Should Handling Employee Benefits Be Handled by HR?

I have been having a debate with myself. It’s becoming both annoying and non-productive. So I thought I would invite you all into the dialogue.

As I speak and write about how HR can become a business accelerator, one of the biggest obstacles is time. HR has such a full plate, that we just run out of time.

While the work of talent development, organizational dynamics and change and solving real business problems related to human behaviors is exactly what will position human resources as a business accelerator, there is too much other work that zaps the available time.

2 roles that don’t accelerate the business

So I think about what roles HR plays that really don’t accelerate business, and come up with two:

  1. Employee relations; and,
  2. Employee benefits.

Employee relations is non-negotiable; there is too much risk involved, and it truly is a leadership and people issue. Where HR can shift to business acceleration is in developing leaders that inspire commitment rather than demand compliance. That would free up a lot of time in “discipline,” but that’s a topic for another day.

Here’s my internal debate: Are employee benefits really appropriately assigned to HR, or would benefits be better as a finance role?

WorldatWork will probably consider this a blasphemous question, but I think it does merit discussion. Benefits, in particular, is (in my experience) 20 percent strategic and 80 percent administrative and financial — and that 80 percent takes a lot of time.

As the profession of HR emerged, health and pension plans were largely unregulated, and the design of the plans was part of the strategy of attracting and retaining employees. As regulators prescribed more and more restrictions and as the question of whether to have benefits and how to structure them became less flexible given the competitive requirements, the discipline of employee benefits became overwhelmingly complex and relatively fixed. But the complexity required more skill and more time: administrative processing, financial analysis and reconciliation, and compliance.

My debate with myself: One side

HR departments spend several months each year tweaking plan design, usually with a financial objective in mind. They spend another several months in open enrollment, chasing and policing compliance so that employees didn’t miss the chance to enroll or change.

They focus time and attention in testing defined contribution plans to avoid discrimination and ensure adherence to plan documents. They develop and produce plan documents that generally require partnership with finance and legal. They build out call centers and intranet portals to answer a wide range of questions for employees and employee families.

As HR struggles to add value to the organization, they spend an inordinate amount of time doing work that is neither strategic nor flexible. The skill set required to do this well is not necessarily the skill set that will help to shape human behavior in such a way as to drive organizational performance.

Given that this latter role is so critical, does it make sense to weigh down HR with the responsibility for the administration of employee benefits?

My debate with myself: The other side

What gets in my way of agreeing with the first argument is relinquishing control of such an important element of the decisions around how to attract and retain the workforce.

Total rewards, as defined by WorldatWork, is the overarching offering made to current and prospective employees, including compensation, benefits, talent development, performance management, recognition and work-life effectiveness. Yes, benefits looms large in this definition.

Additionally, I advocate the role of HR to be “all things people,” so therefore why would benefits be housed in a different department and subject to a “non-people,” financial-only focus?

There is also an element of employee advocacy in the administration of employee benefits. When benefits are handled smoothly by the organization, the workforce is better able to focus on performance, and not diverted by concerns over health care or retirement. That is a good role for HR.

And of course, given that benefits administration is usually integrated into the HRIS, it would be really difficult to separate the functions. Giving access to anyone outside HR provides confidential information on employees related to salary and other sensitive data. That could be a deal breaker.

Given that the cost of benefits is huge, this is also a chance for HR to add value by impacting the cost of benefits through negotiation and auditing. Taking away this lever takes away a large contribution.

Please weigh in

So you see why I need help here. I can effectively argue both sides. But my question remains – is the administration of employee benefits something that a strategic HR team should accept?

Article Continues Below

Sponsored Content

Outperform your competition with a certification from HRCI®

Whether you want to demonstrate HR skills, prove expertise in advanced operations, best practices and regulations, or make that next step into that executive office, HRCI will help to get you there. HRCI certification is a fast track to success.

Eek, I just realized that I may be making Ram Charan’s argument that we should split HR. But not really.

He advocates HR-Administration take over Benefits and Compensation. In no way should HR relinquish Compensation – it is a highly strategic element of “all things people.” Yes, there is administration but unlike benefits, the strategic part is big, real and important and needs to align to performance and development.

Something in the middle?

What I struggle with is the administration of employee benefits. It just doesn’t seem like a role that does anything to help HR in our quest to be strategic.

In fact, it takes precious time that could be used to lead change, develop talent and solve real business problems, and if we don’t get better at that, we will continue to struggle with credibility.

This internal debate is driving me crazy and I need your help. What are your thoughts?

This originally appeared on Carol Anderson’s blog @the intersection of learning & performance. Her new book is Repurposing HR: From a Cost Center to a Business Accelerator.