Procurement Fighting the Good Fight: Benefits Sourcing and HR Complacency (Part 2)

Please click here for Part 1 of this post. This content is based on the research, analysis and opinions contained in the following Spend Matters Perspective: Human Resources & Sourcing Turf Wars -- HR Departments Lose their Prescription for Sourcing Immunity.

When it comes to opposing the HR and HR benefits consulting firm status quo, our above-linked analysis suggests that the big players (IBM, Deloitte, Claro Group, Accenture and Paladin Associates) are now entering the HR benefits procurement game by applying pressure from the top down, promoting their abilities to more effectively source such benefits and/or broker arrangements with other group purchasing organizations and aggregators that have emerged and differentiate themselves as full service.

These firms are often helping procurement fight the good fight. But they can't do it alone. As we opine in Human Resources & Sourcing Turf Wars, it's time for HR leaders to lead by ditching the term "disruption" as a delay tactic. Disruption leads to change and change is essential to recapture a lost opportunity that the industry's professionals now value in the trillions of dollars. Don't like the term "disruption?" Then call it continuous improvement if you prefer, but know that defending the status quo is not wise in this context because the sourcing wave is cresting. Whether HR departments join consortia, hire sourcing professionals or open their doors to internal sourcing expertise, our research indicates that the significant savings that more effective category management of these benefits areas can bring will speak for itself to executives.

Working with Allianza Partners, Spend Matters and Healthcare Matters found that an organization with 10,000 employees enrolled in benefits programs encompassing vision, dental, life & disability, pharmacy, employee safety services and products and relocation could expect to save between $2.12-5.4 million in annual recurring savings. Of course the level of savings per employee as well as the potential disruption to employees may vary by category (read the paper for the full details). But overall, the pain is surprisingly minimal for the savings.

Curious for the full analysis? Download the Spend Matters Perspective: Human Resources & Sourcing Turf Wars -- HR Departments Lose their Prescription for Sourcing Immunity. And stay tuned for the next installment of this series, where we tackle how more effective sourcing can actual help employees maintain the benefits they're losing each year as costs increase unnecessarily.

- Jason Busch

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