by Glenn Tschimpke
Staff Writer
Mention the phrase “employee benefits” in a corporate board room and one is bound to get an array of reactions: expensive, complex, confusing, labor intensive, a competitive requirement. Drop in the word “outsource” and eyebrows begin to raise.
At the intersection of employee benefits and outsourcing resides CitiStreet. Over the last 10 years, the human resources outsourcing company has quietly developed a niche taking on the mammoth task of administering its clients’ employee benefits packages.
“What that means is these companies will come to organizations like CitiStreet and our competitors and they’ll ask us to administer for them their 401k plan or their defined benefit plan or their health and welfare plan or their stock purchase or their stock option plan — the things that you think of as benefits,” explained CitiStreet president James Murphy.
With a client base of corporate heavyweights such as Sears, Boeing, AOL Time Warner and TRW and a total administration of over 6.5 million individual participants, CitiStreet has a big responsibility on its hands. But by assuming the role of benefits manager, CitiStreet frees its clients to focus on their primary business, whether it’s making airplanes, selling stoves or developing Internet service.
CitiStreet takes the burden in stride. After all, it’s what they do. By using economics of scale, they are able to transform their experience and expertise of managing multiple benefits accounts into a cheaper, more efficient service.
“Typically, we can do it with fewer people than the company,” said Murphy. “In the end, once we learn their programs and adapt them to our systems and put their procedures in place, we can deliver them as good or better than the companies themselves.We have the systems, we have the expertise, we have the people and we have procedures down. Companies can look for more consistent delivery of benefit programs. They can look for more cost-effective delivery. They don’t have to maintain systems. There are a lot of regulations that come out surrounding benefits programs, like the government puts new tax laws into place.
“What they can do is reinvest the capital that they would put into those systems and the people and reinvest it back into the company,” he continued. “So the HR organization in the company can be much more strategic as opposed to more tactically-focused in administering the benefits and working with the employees.”
The human resources outsourcing business has been good to CitiStreet. Murphy says the Jacksonville call center plans to add 200 jobs this year to adjust to new clients like the State of Florida and SPX.
Last year, CitiStreet handled 26 million employee contacts between its three offices in Massachusetts, New Jersey and Jacksonville. With 3,000 employees company-wide and nearly 800 in Jacksonville, the phone lines could quickly back up with that level of activity. To streamline its efforts and provide more convenient customer service, the company developed a comprehensive Internet program in addition to its touch-tone telephone system and direct telephone representative presence to help answer benefits questions.
“Eighty-nine percent of those contacts were handled through the Internet and 2.9 million were handled through agent representatives,” explained Murphy.
CitiStreet, co-owned by State Street and Citigroup, is looking to expand on its human resource services in the future. Murphy said the company may eventually expand to offer comprehensive outsourcing services that would cover the gamut of human resources, from hiring, firing and evaluations.
“We are looking at ways to continue expanding into that broader HR outsourcing marketplace,” he said. “We see that as something that’s coming.”