Trek Bicycle Corp. -- An 'Aerodynamic' Approach to Human Resources

How the company famous for manufacturing Lance Armstrong's bicycles streamlined its benefits administration to reduce costs and improve employee relations.

As many manufacturers continue to look for ways to trim budgets and reduce costs in the current economic downturn, Human Resources departments can often get overlooked. Yet given the many inefficient manual administrative processes still used by many companies, the HR department is a ripe target for implementing automated benefits enrollment and administration solutions that can save significant amounts of time and money.

According to CFO.com, the average cost for an HR department to manually enroll one employee in benefits is $109.48 compared to $21.79 using an automated system. In addition, manual administrative and billing processes typically result in errors and premium overpayments ranging from 1% to 10% of benefit costs. Yet, despite the cost savings associated with automation, many companies are still using paper-based manual processes to perform benefits enrollment and administration functions for their workforce.

One manufacturing company that recently implemented a benefits enrollment and administration solution is the Trek Bicycle Corp. Before last year's launch of the new system, Trek -- the largest bicycle company in the United States -- was still dependent on manual processes and reams of paper to administer benefits for over 1,700 employees. According to Jennifer Pagels, Manager of Human Resources for Trek, enrollment forms had to be double and triple copied, manually entered into the company's payroll system, and then faxed or re-entered online for several different vendors. In addition to using up a lot of paper and a lot of time, this manual process left a lot of room for errors -- from delays in employee coverage to premium overpayments.

The company's manual process often resulted in delays of up to six weeks before a new employee was 'active' in the carriers' systems and received insurance cards. With Trek's automated system from bswift, EDI vendor feeds immediately transmit all enrollment and coverage update data to all carriers and employees are active in less than one week. "As an employer that offers benefits from day one, this is a huge step forward," explains Pagels. "Many times, employees had to pay out-of-pocket for their care until the insurance company updated the system and was able to reimburse them."

Although Trek's payroll system provider offered a benefits administration module, Pagels decided to use an outside Software-as-a-Service (SaaS) vendor that specialized in benefits enrollment and administration solutions and provided ongoing service and support. If she had gone with the payroll company's software, Pagels realized that much of the setup, configuration, and ongoing maintenance and troubleshooting of the system would cost her company additional time and expense.

By implementing a Software-as-a-Service (SaaS) solution for benefits enrollment and administration, Trek began to see an immediate impact in the way its HR procedures were handled. No longer inundated with mounds of paper, constant faxing and possible manual errors, the HR staff now has more time to focus on other value-added tasks to support the company's business goals.

Pagels discovered that the new system has also had a positive impact on employee communication and employee satisfaction as well. As a manufacturing company with many satellite locations around the country --some with fewer than 50 employees and no HR support -- the 24/7 ability for all employees to perform enrollments, make changes or view up-to-date benefits information from home, office or production floor kiosks has been a huge improvement.

"The employee self-service system has made it easy for employees to get a snapshot of their current benefits," explains Pagels. "In many cases, our employees had no idea how much coverage they had or who was covered." Employees are also able to see exactly how much Trek contributes to their benefit costs -- an added benefit that only helped to solidify the acceptance of an automated system into the company's culture. "Many of Trek's employees were surprised to see exactly how much Trek contributes to their benefits," says Pagels.

And finally, as a 'paperless,' self-service solution, the new automated system for administering benefits also fits in well with Trek's company culture. It supports Trek's strong "green" initiative by reducing paper usage and it encourages employee ownership by making employees a proactive partner in benefits selection, enrollment and personal information updates. "The system we have chosen is embraced by our culture," adds Pagels. "It really fits in with who we are."

Rich Gallun is CEO of bswift, a Chicago-based company that offers software and services that streamline all aspects of HR, benefits and payroll administration. (www.bswift.com).

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