If you’ve worked in employee benefits long enough, you’ve probably experienced some version of this scenario. 

An organization makes a significant benefits decision. They renew with a vendor, implement a new solution, make a plan design change, or revise a long-standing process. The result is positive. Costs stabilize. Employees are satisfied. Leadership is pleased with the outcome. 

Everyone assumes it was a good decision—and maybe it was. But here’s the question that often gets overlooked: Was it a good outcome, or was it a good process? 

Most employers naturally focus on results, and for good reason. Organizations are accountable for managing budgets, supporting employees, and improving outcomes. Success is often measured by what happened after a decision was made. 

But ERISA’s fiduciary standard doesn’t evaluate decisions through the lens of hindsight. Instead, it generally focuses on whether the organization followed a thoughtful, informed, and well-documented process when making the decision in the first place. That’s an important distinction, and it’s becoming increasingly relevant as health plans face greater scrutiny around governance, vendor oversight, and fiduciary responsibility. 

When a decision produces a positive outcome, we tend to assume the process behind it must have been strong. Likewise, when a decision produces disappointing results, we often assume something must have gone wrong along the way. Unfortunately, governance doesn’t work that way. 

Imagine two employers making the exact same vendor decision. 

The first organization spends several months gathering information, reviewing contracts, evaluating alternatives, benchmarking fees, documenting discussions, and clearly outlining the rationale behind the decision. The vendor ultimately underperforms due to unforeseen market conditions. 

The second organization makes a quick decision based solely on familiarity. There’s little documentation, no formal review process, and limited discussion about alternatives. The vendor ultimately exceeds expectations. 

Which organization demonstrated stronger governance?  

Most fiduciary experts would likely point to the first. Not because the outcome was better, but because the process was stronger. The organization exercised diligence, considered available information, evaluated alternatives, and documented its reasoning. It built a framework for making a sound decision based on the facts available at the time. 

That’s one of the most misunderstood aspects of fiduciary responsibility. Good governance isn’t about predicting the future perfectly. It’s about establishing confidence that decisions are being made thoughtfully, consistently, and in the best interest of the plan and its participants. 

Part of the reason process has become such a focal point is that outcomes can be difficult to evaluate in isolation. 

Healthcare costs increase for reasons outside an employer’s control. Market conditions change. Regulatory requirements evolve. Vendors merge. New technologies emerge. Litigation trends shift. 

A decision that appears successful today may look very different in two years. Likewise, a decision that seems disappointing in the short term may ultimately prove to be the right choice over the long run. 

Because outcomes are influenced by so many variables, governance discussions increasingly focus on something organizations can control: the quality of their decision-making process. 

This shift is especially important in the health and welfare plan space. As litigation expands beyond retirement plans and into areas such as pharmacy benefit management, vendor oversight, fee transparency, and participant communications, employers should be prepared to demonstrate more than just results. They should be prepared to demonstrate how decisions were made. 

A strong governance process doesn’t need to be overly complicated. In fact, some of the most effective frameworks start with a handful of straightforward questions. 

Before making a significant benefits decision, organizations should consider the following. 

One of the most common governance challenges is unclear accountability. 

Benefits decisions often touch multiple departments. HR, finance, executive leadership, and external advisors may be involved. The more stakeholders, the more important it becomes to define ownership. 

Those questions may seem simple, but they often uncover significant ambiguity within organizations. 

Good decisions begin with good information. That doesn’t mean gathering every possible data point. It means ensuring the organization reviewed information that was relevant to the decision being made. 

Depending on the situation, that might include: 

The goal isn’t perfection; it’s demonstrating that the organization evaluated enough information to make an informed decision. 

One misconception employers often have is that fiduciary responsibility requires selecting the least expensive option. That isn’t the standard. 

A lower-cost vendor may not provide the same service levels. A different solution may create operational challenges. Another option may introduce additional risks. 

What matters isn’t necessarily whether the organization picked the cheapest path. It’s whether alternatives were considered and whether the rationale behind the final decision can be explained. 

A vendor may absolutely be worth the additional cost. The organization should simply be able to articulate why. 

Conflicts of interest don’t always involve misconduct. In many cases, they’re completely ordinary business realities. 

Vendor compensation arrangements, consulting relationships, business partnerships, referral structures, and other incentives can influence decision-making in subtle ways. Under ERISA Section 408(b)(2)(B), brokers and consultants to group health plans must disclose the direct and indirect compensation they expect to receive. Reviewing those disclosures is a practical starting point for identifying potential conflicts. 

Good governance doesn’t require eliminating every potential conflict, although certain arrangements are prohibited under ERISA unless an exemption applies. It does, however, require identifying conflicts, discussing them, and documenting how they were considered as part of the broader decision-making process. 

This may be the single most important question in the entire process. 

Imagine someone reviewing a decision two years after it was made. Would they understand: 

If the answer is no, there may be a documentation gap worth addressing. 

Too often, organizations rely on institutional knowledge. The challenge is that institutional knowledge walks out the door. Team members change roles. Leaders retire. Advisors move on. Documentation helps ensure the reasoning behind important decisions survives long after the meeting where those decisions were made. 

One of the biggest governance mistakes employers make is treating a decision as the finish line. In reality, most decisions create ongoing responsibilities. 

A vendor relationship should be monitored. Performance should be evaluated. Contractual obligations should be reviewed. Emerging risks should be assessed. 

Governance isn’t a one-time event. It’s an ongoing discipline. 

Many employers assume an investigation or legal challenge would focus primarily on whether a decision worked. 

In practice, inquiries often begin with questions about process. 

Notice a pattern? These questions rarely focus on whether the organization predicted the future correctly. They focus on whether the organization acted prudently at the time the decision was made. That’s why documentation, oversight, and governance are receiving so much attention. They’re often the clearest evidence that a thoughtful process occurred. 

Governance is about creating confidence—that decisions are being made consistently, that leadership understands the rationale behind important choices, and that oversight exists. It’s also confidence that the organization can explain and defend its reasoning if those decisions are ever questioned. 

Perhaps most importantly, it’s about creating confidence that decisions affecting employees and their benefits are being made intentionally rather than reactively. 

That’s a much different standard than simply hoping a decision works out. And, increasingly, it’s the standard organizations are being held to. 

The next time your organization makes a significant benefits decision, pause before discussing the outcome and ask a different set of questions. 

If your team can answer those questions confidently, you’re likely much further along the governance journey than you realize. If not, that’s okay, too. The goal isn’t perfection. The goal is building a repeatable process that helps your organization make thoughtful decisions today and explain those decisions tomorrow. 

Many employers are surprised by what they discover when they step back and examine how benefits decisions are actually being made within their organization. 

If you’d like a practical way to assess your current governance practices, download MJ’s Fiduciary Risk Self-Assessment and our executive guide, The 2026 Compliance Landscape: Why Governance Matters More Than Ever. 

Together, these resources can help your leadership team evaluate: 

Because in today’s environment, strong governance isn’t measured by outcomes alone. It’s measured by whether you can demonstrate the thoughtful process behind your decisions. 

This article is provided for general informational purposes only and does not constitute legal, tax, or fiduciary advice. The information reflects our understanding of applicable law as of the publication date, which may change, and may not apply to your specific circumstances. Plan sponsors should consult their own legal counsel before making decisions regarding their benefit plans and fiduciary duties. The MJ Companies is not a law firm and does not provide legal services.