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  • Unicorns and Other Mythical TPA Creatures

    Last Thursday at ABC TPA firm…

    Owner: “We’ve brought on 60 new plans so far this year. We are going to have to hire a new administrator and redistribute the caseloads. The number of plans per administrator is getting really large.”
    HR Specialist: “Got it. So, what is the job description for this new position?”
    Owner: “What do you mean? You know, a capable administrator like everyone else.”
    HR Specialist: “Capable like John is capable, or capable like Maria? You know that when we redistribute plans, Maria gets the more difficult ones.”
    Owner: “I’d love to find another administrator like Maria, but, if we can’t, just get someone capable.”
    HR Specialist: “Again, capable of what level of administration? How many years of experience?”
    Owner: “Just find someone like Maria but at a reasonable salary.”
    HR Specialist (mumbles frustrated, under his breath): “Great, find a unicorn!”

    Conversations like these happen in TPA firms across the country and highlight the difficulty to find and train good administrators. The term “administrator” seems to imply a level set of knowledge that does not necessarily reflect the employee’s work experience or education. The industry is mostly self-taught, so distinguishing competency levels is not standardized. Instead, the new person gets hired, a caseload gets assigned, there is some oversight for a while (until the other employees are busy with their respective caseloads) and fingers crossed. You never know what a new employee knows or doesn’t know. In a growing firm, where hiring can be more frequent, evaluating your current employees to understand your need for future employees is a must.

    Meanwhile at the watercooler…

    Admin Assistant: “Hey Brian, I passed 3 of the ASPPA RPF modules!”
    Manager: “That’s great, Kim! Congrats!”
    Admin Assistant: “Do I get my own caseload now?”
    Manager: “Um, no. Not yet.”
    Admin Assistant: “Do I get a raise?”
    Manager: “Huh, er…no. We don’t give raises on that basis.”
    Admin Assistant: “What basis do we use for promotions and raises? Is there a career path for me at ABC TPA?”

    Since the 1970’s, the TPA world as an industry has matured. New and younger people are coming into the industry with an expectation of a career path. How does an entry-level employee navigate from Admin assistant to Senior Administrator or Consultant? What skills do they have to demonstrate to earn a promotion or a salary increase?

    As the industry has matured, the move away from one administrator that handles all aspects of a caseload has occurred for several reasons. (The least of which is the inability to find unicorns!) Working in a functionalized company, where more than one employee is involved in providing services to the plan sponsor minimizes the impact of employee turnover. Moreover, it creates a mentoring environment for newer employees and allows for service coverage due to illness or vacation. TPAs go from operating as practices to operating as businesses while increasing their franchise value along the way. The cultural shift isn’t as daunting as it might seem.

    The first step is to gather your unicorns in a room and discuss what they believe constitutes different position levels for administrators. In our firm, we had four levels, and we simply called them Administrator level one, two, three and four. (Very creative, I know!) A perfect team had at least one of each position. At each level, we agreed upon skills that were required and some that were preferred, some that were resumé driven and some that required demonstrated technical competency. Once we had the descriptions completed, we then tried to attach a pay range to each of the four levels.

    Now the fun part! We looked at our existing group of employees and tried to assign them to one of the levels so that we could form teams. To say the least, it was an interesting process (lots of level ones and twos, very few threes and fours). However, we formed teams the best we could. The result was that it was clear what we had an abundance of, and what levels we would need to fill with new hires. At last, our HR person knew what qualities we would need to round out our team. This process also created a clear pathway for anyone to see a way forward to move up in the firm.

    Moral of the story, all employees are created equal. Some are just more equal than others.