WILL END UP. How much. considerations for the S ALE OF YOUR A GENCY. Inside: A BI-MONTHLY PUBLICATION OF THE PIA OF GEORGIA

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1 NOVEMBER/DECEMBER 2011 A BI-MONTHLY PUBLICATION OF THE PIA OF GEORGIA Inside: THE PRESENCE OF HR OUTSOURCING AND THE IMPACT ON THE PROFESSIONAL INSURANCE AGENT pg 8 A MATTER OF AGE: WHY YOU SHOULD MANAGE MULTIPLE GENERATIONS pg PRACTICAL TIPS TO AVOIDING ERRORS & OMISSIONS CLAIMS pg 12 How much WILL END UP CIC/CISR 2012 EDUCATION SCHEDULE pg 16 NEWLY CONFERRED CICs, CISRs, AND CRMs pg 18 SMALL, MEDIUM AND LARGE pg 22 INTaxYOUR POCKET? considerations for the S ALE OF YOUR A GENCY

2 The Presence of HR Outsourcing and the Impact on the Professional Insurance Agent By Craig Lagos, SCI Companies & Dusty Rhodes, PlatformOne ost industry estimates M validate that 80% or more of the Human Resources department s staff is consumed with transactional, administrative workloads. More and more, HR management is turning to resources outside their organizations for advice and solutions. That resource should be YOU, their current insurance agent. Remaining that trusted advisor in your key accounts may mean being proactive and introducing a more integrated insurance solution, complete with administrative services delivery. By partnering with a non-threatening HRO provider, you can streamline the number of vendor relationships within your key accounts and maintain more control. And long-term outsourcing contracts can mean fewer services responsibilities for you, and even better, superior client retention. Yet, selecting the right outsourcing partner is a difficult process that requires considerable subject matter expertise. Knowing your friends and foes has never been more difficult or more important. A critical first step is recognizing what HR Outsourcing options are available today and determining their presence in your accounts TODAY S HRO OPTIONS FOR YOUR CLIENTS PSP Payroll Service Provider 8 PEO Professional Employer Organization ASO Administrative Services Organization HRO Human Resources Outsourcer HR-BPO Human Resources Business Process Outsourcer PSP - PAYROLL SERVICES PROVIDERS PSPs, payroll services providers, perform traditional discreet HRO services for their clients, such as payroll processing, payroll tax filing, and more. Still today, many companies continue to outsource piecemeal HR functions, with a limited and internal staff doing the balance of the workload. Traditional PSPs are the original payroll service bureaus which got into the business in the 1950s by applying the capabilities of the first computers. These outsourcing service providers are today attempting to add services and shift their marketing and sales efforts to emphasize their breadth of services across the spectrum of HR needs. These traditional HR outsourcers leverage their strengths in HR process expertise, management, and quality to offer new, related services and to capture more business processes within their current customer base. Nearly 90% of small to midsized companies say they have experimented with outsourcing payroll or related payroll tax filing functions with PSPs. By the midsized phase of a company s lifecycle, close to 90% of them are outsourcing at least one major HR function. The outsourcing is almost always piecemeal, meaning a departmental decision is made for a single function. The Internet and the capabilities it has offered the business community in recent years has drastically improved the value of outsourcing payroll to PSPs. Online payroll functions allow the user to enter and review payroll information any time and from anywhere they have access to a web browser. Users can then initiate the processing of payroll real time, which calculates pay, deductions and taxes, and can automatically trigger other processing steps to print checks, route deposits to banks, make tax filing easier and establish year end W-2 processing steps. The key benefit of an online payroll service is enhanced control. Originally, payroll services required small business owners to call or mail in payroll at a designated time. With an online payroll service, payroll can be processed whenever it s convenient for the customer. The ability to modify payroll information in real time and view your payroll calculations instantly provides additional control. With traditional offline payroll services, the client acted through an intermediary - the vendor s payroll representative - who enters the data and /or runs the payroll process. When mistakes were made, which frequently happened, the client never knew about the error until the checks were delivered by the overnight carrier. With online payroll, the client is in control, with online reports and modification capabilities at their fingertips. Because the new online payroll services don t have the same labor requirements and cost structure as traditional payroll services, the charge for such services is 30% to 50% less. Therefore, with the help of the internet, payroll service outsourcing finally accomplishes the claims vendors have been touting for years - it reduces costs, workload, and valuable staff time. That gives your executive and HR management more time to focus on business operations and employee needs. Payroll Services Providers offer: Prepare, audit and deliver payroll Maintain payroll records Provide direct deposit Deliver payroll checks as necessary Observe and comply with payroll and tax laws Prepare and file government compliance forms (CONTINUED ON NEXT PAGE)

3 THE GEORGIA PROFESSIONAL AGENT NOVEMBER/DECEMBER 2011 PEO - PROFESSIONAL EMPLOYER- ORGANIZATIONS PEOs have delivered outsourced HR departments to small companies long before the term BPO (Business Process Outsourcing) was coined. They help small business owners and entrepreneurs minimize costs and maximize efficiencies via a complete HR outsource model. The model is called a coemployment relationship. In a co-employment arrangement, employees are paid directly by the PEO, who delivers a host of HR and co-employment services to employees of the client, such as administering payroll and employment benefits. The advantage of the relationship comes in potential lower overall labor costs, workers compensation rates, unemployment rates and insurance benefit rates. The PEO takes responsibility for becoming the employer of record, and the employee s taxes are reported and deposited under the PEO federal employment identification number (FEIN). The PEO also takes responsibility for safety programs and regulatory compliance. Worker s compensation insurance, health insurance, and other employee benefits are covered under the PEO s master policy, unless one or more of these risk management products are carved out of the contract between the two parties. Clients are billed for all HR services and products on an a la carte or bundled basis, and including payroll, benefits, unemployment insurance, workers compensation and other outsourced costs. These firms are shifting their target markets from blue-collar markets, such as construction, to white-collar services markets. They also are expanding the scope of their services, making greater use of technology, and offering HR portals that enable self-service for timekeeping, payroll, and benefits. Strengths of these firms include strong client bases, HR expertise, and the infrastructure to deliver payroll and benefits administration management services. Professional Employer Organizations offer: Payroll outsourcing and payroll platform connectivity Workers compensation payments/ claims management Wide array of Insurance Benefit Options Payroll tax compliance and other compliance requirements Unemployment tax payments/claims management In house HR staff support and client manager support EPLI insurance coverage & Alternative Dispute Resolution programs ASO - ADMINISTRATIVE SERVICES ORGANIZATIONS ASOs are also known in the marketplace as Administrative Services Organization or Administrative Services Only. Either term is correct in its meaning. These organizations provide similar outsourcing services to similar sized companies as do PEOs, with a key difference. The difference is that the service provided through an ASO does not establish a co-employer relationship with the client s employees. In recent years, there has been a growing interest in ASO services among smaller companies. They sometimes prefer ASO services to PEO relationships because of established relationships with insurance brokers; or previous experience with deep losses relating to workers compensation among companies in risky industries; or an inability to reach minimum contribution levels for health insurance. In other cases, the prospect simply does not fully understand or want to accept the co-employment model. It is sometimes perceived as a more complex and involved relationship, and particularly in today s economic environment, the ASO model seems simpler and less risky. With an ASO model, clients can retain the freedom to shop independently for and retain control of their insurance products and plan policies for their own (CONTINUED ON PAGE 20) RELATIONSHIPS My 20 years of experience in the insurance industry combined with J. M. Wilson s 90 years of top-rated service equals one thing proven success. T-Shirt by HopeDreamsDesigns.Com IT S WHY WE STAND OUT FROM THE CROWD Debbie Martinez Underwriter & Sales Manager, Southern Region and feisty cancer survivor Connect with Debbie on LinkedIn! Managing General Agency Since 1920 Property/Casualty Professional Liability Surety Commercial Transportation Personal Lines Premium Finance jmwilson.com 9

4 THE GEORGIA PROFESSIONAL AGENT NOVEMBER/DECEMBER 2011 (CONTINUED FROM PAGE 9) THE PRESENCE OF HR OUTSOURCING AND THE IMPACT ON THE PROFESSIONAL INSURANCE AGENT organization. Since insurance products are no longer part of the contractual arrangement, only services are left to consider. Thus, ASOs have sometimes adopted the term administrative services only to describe themselves. For smaller companies looking for HR support services, there are three general services options available with ASOs: Commodity like HR transaction level administrative services, such as payroll tax filing HR expertise priced and delivered by the project HR expertise acquired from the provider on a retainer basis, where the company knows it requires outside help with certain HR knowledge The ASO provider oversees the day-to-day administrative aspects of managing a company s human resource functions, on a service by service basis. The client company retains responsibility for regulatory compliance, insurance coverage, and for being the employer of record. The employee s taxes are reported and deposited under the client s federal employment identification number (FEIN). Clients are billed for all HR services on an a la carte or bundled basis by the ASO. Administrative Services Organizations offer: Payroll outsourcing and tax compliance services Benefits administration services HR administrative services Professional insurance selection and risk management services 20 HRO - HUMAN RESOURCE OUT- SOURCING Outsourcing, or subcontracting responsibility for completing certain business functions, has been a fact of corporate life for a number of decades. Traditionally, corporations have outsourced individual business functions, such as computer hardware infrastructure or payroll processing, to niche providers. In deciding to outsource HR functions, most companies choose to outsource the tactical, transactionrelated activities while keeping strategic functions in-house. These tactical activities include functions such as payroll processing, human resources administration (adding and terminating employees and the like) and benefits administration. These functions affect the performance of virtually every part of the company and consume a tremendous amount of the HR department s time and energy. Many companies report that these transaction oriented tasks require more than 80% of the HR staff s time. Likewise, implementing the systems to support these functions is complicated, time-consuming and expensive. Once implemented, maintaining HRIS systems over their expected life cycle can approach or exceed the cost of the original implementation. Traditional, niche oriented HRO service providers (such as payroll service bureaus) are realizing that they must expand their services offerings to remain competitive. Outsourcing a single function is rapidly moving toward outsourcing an integrated set of business processes. A single source provider that can deliver solutions across multiple business functions can service the client better and cheaper than several niche vendors, due to economies of scale. HROs are ideal for medium to large organizations that are looking for ways to reduce costs without losing the direct employee/employer relationship (no co-employment). Standardized, high-volume, high-cost, administrative tasks are the best candidates for outsourcing. Decisions are usually driven by the need to reduce in house HR support and overhead and the need to access better technology at reduced costs. Functions outsourced to HRO service providers vary depending on internal department requirements. Most HROs allow flexible combinations of their product and service offerings to meet client needs. Human Resources Outsourcing firms offer: Self-Service or supported HR and payroll related technology Scalability Employee education and training Recruiting services Benefits management and administration Payroll services Risk management HR management HR-BPO - HUMAN RESOURCES BUSINESS PROCESS OUTSOURCING HR-BPO is a logical extension of the trend toward outsourcing and the inclination of companies to delegate individual functions. In HR-BPO, the company outsources complete responsibility for an integrated set of functions such as Benefits Administration, Payroll Management and general Human Resources Administration to a third party. While many outsourcing initiatives focus on specific business functions, some providers are trying to help their clients achieve more broad-reaching benefits. By carrying BPO to its next logical step, a company can outsource not single functions, but entire business processes and the overall responsibility for managing them. In these cases, the outsourcing provider becomes a strategic partner and the client provides only guidance and oversight of the provider s activities. Human Resources is a logical candidate for comprehensive BPO. It s generally accepted that Human Resource departments provide 22 standard services to mid-sized and larger corporations, some of them strategic (they contribute to the central mission of the company), and some of them tactical (they don t contribute to the central mission, but they re necessary to carry on business day-to-day). In comprehensive HR-BPO, the provider assumes responsibility for most, if not all, of the tactical, back office HR functions because these are transaction intensive and can consume as much as 80 percent of the time and energy of an HR department. The internal HR department and its staff retain responsibility for the strategic HR functions. Of the total list of 22 functions, eleven are tactical, back office functions. HR-BPO firms offer: Compensation administration Benefits administration Payroll administration Time and expense reimbursement Employee data and records management HR information technology / HR information systems Employee and manager selfservice technology Workforce analytics Expatriate administration Domestic relocation Policy and legal compliance HOW THE AGENT WINS (OR LOSES) WITH HR OUTSOURCING Over the next several weeks, determine the presence of these HR Outsourcing options in your key accounts. In our next edition, we will discuss the benefits of having an HR Outsourcing ally present in your accounts. d Visit to find out how a relationship with SCI will help elevate your agency s production and profits to new levels, while at the same time solve your client s ever-changing business challenges. Contact Craig Lagos at 678/ or clagos@scicompanies.com

5 KNOWLEDGE EXPERIENCE VALUES By Partnering with SCI Companies Independent Agents and Brokers will: Leverage our HR Outsourcing Solutions to your competitive advantage Increase your retention rates by demonstrating profitable solutions Grow your book of business and earn greater revenues by introducing operational improvements Reduce service work and client headaches Become an Agent for Positive Change and Your Clients will: Be far more satisfied through the finest outsourcing service and HR solutions available Reduce their headaches and unnecessary internal workloads Increase employee satisfaction through improved service responsiveness Deliver to management superior and more profitable performance Decrease direct labor costs and increase operational efficiency About SCI Companies SCI is a best in class provider of HR Outsourcing solutions specializing in payroll, human resources, benefits and workers compensation administration. We are one of the largest privately held Professional Employer Organizations (PEOs) serving more than 1000 clients nationwide. SCICOMPANIES.COM