The Cost of Reduced Hours
This article accompanies The Challenge of Obamacare.
Nearly half of U.S. employers (45 percent) are considering making changes to their total-rewards programs or workforce strategies as a result of the Affordable Care Act, according to a survey of 113 companies by Towers Watson released this summer.
However, most say they are not planning to make changes that could negatively affect a large proportion of their workforces, such as discontinuing coverage, switching full-timers to part-time status or increasing their use of contract workers, according to the survey.
Those sorts of moves could prove short-sighted, says Chris Ryan, vice president of Roseland, N.J.-based ADP's Strategic Advisory Services.
Although companies that have vowed to reduce their employees' work hours have attracted the most media attention, he says, other companies are refining their approach by, for example, offering top-performing part-timers the chance to buy into healthcare benefits in order to attract the best of the best. Firms that focus on reducing the hours of their part-timers or switching to contractors may find their costs going up in other ways, says Ryan, in areas such as hiring, turnover and administration. They may also pay in less-quantifiable ways, including a loss of esprit de corps.
"In a service-based economy, the quality of customer experience is crucial," he says. "When we sit down with clients to talk about the ACA, the CEO is often in the room along with the CHRO, and the topics that come up include whether the potential changes they make will affect the quality of the customer experience."
Some companies see it as an opportunity to build competitive advantage in their sector by making themselves more attractive to skilled part-timers, he says.
"They say 'OK, we've got to deal with these extra costs, but so do our competitors, so how do we do this better so we succeed with our customers?' " says Ryan.