Background and business challenges
This Woodland Hills, California-based real estate investment and management company was founded in 1980. It grew to 35 employees and focused on developing and managing properties throughout Southern California. Shortly after joining the company in 2007, its new CFO quickly identified four critical challenges within the organization that needed to be addressed quickly.
Paysheet.The processing and production of the payroll was handled by an external CPA firm. The CPA charged exorbitant fees for preparing payroll, electronic tax deposits, quarterly tax returns, annual tax returns, and W-2 forms. Despite the excessive fees, the CPA firm did not have a system to track vacation, sick, and other leaves, and the organization found itself constantly requesting information that was not available.
medical benefits. Any employee health benefits questions, clarifications, or issues had to be handled through a third-party broker or directly with the insurance company. All health plan administration was being handled through the organization’s accounting department. This process was time consuming and did not provide them with accurate results. “The process caused a lot of stress for me, my department and other employees in the company,” explains the CFO. “I knew we had to make a change.” Also, the benefit premiums from him were extremely expensive. It was one more reason why they needed to look at alternative healthcare solutions.
workers compensation. While they did not face excessive workplace injuries, there were several incidents that required the attention of the insurance company. They discovered that the claims were not being satisfactorily addressed by their insurer and, as a result, faced increases in their workers’ compensation insurance premiums.
employee management. Lacking a dedicated personnel department, the company did not have proper HR systems in place. Employee termination issues were not handled properly, many employees are exempt vs. non-exempt statuses were questionable and employees’ personnel files were in disarray.
“There was no way we could continue to manage our HR responsibilities the way we did,” says the CFO. “We began to investigate alternative HR management options. After extensive research, we selected a local HR outsourcing provider to assist us.”
HR solutions.
The HR outsourcing company conducted an initial consultation to determine which service package would best meet the needs of their company. Due to the multiple challenges, the complete HRO package was selected. This program included payroll and tax administration, human resource management, workers’ compensation and safety services, and a full range of employee voluntary and medical benefit packages.
The first step was to provide each employee with a new employment packet, including I9, W-4, general information sheet, and other required state and federal documentation. The client management team then reviewed the benefit options with the HRO’s benefits representative, discussed the options, and selected a variety of HMO and PPO plans to offer their staff. Finally, the Business Implementation team conducted an Employee Orientation with all their existing staff and helped them complete paperwork and enroll them in their new benefit programs.
Once on board, the HR outsourcing company provided the client with a dedicated HR representative who acted as the primary liaison to all other departments: Workers’ Compensation, Benefits, Payroll, and HR. One by one, each job challenge was addressed and resolved:
- Payroll was processed accurately and in a timely manner, and all paid time off benefits were tracked and administered;
- Health benefit premiums have been significantly reduced;
- All employee benefits issues were handled by the HRO Benefits Representative, who acted as an intermediary between the client and the insurance company;
- Workers’ Compensation premiums have been significantly reduced and a claims administrator has been assigned to address all future workplace injuries;
- Employee files updated and all questions regarding exempt and non-exempt status resolved.
Tangible HR results
To cover the services provided, the HR outsourcing company charged a monthly administration fee as a percentage of payroll. “The administrative fee charged by the HRO firm was most reasonable,” muses the CFO. “It provided our company with significant cost savings in both fixed and indirect costs.”
The rate was offset by reductions in workers’ compensation, health and other benefit premiums, consolidated providers under one roof, streamlined employment processes and a reduction in occupational risk.
“Beyond the savings, the HR company protected our company from making poor employment decisions and running inefficient HR systems. They provided exemplary advice on employee termination issues and kept us out of trouble on numerous occasions. The HR outsourcing was probably the best business decision we ever made.” company ever made”.