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As flexible benefits systems have developed so has the level of information available to HR, payroll and employees. Rob Bell investigates
Benefits and the way they are offered are changing rapidly - driven by technological advances in software and online services, along with increased competition within business sectors to offer the most competitive package.
Consequently, flexible benefits are rising in popularity, and while employees gain greater choice, personalised packages create new administrative challenges for HR departments. Fortunately, technology and benefits providers are rising to the challenge, and implementing a flexible benefits system can offer businesses the ability to understand their employees' needs better, communicate the advantages of the benefits they offer more clearly, and gain a competitive advantage in recruitment and retention over other companies in their field.
Recent research carried out by Thomsons Online Benefits shows that the past three years have seen a 10% rise in companies offering employee benefits packages, with 31.6% offering flexible benefits (up from 17% last year).
However, over 40% of respondents to the survey thought the benefits offered were not valued by employees, and only 6.3% felt their employees valued their employee benefits highly. This highlights the key issue of communication - particularly when flexible benefits, which are inherently more complex, are on the table. Interestingly respondents with flexible benefits schemes were much more likely to think that their employees valued their benefits highly or quite a lot. This may in itself be evidence of the improved communication and access offered by web-based solutions, particularly as those companies taking part in the survey which offered flexible benefits had a higher use of web-based software.
A popular choice
Peter Cullum of software provider Gowi HR, says: As software becomes more advanced, you will find it bringing increased features such as flexible benefits and self-service to a higher number of organisations. Ultimately, HR and payroll may have no choice but to offer this kind of technology to their employees because it is being offered by their competitors. Indeed it may be that the ability to offer technology driven employment choice becomes a critical factor in being able to attract and retain the best talent.
Chris Bruce, director of marketing and technology at Thomsons, agrees, saying his company is finding whole business sectors following the one or two early adopters in adopting flexible benefits in a matter of one or two years. The main reason being that they begin to find it hard to recruit [staff] from the companies that offer flexible solutions, he says.
The popularity of flexible benefits is not just about increased choice. Software that allows employees to model the impact of their choices and the advent of web-based systems that can be accessed from home mean companies can offer tailored benefits packages alongside clear information to help employees in their decisions.
Cutting down on paper
Publisher Emap took its flexible benefits system online with supplier Vebnet last year, primarily because the range of benefits the company offers meant huge amounts of printed information was being sent to thousands of employees each year. However, success has been measured in more than just the number of trees still standing.
Group benefits manager Stewart Grant says: Going online means all the information is there and up-to-date - we can update one page and it will be available to all our employees. Also, there's a tool so employees can work out their personal costs.
People are ready for online solutions - everyone has a computer at home, so they can discuss their choices with the family then input them online. And from an administration point of view we can easily access employees' choices, which means less paperwork for HR.
Accounting, business and tax advisory group Vantis has also implemented a web-based flexible benefits system, through software provider 4th Contact. The majority of our employees have found it easy to make their choices, with around 60% using the system, says Steve Field, group compensation and benefits manager.
And for us it has been useful. The system provides us with reporting tools that allow us to keep payroll informed each month, see who has opted for what, break the data down by location and grade, then export it back into our HR database so we can carry out modelling. Having a system where we can download and manipulate the data has made analysis easier - and we get some interesting results.
Bruce says: We've got a lot of modelling tools, alongside tools such as pension calculators that enable employees to understand what they'll receive and to model real scenarios.
It provides a tremendous amount of management information internally on what employees are doing. It's also broken down by demographic groups so a company can understand any trends then target employees appropriately.
Communication
But while the HR department has a lot to gain in terms of useable information, it is communicating the benefits package to the employee base that will have the greatest impact, as Field attests: Most importantly, benefits provision is all about communication - the more we can communicate and the easier it is to understand the better. And the system meant we were better this year and intend to be better again next year in terms of the quality and quantity of information we provide.
Stuart Stroud, consultant with the Employee Benefits Group at Baker Tilly Financial Services, also stresses the importance of clear communication if flexible benefits are to be a success. Communication is the key to the success of any flexible benefits platform, he says. The system must provide details of each benefit including a detailed description of how the benefit will help employees. And it shouldn't be seen as static. The system will provide information on which benefits are popular and with whom, and this data can be used to tweak the portfolio.
Ideally, this information should also be augmented by data from staff surveys. Generally, staff are allowed to change their benefits profile yearly, and this annual update provides an opportunity to bring on board new offerings and dispense with elements that are not popular or cost effective.
The future
Clearly flexible systems are the benefits provision of the future, and cutting-edge technology makes it a manageable process with the potential to improve benefit take-up and increase employee satisfaction with their benefits package - with positive impacts on recruitment, retention and job satisfaction.
Add simplified administration for the HR department and a wealth of easily accessed management data to the mix and the solution seems to be a perfect one. However, as has been stressed throughout this article, provision without communication will not prove a success.
Despite Grant's confidence that Emap staff are now fully informed of the benefits on offer, an employee at the company says: I didn't change any of my Flexiplan settings this year, although you can buy and sell extra holiday days or pay into health/dental insurance and so on. It seemed quite a good idea, but I didn't really understand it all so I left it as it was.
While the advantages of flexible benefits are clear, the issue of communication is the most difficult to overcome, despite the high quality of the software and online offerings available and the best efforts of HR staff. Introduction of a flex system requires careful planning, and employees must be well informed of their options and how to exercise them.
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Printed: 06 January 2009 |