Another typical day on the road. I met yet another FTSE 250 company with their benefits all over the place. Pension schemes divided between a large Actuary and an IFA, Share scheme with a Share Administration provider, Risk benefits provided through one company and Medical benefits through another; separate providers for Voluntary Benefits, Childcare Vouchers, Bikes and Total Reward Statements; and an overall realisation, that the system is just not working.
Organisations seem to be battling some very major issues; the closure of DB schemes, spiralling costs of benefits, re-inventing the pay package to meet new hire expectations, re-negotiating the packages of current employees, managing complex eligibility requirements of historic employment contracts; the last thing they need is a web of supplier networks attempting to deliver against these requirements.
Employers appear to be coming around to the discovery that there are core benefits; savings, risk and health; that need to be provided to a certain level as a key responsibility to their staff; and then there are Employee Discount schemes that can stand alone in cyberspace for anyone who is interested.
Even after stripping out the chaff from the core though, they are not the simple things that could be administered off spreadsheets in the past.
The reasons for the increased difficulty are:
- Cost
- Complexity
- Change
Cost
Pensions were the first benefit to bust the bank, spectacularly! But the cost of most other health and risk products is spiralling as well to a lesser extent. Companies are also realising as they begin to consolidate benefits across the organisations that they may have multiple deals in place with a single health insurer, or are paying far too much for their life insurance. Interestingly, it is the rare company that actually knows the amount they spend on their benefits, let alone administration of those benefits. But all this is changing as the spotlight turns on to this part of the compensation package.
Complexity
Organisations are growing rapidly and often by acquisition. Over time, multiple levels of terms and conditions are created, usually quite invisible to the benefits department. As organisations begin to consolidate their benefits and analyse eligibility, the true complexity of the benefits emerge and the realisation that the age old methods of administering benefits cannot continue.
Change
Finally, in the post-DB era, companies are realising that they need to offer employees multiple methods of saving for retirement and this by definition means enabling employees to switch funds between Pension, Shares, Mortgage Repayment and other similar savings and risk products. This requires technology, availability of data, automated workflow and occasionally, manpower to grease the wheels.
Reward & Benefits departments are therefore focussing on re-evaluating their Benefits strategy and looking at three key objectives:
- Streamline eligibility and processes
- Consolidate benefits brokering, access and delivery
- Outsource as much of the delivery as possible
So in answer to the question, “Are we there yet?” the answer has to be a resounding “No”!
To learn more about how this is being done, email the author at girishmenezes@hotmail.com
