- people on the move
The Eternal Question Mark In Corporate Financial Planning
GRAND RAPIDS — As officers of most corporations work on next year’s budget, they always must do a fair amount of educated guessing: energy prices are likely to rise X percent; rent is gonna be Y; materials costs are likely to edge up in the third quarter and so forth.
But then there’s a big area where the unexpected is the rule and you probably can just speak of pure guessing.
At least that’s how Chris Engle sees it.
Engle is the director of sales and marketing for Right Source, a PEO that he says exists to bring about certainty in the very uncertain world of personnel costs.
“Certain things about personnel costs are predictable and tangible, of course,” he told the Business Journal. “You know what your payroll costs are going to be; what the deductions will be for FICA and taxes and so forth.”
But among the difficult things to anticipate — particularly in a small firm — are myriad costs of administering hiring, firing, training and benefits … particularly at a time of labor shortages when some companies’ human resources offices find themselves hiring, and hiring, and hiring, and hiring.
Engle stresses up front that his job is to sell his firm’s services to corporations, but he doesn’t believe his depiction of unpredictable costs is at all out of line.
And the fact is, he said, that in smaller companies there’s a tendency to be blindsided by the unexpected.
For instance, he notes, the corporate world right now finds itself in a time of volatility in health insurance premiums and benefit structures.
So let’s say that XYZ Corp.’s human resources office is scrambling to distribute brand new health plan handbooks. Meanwhile, it’s having to explain to naturally-disgruntled employees why their share of premium is going up and why co-pays for office visits and prescription drugs are going to do the same thing.
“You’ve got to communicate a lot of information that can be confusing,” Engle said, “because many people just don’t understand the details of health insurance very well anyway. And now you’re having to give them bad news …”
Which is when Murphy’s Law comes along with, say, a Friend of the Court garnishment order, or a garnishment for a debt.
“Garnishments are very complicated,” Engle explained. “They take a great deal of HR staff time when the staff already may be stretched on other work.”
What work, other than the major change that’s underway in health benefits?
Well, he explained, like spending a great deal of telephone time with the company’s insurance carrier on behalf of several employees whose claims the carrier has denied.
And such work, he said, also entails spending like amounts of time dealing with the affected physicians’ offices and hospitals that are trying to collect their due.
“Based on our experience here at Right Source,” he said, “I would say it is not at all unusual to spend and hour and a half on a call to the claims workers at the carrier’s home office, and often a good deal more.”
It’s hard to build that sort of thing into a corporate budget, he said, because such events are unpredictable, especially when they take time from the day-to-day routine.
Other unpredictable items, he said, can include:
Communicating and administering Section 125 Plans.
Communicating and administering 401(k) Plans.
Administering COBRA benefits.
Updating, communicating and administering corporate safety plans and policies.
Arranging drug testing for prospective employees.
Doing the work of the Immigration and Naturalization Service in establishing new hires’ country of origin.
Dealing with or even arranging for testimony in worker’s compensation claims.
Keeping the company current and compliant with periodic and frequently unpredictable tides of mandates from state and federal departments of labor, plus MIOSHA, and pursuant to the Americans with Disabilities Act.
Engle chuckles in saying his firm and other like it are positioned to transform the unpredictable into the predictable for corporate planners while relieving them of HR burdens.
The unpredictable is a bit easier to handle, he argued, for a firm such as a PEO that specializes in such things.