It’s no secret that technology-based solutions have become standard for human resource management, and employee benefits administration is no different. Recently, benefits-related technology firms have proliferated in the professional services marketplace, many offering “easy, out-of-the-box solutions” and some even offering “free” services in exchange for a broker-of-record designation.
For clients seeking help navigating the quagmire of regulations and paperwork surrounding the business of human resources, especially the incredibly complex world of employee benefits, these can seem like ideal solutions. After all, many business owners and managers simply don’t have the time or the expertise to adequately manage benefits delivery and administration on their own. The mistake these corporate decision-makers often learn – the hard way – is that cheap and easy today often leads to an expensive and painful tomorrow.
Procurers of free HR software solutions should consider that there is much more to managing benefits than simply filling out documents and managing forms online. What happens when health insurance regulations change (and you know they will)? Who do you consult about aligning your company’s goals with employee benefits offerings and packages? How will a “free” web-based solution see your company through critical transitions and help you prepare for your company’s future?
The adverse (and costly) consequences of missing something
HR regulations change – often and quickly – and the consequences for not following them can be detrimental to running a business. Human resources is one of the most heavily regulated and complex areas of business management. Employers have a responsibility to ensure that the benefits they offer are in compliance and administration is handled correctly. Any mistake, even slight ones, can end up costing the employer far more than they realize. Why would an employer want to take cost-cutting measures that could potentially put the business at reputational and financial risk?
Software is not strategy
This is perhaps the most important consideration because it is one that focuses on the long-term goals and direction of a business. The relationship between an employer and an experienced employee benefits consultant – one who is engaged with the business and you’ve met with face-to-face – is not something that can be replicated with a computer and software. While free software and service center models focus on fast and cheap, a local HR broker will focus on negotiating better prices and finding the very best coverage options for you and your employees. Without this personable, constant analysis of the market and a broker who takes the time to get to know your business and its goals, you could be losing out on important savings that a service center model wouldn’t catch.
How free HR software turns a profit
When software is free, the creator can make money a few different ways: from displaying ads within their application, from a “freemium” model, or from connecting consumers or businesses to a service—e.g., health insurance for a business or a credit card for a consumer—and then charging referral fees.
To maximize profits, any free software company has a vested interest in automating or eliminating customer service as much as possible. When problems arise, their customers are usually left to dig through support forums and solve it themselves. Many times, the frustration of that experience leads users to a solution that offers support from human beings, not just outdated forum posts.
Here’s where professionalism counts
When considering the real, long-term costs of HR solutions, corporate decision-makers would be well-served to partner with a professional, strategic employee benefits management firm rather than seek a short-term fix with a cheap, or even free, software package delivering only a basic set of tools and not much else. A professional partner will not only work side-by-side with corporate HR teams to navigate compliance, mitigate risk and handle back-end administration, but help them keep their promises to one of their company’s most important constituencies – their employees.