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OPERATIONS

Techniques: Microcases
 

How three companies solved problems with technology. Topics include administering benefits, bad debts and late payments, and inefficient employee scheduling.
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Human Resources
A Line on Benefits

  • Problem: Administering benefits to a far-flung workforce
  • Solution: Internet-based benefits-administration service
  • Payoff: Streamlined record keeping; time and money saved

Eligibility for benefits. up-to-date census information. Emergency contacts. Beneficiary information. Chris Fletcher, managing partner at Tri-City Benefits, an insurance broker in Hauppauge, N.Y., is the first to admit that managing the daily details of a company's human resources is a huge hassle. "If you look at most HR offices, you'll see files and files full of paper," he says.

Administering Tri-City's benefits is further complicated by the fact that the company is just one division of San Francisco-based Tri-City Insurance Brokers, a $35-million independent insurance wholesaler and distributor, with 200 employees scattered in eight offices across the United States. Keeping information current in one office is difficult and costly enough; administering the benefits of employees in eight far-flung locations can be mind-boggling. As Fletcher says, "There's money to be saved by tightening up this eligibility management."

Fortunately, last summer Fletcher heard about a new Internet-based benefits-management system that sounded perfect for Tri-City Insurance. Benefits Management Network (from Employease, 1-888-EASENET; $1 to $4 per employee, depending on company size) is an on-line business tool designed to simplify the often unruly process of administering employee benefits by having all the information in one place, in a system that largely keeps track of itself.

To get started, the insurance wholesaler supplied Employease with basic employee census information (in this case, in the form of an Excel spreadsheet), which Employease then up-loaded into its own system and used to tailor-make a password-protected area for Tri-City Insurance on Employease's Web site. Now, whenever Tri-City's HR manager, Nanci Severietti-Boyd, has a benefits matter to take care of, she clicks on the customer area of the Employease Web site (the system requires Netscape 3.0 as well as a modem of at least 28.8 Kb), connects with Tri-City's page, and makes the necessary adjustments. Time to initiate benefits coverage for a new employee? Once Severietti-Boyd keys in the new hire's information, the Benefits Management Network "remembers" to start coverage (and billing) as soon as the new employee is eligible. In addition to complete census information (including salary, smoker or nonsmoker status, and number of dependents), the service tracks the details of each employee's benefits, including medical and dental insurance, long-term disability insurance, life insurance, and 401(k) contributions. "For the first time we're able to maintain an instantaneous record and database on all our employees," notes Fletcher.

The system costs Tri-City Insurance approximately $6,000 a year. It's too early to tell how much money it has saved the firm, but Fletcher notes that it is already saving Severietti-Boyd up to 20 hours a month of paper pushing. "We're now better managers of our time and dollars," observes Fletcher. "Employease is one of our weapons to tighten up efficiencies in an inefficient market." --Alessandra Bianchi


Credit Management
Risky Business

  • Problem: Bad debts, late payments
  • Solution: Credit manager on a disk
  • Payoff: Minimal exposure to high-risk accounts

When Richard Pollock bought International Neon Products, in 1995, he knew the previous owner of the Chicago sign-supply distributor had lost several hundred thousand dollars to bad debt. But Pollock, who in previous jobs had helped automate giant retailers like Staples, was confident modern technology could turn the unprofitable 50-year-old company around.

Distribution software helped resolve some of Pollock's inventory-management problems, but the company still faced bad-debt and collection issues. With 11 employees and approximately $3.5 million in revenues, International Neon was too small to have a full-time credit manager. Instead its accounting staff had to call references and banks and do background checks on potential customers. The process was both time-consuming and unreliable.

Pollock knew from other jobs that gathering credit information on large companies is relatively easy because most of them are public. But International Neon's customers--sign makers throughout the Midwest--typically are small and privately held. Even when credit reports are available for them, they can cost as much as $75 a pop. Wasn't there a cheaper way to gather timely credit information?

Just when Pollock was ready to give up, he heard about Risk Assessment Manager (RAM) from Dun & Bradstreet. RAM is a software program/service that makes credit decisions based on D&B data and industry-specific criteria selected by the user (800-234-3867; $5,000 for one workstation, with discounts for additional copies ranging from 5% to 25%, depending on volume). Once the software is loaded, users access a D&B service via modem that, within minutes, can perform due diligence on thousands of accounts and approve, deny, or limit credit depending on the risk associated with each. It can also monitor high-risk accounts by keeping track of both their credit score (which measures the likelihood of their paying their bills on time) and their financial-stress score (which measures the likelihood of their going bankrupt).

Looking up credit information on International Neon's 500 accounts is now simply a matter of dialing into the D&B system and keying in a company by name, address, or phone number or, if Pollock remembers it, its D&B number. RAM then supplies such information as the firm's D&B rating, SIC code, PAYDEX score, and any public-record data (like suits and liens). "The real bonus," notes Pollock, "is that after an account is established, RAM keeps track and tells me whether my customer has gotten stronger or weaker."

Pollock pays an additional $3,250 annually (or $6.50 per account on 500 accounts) to have his information updated quarterly (right now, on disks; soon, directly via modem). Even with this additional charge, Pollock estimates it costs him only about $20 each time he does a credit check on an account. "It really pays for itself," says Pollock, who credits RAM with bringing International Neon into the black in less than two years and enabling him to stay "well under" his goal of limiting the company's bad debt to 0.2% of sales. -- A.B.


Scheduling
At Your Service

  • Problem: Error-ridden employee scheduling
  • Solution: Software that automates off-site service businesses
  • Payoff: Soaring revenues, 60% time savings, and a paperless office

I was having a nightmare of a time. I'd write something down on a piece of paper--'Pay Nancy for one hour of office work,' for example--and the paper would get lost."

General manager Julianne Lewis is remembering what life was like for her at MaidPro, a residential-cleaning service based in Boston, before a software program called ServiceWorks (from Insight Direct, 800-471-4200; $1,495 for use on one computer, $2,295 for five users on a network) came to her rescue. At the time Lewis had 22 employees. Keeping track manually of their jobs was confusing at best. On top of that, she had to juggle everything else: payroll, billing, accounts receivable, and more. Lewis is embarrassed to admit that she lost "a good $500 a month" because of errors and inefficiencies.

It's not that she hadn't tried to automate the business. She had--four times. But she just couldn't puzzle out the software. "I was computer-illiterate and scared," recalls Lewis. Then Insight Direct, a developer of integrated scheduling software for service industries, cold-called her and asked if MaidPro would be a test case for a comprehensive system tailored to its needs. Lewis jumped at the offer. "I was in such bad shape, I would have tried anything," she concedes.

ServiceWorks wraps accounting, contact-management, and scheduling software in one package. Now everything Lewis needs to keep track of--payments, client and employee histories, accounts receivable, customer forms, even her marketing efforts--is located in one place. And because all the applications are integrated, she has to input the information only once. When new clients call, Lewis immediately types in their name, address, phone number, the type of service they want, and payment method, and then uses the contact manager in the system to assign one of her employees to the new job.

Since Lewis began using Service-Works about a year ago, MaidPro's revenues have soared, to approximately $1 million, and the company has opened six new branches, bringing the total number of employees to 100. The system has also freed up as much as 60% of the time Lewis used to devote to paperwork. "I really believe this has made a major difference in my business," she says. --A.B.

Last updated: Dec 15, 1997




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