Affordable Care Act Compliance

Manage your workforce effectively to more successfully execute your strategy

By Liz Moughan, Kronos Incorporated

Sometimes uncertainty causes us to put off things we should do now.

This is true when it comes to retailers and their preparation for complying with the Affordable Care Act (ACA). In fact, 56% of organizations reported that they hesitated to initiate any changes in 2012, preferring instead to wait until the Supreme Court decision and the 2012 elections before they took any major actions.

But now that it is clear that the ACA legislation will continue to move forward, many organizations are scrambling to create effective strategies and update their systems to best comply. At first glance, it seems to be a no-win situation: facing rising costs, retailers are hard pressed to offset them without triggering negative outcomes such as employee turnover, poor customer service, and ultimately, a loss in revenues and profits.

Yet there is good news. By focusing on the workforce – with workforce management technology – retailers can improve efficiencies dramatically that can help with more effective execution of their ACA strategy. They can achieve compliance, minimize the costs associated with the ACA, and even focus on initiatives that can improve their business.

How will you meet the ACA requirements?
As an industry with one of the largest populations of part-time workers, retail stands to be hit the hardest by the changes required by the ACA. Yet as retailers start planning, many of them simply don’t know how to comply, and what the long-term effects will be. Unfortunately, there is no “one-size-fits-all” solution, and employers will have to carefully select a strategy that is right for them.

While there are many choices, most retailers have indicated that they will pursue one of the following three options.

Option 1: “Business as usual”
Some companies will continue to provide healthcare coverage for all of their opt-in, full-time employees. But in doing so, they expect their costs to rise. In fact, recent research found that 40% of retail organizations expect that the ACA will increase their operating costs by at least five percent.

In response, retailers may look to reduce costs – from any source, including labor – but in an industry that has already cut to the bone, more cuts simply might not be possible. They may also consider rising their prices to increase more revenue, yet doing so risks sending customers – and their wallets – to competition.

Option 2: Pay the related penalties for no coverage
Other retailers will choose to not provide coverage and elect to pay the government’s penalties for non-compliance. While it may be true that some organizations may not have to pay as much as they would by providing full coverage, they still have to pay more than they did in the past.

As a result, they also face the challenge of rising costs and potentially even more. For example, by not providing coverage, retailers will inevitably lose some employees who must go elsewhere to get health care benefits. Losing employees doesn’t just affect productivity – as top talent leaves, the company could face decreases in the customer experience, average transaction value, and their overall brand equity.

Option 3: Alter the mix of full time and part-time employees
Finally, many retailers will attempt to alter the mix of full time to part time employees in a manner that produces an acceptable cost profile. The average retail employee works an average of 31.6 , hours today, which could make changing this mix difficult without losing productivity or causing the entire organization to suffer.

Yet retailers should be wary of this strategy, too. In part because it exposes them to the same employee disengagement and turnover issues as described above, but also because of employees’ role in delivering the best customer experience possible.

Today, improving the customer experience is a significant opportunity for retailers. In the customer’s eyes, overall “value” now represents a combination of price and their personal experience while shopping. Research shows that customers are now willing to pay 13% more for a good experience , which explains the recent trends of showrooms and other premium services. Remember that your workforce is largely responsible for delivering this experience, so retailers should make every effort to keep the employees who deliver it best.

Focus on the workforce
No matter which option retailers choose, workforce management technology can help them minimize the costs and deliver better business results. Workforce management can help in the following areas:

  • Time and attendance: By automating time and attendance processes, retailers can reduce labor costs by enforcing pay rules – consistently and accurately – across the entire organization. To help with ACA, time and attendance solutions can help retailers examine past data to determine employees’ full-time or part-time status based on average hours worked per week.
  • Scheduling: Effective scheduling solutions enable managers to create the “best-fit” schedules that align labor with demand while still complying to all applicable regulations. For ACA compliance, scheduling solutions enable retailers to make intelligent scheduling assignments based on their ACA strategy. For example, if the organization is trying to maximize the use of part-time and full-time employees, they can use scheduling to optimize the workforce – both for their business needs as well as to strive to comply with the ACA’s 30-hour threshold.
  • HR and payroll: With HR and payroll solutions, retailers can automate benefits administration and gain real-time insight into employee benefit eligibility, thus improving compliance and reducing financial penalties. These solutions also apply rules, policies, and regulations consistently across the board, simplifying complex processes and helping to ensure compliance with the ACA. HR and payroll solutions can also generate a complete audit trail to provide evidence of compliance efforts.
  • Workforce analytics: The right reporting and analytics tools can help retailers monitor the workforce by analyzing schedules, time records, and benefits enrollments in real time. Additionally, to help determine the right ACA strategy, users can perform “what-if” scenarios to select the right course of action – provide benefits, pay fines, or examine employee hours – going forward.

Transform the ACA challenge into a business opportunity
No matter what strategy retailers select to meet the requirements of the ACA, they will face new costs and other potential business challenges. Yet by focusing on the workforce, and the frontline employees who can actually influence results, retailers can do more than just survive ACA – they can thrive.

Liz Moughan is director of the retail and hospitality practice group, Kronos Inc.


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