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A recent post over on E- Sourcing Forum got me thinking that far too few procurement organizations are willing to insert themselves aggressively into the process of sourcing employee benefits. They would rather leave benefits sourcing to HR, and let it deal with the repercussions: when cost-saving measures are applied to benefits sourcing, the popularly held belief that you can’t reduce the cost of benefits without sacrificing quality often results in negative PR, and flack from employees. (BTW, for those who are new to employee benefits, I’m talking about the broader category of health insurance, pharmacy benefits, 401K servicing, and the like — in other words, the out-of-control HR cost categories than many feel have only one direction to move and can’t be addressed by procurement effectively.)
The fundamental challenge is that current advisors in these areas have fundamentally misaligned incentives. Many benefits advisors are also brokers who stand to make a commission based on the size of a particular package they sell. Moreover, benefits advisors nearly always come from an HR orientation that is focused on containing employee push-back on package changes. Procurement, on the other hand, examines the total value and cost of the package (based on available budgets and options in the market — and the overall effectiveness of the negotiating effort)…
