Plan Sponsors Could Consider a Different Solution to Provider Woes

If benefit plan participants are dissatisfied, the sponsor often has a good—and overlooked—option, experts say.

Occasional employee complaints about a benefit plan are inevitable. But when they become a regular occurrence, it can point to more significant problems and cause turmoil throughout the organization. Things can become particularly uncomfortable when participants voice their issues to the company’s top executives. Emotions flare. The pressure builds. Something has to be done. But the question is, what?

Symptoms vs. root cause

When a plan sponsor faces a labor-intensive and time-consuming problem, the natural response is to seek the most expedient solution—and often, what feels most expedient is to move on to a new provider. But we know from experience that new providers always come with their own issues, which may be just as bad or even worse. Moreover, the desire for immediate relief can lead plan sponsors and providers to make business decisions based on emotion rather than seeking the facts that will point to the problem’s root cause(s).

What to do?

Companies that find themselves at such a juncture have a few options. One is to continue being saddled with an unproductive relationship and enduring the noise and high cost of dissatisfied employees.

Another is to invoke the breach-of-contract clause and attempt to exit the contract early. This one always sounds good on paper but in practice rarely works. Over several decades of running outsourcing operations and consulting with firms large and small, we’ve seen some ugly relationships—but never has a client followed through on invoking the breach clause. Proving fault is a tall order, and each side of the relationship usually has strong arguments about the other party’s culpability.

A third option is to continue until the end of the contract while embarking on a quest for a new provider, which typically involves issuing a request for proposals (RFP) and planning for another integration. This approach carries its own challenges, not least of which is the cost and risk of establishing a relationship with an entirely new provider. These are typically massive and costly implementation projects that are resource-intensive and can take a year or more to complete. There’s no guarantee the situation will improve after such a project. As we said above, it could, in fact, get worse.

An alternative option: provider recovery

A fourth option, which we call “provider recovery,” is one that is often overlooked—but salvaging the relationship is entirely feasible and often the least time-consuming, and least expensive, path to take.

The premise is that the two parties entered the relationship for good reason, and abandoning the investment to start from scratch with a relatively unknown provider could create bigger problems. As they say, the devil you know is better than the one you don’t. Moreover, the plan sponsor is often partly responsible for the challenges in a provider relationship, in which case moving on to a new provider will not help. For these reasons, we advise plan sponsors experiencing challenges with their vendors to consider working on the relationship before choosing a riskier or more expensive option.

In a typical provider recovery project, both sides agree to allow a third party to examine the following aspects of the sponsor-provider relationship:

Management perspective – Interview senior leaders and staff from both the plan sponsor and provider teams in order to identify all known problems from both viewpoints.

Processes – Examine workflows and drill into procedures to reveal process errors that can be re-engineered for efficiency and improvement.

Specifications – Thoroughly review plan documents and administrative processes to ensure the plan setup is correct and reflects the most current version of the plan documents.

Systems – Perform audits to find errors that might result in compliance issues, financial complications and/or dissatisfaction for all parties.

Personnel – Evaluate the quality and capabilities of provider staff to identify individuals who are part of the problem and could be replaced with more acceptable staff.

Data – Check to see if data issues stem from the plan sponsor and/or if they are being introduced into the data after it reaches the provider.

Call centers – Review how calls are handled by listening to real calls and analyzing them to see if incorrect information is being provided or the service could be improved.

It’s a complex and multifaceted process—like the provider relationship itself—but it’s the only reliable way we have found to drill down beneath the symptoms, determine root causes and resolve them.

Persistence pays

In a case with one of our clients, an extended period of quality issues and mistakes on both the plan sponsor’s and provider’s part had led communications between the two to deteriorate sharply, to the point where the organizations were not speaking to each other and the relationship was on the verge of collapse.

By applying a provider recovery approach, we were able to uncover numerous issues on both sides of the relationship. We worked with the client and provider to develop an action plan that addressed the issues we had identified in the areas of specifications, systems, processes, personnel, training, executive communications and employee communications.

As the action plan was instituted, we began tracking and measuring results to verify that these corrective actions were truly effective. Finally, we developed and implemented a concrete measurement process so the client could evaluate ongoing performance in an unemotional, data-based way.

With a new framework in place, vendor performance improved, and lines of communication reopened between the senior management of both companies, reducing the significant emotions that had become prevalent in both environments. Metrics were put in place to measure true performance, allowing objective tracking of program outcomes and preventing emotional responses.

As a result, employee complaints dropped to a negligible level and employee satisfaction increased dramatically. Further, the process served not just our client but the vendor as well, which could now break out of being a commodity provider and make strategic suggestions to the client. Today, the client views the vendor as a key partner.

Could provider recovery be an option?

If your company is facing challenges with any type of benefits provider—defined contribution (DC) plan, defined benefit (DB) plan, health benefit, etc.—provider recovery is worth considering. By carefully examining the relationship from all sides, a plan sponsor can learn where the current process can be improved and how to avoid facing the same challenges with a new provider. This can present a significant cost savings compared with embarking on a new provider search.   

For more information, contact Andy Adams and Jay Schmitt at

Andy Adams and Jay Schmitt are principals of Strategic Benefits Advisors, an independent, full-service employee benefits consulting firm focused on solving complex benefits issues for its clients, whose workforce size has ranged from 500 to over 250,000 employees. Andy and Jay have more than 55 years’ combined experience in benefit plan administration and consulting.


This feature is to provide general information only, does not constitute legal or tax advice, and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of Strategic Insight or its affiliates.