recent enhancement to ADP Mobile Solutions

adds the ability to check benefits information. Employees

of eligible ADP clients can view their co-pay amounts, current coverage, and future coverage elections.

Employees can also store an image of their insurance card and display it as proof of coverage.

“The enhancements make it more convenient for employees to access HR information and manage

the intersection between work and personal life,” says Steve Roth, Product Manager of ADP Mobile

Solutions. He notes that ADP’s mobile app has more than 150,000 users and consistently ranks

among the top 20 free business apps available at the App Store. n

For more information, visit www.ADP.com/MobileSolutions.

Recent enhancements to the ADP MobileSolutions app enable employees to checkbenefits information anytime, from virtuallyanywhere. ADP Mobile Solutions is available for selected ADP services.

To register, visit www.ADPTotalSource.com/TotalSource/wage_compliance_webinar.aspx.

FREE ON-DEMAND WEBCAST!

The United States Department of Labor (DOL) has found that more than70% of employers have some type of Fair Labor Standards Act (FLSA)violation. As a manager, it's your job to keep up with the legislative andregulatory changes to ensure your organization is compliant in order toreduce the risk of time-consuming lawsuits and costly penalties.

This on-demand webinar will provide you with what you really need to know about FLSA. Topics will include:• What is Wage and Hour?• Why is it important?• Employee classifications (including key exemptions and case studies)

As a webcast attendee, you will receive a complimentary copy of ADP’s specialreference: Practical Guidance on Wage and Hour Compliance: What Do You Really Need To Know?

This webinar has been approved for one (General) recertification credit hour toward PHR, SPHR, and GPHR recertification through the HR Certification Institute.

* The use of the HRCI seal is not an endorsement by the HR Certification Institute of the quality of the program. It means that this program has met the HR Certification Institute’s criteria to be pre-approved for recertification credit.

Practical Guidance on Wage and Hour Compliance: What Do You Really Need To Know?

4

Please address your suggestions to: Susan Lodge, Managing Editor • Susan.Lodge@adp.com

The ADP logo, ADP, ADP Advisor, and RUN Powered by ADP are registered trademarksof ADP, Inc. ADP TotalSource is a service mark of ADP, Inc. Apple is a trademark ofApple Inc., registered in the U.S. and other countries. BlackBerry is owned by ResearchIn Motion Limited and is registered in the United States and may be pending orregistered in other countries. All other trademarks and service marks are the propertyof their respective owners.

11-245-0212 314M Printed in USA © 2012 ADP, Inc.

Y O U R S U G G E S T E D T O P I C S F O R T H E A D P A D V I S O R A R E W E LC O M E

IMPORTANT NOTICE: ADP publishes the ADP Advisor free of charge to its clients. It is accepted with the understanding that the publisher is not engaged in the business of rendering legal or accounting services. If legal, tax, accounting, or other professional assistance is required, the services of an attorney or a certified public accountant should be sought.

Misplaced your copy of the ADP Advisor? Want to check aback issue?

Visit www.ADP.com/home/advisor.

2012 FUTA taxes to increase insome states Employers in 20 states and the Virgin Islands paid increased

Federal Unemployment Tax (FUTA) taxes in January of 2012 for

wages paid in 2011. These states depleted their own

unemployment insurance funds and had to draw from a federal

loan account. When these loans were not repaid within two years,

employers in those states lost part of a FUTA tax credit.

The net effect is typically a 0.3% increase in the FUTA tax, $21 per

worker, payable in January of the following calendar year with IRS

Form 940. The FUTA credit reduction increases annually by 0.3%

until the loans are repaid.

For 2012, the FUTA tax rate is scheduled to remain at 0.6% of

wages paid, up to the taxable wage limit of $7,000, or $42 per

employee per year. But employers in credit reduction states

should plan on an additional 0.3% increase in FUTA taxes, payable

in January of 2013. If ADP is responsible for filing Form 940 for

your organization, you will receive an invoice for credit reduction

amounts in mid-January.

Unemployment Insurance remains the only payroll tax that

employers can control through prudent human resource

management and careful handling of claims. ADP can assist

you in managing UI claims, helping you keep UI taxes as low

as possible. n

The above article is from an ADP Eye on Washington alert. To have future alertsemailed to you as they become available, go to www.adp.com/regulatorynewsand complete the “Subscribe” field in the right-hand column. For alerts affecting the health care industry, go to www.adp.com/healthcare.

States and Territories Subject to the FUTA Credit Reduction for 2011

ArkansasCaliforniaConnecticut FloridaGeorgiaIllinoisIndianaKentuckyMichiganMinnesota

MissouriNevada New JerseyNew YorkNorth CarolinaOhioPennsylvaniaRhode IslandVirginiaVirgin IslandsWisconsin

Additional states, including AZ, CO, DE, KS, SC, and VT, are expected to become creditreduction states for 2012. Some that were subject to credit reduction in 2011 may not be in 2012. This determination will be made in November of 2012.

Mr. Marini notes that employees typically pay $400 a month for such coverage.

“Switching to a high-deductible plan could save them $250 a month, which

they could deposit into a Health Savings Account,” he says. Employees who

stayed healthy could accumulate $3,000 a year in tax-advantaged savings,

while the employer could save $1,500 a year — per employee — on health

insurance. “If you have 1,000 employees and migrate 30% of them to high-

deductible plans, that adds up to $450,000,” Mr. Marini notes.

As employees gain a financial stake in staying healthy, they become more

willing to participate in wellness programs (weight loss, smoking cessation).

This helps create a healthier, more productive workforce, according to

Mr. Marini.

Analysis of plan usage and total cost of ownership

As a client of ADP’s Strategic Advisory Services, an employer can use

internal resources to implement the resulting communication and education

recommendations, or ADP can help implement them.

ADP can also perform an in-depth analysis of a company’s plan usage, identifying

participation patterns among various age and salary groups. This helps

employers refine their plan design and target communications more effectively.

Finally, The Hidden Reality of Payroll & HR Administration Costs published in

2011 by PricewaterhouseCoopers (PwC) found that organizations frequently

overlook the “hidden costs” of in-house workforce administration, time and

attendance management, and health and welfare benefits administration.

These associated costs account for more than 50% of the total cost of

administering these functions. ADP’s Strategic Advisory Services can help

employers identify these hidden costs and determine where it would and

would not pay to outsource a function. n

The ADP Strategic Advisory Services Group provides industry expertise and guidance on bestpractices and cost-effective benefits management. For more information, SASinfo@adp.com.

New ADP advisory service continued from page 1

ADP Advisor®