Kimberly-Clark soaks in the benefits of outsourcing to one vendor for all of its benefits administration needs.
Because benefits administration can be one of the most complex and exasperating tasks facing HR professionals these days, outsourcing these services has become a common practice among companies whose defined benefits (DB), defined contributions (DC), and health and wealth management would otherwise require a small army of administrative specialists if handled internally. But until recently, employers often adopted a best-of-breed approach, turning to one service provider to manage DB, another for health and wealth, and yet another for DC—which can create vendor management headaches. For many, outsourcing by piecemeal is simply not an efficient strategy.
That’s why total benefits outsourcing (TBO) has garnered increasing attention from employers these days. Take the case of Kimberly-Clark, the consumer products company whose Kleenex, Cottonelle, and Kotex brands are household names. A benefits outsourcing practitioner since 1993, the Dallas-based maker of toilet paper, diapers, and other nonwovens products has over the years turned over administration of its benefits portfolio to Hewitt in steps, starting with DC 15 years ago, followed by DB in 1997, and then health and wealth a year later. Today, all aspects of employee benefits except for educational opportunities are handled by Kimberly-Clark’s provider, and company HR leaders say having one vendor overseeing all of their benefits plans has resulted in markedly better services to employees.
“One of the great things about being able to focus on everything through a single provider like Hewitt is when issues in the contact center come back to us, we have very good access to information. If there is an escalated issue, we can quickly resolve it,” said Jane Nerison, director of benefits for Kimberly-Clark. “Clearly we are very pleased with Hewitt.”
Nerison explained that several considerations drove the company’s phased-in approach to TBO. Like many HR organizations, Kimberly-Clark wanted to simplify benefits services for its workers. With 15,000 active employees and 25,000 retirees in North America, the consumer and industrial products maker sponsors a variety of plans and programs. As the company has grown during the years, through both acquisition and organic means, its benefits needs also became more complex. HR leaders realized that employees needed a central source for answering their questions and addressing their needs, and using myriad providers added to employee confusion. Moreover, multi-sourcing benefits services meant HR had to maintain a sizable staff to address employee inquiries.
According to Sue Thomson, the national sales leader for benefits at Hewitt, Kimberly-Clark is not alone in its phased adoption of TBO. “It becomes more and more difficult to manage multiple providers as HR staffing gets leaner. Therefore, second-generation outsourcing is all about efficiency and improving the employee experience. Managing one provider through acquisitions or divestitures or plan design changes is far more efficient and effective than dealing with multiple providers,” she added.
HR organizations struggling with service delivery might be tempted to just throw it all to a third-party vendor, but the industry through trial and error has learned that external solutions work best when they are bolstered by internal process alignment. In Kimberly-Clark’s case, it didn’t simply roll out benefits; it undertook a rigorous effort to standardize processes and policies before handing them over to Hewitt.
“I think that if you are looking to your provider to standardize the program, that’s a pitfall. If you haven’t thought about how you want to standardize your services, and you are transitioning [to a vendor] while standardizing them, that can be a problem,” she said. “We have standardized a lot of our processes. It’s still a challenge at Kimberly-Clark. We’ve made some significant strides in simplifying our programs in pensions, and you have legacy issues you have to deal with. We have, in working with Hewitt, been pretty thoughtful in terms of how to manage those situations so that they are as streamlined as we can be under the circumstances.”
Another reason why Kimberly-Clark decided to embrace the TBO approach is for the technology platform Hewitt offered, Nerison pointed out. Like many other outsourcing practitioners, her company could not “rationalize” a deep and costly investment in a benefits administration toolset. Now with nearly all benefits services on the same platform, employees and managers have a standardized way of managing them.
Nerison said ultimately TBO offers a better experience for employees because it helps organizations to standardize and simplify processes. Moreover, with one point of contact for support, workers can look to their provider to address all of their questions, allowing HR to focus on more strategic work. “The more we can direct them to a single source of assistance, it makes managing their choices more effective,” Nerison added.