If you read nothing else, read this…
- Time is increasingly a factor for in-house benefits teams when implementing or reviewing products and services.
- Putting more of the burden on to consultancies, brokers or suppliers is an option, and many will offer services they don’t always shout about.
- New tools are emerging that can free up more time, and it is also worth investigating unused features of existing software.
Cost will always be a factor in any decision about whether to implement, review or expand a benefits package, but increasingly the new realities are creating another important criterion: time. Benefits professionals simply do not have enough time to invest large amounts in implementing and administering perks, and are increasingly looking to consultants, brokers or suppliers to help them out.
“It’s always a factor these days,” says James Malia, managing director of P&MM Employee Benefits. “People will look at things and think ‘is this going to be more work for us to set up and run?’. A lot of HR teams are smaller than they were and they are mindful of the work involved for them or payroll, or anybody else. It’s also the case with switching providers; they have a fear that it’s going to be over-complicated and time-consuming.”
Managing benefits through a single provider
But this doesn’t have to be the case. Malia estimates that an HR team’s involvement in running a benefits package can be as little as undertaking a couple of tasks a month, if it is managed through a single outsourced provider. “If you have one central point, it makes life a lot easier,” he says. “If you’re with the right provider, not only can it advise on products, but if there are ever any issues, you only have to deal with one company. You don’t have to call in different providers to talk about how their different products are running.”
Matthew Gregson, consulting director at Thomsons Online Benefits, says the effective use of technology can also help with the smooth administration of benefits. This includes both portals, which allow employees to manage their own benefits online without involving HR or benefits teams, and assessment tools, which can perform calculations around benefits such as childcare vouchers and company cars.
“The biggest challenge, and work that is sometimes split between HR and payroll, is having a back end that can do all the assessments and calculations to make sure you don’t under-pay or over-tax someone,” says Gregson. Research by Thomsons Online Benefits suggests HR teams that use a single system to manage their benefits save an average of five and a half hours a month compared with those using multiple packages.
Chris Evans, senior consultant at Buck Consultants at Xerox, says consultancies can also help save time in other ways, particularly in making the right decisions about benefits selection in the first place. “If you get that right, it means you don’t have to review it again six months down the line,” he says.
Consultants can troubleshoot problems
A related issue is troubleshooting any problems that arise, such as an insurance company failing to send out the right documentation, says Evans. “We are exposed to those sorts of problems more often than we’d like to be, but the net result is we are also experts in helping [employers] fix them when they occur,” he adds.
Employers can also save time by opting for standard packages put together by consultancies using their own preferred suppliers. Manesh Patel, senior benefit consultant at Aon Employee Benefits, says this tends to appeal particularly to smaller organisations without the capacity to employ someone to design bespoke schemes.
Aon Employee Benefits operates a preferred supplier system, but complements this with a preferred panel set-up, giving clients the option to choose from a further three providers if they do not want the default option.
“The advantage of the preferred route is that we’ve done the legwork,” says Patel. “We’ve done the RFPs and the beauty parades, we’ve negotiated terms and we’ve also been able to streamline the set-up process in terms of contracts or agreements.”
Consultancies can also help with communications around benefits, he says, ensuring consistency in messaging and appearance across different products, and even branding this in the organisation’s style. “It cuts out the cost of having to deal with it in-house, financially or resource-wise,” says Patel.
Put the administrative workload on brokers
However, not everyone wants, or can afford, to go down the single-provider route, and there are plenty of organisations willing to manage a range of suppliers in-house. Janet McKenzie, reward and recognition manager at B&Q, is one example, but her approach is to put as much of the administrative workload as possible on to brokers.
“We work very closely with our brokers because they can provide a huge amount of help and assistance,” she says. “But some are better than others. I have encountered some that do the minimum required to earn the fee, and it’s only when you really push them that you find there are all these other things they can do. If you get a good broker, it will be proactively contacting you and telling you what it can do.”
New tools are also emerging that should, in theory, help save benefits professionals time. Evans points to the huge amount of data that can be generated by providers around the take-up of benefits, which can help in-house teams analyse trends and make decisions quickly.
“One of the tools we’re developing allows you to convert that data into information, and then, by analysing that information, turn it into intelligence,” he says. “It can turn what was previously a hugely time-consuming process, trawling through data and spreadsheets, into a more automated one.”
Aon Employee Benefits, meanwhile, offers tools that can help benefits teams benchmark rates in the market according to their demographics, size and claims history, which Patel says can save time when it comes to researching and taking out new policies.
“It allows organisations to assess their profile and what the market is thinking of them at any point in time, which means that when it comes to reviewing products, benefits providers and rates, you’re already ahead of the game,” he says. “It saves you having to take the time to go through those discussions at annual renewal stage.”
Insurers offer absence management tools
Help can often be closer at hand than it might initially appear. Jamie Winter, senior consultant in Towers Watson’s health and group benefits practice, says many income protection or private medical insurers now offer absence management tools, either as part of the premium or for an add-on charge, which can free up HR teams from getting too embroiled in managing such matters.
“Absence recording systems are also often a core part of payroll management systems, such as SAP or Oracle, but often they’re not switched on because employers don’t know how to implement them,” says Winter. “There is an argument for saying that if you want to understand what your absence levels are and what time you’re having to invest in it and what it’s costing you, why don’t you switch that absence recording tool on?”
Many group income providers also offer early intervention services, which can ease the burden on in-house teams, he adds.
B&Q’s McKenzie urges organisations to make more use of their existing software. “Some [employers] have a payroll system where they only use the vanilla side of what it can do, and if you investigate it a bit more, it can help you out,” she says.
B&Q uses its payroll software to check that employees receive the right amount of reward, taking into account benefits such as childcare vouchers and pension contributions, she adds.
McKenzie has also taken advantage of a service offered by B&Q’s company car provider, GE Capital. “They come in and identify which processes give us the most grief or require the most admin and look at whether there are things they could do for us or that we could do differently, given their experience of dealing with other organisations,” she says.
Provider communicates shopping discounts
Taking on more of the legwork is a core selling point for The Voucher Shop when offering its MySpree discounted shopping card to employers. As well as managing the system itself, the provider takes responsibility for communicating with employees, tailoring messages depending on their usage.
Kuljit Kaur, head of business development at The Voucher Shop, says: “It takes the onus away from HR teams and they are quite happy not to have to get involved at all. We’ve built a whole communication piece that supports the product , so the client doesn’t have to worry about doing any of that.”
Certain benefits carry a heavier administrative burden and require more employer interaction than others. Patel highlights company cars as difficult, largely because of the complexity of combining old and new schemes and the need to mitigate potential risks around leavers, while Thomsons Online Benefits’ Gregson says childcare vouchers and even life cover and income protection can involve a significant amount of management time.
But here, too, employers should be able to turn to consultants, providers and brokers for an honest assessment of what is involved, says P&MM’s Malia. “There are some that have more options as to how they can be run, and they all have their own idiosyncrasies,” he says. “But that comes down to the provider to explain what those risks are.
“There is no harm in having a conversation about it and potentially putting a business case together. The provider should be the first person to say whether it’s going to work or not. They don’t want to waste their time, either.”
One for all
Up to now, recruitment business Adecco has managed its employee benefits in-house, drawing on a standard package offered by a firm of advisers, with external administrators used for certain benefits.
Matthew Johnson, head of compensation and benefits at Adecco, says the decision to use a standard package was aimed at keeping internal administration to a minimum, but the reality has been different. “We try to get the two [organisations] to talk to each other, but they don’t,” he says.
As a result, Johnson says he has to spend a lot of time working with the two organisations, as well as having to manage relationships with individual benefit providers.
Increasingly, he is coming round to the idea of outsourcing the entire benefits offering to just one provider, which can handle individual relationships with suppliers and provide the thought leadership around new products, which Johnson believes is currently missing.
“At the moment, we are provided with a report from our flex provider and we then send that information to individual benefit suppliers,” he says. “But why isn’t our flex administrator doing that for us? That would be far more efficient.”
Help or hindrance
One of the biggest issues for in-house benefits teams is that they don’t know how effective a benefits provider or supplier is until they start working on a project, says Richard Higginson, head of reward at financial advice and investment management firm Towry.
Higginson has learned this the hard way, having endured a bad experience with a pensions provider handling the transition to auto-enrolment.
“They told us they had this fantastic new automated computer system, but eventually confessed that somebody at their end would manually type all the data into the system,” he says. “That meant they had a 10-day turnaround time on it, which took them beyond our pay date each month. There was no way we could ever get anybody’s contributions paid on time.”
Higginson is currently looking at introducing a company car scheme, but admits to concerns over the time involved in running it. “If it is more than minimal, then it’ll be a no-go, because we don’t have the resources for it,” he says.
