How to measure a return on investment (ROI) on benefits technology

ROI

Need to know

The cost of benefits technology can vary considerably, from a set-up price of £15,000 to £100,000 per organisation for a flexible benefits scheme, depending on the complexity and scale.
When it comes to measuring return on investment, research by Personal Group estimates that an organisation with 1,000 employees can save more than £125,000 a year buy introducing an employee services platform and holistic wellbeing programme.
Benefits technology can capture ongoing data which can be used for comparative purposes and provide return-on-investment information.

Benefits technology systems can provide a wealth of data which employers can mine to better understand what their employees want from their benefits packages, as well as where their investment is going. Implementing a technology system can run to thousands of pounds in implementation, administration and licence costs, so employers need to ensure that they are getting a good return for their investment. But how can they determine just how valuable this technology is to their workplace?

Benefits dataBenefits technology systems can, however, vary considerably. Katrina Philippou, marketing manager at Personal Group, says: “There are a number of different types of benefits technology systems to choose from. First, [there are] the out-of-the-box platforms that simply host benefits, then there are platforms which hold data which HR professionals can dip into to measure efficiency, success and engagement, among other things. Finally, there are platforms which bring technology together with face-to-face engagement and account management to help businesses constantly improve their platform and make sure that they are getting the most out of their investment.”

When it comes to measuring return on investment, research by Personal Group, published in October 2017, estimated an organisation employing more than 1,000 employees could save £125,000 a year with the introduction of an employee services platform and holistic wellbeing programme. This is calculated based on reduced absence, improved retention, lower administration costs and savings in VAT and national insurance (NI).

Identify benefit take-upTechnology can also be used to identify which benefits are popular with employees through take-up and engagement statistics, as well as help to gather qualitative feedback.

However, the cost of such schemes and the technology behind them can vary considerably. Richard Geldard, an account director at employee benefits specialist Staffcare, says: “The typical spend [to set up a flexible benefits scheme per employer] can range widely from £15,000 to £100,000, depending on the complexity and scale. There’s also license fees to consider, which are typically charged per person per annum.”

It is also important to differentiate between voluntary and flexible benefits systems, says Geldard. “Flexible workplace benefits applications let [organisations] specify the often-complex rules of policies that have been negotiated with providers,” he explains. “Some of these benefits may be a core part of an employee’s contract. This isn’t a predefined list; the applications can usually handle all types of benefits which can be customised accordingly.”

Voluntary benefits platforms, by contrast, usually let the employee select from a predefined list of products and services, much like online shopping, says Geldard.“Typically, these systems are very simple providing instant access to a wide variety of consumer products,” he explains.

Flexible benefits platforms used to be seen as a luxury for large organisations with big budgets, however, they are now available to a much wider range of employers, says Nicky Dunderdale, director of digital services at Pyson. Such technology can also be used to provide a return on investment (ROI) and measurement on other benefits. “Once the technology is in place, it can capture ongoing data which can be used to compare and contrast against the baseline,” says Dunderdale.

For example, one organisation wanted to increase engagement with its voluntary benefits platform among its employees. Pyson worked with the organisation to help it fully understand its workforce demographic and tailor its employee communications more successfully. “By working to understand [its] employees, rather than offering a generic strategy, the [employer] has seen a significant increase of 29% in employee participation in the benefit, which is now 8% above the industry average,”explains Dunerdale.

Measuring return on investmentUltimately, benefits technology has been created to help organisations increase benefit take-up and reduce the time spent administering their benefits schemes, says Geldard. “By removing manual processes for loading data and reducing simple questions and queries, administration becomes significantly faster and errors are less likely to occur,” he says. “So, costly mistakes can be ruled out. HR and benefits professionals are then able to increase their scope of work, saving on the need for additional headcount.”There are also cost savings alongside the reduction in administration costs and time, or savings through tax and NI where applicable. “[Employers] could look at how [they're] able to retain talent, and save on recruitment fees,” says Geldard. “Review staff motivation and how effectively people are working.” Employers should consider what really matters to their organisation, and what they want their employees and, in turn, the organisation to achieve.

Ultimately, it should not all be about the perceived ROI, but rather the objectives behind using benefits technology. “Traditionally, ROI was looked at in terms of monetary savings but that is seen as much less relevant these days,” says Dunderdale. “The key is for the employer to have clearly defined objectives as to why [it is] implementing a benefits strategy and how [it is] going to measure the success of the project and, therefore, the ROI.”By investing in technology which is relevant to their key objectives, employers will be able to demonstrate a successful ROI; not just in pounds and pence, but also in less tangible gains.“Well-implemented technology will support increased efficiency, saving man hours for [organisations that] are currently using manual processes and reducing the risk element by eliminating data input errors," explains Dunderdale. "An effective benefits strategy can also increase staff retention and engagement. All of these are significant measures for ROI.”

Infographic: How do employers measure engagement with online or flexible benefits portals?