This is the Management Summary of a survey I conducted with B2E Solutions. If you want a copy of the full report in PDF you can email me at GirishMenezes@hotmail.com
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As we all know "flex" is back on the agenda of nearly every company of any size in the UK, a result which is borne out by many recent surveys. Wanting to analyse trends within the ‘largest UK private companies’ as a route to develop some guidelines or trends, we carried out research on a sample of the 250 largest companies in the U.K. We were surprised to find that over 40% of these organisations claim to have a fully implemented flexible benefits package in place.
Another interesting result of the survey was that over 90% of respondents who currently outsource some or part of their administration indicated that they were unhappy with their administrative arrangements and over 75% intend to change their administration arrangements over the next two years. Given this context, it is perhaps no surprise that 59% of our sample reported still using Excel spreadsheets to manage their benefits.
Interestingly 50% of the organisations surveyed would like to bring their administration in-house. A trend reflected in the fact that all of the organisations currently running their administration in-house (using software as opposed to excel sheets) are happy with their current administrative arrangements.
The survey we carried out personally approached the directors and managers with responsibility for HR and/or benefits within the participating companies. The data we have collected from these individuals give some unique insights into the experiences of some of our larger companies that seem to be leading to this result.
One clear conclusion is that simply adopting flex is not the path to better benefits management. The root of the dissatisfaction seems to lie in the administrative arrangements companies have in place to manage their benefits. As we all know, flex potentially increases the amount of administration, so an inadequate administrative system will be even less satisfactory with flex. Merely outsourcing this problem does not appear to help.
We explored the decisions behind choosing an administrative solution, but found this quite standard; reduction of errors, flexibility of the solution and service from the supplier.
Finally, it is interesting to note that organisations with live flexible benefit programmes cite employee retention, NI savings and the capping of rising benefit costs as the three key drivers of flexible benefits in their organisations. This is in contrast to schemes yet to take off who tend to focus on requirements like harmonisation, recruitment and retention.
This indicates, that at least for this sample of blue chip companies, the core requirement in successfully implemented schemes is for a flex benefits system which goes beyond simply being an attractive feature for active and potential employees to having the capability of being a powerful tool for other management objectives (like cost control).
The unavoidable conclusion seems to be that a successful flexible benefit programme requires three key features:
• A well thought out administrative system that reduces errors, is flexible around requirements and may be supported by a responsive supplier(s)
• A robust and flexible piece of technology that can enable this in a cost-effective manner
• A clear business case based around the harder factors dealing with cost savings and control
If our larger companies are the trend setters for the rest of us, perhaps some of these results will help us make decisions to avoid the pitfalls they have already experienced. As we all know, the supply of sophisticated flex software is improving and the cost structure for in-house and ASP offerings has significantly undercut the more traditional outsourcing arrangements. We have the options. Let’s go test!
The research was covered by Employee Benefits magazine here: http://www.employeebenefits.co.uk/item/799/pg_dtl_art_news/297/pg_ftr_art
And by Personnel Today magazine here: http://www.personneltoday.com/Articles/2005/11/22/32689/making-the-most-of-flexible-benefits.html
I'm always happy to link to new research in this area. Let me know if you have conducted anything of this nature.
Thursday 1 February 2007
5 Steps to Benefits Administration Heaven
A Client recently asked me if I had a ‘Benefits Administration Supplier checklist’ fand so I thought that it might be useful to actually create one for him. I've now converted it into a white paper, which I hoped may be of interest to a wider audience. For a PDF copy of the full report send me an email at GirishMenezes@hotmail.com
What began as a laundry list of tips and tricks based on our almost 30 years of experience in this industry was edited down to five key elements. We have billed these as the 5 C’s of Benefits Administration supplier selection.
- Complexity
- Configurability
- Change process
- Control
- Costs
Whether you are in the early stages of investigating the options facing you in terms of Benefits Administration solutions, in the midst of renewing a contract, or merely attempting to benchmark your current solution against the market - I would hope that this checklist will help you work through a process of requirement definition and supplier selection.
Different Clients in the Benefits market have very different requirements, internal capabilities and company policy. All of these dictate very different choices in terms of supplier. I have therefore tried to make this list as agnostic as possible, to enable the appropriate decisions by Individual organisations.
So without much further ado, let’s get on with the checklist.
COMPLEXITY
The first key element to note while selecting a supplier is to audit the complexity of your own requirement. The vast numbers of SME organisations across the United Kingdom have a fairly standard requirement and they can almost always pick up an off-the-shelf solution that meets their needs. The system sucks up their employee and benefit data once a year, employees make their elections, and the system spews out the monthly payroll deduction numbers. New hires, leavers, the odd exclusion or an employee who goes on maternity leave, are then processed as the issue crops up.
However, there are a number of reasons why your own requirement may not be as straightforward. The key reasons for this would be number of employees (complexity begins at numbers as low as 3,000), multiple eligibility requirements, interfaces with multiple systems (HRIS/Payroll/Time & Attendance), percentage of employees with no online access, high employee turnover, a requirement for greater control over data and reporting or data security.
Most of this complexity requires changes to the underlying code in most Benefits Administration solutions in the UK. And on the odd occasion that a Client has worked with a supplier to implement the necessary modifications to their systems, the following year brings a slew of additional changes that require going back to code once again.
Be honest about your own requirement and investigate whether the suppliers you are speaking to have actually delivered against a similar specification. If your requirement is complex - do select a supplier with the appropriate level of flexibility in their configuration engine.
CONFIGURABILITY
Phase II of the process is therefore looking at the configurability of the system. Regardless of your requirement – the nature of the Benefits market defines some level of sophistication in regards to configurability.
There are three key factors that one needs to keep in mind when analysing configurability for benchmarking purposes.
The Rules Engine
Reports & Forms
Interfaces
Semantics is a strange beast. Every Benefits Administration solution supplier in the country offers a ‘rules engine’. Of course, as we know, a ‘rules engine’ is nothing more that a list of rules that operate in unison. A project plan in Excel has built-in mini ‘rules engines’ hidden around the spreadsheet. How does that differ from the complex configurable rules engines required by a 5,000, 50,000 or 500,000 employee organisation?
There really is no clever answer other than to do some research of your own. Nothing beats the hard graft of hands-on research; have a look at the all of the solutions available, let your IT team do the due diligence, and speak to some of the Clients who have already implemented some of these solutions.
Different levels of complexity have different levels of requirements. And in the end, you may have to make certain compromises depending on you financial/risk profile.
Do not take for granted that outsourcing your requirement will solve all of your problems with complexity. Outsourcing companies tend to be very rigid in what they deliver and making changes to their delivery and processes can be incredibly expensive.
Reports & Forms are simpler to benchmark. Systems usually come with a specific number of built-in reports and forms and a budget for ad-hoc requirements. An enquiry process is required in terms of the ability of the Client (i.e. you) to define the built-in reports, any limits on the ad-hoc reports and the costs for developing anything not covered by the quoted prices. Reports and Forms are especially important if a lot of the deliverable (Total Reward Statements, Election and confirmation forms, etc.) needs to be in the form of paper.
Finally, there must be an investigation into interfaces. How does one get data into and out of the system? This depends on the number and type of your interfaces (HRIS/Payroll/Benefit provider/Pension/Share scheme/Excel spreadsheets).
Data is often dirty, complex, multi-system and difficult to process. If you have to press three buttons to process a single HR import every week; that gives you a 6 permutations across 52 instances a year. What chance do you have of getting it right every time? Multiply that by a number of HRIS imports, payroll exports and perhaps an overlay of weekly and monthly payroll runs, and you are well on your way to understanding the criticality of automated interfaces.
Changing benefit providers, cantankerous controllers of your ERP system and complex multi-lined HRIS files create additional problems.
Critically remember that it isn’t about the initial configuration process of the rules, reports, forms and interfaces; it’s all about keeping them running and updated on an ongoing basis. Verify your requirements and then confirmation from the supplier that they are covered by their quote.
CHANGE PROCESS
This brings us to the criticality of the change control process. What is the process for making ongoing changes in the system? How long will it take and how much does it cost? What happens if the supplier delivers the system on spec, but the spec turns out to be wrong? Will the supplier have to go all the way back to code to make the modifications?
Since the change control process is always fraught with difficulties, it is worth checking whether some of these changes can be made internally by you or your team. Can your team be trained to do this? What are the types of changes that can be transferred to your internal team?
Finally, what is the audit process on all of these changes? Are the changes made on the live system? Will the system have to be taken offline to apply the changes? Are the changes tracked with time stamps and person who made the change?
Of course, very little of this matters if your requirement is simple and straightforward. But even if that is the case, it is always worth clarifying these issues before signing a contract.
The costs of change can be prohibitive. This is especially true if you are using an ERP or HRIS system. In the case of a system built in-house or an out-of-the-box solution, it is often better to just bin the system and start from scratch to get up to speed on current market requirements.
CONTROL
There are three levels of control that organisations wish to retain.
Employee and Administrator workflow
Employee and Company data
Modifications of the system
Most companies wish to control the experience, workflow and choices their employees and administrators face during their interaction with the benefits selection process. In smaller organisations, it may be possible to identify off-the-shelf software that meets with your requirements. However, more complex requirements require system modifications of some degree.
In a recent study Met Life discovered that on average employees spend less than 30 minutes a year on selecting their benefits. My organisation has worked on this understanding for years and advises clients to create as much guided workflow as possible to ensure that the employee and administrator experience is as simple and pleasurable as possible. The more complex the requirement, the more important to work with living templates that can be adapted to changing employee, administrative, legal and benefit provider requirements.
The second level of control required is the ability to control the employee and company specific data within the system. This could be driven by a need for data security, or arguably far more important, the need to mine the data. This ability to analyse the data can give organisations key insights into employee motivation and cost drivers.
Finally, based on the earlier two points, a number of organisations believe that the best way they can capture control and offer value from a system is by transferring the skills to modify the system internally. This enables them to truly adapt the employee experience, workflow, reports and interfaces to their own internal requirements.
The final decision in all these matters finally depends on need, company policy and the ability of internal resources.
COSTS
Last but not least is the importance of costs. As we know, costs can add up dramatically, sometimes exponentially, if a requirement has not been mutually defined and accepted on both sides.
Many of our Clients find themselves signed up to a deal with a supplier who failed to mention that they expect Clients to do their own eligibility calculations and deliver to the supplier a single Excel file in a specific format.
This of course may be completely acceptable to some Clients, but as complexity grows, the key selling point of a Benefits Administration solution should be the ability to work seamlessly and in an automated fashion with raw data from the Clients current system’s and to deliver to their employees, administrators, payroll division and benefit providers suitable data with the minimum involvement of the Clients personnel.
Though the technology to do this is available – very few suppliers have made the necessary investment to upgrade their solutions to the required level.
The second area where costs can go out of control is ongoing changes. Frequently, annual system changes can cost as much as the initial setup charge. This can hit a company quite badly when considering the ‘total cost of ownership’ over a 3 to 5 year period. Setup charges reduce as a result of the configurability of the system, so the more complex your requirement, the greater the amount of due diligence is required to benchmark the configurability of the various solutions in the market.
Finally, the key issue of cost is contained in the ongoing support of the system. How much does it cost to create a new report? What is the cost of the sometimes near unlimited assistance that you may require? Is it possible to transfer skills to your internal team to ensure certain modifications can be contained as an internal expense? What will the system modification cost be if you merge, acquire a new company or make some other major structural change?
All of these costs can add up to a significant sum and a true picture of the desired solution can only emerge from benchmarking over a 3 – 5 year cycle.
Of course, it doesn’t help benchmarking the costs of a supplier focused on complex solutions with a purveyor of out-of-the-box solutions. This may sound ridiculous – but it happens more often than you think. Choose your relevant set of suppliers before benchmarking them against one another.
CONCLUSION
There are a number of Benefits Administration solutions in the market today and specific suppliers specialise in specific areas of the market. This could be defined by size (SME), functionality (out-of-the-box/fixed benefits/configurable), services (benefit design/IFA/administration solution), focus (ESS / Administrative tools), or delivery model (Outsourced/In-house).
Working through the 5c checklist will ensure that you select the right solution for your own specific requirement.
In summary, these steps are:
Audit the complexity (or simplicity) of your requirement as honestly as possible
Benchmark the configurability of the supplier’s solution and match them against your own needs
Investigate and map the change control process and options
Evaluate your own internal needs for control and compare them to supplier deliverables
Do a ‘total cost of ownership’ comparison across the relevant suppliers
Hope you found this checklist helpful.
To learn more about how to audit your Benefit Administration requirements please send me an email at GirishMenezes@hotmail.com.
Read a whitepaper on simplifying Benefits Administration here: http://employeereward.blogspot.com/2007/02/5-steps-to-benefits-administration.html
Read a copy of a study we completed on Benefits Administration trends and best Practice here: http://employeereward.blogspot.com/2007/02/benefits-administration-in-united.html
What began as a laundry list of tips and tricks based on our almost 30 years of experience in this industry was edited down to five key elements. We have billed these as the 5 C’s of Benefits Administration supplier selection.
- Complexity
- Configurability
- Change process
- Control
- Costs
Whether you are in the early stages of investigating the options facing you in terms of Benefits Administration solutions, in the midst of renewing a contract, or merely attempting to benchmark your current solution against the market - I would hope that this checklist will help you work through a process of requirement definition and supplier selection.
Different Clients in the Benefits market have very different requirements, internal capabilities and company policy. All of these dictate very different choices in terms of supplier. I have therefore tried to make this list as agnostic as possible, to enable the appropriate decisions by Individual organisations.
So without much further ado, let’s get on with the checklist.
COMPLEXITY
The first key element to note while selecting a supplier is to audit the complexity of your own requirement. The vast numbers of SME organisations across the United Kingdom have a fairly standard requirement and they can almost always pick up an off-the-shelf solution that meets their needs. The system sucks up their employee and benefit data once a year, employees make their elections, and the system spews out the monthly payroll deduction numbers. New hires, leavers, the odd exclusion or an employee who goes on maternity leave, are then processed as the issue crops up.
However, there are a number of reasons why your own requirement may not be as straightforward. The key reasons for this would be number of employees (complexity begins at numbers as low as 3,000), multiple eligibility requirements, interfaces with multiple systems (HRIS/Payroll/Time & Attendance), percentage of employees with no online access, high employee turnover, a requirement for greater control over data and reporting or data security.
Most of this complexity requires changes to the underlying code in most Benefits Administration solutions in the UK. And on the odd occasion that a Client has worked with a supplier to implement the necessary modifications to their systems, the following year brings a slew of additional changes that require going back to code once again.
Be honest about your own requirement and investigate whether the suppliers you are speaking to have actually delivered against a similar specification. If your requirement is complex - do select a supplier with the appropriate level of flexibility in their configuration engine.
CONFIGURABILITY
Phase II of the process is therefore looking at the configurability of the system. Regardless of your requirement – the nature of the Benefits market defines some level of sophistication in regards to configurability.
There are three key factors that one needs to keep in mind when analysing configurability for benchmarking purposes.
The Rules Engine
Reports & Forms
Interfaces
Semantics is a strange beast. Every Benefits Administration solution supplier in the country offers a ‘rules engine’. Of course, as we know, a ‘rules engine’ is nothing more that a list of rules that operate in unison. A project plan in Excel has built-in mini ‘rules engines’ hidden around the spreadsheet. How does that differ from the complex configurable rules engines required by a 5,000, 50,000 or 500,000 employee organisation?
There really is no clever answer other than to do some research of your own. Nothing beats the hard graft of hands-on research; have a look at the all of the solutions available, let your IT team do the due diligence, and speak to some of the Clients who have already implemented some of these solutions.
Different levels of complexity have different levels of requirements. And in the end, you may have to make certain compromises depending on you financial/risk profile.
Do not take for granted that outsourcing your requirement will solve all of your problems with complexity. Outsourcing companies tend to be very rigid in what they deliver and making changes to their delivery and processes can be incredibly expensive.
Reports & Forms are simpler to benchmark. Systems usually come with a specific number of built-in reports and forms and a budget for ad-hoc requirements. An enquiry process is required in terms of the ability of the Client (i.e. you) to define the built-in reports, any limits on the ad-hoc reports and the costs for developing anything not covered by the quoted prices. Reports and Forms are especially important if a lot of the deliverable (Total Reward Statements, Election and confirmation forms, etc.) needs to be in the form of paper.
Finally, there must be an investigation into interfaces. How does one get data into and out of the system? This depends on the number and type of your interfaces (HRIS/Payroll/Benefit provider/Pension/Share scheme/Excel spreadsheets).
Data is often dirty, complex, multi-system and difficult to process. If you have to press three buttons to process a single HR import every week; that gives you a 6 permutations across 52 instances a year. What chance do you have of getting it right every time? Multiply that by a number of HRIS imports, payroll exports and perhaps an overlay of weekly and monthly payroll runs, and you are well on your way to understanding the criticality of automated interfaces.
Changing benefit providers, cantankerous controllers of your ERP system and complex multi-lined HRIS files create additional problems.
Critically remember that it isn’t about the initial configuration process of the rules, reports, forms and interfaces; it’s all about keeping them running and updated on an ongoing basis. Verify your requirements and then confirmation from the supplier that they are covered by their quote.
CHANGE PROCESS
This brings us to the criticality of the change control process. What is the process for making ongoing changes in the system? How long will it take and how much does it cost? What happens if the supplier delivers the system on spec, but the spec turns out to be wrong? Will the supplier have to go all the way back to code to make the modifications?
Since the change control process is always fraught with difficulties, it is worth checking whether some of these changes can be made internally by you or your team. Can your team be trained to do this? What are the types of changes that can be transferred to your internal team?
Finally, what is the audit process on all of these changes? Are the changes made on the live system? Will the system have to be taken offline to apply the changes? Are the changes tracked with time stamps and person who made the change?
Of course, very little of this matters if your requirement is simple and straightforward. But even if that is the case, it is always worth clarifying these issues before signing a contract.
The costs of change can be prohibitive. This is especially true if you are using an ERP or HRIS system. In the case of a system built in-house or an out-of-the-box solution, it is often better to just bin the system and start from scratch to get up to speed on current market requirements.
CONTROL
There are three levels of control that organisations wish to retain.
Employee and Administrator workflow
Employee and Company data
Modifications of the system
Most companies wish to control the experience, workflow and choices their employees and administrators face during their interaction with the benefits selection process. In smaller organisations, it may be possible to identify off-the-shelf software that meets with your requirements. However, more complex requirements require system modifications of some degree.
In a recent study Met Life discovered that on average employees spend less than 30 minutes a year on selecting their benefits. My organisation has worked on this understanding for years and advises clients to create as much guided workflow as possible to ensure that the employee and administrator experience is as simple and pleasurable as possible. The more complex the requirement, the more important to work with living templates that can be adapted to changing employee, administrative, legal and benefit provider requirements.
The second level of control required is the ability to control the employee and company specific data within the system. This could be driven by a need for data security, or arguably far more important, the need to mine the data. This ability to analyse the data can give organisations key insights into employee motivation and cost drivers.
Finally, based on the earlier two points, a number of organisations believe that the best way they can capture control and offer value from a system is by transferring the skills to modify the system internally. This enables them to truly adapt the employee experience, workflow, reports and interfaces to their own internal requirements.
The final decision in all these matters finally depends on need, company policy and the ability of internal resources.
COSTS
Last but not least is the importance of costs. As we know, costs can add up dramatically, sometimes exponentially, if a requirement has not been mutually defined and accepted on both sides.
Many of our Clients find themselves signed up to a deal with a supplier who failed to mention that they expect Clients to do their own eligibility calculations and deliver to the supplier a single Excel file in a specific format.
This of course may be completely acceptable to some Clients, but as complexity grows, the key selling point of a Benefits Administration solution should be the ability to work seamlessly and in an automated fashion with raw data from the Clients current system’s and to deliver to their employees, administrators, payroll division and benefit providers suitable data with the minimum involvement of the Clients personnel.
Though the technology to do this is available – very few suppliers have made the necessary investment to upgrade their solutions to the required level.
The second area where costs can go out of control is ongoing changes. Frequently, annual system changes can cost as much as the initial setup charge. This can hit a company quite badly when considering the ‘total cost of ownership’ over a 3 to 5 year period. Setup charges reduce as a result of the configurability of the system, so the more complex your requirement, the greater the amount of due diligence is required to benchmark the configurability of the various solutions in the market.
Finally, the key issue of cost is contained in the ongoing support of the system. How much does it cost to create a new report? What is the cost of the sometimes near unlimited assistance that you may require? Is it possible to transfer skills to your internal team to ensure certain modifications can be contained as an internal expense? What will the system modification cost be if you merge, acquire a new company or make some other major structural change?
All of these costs can add up to a significant sum and a true picture of the desired solution can only emerge from benchmarking over a 3 – 5 year cycle.
Of course, it doesn’t help benchmarking the costs of a supplier focused on complex solutions with a purveyor of out-of-the-box solutions. This may sound ridiculous – but it happens more often than you think. Choose your relevant set of suppliers before benchmarking them against one another.
CONCLUSION
There are a number of Benefits Administration solutions in the market today and specific suppliers specialise in specific areas of the market. This could be defined by size (SME), functionality (out-of-the-box/fixed benefits/configurable), services (benefit design/IFA/administration solution), focus (ESS / Administrative tools), or delivery model (Outsourced/In-house).
Working through the 5c checklist will ensure that you select the right solution for your own specific requirement.
In summary, these steps are:
Audit the complexity (or simplicity) of your requirement as honestly as possible
Benchmark the configurability of the supplier’s solution and match them against your own needs
Investigate and map the change control process and options
Evaluate your own internal needs for control and compare them to supplier deliverables
Do a ‘total cost of ownership’ comparison across the relevant suppliers
Hope you found this checklist helpful.
To learn more about how to audit your Benefit Administration requirements please send me an email at GirishMenezes@hotmail.com.
Read a whitepaper on simplifying Benefits Administration here: http://employeereward.blogspot.com/2007/02/5-steps-to-benefits-administration.html
Read a copy of a study we completed on Benefits Administration trends and best Practice here: http://employeereward.blogspot.com/2007/02/benefits-administration-in-united.html
£150K job opportunity in Comp & Ben
I have just heard of a job opportunity which may be of interest. A global outsourcer is looking for someone to run their global comp and bens services offerings for their HR Services in the UK.
Key points are :
• Line HR experience preferred
• Good understanding of Comp and Bens on a global basis
• Able to think strategically
• Based in UK/Europe
• Will pay £110K plus up to 30% perf bonus
If anyone is interested, drop me an email at GirishMenezes @hotmail.com.
Key points are :
• Line HR experience preferred
• Good understanding of Comp and Bens on a global basis
• Able to think strategically
• Based in UK/Europe
• Will pay £110K plus up to 30% perf bonus
If anyone is interested, drop me an email at GirishMenezes @hotmail.com.
Child Trust Funds
Friends of mine at a leading UK Benefits Consultancy have recommended a scheme to the Inland Revenue around Child Trust Funds.
The idea is to offer a 'salary sacrifice' based scheme to encourage parents to invest up to £1,200 for a child per year. Income arising on the money and investments in a CTF account is already exempt from tax. HM Revenue & Customs are keen to promote Child Trust Funds as they see this as a key way for us to save for future generations as well as to encourage a savings habit in them.
Financial education is a key part of the CTF and all children will receive financial education to help them manage their money with future needs in mind. Information will be available for parents, teachers and children over the lifetime of a child's CTF account.
No word back from the Inland Revenue yet...further information when available. But I think we can all agree that it is a benefit with a truly noble cause.
I would be interested in any comments on this benefit or any alternative views or strategies that people may be putting in place.
The idea is to offer a 'salary sacrifice' based scheme to encourage parents to invest up to £1,200 for a child per year. Income arising on the money and investments in a CTF account is already exempt from tax. HM Revenue & Customs are keen to promote Child Trust Funds as they see this as a key way for us to save for future generations as well as to encourage a savings habit in them.
Financial education is a key part of the CTF and all children will receive financial education to help them manage their money with future needs in mind. Information will be available for parents, teachers and children over the lifetime of a child's CTF account.
No word back from the Inland Revenue yet...further information when available. But I think we can all agree that it is a benefit with a truly noble cause.
I would be interested in any comments on this benefit or any alternative views or strategies that people may be putting in place.
Do employees value their benefits?
Ten heads of Compensation & Benefits from a cross-section of FTSE 250 companies gathered for tea at the Ritz in July to discuss the business case for Flex. I was one of the fortunate few to get in through the gates to help organise the event and thought that you might be interested in some of the findings. There were some amazing insights I gained from the forum as a whole, but the key finding for me was the enormous gap between the HR department's need to demonstrate the value they offer through the benefit package and the rude reality that is life.
Participants were asked to score the importance of certain criterion and then rate their own companies on a scale of 1-5. Across the attendees, the importance of employees understanding their benefit package stood at 98%, but the feeling was that delivery is at a paltry 30%. The importance of reporting on benefit costs and take-up stood at 98%, but the reality stood at 40%. In fact, the group felt that their rating of how well they deliver on awareness of employees of all elements of their benefits package stands at a low of 48%.
Given the vast steps technology has taken over the last ten years, it is a shame that we should still be in this position. There are more than enough options available to meet these requirements and I believe that four simple steps can help organisations move a long way in terms of meeting these goals.
Demonstrate value
One of the key drivers for best-of-breed benefits administration solutions is the flexible way in which they can place a value on the benefits received by your employees and present them in an interesting manner. Comparative charts can include market value, tax and NI savings, as well as group discounts. Every organisation has a different set of benefits, eligibility criterion, valuation methodologies and presentation benchmarks. Organisations who are managing to demonstrate the value of their benefits are the ones who realise this and stop trying to shoe horn their complex requirements into a rigid out-of-the-box solution.
Amalgamate benefits
My wife works for a leading UK bank and while doing my annual accounts we decided to create a Total Reward statement for her to get a full picture of our financial health. She was absolutely amazed when she realised how much she had gained through her stock option plan and via commission. This is a frequent situation I bump into at Client offices. Salary, parking, shares, and commission are rarely stored on the same software. As a result, it is the rare organisation, who can manage to amalgamate all of this information and therefore demonstrate the `Total Value' of the compensation and benefit package to an individual employee.
Automate updates
Total Reward is becoming more common in large organisations, though I am sure that you will agree that these statements, more often than not, miss out certain key benefits (canteen, parking and training are almost always going to be missed out). These statements are then printed out on statements that look more like black & white ATM advice slips than a presentation of your annual reward. What is worse is that they are out-of-date even before you have received them. It is a rare company that has invested in the ability to both amalgamate the data across sources, as well as enable the automation of the update process to ensure that the `Total Value' statement stays abreast with share price changes and commission payments.
The issue of course with both amalgamation and automation is the cost of change. The amount of time and cost that it takes to design and implement the initial solution is thrown to the wind when the payroll system changes the following year or you change your PMI provider. However, I think we all know that flexible systems do already exist and are able to meet these demands. It is not fair on your company or your shareholders if best efforts are not made to invest in these systems.
Communicate highlights
Finally, the key to highlighting `Total Value' to employees is to communicate. Having an online `Total Value' statement that stays up-to-date with employees financial status will go a long way to increasing employee understanding of the value of their benefits. But focused communication on the fringe benefits of training spends, employer awards and work culture can re-emphasise the HR departments focus on the individual employee. It is simple enough then to link back this communication with the "Total Value' position.
The marketplace certainly seems to believe that change is required if we are to meet this basic vision of being able to demonstrate the value of their benefits to employees and I am sure that I am personally committed to this goal as well.
If you would like to be put on the Tea @ the Ritz list, receive more information about the findings of the forum, or learn more about options in the area of `Total Value' statements, contact me at GirishMenezes@hotmail.com.
Participants were asked to score the importance of certain criterion and then rate their own companies on a scale of 1-5. Across the attendees, the importance of employees understanding their benefit package stood at 98%, but the feeling was that delivery is at a paltry 30%. The importance of reporting on benefit costs and take-up stood at 98%, but the reality stood at 40%. In fact, the group felt that their rating of how well they deliver on awareness of employees of all elements of their benefits package stands at a low of 48%.
Given the vast steps technology has taken over the last ten years, it is a shame that we should still be in this position. There are more than enough options available to meet these requirements and I believe that four simple steps can help organisations move a long way in terms of meeting these goals.
Demonstrate value
One of the key drivers for best-of-breed benefits administration solutions is the flexible way in which they can place a value on the benefits received by your employees and present them in an interesting manner. Comparative charts can include market value, tax and NI savings, as well as group discounts. Every organisation has a different set of benefits, eligibility criterion, valuation methodologies and presentation benchmarks. Organisations who are managing to demonstrate the value of their benefits are the ones who realise this and stop trying to shoe horn their complex requirements into a rigid out-of-the-box solution.
Amalgamate benefits
My wife works for a leading UK bank and while doing my annual accounts we decided to create a Total Reward statement for her to get a full picture of our financial health. She was absolutely amazed when she realised how much she had gained through her stock option plan and via commission. This is a frequent situation I bump into at Client offices. Salary, parking, shares, and commission are rarely stored on the same software. As a result, it is the rare organisation, who can manage to amalgamate all of this information and therefore demonstrate the `Total Value' of the compensation and benefit package to an individual employee.
Automate updates
Total Reward is becoming more common in large organisations, though I am sure that you will agree that these statements, more often than not, miss out certain key benefits (canteen, parking and training are almost always going to be missed out). These statements are then printed out on statements that look more like black & white ATM advice slips than a presentation of your annual reward. What is worse is that they are out-of-date even before you have received them. It is a rare company that has invested in the ability to both amalgamate the data across sources, as well as enable the automation of the update process to ensure that the `Total Value' statement stays abreast with share price changes and commission payments.
The issue of course with both amalgamation and automation is the cost of change. The amount of time and cost that it takes to design and implement the initial solution is thrown to the wind when the payroll system changes the following year or you change your PMI provider. However, I think we all know that flexible systems do already exist and are able to meet these demands. It is not fair on your company or your shareholders if best efforts are not made to invest in these systems.
Communicate highlights
Finally, the key to highlighting `Total Value' to employees is to communicate. Having an online `Total Value' statement that stays up-to-date with employees financial status will go a long way to increasing employee understanding of the value of their benefits. But focused communication on the fringe benefits of training spends, employer awards and work culture can re-emphasise the HR departments focus on the individual employee. It is simple enough then to link back this communication with the "Total Value' position.
The marketplace certainly seems to believe that change is required if we are to meet this basic vision of being able to demonstrate the value of their benefits to employees and I am sure that I am personally committed to this goal as well.
If you would like to be put on the Tea @ the Ritz list, receive more information about the findings of the forum, or learn more about options in the area of `Total Value' statements, contact me at GirishMenezes@hotmail.com.
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