Is Flexible Benefits Worth the Trouble? - the 5 Levels of Complexity

According to recent research, 59% of UK organisations have or are planning to have a Flexible Benefits programme within the next two years. But 57% of employers believe that the cost of implementation and the complexity of administration are the biggest problems with setting up and running a flexible benefits scheme. So the big question on people’s minds when dipping their toes into Flex is whether ‘Flex is worth the trouble’.

Is Flexible Benefits worth the trouble?
Within organisations that my company has implemented Benefits Administration solutions, we have reached 70% employee engagement in terms of employee population who have changed their benefit mix in some way. At least one of our Clients has seen dramatic improvements in retention rates and over 50% of companies who have implemented Flexible Benefits claim that Flexible Benefits improves recruitment and retention figures. That indicates to me and my Clients that implementing Flexible Benefits is indeed worth the trouble.

However, in the rush to implement Flexible Benefits, we have found that the reason a number of companies face administration nightmares is that their focus tends to be solely on the superficial layer that is the choice of Benefits themselves, and forget some of the far more important factors that need to be ascertained around the administration of these benefits.

What are the key complexities to administer Flexible Benefits?
The 5 levels of complexity that need to be addressed as part of implementing Flexible Benefits are:

- Benefits mix
- Eligibility matrix
- Workflow design
- Data mapping
- Channel selection

Benefits mix
Most organisations spend a considerable amount of time, effort and money on selecting the Benefits in their Flexible Benefits mix. In fact, Companies are often days away from Open Enrolment when the benefit supplier’s change or an additional benefit added or subtracted from the plan. Demographic profiling of employees, focus groups, supplier selection panels, procurement negotiations and feasibility studies based on benefit take-up and NI/Tax savings are some of the tools used for this purpose. This is a critical first stage in the implementation of Flexible Benefits, however once completed, Clients tend to drop straight down to ‘Channel selection’ stage without bothering to fine-tune some of the other pieces in the puzzle.

Eligibility matrix
Almost every Client or prospective Client I have met tends to tell me that eligibility criterion in their company is really very simple. And on closer inspection, this is almost never the case. Benefit eligibility tends to be built up over time and based around changing employer-employee relationships, individual negotiations, mergers, acquisitions and disposals. As a result, the benefit eligibility matrix is usually extremely complex. Even post harmonisation, it takes an iron will, well structured templates, and a time-tested system to capture all of the eligibility exceptions that you will find across your company. Once you do however make the effort to create your three-ring binder containing your eligibility matrix, this suddenly gives you the power to intelligently interrogate choices made in the benefit selection process and thereby enables you the opportunity to reduce your overall benefit costs.

Workflow design
Once you have a clear idea regarding the benefits on offer and have mapped the eligibility criteria across your organisation, you will realise that a variety of sub-optimal historic workflow have been put into place to support the benefit selection process. The trick is to get away from historic decisions and look at the Benefits and supporting Workflow with an entirely new set of eyes. You would expect that the Consultancy paid to prepare your Benefit Case would have investigated the optimal workflow to support the process; however this is almost never the case. Once you have arrived at your best-practice Benefit Administration workflow, you can easily automate these via readily available software solutions.

Data mapping
Once you have the workflow sorted out, you can then go down a level and look at the data map that you need to put into place to make the solution work seamlessly. Where is the data stored, and how do you get it from one place to the other. SBC Systems routinely tests systems using live data as this flushes out corrupt data that could create mystifying issues if left unchecked. Data cleansing and the putting into place of strong processes to keep the data clean is a critical step to ensure the smooth running of your Benefits Administration system.

Channel selection
Only after thoroughly specifying the first four layers of complexity in the Benefits Administration process, should a company begin investigating channel options and the channel itself can be broken down into a variety of specific components.

The key components are:

Benefit selection mechanism – web / paper / telephone
Help & Assistance – Online help, Paper based communication and Tele-services
Back-end processes – Back-office systems for changing data, inputting paper enrolment, reporting and event management
Change control – Design, delivery and testing of annual enrolment changes and mid-year changes
Delivery – Outsourced, Externally hosted, Internally resourced

Conclusion
Flexible Benefits has proven itself as a tool for employee engagement, recruitment and retention to a significant percentage of UK Organisations. We appear to be now moving into the second phase where organisations are being forced to implement Flexible Benefits due to competitive pressures and the need to be seen as the ‘Employer of Choice’. There is a very real concern though that administration of Flexible Benefits is not easy and there is a need to do a far more thorough audit of the Benefits Administration processes rather than just focussing on the Benefits themselves. Since the UK Flex market is reaching maturity, it is possible to find organisations who have successfully implemented Flexible Benefits in organisations like yours, and it is therefore possible to tap into their knowledge of best practice prior to implementing Flex. Finally though, it must be remembered that auditing these processes that lie beneath the benefits requires a greater investment than is now being made by most companies.

Hope this article helps you in your next Benefit Administration project. If you would like to know more about the work we do in this area or you want to do an audit of your own Benefits Administration system contact us at GirishMenezes @hotmail.com