In recent years, several businesses have outsourced the data-based activities of their human resource departments, allowing their HR workers to focus on employees, rather than administering health savings accounts or other programs. HCap Strategies, a Mequon-based national employee benefit management and administration firm, has capitalized on this trend, with big results.
One year ago, HCap, formerly known as FlexBen Corp. of Wisconsin, had about 100 employees. Today, the firm has increased its staff to 157 and expects to have up to 250 employees in the next few years, said HCap president Kent Smith.
The company’s annual revenues have risen steadily to nearly $10 million in 2004, and Smith expects to reach $13 million in 2005 by introducing new products and moving into new markets.
"That’s a middle number," he said. "That’s realistic. Of course, we could go above and beyond that."
To house its new employees, HCap will move in September to a new 36,000-square-foot building under construction just across West Donges Bay Road from its current facility at 10404 N. Baehr Road. HCap will lease the space in the building from developer Michael Mehta.
HCap’s information technology and operations will move to the new building, while its sales, marketing and accounting departments will stay in about 10,000 square feet in the current building, which also is owned by Mehta, Smith said.
Some of HCap’s growth has come from the growth of corporate outsourcing of record keeping and benefits management.
HCap has focused on the tasks that many corporate human resource departments no longer want to do, because of intensive paperwork and complicated processes, Smith said.
"Human resources departments are looking to stay focused on taking care of people and not being administrative paper-pushers," he said. "Our business plan says for us to be successful in the future, we need to be part of the total human resource outsourcing solution to our clients."
To maximize the amount of business it can attract, HCap has expanded into more than just flexible spending accounts. The firm now offers administration for COBRA benefits, payroll and other records-based services.
"To be a full-service provider, we need to integrate data from payroll to benefits administration," Smith said.
Smith said HCap’s sales force has played a key role in the company’s growth by tapping into new markets.
From 1987 to 1999, the former FlexBen focused on doing business only in Wisconsin. In 1999, it expanded into the Chicago market. It took four years for the company to take root and become successful in the Windy City, Smith said.
Once it gained the foothold it was looking for, the company’s board of directors realized there is a national market for Hcap’s services, Smith said.
HCap started planning the placement of permanent salespersons in other markets in 2002 and began implementing the plan the following year. In March 2003, HCap tapped into the Atlanta market.
Last May, the company placed a salesperson in Philadelphia and another in San Francisco in August.
"Our business plan is to open in three geographic locations every year," Smith said. "This year, we’ll be going to L.A., Denver and somewhere in the Ohio valley."
The company is still deciding which markets to move into in 2006, but Smith and his team have some ideas.
HCap expanded its staff last year because the company believes the human resource outsourcing trend will continue in coming years, Smith said
"Part of our growth is preparation for what we will do," he said. "We have to be ahead of the curve – get employees in here and get them trained."
The company soon will roll out three new products to its clients – a supplemental disability income plan, a retirement protection plan and a long-term care plan – all designed for top-level executives and chief executive officers.
Smith said the trio of new products is a step in a new direction for HCap.
"We’ve always worked on things that are more administrative in nature," he said. "This is consultative. This is not record keeping, and we’re excited about that."
HCap also has made a large investment in technology, increasing its IT department from three employees a year ago to 17.
"Technology will drive our business, and we have to have better technology than we have today," Smith said. "Traditionally, we used shelf products. And we’ve outgrown the shelf products. We need to go custom."
HCap Strategies
Address: 10404 N. Baehr Road, Mequon
Employees: 157
Product or service: Employee benefit management, administration and human resource outsourcing
2004 revenues: Nearly $10 million
Clients: Include Harley-Davidson Inc., S.C. Johnson & Sons Inc., Johnson Controls Inc., Northwestern Mutual Insurance Co., the Milwaukee Brewers, the National Football League office, Rockwell Automation Inc. and Briggs & Stratton Inc.
Web site: www.hcapstrategies.com
January 7, 2005, Small Business Times, Milwaukee, WI
