There’s a lot of pressure when you undertake a new employee benefits RFP. Indeed, finding the right combination of employee benefits has a significant impact on employee morale, talent retention and recruitment.
Whether you’re a procurement manager or HR professional, searching for a benefits broker or a benefits administration software isn’t an everyday occurrence. Luckily, an employee benefits RFP offers an organized way to manage the process, enabling you to make a carefully considered, data-based decision.
In this blog, we’ll cover everything you need to know to effectively manage a benefits RFP. To begin, we’ll offer some foundational information like key definitions and RFP benefits. Then, we’ll offer five benefits RFP best practices. Finally, you’ll see several benefits RFP examples and a helpful template.
Benefits RFP basics
The importance of employee benefits
Having competitive employee benefits is crucial to your business. Not only do employee benefits impact your recruitment and retention efforts, but they can also impact your reputation. Now more than ever, employers need to deliver benefits plans that are comprehensive, affordable and creative.
As competition for the best candidates heats up, the days of simply offering vacation, health and retirement plans are gone. Indeed, the term ‘employee benefits’ now encompasses those traditional benefits as well as new offerings, sometimes referred to as fringe benefits. For example, it’s common to see recruiting employers offer flexible work, professional development, childcare and wellness benefits to tempt talent.
It’s easy to see why, as 79 percent of employees prefer better or additional benefits to a pay increase according to a study from Glassdoor. And, it’s no wonder when you consider that benefits make up about 30 percent of an employees’ total compensation.
What is a benefits RFP?
A benefits request for proposal is a questionnaire issued by an organization to gather information and compare potential employee benefits brokers, consultants and providers. The selected advisor then leverages their expertise and relationships to find the right providers for the business.
Overview of the benefits RFP process
- A business issues an RFP to find the best benefits broker or consultant
- They receive proposals, score the RFP and select an advisor
- The advisor then evaluates the business’s needs and issues an RFP to benefits providers
- Benefits providers respond and the advisor reviews and scores the proposals
- The advisor provides the client with recommendations and they make their selections
As you can see, within the benefits procurement process, there are two sets of RFPs. The first RFP is issued by the business to potential brokers. The second set of RFPs are issued by a broker to potential providers.
Who runs the process?
Employee benefits RFPs usually come from the human resources or procurement department, operating independently from one another. Unfortunately, this often leads to less than ideal outcomes. When HR runs the process, the business may miss the opportunity to leverage the negotiating power of procurement to save money. On the other hand, when procurement is in charge they may neglect to properly prioritize and weigh all the factors in favor of cost reduction.
Consequently, the best approach is a joint effort between the two departments. Human resources should inform the RFP process, engage in proposal scoring and broker selection. At the same time, procurement manages the creation of the RFP, vendor communication and negotiation. Likewise, the final selection of benefits from your broker’s recommendations should be a joint effort.
Not only should HR and procurement partner up, but involving other departments also improves results. Consider engaging with legal, information services, finance and any other who may have valuable input to the process early so their feedback can be incorporated into the initial RFP.
When should you consider a new broker or providers?
Finding a new broker or benefits provider isn’t an everyday task. As with most vendor relationships, ideally, you’ll find a long-term partner and avoid repeating the RFP process. However, from time to time you’ll need to explore your options.
It’s time to issue a benefits RFP if:
- Your current broker relationship isn’t meeting your needs
- It’s been three to five years since you last checked the market
- There’s been a significant change to your business or employee needs
Five best practices for a benefits RFP
Sample RFPs for employee benefits
Employee benefit RFP templates
- Employee benefits broker RFP template – PSF Inc.
- Benefits software RFP template – PlanSource
- RFP questions about employee benefits form (Word) – ISCEBS
Employee benefit RFP examples
See how others issue better benefits RFPs
Ultimately, keeping your employees healthy, happy and productive is important to your business’s end goals. So, finding the right benefits provider is crucial. RFP software, like RFP360, can make the process much easier. Consequently, our customers include several employee benefits brokers and consultants who use the platform to better serve their clients.
“I think it helps put [clients] at ease and makes them a bit more comfortable. They can see what we’re doing — that it’s very objective and very clinical. They don’t have to worry about opinions being biased because they can see the scores, they can see the progress, and they have complete visibility into who was invited, who responded, and who didn’t.” – Kelly Ellis, Piper Jordan
Learn more about how Piper Jordan uses RFP360 in their case study.
“Using RFP360 allows us to focus on the most important aspects of the RFP and makes managing vendor information much more straightforward,” said Mark Rieder, NFP.
Explore NFP’s full use case and favorite RFP360 features here.
“We had templates in Excel, but we’d always have to add customizations. Then, we’d send multiple copies of those spreadsheets via email, and we’d have to track those emails individually. RFP360 helped us streamline our templates so we don’t have to add as much. We’re a billable-hour practice, so that reduction in time is great for clients. Additionally, we now have time to ensure our vendors understand the questions.” – Eric Hollenbach, Lockton
Read the full Lockton case study to see how they use RFP360 to save money for their clients.
Originally published February 17, 2016 — Updated October 21, 2021