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Cost Reduction Guide Issue 4 Professional Services

Cost Reduction Guide Issue 4 Professional Services






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    Cost Reduction Guide Issue 4 Professional Services Cost Reduction Guide Issue 4 Professional Services Document Transcript

    • Is your business costing you? find extra profit A guide to maximising value from financial services providers Issue 4: Professional Services, Insurance and Employee benefits Expense Reduction Analysts
    • Introduction Few companies these days have the resources or expertise to manage all of their business functions in-house. We all depend on a range of outsourced professional advisors and service providers to maintain the vital processes, especially finance-related, which underpin the operation and staffing of our organisations. But all this professional advice comes at a It includes tips and advice on the cost and, as with every other cost base following areas: within your business, it may be larger than you think and larger than it needs to be. • Professional advisors – why an open and honest relationship between client and This guide - the fourth in our series looking advisor will deliver value at different areas of cost reduction - aims to provide a range of practical advice and • Insurance – as well as a competitive examples from experts in the financial premium, how do you negotiate the services field to help ensure your business is complex broking market to ensure you’re managing its costs effectively and efficiently. receiving the right levels of cover and service too? • Employee benefits – is your current package an effective tool for motivating and retaining key staff? 02 Introduction
    • Insurance A successful programme is about far more than just a competitive premium, how do you negotiate the complex broking market to ensure you’re receiving the right levels of cover and service too? The insurance market is a complex one, often built on entrenched personal relationships. This means that the sort of competitive pitch or price comparison exercise that you might carry out when purchasing certain types of product or service simply don’t work where insurance is concerned. 1 Avoid the ‘incumbency’ factor 2 Don’t confuse the market If your broker has successfully retained your Whilst inviting a number of brokers to look business without major changes to the at your business might seem the logical programme over a number of years, there response to point one above, in reality this may be a reluctance to change the status quo strategy risks restricting the quality of for fear of admitting there were gaps or responses you receive as insurers, faced with deficiencies in the existing cover. This can similar – but not identical – presentations obviously lead to a lack of innovation with supplied by competing brokers may simply the result that you may not be purchasing decline to quote for your business at all. the most appropriate and up-to-date cover the market currently has to offer. Further, if your incumbent broker feels threatened by the competition, it may simply prevent others from accessing the market by “Expense Reduction Analysts saved approaching as many insurers as possible. It us time and money and provided the is a quirk of the insurance industry that, once totally objective confirmation that an insurer has quoted on a particular piece of our cover and programme were in business, it is then obliged to offer the same order that we were seeking.” quotation to all other presentations of the Purchasing Manager, Tower Hamlets College same case. Insurance 03
    • Insurance Furthermore, says Expense Reduction Analysts Insurance consultant, Scott Ingham, market rates for certain classes of insurance have been falling for some years now, so it has been relatively easy for insurance brokers to offer attractive premiums which may disguise the actual value of the overall package of price, cover and service you’re receiving. Scott explains the reasons why the only real way to benchmark your insurance arrangements, is to use an independent assessor which is neither a broker or an insurer. 3 Presentation matters “Expense Reduction Analysts The insurance market sets its prices on the provided us with access to basis of its perceived exposure to risk. So significant knowledge, technical you will only be getting the best results if expertise and experience of the all your efforts to reduce risk in your insurance market which is not readily organisation are being accurately reflected available to any organisation when in the presentations your broker makes to they undertake this type of the market on your behalf. Unless the time insurance review on their own.” and investment you are making and the Deputy General Counsel, Volkswagen Group UK Ltd. positive impact this is having on your claims experience and exposure to risk is properly presented then the benefit of such work will be lost. 04 Insurance
    • Professional Services Unlike death and taxes, fees notes from your professional advisers are not inevitable and immutable, says Expense Reduction Analysts consultant and specialist in financial services, Paul Seddon, and a fatalistic approach to professional fees can only hinder the relationship between client and adviser. Instead, an open and honest relationship is critical to obtaining value for money. Paul offers the following tips to get the best value from your external professional advice: 1 Set the goalposts clearly 3 Keep talking… A successful client-adviser relationship Don’t run the risk of frustration building up depends on both parties sharing a common and eventually exploding into a breakdown goal. The client needs to have a clear view of the relationship because you have failed to of the outcomes they want to see and be tackle perceived poor value or performance able to communicate that effectively to during the project. their adviser so that there is an absolute shared understanding before the Avoid this by insisting on a clear and proper project commences. fee estimate up front (where fees are to be billed on a time basis), followed by 2 Agree who does what – and when transparent reporting on costs and timely The very reason for commissioning external warning of changes in expectations. Don’t advice is to supplement and enhance the shrink from asking you adviser to explain in expertise within the organisation itself. Any whatever level of detail you require why the client therefore needs to be happy that their time and/or the rates charged are reasonable. adviser is only spending time on matters that are (i) necessary to achieving the agreed 4 Compare the market outcome and (ii) not within the client’s own Ultimately, if you do not think your adviser’s competence or resources account is reasonable, test it in the market. This is a positive for both sides as, without Your adviser should be expected to provide a a flourishing market, it is not possible to formal agreement of terms and conditions establish market rates for work and so and a project plan that specifies key dates to satisfy all concerned that costs and outcomes, as well as clearly outlining the are reasonable. roles and responsibilities of both parties. Professional Services 05
    • Employee benefits Is your current package fully up-to-date, competitive and operating as an effective tool for motivating and retaining your key staff? Your people are your most valuable asset and the employee benefits you provide should go a long way to helping you retain and motivate them. But, with an ever growing range of products and a bewildering array of providers, it’s easy to pay more than you need and yet still have a package that isn’t valued by your staff and doesn’t deliver against your business objectives. Scott Ingham provides the following advice: 1 Don’t delay 2 Bespoke benefits If you haven’t reviewed your package for Every business and its staff is different. So some time, there will almost certainly be make sure that the cover you are buying is premium savings and cover refinements tailored to your individual organisation and to be gained. properly serves your business objectives. Recent developments mean that once Unlike your general business insurances, you standard approaches don’t necessarily can choose to review your employee benefits deliver the best results today. For example, package at any time, meaning that available now might well be the time to look at improvements and potential cost savings can whether replacing your private medical be realised very quickly and start to impact insurance (PMI), cover with a cash-plan on your bottom line all the sooner. might offer a more effective, cost-efficient solution. Equally, it’s worth asking the question whether the rates you are currently paying for fundamental cover such as death- in-service are still competitive when set against your current risk profile? 06 Employee benefits
    • The cornerstone of most employee benefits Expense Reduction Analysts is the world’s packages is the provision of Private Medical largest cost management consultancy and Insurance (PMI) for staff. However, this is focuses on reducing non-core operating also one of the most common areas in which costs for private, not-for-profit and public employers find the cover in which they are sector organisations. investing is not delivering the required benefits. Does your company recognise any Handling an annual supplier spend of millions of the following scenarios? of pounds on behalf of clients in all sectors, the consultants at Expense Reduction Analysts use • Limited penetration – in most cases, their significant purchasing influence to younger employees are not members of achieve optimum value from suppliers, often PMI schemes but they are also the most successfully retaining incumbents and using active and prone to sports-related injuries in expert analysis and market intelligence to particular. Dependency on the NHS for combat ‘contract fatigue’. these key team members could mean delays of several weeks and subsequent Expense Reduction Analysts has 170 impact on productivity at work consultants across the UK, as well as having a global influence in over 35 countries • Increased short term sickness leave – specialising in more than 100 non-core whilst staff are signed off by their GP business expenditure categories. pending further consultation, the business needs to make unexpected adjustments to Other topics covered in our series resourcing and work programmes to cover of cost reduction guides include: the absence Issue 1 – Property and Premises Issue 2 – Banking and Finance • Associated ‘healthcare’ costs – it’s not just Issue 3 – Back Office Supplies the cost of running the PMI scheme itself that costs your business but the additional For more information contact administrative or resourcing issues of Expense Reduction Analysts servicing regulatory regimes such as the on: 02380 829 737 Display Screen Equipment regulations (DSE) or counselling services such as or visit our website at: Employee Assistance Programmes (EAP) www.expense-reduction.co.uk 07
    • find extra profit Argentina Australia Austria Belgium Brazil Canada Chile Columbia Ecuador France Germany Greece Hungary Jordan Italy Lebanon Luxembourg Mexico Morocco Netherlands New Zealand Panama Portugal Spain Taiwan United Kingdom United States Uruguay Expense Reduction Analysts www.expense-reduction.co.uk