As organisations look to limit administrative headaches with flex technology, the data that is thrown up can be a vital source of knowledge, shows Laverne Hadaway
Over the past few years, developments in technology have helped to overcome some of employers’ concerns about introducing flexible benefits, such as cost and ease of use.
Phil Hollingdale, chief executive officer of Staffcare, says: “Companies have always liked the idea of flex, but they were put off by the cost in the past. It’s [now] more user friendly for employees and employers, and more accessible because of the internet. The advantage is that employers can deploy the application across their business, providing access to anyone in the business [who has] internet access.”
The falling cost of implementing flexible benefits has also removed barriers for organisations. Two-to-three years ago, employers typically had to spend around £50,000 in order to implement flex software. Now, this has dropped to less than £10,000, making it more affordable for companies of all sizes.
This has raised the possibility that some firms may be able to go it alone and install flex systems without the aid of a consultant. Some providers, such as Staffcare, offer flexible benefits software without consultancy services attached.
Not surprisingly, few consultants believe that employers will be able to do so without their input. Nigel Dumbrill, flex consultant at Aon Consulting, says: “You can do it yourself, but there’s more to getting flex than just buying software tools.”
Marcus Underhill, head of consultancy at flex IT provider Vebnet, adds. “The principle of being able to buy off the shelf and go, gets tested the more complex a system gets.”
While the advent of online systems has made flex more affordable and accessible, other developments have meant that it is becoming increasingly powerful to use. Kim Honess, head of flexible benefits consulting at Watson Wyatt, explains that integrated portals and password security measures have made systems increasingly user friendly. For example, pensions and flexible benefits systems are usually managed on separate systems, but can be integrated so that, from a user point of view, they appear to be the same system and can be accessed using a single password or user interface.
HR administration duties can also be incorporated in to this single online point of access making it easier for employees to log on and do what they need to do, using a self-service system. Employees can book holidays, change address, log their absences and so on online. Hollingdale says that self-service systems help to justify the cost of flex because functions that would have been time consuming and carried out by the HR department can be done by employees themselves, often with more accurate results.
Such developments also have implications for overall benefits administration, marketing, and the measurement of flex take up and HR strategy, both now and in the future. Chris Bruce, director of marketing and technology at Thomsons Online Benefits, argues that flex technology is evolving to the stage where users can make selections online and produce various management reports, for example, on benefits uptake. “People are beginning to realise that the technology for flex provides a data dump of information. It enables the selection of benefits, but doesn’t really handle the administration. Users want something that does do that. No matter how complex, they want everything handled,” he says.
As the number of benefits options available via flex schemes grows, so systems will have to become more sophisticated. Some systems, for example, include modelling tools to enable staff to select the best benefits or level of cover for them, however, Honess argues that financial modelling via flex has to improve.
Many systems already incorporate total reward statements that are updated automatically as employees make changes to their benefits. However, financial modelling is not always as comprehensive as it could be. Honess says that any changes made should be reflected in the gross and net pay employees end up with each month. “Unless you include all the elements of flex on the system, the choices that employees make will not be reflected in their final take-home pay.” Instead, modellers should enable staff to look at the value of their flexible benefits alongside the other perks they receive. This year, for example, one of Honess’ clients has introduced a share incentive plan (Sip) into its flexible benefits scheme.
She adds: “We need to cater for more short-term saving vehicles such as Sips and corporate individual savings accounts (Isas), as well as more long-term savings like house purchase plans. If the modelling only includes core benefits, it won’t reflect all the benefits.”
Another area around which development has occurred is in systems’ levels of access and security. Honess explains that while systems may have the same front-end appearance, access and security levels can be set differently, so that an HR executive can see and do a lot more than an ordinary employee. For example, they may want to access data to help them target communications at employee groups.
Bruce adds: “The information held within flex is the most incredible database. You know how old [employees are], what sex [they are], where [they] live, how often they log in and what benefits they choose. The information can be used intelligently for developing a reward strategy and managing the information produced.”
A 32-year-old male employee with two children under the age of five years may pass by a poster advertising childcare vouchers in their workplace everyday without realising the relevance of the product to him. “The system can be set up so that he receives a email telling him the benefits of the scheme and who to contact. It’s personalised and relevant to him but completely automated and potentially very powerful,” says Bruce.
Underhill adds: “You can set up the system so that only certain people see certain information or so that the tone differs depending on the recipient.”
Employers can also utilise new technology to enhance their scheme’s communication. Instead of placing two or three lines of text about the scheme online, they could use mini videos and 30-second podcasts to generate interest.
Additionally, employers can use techniques employed by some online retailers, so that employees who select specific benefits are told “people who chose this, also chose this…” Staff can also be given the opportunity to rate perks online, providing employers with insight into what benefits they prefer.
In order to gain the most from their system, however, employers must determine from the outset how they are going to measure its success and so quantify the return on their investment. One way of doing so is by looking at the number of employees that log on to a system, the time they spend on certain pages and the selections they make through flex.
While the multimedia and strategic aspects of flex are still developing, so is the use of the concept on an international basis. Honess explains that in the next two-to-five years, she expects to see a greater emphasis on the globalisation of flexible benefits. “Clients are wanting multi-currency and multi-language versions that will look the same across the board wherever they decide to open offices.”
She adds that, while English remains the international language for the moment, and European character sets can be easily set up, Cyrillic and kanji character sets could be next.
This is being driven by the increasing number of organisations that function in a global market, says Bruce. “They want a consistent approach to reward and to integrate their employee communications.” In light of this, Thomsons Online Benefits opened an office in Singapore last year to help roll out the concept of flex to Asia.
Clearly, flexible benefits technology has come a long way, even over the past couple of years and the evolution process looks set to continue. As a result, employers are enjoying more functionality, including marketing, monitoring and strategising. Meanwhile, employees are able to do more for themselves and are aided in making benefit choices as the financial modelling features improve and information is provided to them in a more targeted way.
Case Study: BuyingTeam
When procurement services firm BuyingTeam considered implementing flexible benefits, it began speaking to various consultants and advisers. Ultimately, however, it took the decision to go it alone and install a software solution from Staffcare. Leah Fairman, HR manager, explains: “What the consultants appeared to offer – primarily PR for the system and employee communications – we realised we could do ourselves. In the initial stages we weren’t going for a full flex platform and we felt we had sufficient ability in-house. We have a small, cohesive administrative team, and our finance and HR teams work closely together to ensure the system works.”†
The organisation has approximately 100 staff and Fairman admits a larger company might have more difficulty in implementing such a system itself because of the co-ordination and communication required between departments.
“One person did offer to come in and design the system for us, but we had a clear idea of what we wanted and Staffcare made it very easy for us to give them our specification,” she adds.
Due to its size, the number of suitable products offered by providers is limited so the firm has yet to implement fully flexible benefits. Instead, it offers holiday trading, payroll giving and salary sacrifice pension contributions flexibly for staff to select in an annual enrolment period.