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Small Business Employee Benefits and HR Blog

How HR Can Free Up Strategic Time with a Defined Contribution Approach

Every small business owner and HR manager wants to spend more time on strategic issues, and less time on transactional items.free up more time for meaningful work

For example, we all have those "big ideas" that stay on our to-do list for way too long, until we carve out enough time between the daily and weekly tasks to spend on these strategic issues. But to grow personally, to grow our departments, and to grow our companies we all need time to think strategically.

While most of us know this, and strive for more strategic time, most HR managers spend less than 10% of their time at the strategic level. Instead, they spend 50-65% of their time processing HR transactions. These heavy transactional workloads make recruiting and retaining top managerial talent increasingly difficult.

The good news is, we are moving in the right direction. The HR profession is getting more efficient and streamlined. With rapid growth of the knowledge and technology industries, third party administrators are taking over many of the traditional HR and benefits tasks including payroll, recruiting, evaluations, and health benefits. These advancements allow HR managers to become more efficient and free up more time for meaningful and strategic work.

Administering a traditional group health benefits plan has been one of these tasks that traditionally takes up a big portion of the transactional work. Activities such as claim disputes, renewals, premium payments, managing employee enrollment, and answering employee questions or concerns are time consuming. This is even more of a time drain for small businesses who are less likely to have dedicated HR personnel.

Freeing Up Time with a "Pure" Defined Contribution Approach

One trend small businesses and HR departments are adopting to help minimize the administration of health benefits, is utilizing a "pure" defined contribution approach. This is especially common with small and medium size businesses who have limited resources and personnel.

With defined contribution (see a complete overview of defined contribution health plans here), administration becomes a payroll function. After the plan is designed and set up, administration takes 5-10 minutes a month.

For example, once the plan is set up, the business’s HR administrative activities include:

  • Adding approved reimbursements to payroll
  • Enrolling new employees online
  • Terminating employees from the plan when they leave the company
  • Providing education to employees about the benefit
  • Connecting employees with an insurance agent for insurance questions

If you're an HR manager, small business owner, or broker, what are your tips for freeing up time for more meaningful and strategic work? Join the discussion below.