What’s the Color of Your Private Exchange?

Posted by on March 3, 2015 | Be the First to Comment

Posted on behalf of Mike Smith, Director of Exchange Solutions, Lockton Benefit Group

Last Thursday night, my wife asked me a pretty random question. “Hey Smitty (my nickname is so ingrained, even my wife calls me Smitty…), what color is this dress?”  I glanced over at her iPhone and replied, “White and gold…” to which our youngest daughter said, “No it’s not.  It’s black and blue.” Turns out our nieces created a Facebook post asking people about the color of this particular dress.  I dismissed it as some kind of internet hoax right up there with imprisoned foreign ambassadors looking to move vast sums of money to America…if you could only supply your bank info, instant riches await.  Thinking nothing more of it, I went to bed.


Well, the next morning, this “dress controversy” was all over the news, social media and even my morning Boston sports radio program.  It kind of freaked me out when Pam came into my office later in the morning and said, “Now the dress is black and blue!” I still only saw a white and gold dress on her phone.  She was fascinated with this dress sensation and researched what was causing the color to change.  Apparently it depends on the circumstances under which you view the dress, light sources, time of day, media source, height, weight, what you had for breakfast.  But I digress.

And that got me thinking about, of course, private exchanges.

As I meet with clients, Lockton Associates, analysts, competitors and partners across the country, I am inevitably asked, “So, what’s your definition of a private exchange?” And my standard reply is “That depends.” Some define a private exchange as a vibrant marketplace of expanded plans and choices for employees, powered by decision support technology and underlying defined contribution.  Others say it’s a metallic structure of plans (platinum, gold, silver and bronze) from competing carriers, underwritten on a fully insured basis.  Still others say a private exchange is just ben admin on steroids and sometimes “free” with the inclusion of voluntary benefits. What about the inclusion of a public strategy for the non-benefits eligible/seasonal population or retirees, or as an alternative to COBRA? How about mobile and wellness? There are even very liberal (small “L”) interpretations stating that every employer is an exchange unto themselves, since they offer choice (“take it or leave it is still a choice”), some method of decision support (think benefits comparisons), define their contributions through the annual renewal/budget cycles, and administer benefits either manually, outsourced or through some technology combination.

grumpy baby

So who’s right?  Well, that depends.  We have seen clients be successful with a strict defined contribution, broader choice, and powerful decision support.  Sometimes this was due to budget pressures in their business and sometimes it was the desire to get employees more engaged as consumers.  Another client was able to leverage a private exchange through carrier and technology innovations to meet head-on some unique challenges posed by the Affordable Care Act and by such, actually grow their business. Many clients are using an integrated hybrid solution of private and public exchanges to provide a seamless benefits program throughout an employee’s career and in transition to retirement or end of employment.

So the dependency is really what a particular client is looking to accomplish: their HR strategies, their ability to enable that strategy and what is holding them back.  There is no one-size-fits-all for clients. Employers often look to provide financial/physical stability for their employees and their families, as well as look to be efficient and productive as businesses. Benefits help with these goals. And sometimes private exchanges can help employers meet these goals. But there is more than one way to accomplish these objectives. I applaud our partners and even competitors who are building and innovating in this arena — but for Lockton, we will always think about the client first, rather than our internal business needs, products, investments, investors or shareholders. Being privately held has its advantages.

We consult with clients in the emerging private exchange market space through education, analysis, vetting and then implementation.  Some clients look to turn-key solutions (including competitors’), others to our preferred partners, and still others implement a solution customized to the needs of their businesses and employees.  We demand transparency, disclosure and a spirit of partnership in these exchange solutions.  Clients still have many responsibilities (fiduciary, compliance, payroll, etc.) even after going with a private exchange.  As the exchange market grows, we see the need for independent advice growing in an era of product/solution-based sales pitches, presentations, webcasts and news releases.

Many people are confused by the various approaches.  I think the right answer is dependent upon returning to the questions stemming from employers’ HR strategies, goals and objectives, balanced against other (sometimes competing) business requirements.  In my opinion, brokers and consultants investing in their capacity to provide advice to map these strategies, goals and objectives to actionable solutions will see opportunities in this emerging market.  And all of that depends on where they are investing for the future.

By the way, the dress is still white and gold.

Position Control 101

Posted by on February 26, 2015 | Be the First to Comment

Imagine you are headed to a baseball game on a warm, sunny spring day. You approach your city’s stadium with your ticket in hand, showing exactly what section and seat you’ve purchased.  You have no trouble entering the stadium and finding your particular seat.  You may have brought a seat cushion to alter your seat to be more comfortable, but the basic characteristics of the seat (fold-down, red, hard plastic) are the same no matter who sits in it.  After the game, you leave the seat as-is for the next person attending the next game.  If a person doesn’t have a ticket for the baseball game, they will not be allowed into the stadium until a ticket agent confirms that a seat is open and the fan has purchased it.

stadium seats

Position control is a lot like that stadium and seat.  It’s a method of setting up seats (positions) in a stadium (your company) that have specific characteristics like hard plastic (HR division), red (job title), and fold-down (salary range).  In a position control system, each position has its own unique position number or ID and is separate from those employees currently holding that position.  In most cases, a seat (position) has to exist before a person can be brought into the organization.

Information about the position is stored separately from any employee information to allow for ease of movement.  One of the most important reasons a company will implement position control is to be able to strictly manage the organization structure, including financial budgeting and headcount.  Because the position structure is set up one time (and then updated with additional positions as they are approved), a company can more easily track exactly how many current employees and new hires there should be in a given fiscal year.  The alternative to a position control system would be a job-based system, which tracks only the people in the jobs.

Position control systems work best for organizations that are fairly static, where jobs and job descriptions are mostly fixed, the organization is hierarchically structured, and budget by position and FTE often well in advance of filling positions.  A prime example of a business type that uses position control is the hospital industry.

Below are some of the advantages and disadvantages of using a position control method or system.


  • Consistency in application of job information
  • Allows control and management of the budget
  • Reduces risk of legal exposure due to inconsistent application of job information
  • Job association to position allows organizations to run reports and analytics around position categories for workforce planning
  • Job association to position reduces the risk of missing key positions in reporting
  • Mass changes to employees’ positions (i.e., multiple people in one position) can be done fairly easily
  • Allows more accurate reporting and provides better management information about the positions and vacancies in the organization
  • Forces a discipline around the process of creating a position; ensures that all of the approvals and information are collected before entering a person onto the system or moving an employee to a position
  • When a new employee is hired and position management has been set up, only the employee data and the position number that the person will hold needs to be entered


  • May stifle operating approach if the organization is unstructured and / or continually creating new roles
  • May be viewed as non-value-adding by line managers
  • Requires a high level of acceptance and commitment to processes from HR and line management
  • If it is not managed well, it will hamper effectiveness of HR and cause loss of respect and trust from managers
  • Anomalies at the position or employee level can become difficult to manage if they are numerous
  • Matrix supervision cannot be managed with position management; if a supervisor needs to manage people outside of the positions they are designated on, it is a security change
  • Position creep is common:  positions approved and created to ‘get someone in’ and clean-up of the old / inactive position is delayed
  • Position management is complicated and few HR software packages have it;  those that have it don’t necessarily do it well—there is often a disconnect between recruiting and position management
  • Organizations must determine how employees on LTD, employees in transition out of the organization, or non-employees will be managed. Should they have a different position?

Position control is a functionality available with many HR, Payroll technology vendors.  Prior to determining that a position control system is needed, it’s a good idea to have a dialog with the appropriate parties in finance, payroll, and HR to discuss the system objectives.  If a position control system is desired, it’s helpful to see demonstrations of position control functionality or speak with vendors whose systems have it.  It takes some work, but if you do the research and understand the concept, implementation will go much smoother.

How do you currently track information in your organization? Do you have any experience with position control?

Tips for Purchasing New Technology

Posted by on February 24, 2015 | Be the First to Comment

Purchasing Tips Whitepaper

If your company is in need of new technology for HR, payroll, benefits administration, or time and attendance tracking, you’ll want to check out the newest whitepaper from Lockton Benefit Group’s HR Technology and Outsourcing Practice. Here’s a sneak peak!

Purchasing any new HR technology system is a big decision for your company. From the cost and available resources to system fit, there are a lot of considerations. Here are a few tips:

  • Do your homework.
  • Set expectations.
  • Designate a project owner.
  • Be flexible.
  • Have a plan.

Check out the full whitepaper here on Lockton.com.



IRS Releases Final ACA Reporting Forms

Posted by on February 12, 2015 | Be the First to Comment

A lot has been going on the past few weeks: the Anthem data breach followed by the phishing scam of those same victims and then the IRS delivered the final instructions for ACA reporting forms. If you weren’t aware of the employer requirements for the Affordable Care Act, the release of the final reporting forms confirms that employers will be required to collect a massive amount of data.

For employers, the IRS released the final versions of Forms 1094-C and 1095-C and instructions for completing them. For insurers, the IRS also released final versions of Forms 1094-B and 1095-B with instructions to report minimum essential coverage.

What does this mean for employers?

Employers should start talking with their HRIS vendors now to determine what data is already being collected or if they will need to seek out an ACA technology system to facilitate the collection of the data required for the 1094-C and 1095-C forms.


In our experience, each HRIS vendor may have some capabilities to help their clients with ACA compliance.  However, not many vendors can help support a client with all of the required areas of compliance.  In addition, each employer must find out if they are capturing the required information, (i.e., Offer of Coverage Codes, Safe Harbor Codes, names and social security numbers for each covered individual, leave/absence management information, etc.) which is not likely captured in current technology solutions.  Employers must find out if this data will need to be manually entered into a system, form, or software, how they will do this, and how they will ensure the integrity of this data.

The HR Technology & Outsourcing Practice has outlined a list of questions each employer should be asking their current HR technology vendors with regards to their readiness to aggregate the information required to populate and distribute the forms, as well as help with other areas of ACA compliance. Depending upon their response, a stand-alone ACA tracking solution may serve a client well.

Questions each Employer should ask their current HRIS Vendors
How can you help me with ACA compliance related to:

  1. Hours tracking and measurement?
  2. Determination of eligible employees?
  3. Initial Notice of Exchange?
  4. Affordability?
  5. How are you ensuring I am capturing required data?
  6. Aggregating data from my disparate HRIS systems (HR, Payroll, Benefits Administration and Leave Administration)?
  7. Populating the required IRS forms?
  8. Distributing forms?
  9. Exchange Notification log and response?
  10. Storing aggregated data for seven years?
  11.  Audit reconciliation?
  12. Mechanics:  Are you pulling data from my other vendors or am I sending to it you? Is data pushed to me or am I running reports? Am I sending the forms or are you?

How do you feel about the final forms release? How do you feel about the reporting requirements? If you have any questions about ACA reporting requirements and how technology can help, let us know!

And Another Data Breach

Posted by on February 5, 2015 | Be the First to Comment

Health Insurer Anthem Reports Massive Data Breach

The nation’s second largest health insurers, Anthem Inc., is the lastest to fall victim to hackers. Anthem reports that as many as 80 million current and former customers have had their account information stolen in a breach last week. Information such as names, birthdays, Social Security numbers, addresses, e-mail addresses, medical IDs, and employment data were affected; however, no medical or credit card information was taken. (Read CEO Joseph Swedish’s statement here.)

anthemAnthem is currently working with the FBI and Mandiant, the computer security company hired to evaluate Anthem systems, to further investigate the issue. This hack is ”the largest health care breach to date,” said Vitor De Souza, a spokesman for Mandiant.

The breach does not come under HIPAA rules because no actual medical information appears to have been stolen.  (HIPAA stands for Health Insurance Portability and Accountability Act, which was created in 1996 and governs the confidentiality and security of medical information.)

Anthem has said it will notify – by mail and, where possible, email – everyone whose personal information was stored on the compromised database.

We’ve talked about how important system security is before and even predicted that there would be more data breaches this year. Remember, it’s not if, but when, you will be hacked. What are you doing to prepare and protect your personal information? How have you been affected by this latest breach?

How the Future of HR Technology Buying is Changing

Posted by on January 27, 2015 | Be the First to Comment

Last week, our team had the opportunity to gather together during our semi-annual confab. It was a long, but fun and educational week. In between our BBQ binges and Whirly Ball tournaments we had the opportunity to discuss some of the HR Technology trends and vendors with an industry friend, Rhonda Marcucci. Rhonda heads up Gruppo Marcucci, a consulting firm out of Chicago. Our discussions had me thinking a lot about where this industry is heading from both the vendor and consultant sides, but also the employer/consumer side.

lincolnWith today’s technology advances and the trend toward “digital”, the buying experience is changing. Buyers have so much more information so easily available to them. With the click of a button, thousands of pieces of data are at your fingertips. With all of that information, it makes sense that consumers now use on average 28 different vehicles to research their large purchases. For instance, search “Benefits Administration” on Google and you get about 45,800,000 results! I’m sure you’ve heard the saying “quality over quantity” before. The same applies to this excess of information. Yes, just because you read it on the internet, doesn’t mean it is fact.

For example, a few years ago we had a client that sent our their own RFP for a benefits administration system and requested printed materials. They went into a bit of shock when they received huge boxes of brochures and binders. How could they possibly get through all of that data and still manage to do their day job? They would be responsible for all that data in making the right decision. And that’s when they called us…

temple inland

The commercial vendors must be able to make their websites engaging. In order to stand out from all of the other competition (and there is a lot in the tech space due to the low entry barrier), your website should have a slick looking, personalized interface consumers can interact with.  The battle is between the tension to engagingly provide information about value proposition, while at the same time protect the secret sauce that gives them a competitive edge. The desire for engagement goes beyond just the website though. Consumers are demanding that engagement throughout the usage of the product.

In companies, most large purchasing decisions are made by teams, which means tech companies have to appeal to more than one person within a consuming company. And while appealing to a group, they also have to note that there are many other vendors that offer a very similar service offering. What makes them stand out from those other vendors? It comes down to a culture fit. We have been seeing this trend a lot lately too: the final decision for a new HR Tech vendor coming down to two comparable vendors and the deciding factor ends up being the culture match of the vendor and the client.

What are you noticing as a buyer or seller of technology? Are there any other trends you’ve noticed?


6 Keys to Preventing or Resolving Implementation Drama

Posted by on January 21, 2015 | Be the First to Comment

The grass isn’t always greener on the other side.

Recently, my team has been brought in on a few implementations that haven’t gone quite as expected. I understand that sometimes you might do everything right leading up to the implementation and still have some issues during the actual implementation. (Let’s be real, there has never been a perfect implementation. Something will go wrong!) But the degree of your issues might determine the success of the implementation and the use of your system from here on out. Throughout the implementation rescues, I have noticed a few things that potentially could have helped things from going sour.

How to prevent an implementation from going sour:

1.  Set expectations upfront

Make sure both you and your vendor agree on the terms of the implementation. This should include timelines, quality, and task responsibilities. Predict and plan for what will happen if (when?!?) things go wrong. What are the escalation paths?

Create Service Level Agreements (SLAs) can help keep vendors on the right track. We believe a vendor that’s unwilling to put themselves financially at risk (in a material way relative to the employer’s contract value) is not being a true partner.

2.  Make sure you’ve done your prep work

This includes having an assigned Project Lead and clean data to transfer. Implementations take some prep work ahead of time. Too often we see the momentum of a partnering decision waylaid by bad data and the extra delays the cleanup effort will require.

This also includes knowing the vendor you’ve just decided to partner up with. Are they new and less experienced with implementations? Is there a chance they might get bought out?

3. Have an escalation plan

Just in case you aren’t getting the service you need, you should know who to contact to get things back on the right track. Your vendor team should be able to provide this info for you.

Be sure to tie this to position and not just someone’s name. Turnover is a natural part of business and if your vendor’s staff is any good, they’ll have opportunities to climb the ladder or leave before your contract is complete.


What to do when an implementation starts to go sour:

1. Contact your service rep

Using your escalation plan, start with the person closest to your implementation, which most times is you client service representative or manager. If they are unwilling or unable to help, move up that chain until you can get someone to acknowledge and take care of your issue.

If you haven’t already done so, start asking around at industry events or every time you meet with your broker or consultant to find other employers using the same solution and/or vendor. Find out from those employers who their go-to person is. Often the maxim of “if you want something done, assign it to an already-busy person” carries over to the HR Technology space. Good representatives are important to identify ahead of time. Then you already have an introduction in place for when things get rough.

2. Be open to flexibility

We recently heard a vendor say that they “have never missed an OE date.” At first you might think this is a great thing, but for the client we were working with, it raised a red flag for us. Sometimes things get complicated and it is better to miss your goal OE date than have it up and running for that date, but unusable, glitchy, or error-laden for your employees.

3. Call Lockton

Ok, I am kind of kidding with this one. But know that we can help. Unfortunately, we have seen a lot of vendors mess up during implementation. Fortunately for you, we are well prepared to turn those implementations gone South right around.

Have you had a less than ideal implementation? How did you get it back on track? We’d love to hear more (war) stories. Share by commenting below. May the odds be ever in your (implementation) favor!

What’s Ahead?

Posted by on January 8, 2015 | Be the First to Comment

Wow, we are already a week into 2015 and I still don’t have a hover board! In all seriousness, I think 2015 will be a big year for technology advances. Since there are way too many areas of technology trends to discuss on this blog, I’ll focus on my favorite area…you guessed it! HR Technology! But before I get too far into what to expect for 2015, let’s quickly recap 2014.

For us, 2014 was the year of ACA technology. The demand for this new area of measurement and reporting sent a lot of clients our way. (So much so we’ve got a whitepaper on the way! Stay tuned.) I don’t blame them either. With the delays and the lack of requirements information regarding the Affordable Care Act, it’s easy to be confused. If it wasn’t for my team, who actively research the laws and requirements and seek out vendors, I probably wouldn’t be able to keep up! But, at the end of the day, ACA is here and employers need to have something in place to measure, track, and report their workforce and benefit offerings.  2014 brought to light several new vendors on the scene, existing vendors that are promising but not delivering, and a few existing vendors that increased or improved their functionality offerings.

Other noteworthy HR Tech happenings of 2014 would include:

  • The trend towards social and mobile
  • Mergers and Acquisitions (Aetna and bswift, Cornerstone OnDemand and Evolv, SAP and Concur Technologies, LinkedIn and Newsle, and the list goes on!)
  • Vendors going IPO (Tri-Net, CastLight Health, Paycom)
  • Talent Management taking center stage at the HR Technology Conference and Expo
  • Technology vendors taking over BOR responsibilities (Zenefits, Paychex, Paycom)

And now, let me pull out my crystal ball and let’s take a look into the year ahead!

  • Cyber security – as was seen in 2014, I think our data and systems have become more vulnerable. It’s not a matter of if, but when, you will be hacked. I think 2015 will bring more security breaches and in causation require us to look at our security standards.  Will cyber security insurance become a thing? If so, who will be responsible- employers or vendors?happy-new-year-2015-wishes
  • More M&A – the HR Technology landscape has been one big, ongoing development. Because the barriers of entry are so low, new vendors pop up left and right and just as quickly become acquired by the big guys. I think this trend will continue. I would even go so far as to say that carriers, too, will now be playing in the game of HR Tech Monopoly (as we saw with Aetna’s acquisition of bswift).
  • Still social – 2014 promoted social media and HR Technology integration. I think 2015 will take that integration one step farther.
  • Wellness integration – fitbits and other wearables have become a huge sensation in the U.S., especially for those involved in wellness programs. I think this industry will continue to grow and find new ways to integrate your daily activities to your wellness initiatives. (Hello Platinum Status!) I’m interested to see the data from these wearable and wellness program participants to the actual usage of benefits.
  • Get engaged – I’ve been hearing a lot of buzz around “employee engagement” lately. As the buzz continues, I think we will see more technologies try to address the issue. Employee engagement is important for attracting and retaining top talent in an organization and I think a lot of companies would buy into a technology that can improve their engagement. (Tinypulse, Kudos, Gratzi, Achievers, etc.)

Although, most of these predictions are completely out of left field, I’m curious as to what you guys think? Am I way off, or right on target?

Lockton Spreading Holiday Cheer

Posted by on December 22, 2014 | Be the First to Comment

I have to say, there are many reasons I love working at Lockton. Though hands down my favorite part is the people! There are so many great people working at Lockton. If you don’t believe me, take a look at this year’s collection pile for the Salvation Army’s Angel Tree program. Lockton Associates could volunteer to adopt children off of the Angel Tree and buy presents for them. Each child’s presents were to be placed in a trash bag and dropped off in an empty office. As you can see, there was a lot of generosity spilling out of that room! I love that as a company, we can come together to help out our community! Lockton’s We Live Service motto goes beyond helping our clients, but extends to the communities in which we reside.

Angel Tree 3

Angel Tree 2

Speaking of great people, the entire HR Technology and Outsourcing Practice was in town last week for our holiday party. It was so great to spend time with those members of the team who represent our practice all across the country!

Team pic

On behalf of the Lockton HR Technology and Outsourcing Practice, Merry Christmas and Happy New Years to you and yours!

NexGen Cloud Conference Recap (Part 2)

Posted by on December 17, 2014 | Be the First to Comment

In case you missed the first part of Brad’s conference recap from the NexGen Cloud Conference he attended, you can read it here.  As promised, here is the rest of the recap. (And yes, it is just as geeky as the first installment.)

What if, as humans, we could process information as IBM’s Watson does? It was proposed that within 15 years we’ll be able to link the human neocortex to the cloud to access thousands of documents and pages of data within seconds.

Google engineers have been busy; Rather than just a key word search, they are working towards understanding the meaning of documents and not just the words. Google will remember that you searched on a specific topic a week ago and will notify you that new information on that same topic was just released three seconds ago and provide you with the link.

nexgen 2

It has been suggested that Google glasses will be able to link to facial recognition technology: it will scan someone’s face as they are waking towards you and within seconds ping their Facebook, Instagram, Pinterest, etc., profiles and provide you with everything about them ─ including what they had for lunch, what they did over the weekend and the funny (?) video of their kid trying to sing Christmas carols ─ before they’re even close enough to say hello.

Google’s purchase of Nest was not because they want to be in the air conditioning business, but rather to track utilization and tendencies of heating or cooling your home, then sell it back to the utility companies. It was suggested GE would like to put microchips in washing machines to report how much laundry you do, how much soap you use, and if you fill the machine too full. What is you smart refrigerator reporting back to Samsung? Disney is redefining their process through the wristbands used to track purchases and movement throughout their theme parks. Phillips redesigned and digitalized the light bulb and are creating new revenue streams.  Every company is becoming an IT company.

nexgen 1By 2020, more than 50 percent of domestic smart objects will be able to communicate directly or indirectly with a smartphone. For instance, I can open my garage door with my smartphone. In a Japanese train station, there is a mural with images of food and grocery items. With a smart phone, people can scan the items they want, and the items will be waiting for them when they arrive at the grocery store at the next train stop. Sure it’s convenient and easy for the shoppers, but the store can now track what you purchase, how often, what day of the week, seasonal purchases, and ultimately, advertise to you accordingly. Some department stores in the U.S. have transmitters to alert shoppers of discounts as they approach that specific section of the store. Could the day come when the department store reminds me of my wife’s birthday (not like I need that…), the styles she is most interested in based upon past purchases, and of course, the right size. (Am I right, fellas?)

It appears Locutus of Borg was right. (Well, ok, so maybe my inner geek is showing.)

What do you think about the direction technology is headed? Cool or scary? Share your thoughts below!