Flexible benefits: Booking a ticket for first-class service

If you read nothing else, read this . . .

• An employer’s relationship with its flexible benefits provider can make all the difference to a scheme’s success.

• To obtain the best service, employers should ensure requirements are explicit from the outset.

• Agree on a fixed fee and insist on signing off any additional work before it is carried out.

• Even if an employer is happy with a provider, it is a good rule to regularly benchmark it against others.

• Ensure a provider has a good grip on the latest market trends.

Case study: Azzurri seeks strong connection

Telecoms and IT company Azzurri Communications keeps its flexible benefits provider on its toes by regularly benchmarking against the competition.

Noel McGonigle, group HR director, says: “We review providers every two years. We believe this is the optimum
time because a year is not enough for the provider to fully understand a business and make a real difference. But leave a review any longer than two years and you run the risk of them going stale and not trying as hard as they
might have at the outset.” McGonigle believes employers and providers should work together as a team to improve the flexible benefits scheme.

“We want quality interactions, so our meetings are very focused on finding creative ideas to support what we are seeking to achieve for our diverse workforce of 750 staff,” he says. “Innovation is important. We want to work with a provider which is leading the market, not following it.”

Azzurri Communications researches new flex trends to ensure that it does not get left behind by advancing technology. McGonigle explains: “We challenge our provider at account reviews to update us on the newest market developments. However, as a customer, it is very important to scan the market as well, because sharing this responsibility helps to ensure the best mix of flexible benefits gets delivered to employees.

Case study: Mouchel keeps in contact

Consultancy and engineering services group Mouchel boosts its provider relationship with a clear contact strategy.

The company regularly meets its provider to exchange information about plans and market developments. Kate Moore, benefit adviser at Mouchel, says: “There are key meetings during and outside of renewal that must take place for a successful flexible benefits scheme to grow. It is vitally important to ensure the mapping session between provider and employer takes place in plenty of time before the annual renewal to ensure a smooth choices period. As renewal draws near, we talk to the provider daily.”

Mouchel employs 9,000 workers, of which 6,500 are entitled to take part in flex. The scheme offers more than 20 perks, including private medical insurance, travel insurance and a tax return service.

Mouchel puts in research to ensure its provider innovates and stays ahead of the game. “We expect our provider to be at the forefront of improvements on both benefits and technology, as these are the services we are paying for,” says Moore. “However, it is up to us, the client, to be aware of market developments to ensure we make informed decisions with our flex provider.”

Ten tips to get the most from providers

1 Plan ahead. Decide on requirements before starting a project, so you can give the provider a clear, well-defined brief and stop it going down blind alleys.

2 Avoid racking up extra costs. That flex scheme might seem good value, but check it is a fixed fee. Just a few payroll changes can boost a scheme’s cost by thousands of pounds.

3 Ask for a dedicated project manager. Ensure you are corresponding with a named person. Accountability brings a more successful scheme.

4 Establish service-level agreements. Carefully draw up agreements that cover issues such as server downtime and query response times, with penalties for getting it wrong.

5 Include escalation provisions. Ensure problems will be escalated to a senior manager at the provider’s company.

6 Communicate effectively. Communication is the backbone of any employer-provider relationship, so chat at least monthly and get together once a quarter – more often at the launch and renewal stages.

7 Take responsibility for your scheme. HR has to play ball, too. Be sure to provide the required data on time and contact the provider if you need help.

8 Compare with the competition. Putting the flex scheme out to tender every three years provides a benchmark by which to judge the scheme’s competitiveness. Consider enlisting a consultant to help.

9 Exploit technology. Providers’ communications on sites such as Twitter, LinkedIn and Facebook allow you to check yours is on top of market developments, while HR chat forums enable instant market research.

10 Rate employee satisfaction. Employee surveys and focus groups are a great way to judge a provider’s service levels.

Choosing the right provider and developing a close working relationship are vital elements in the success of a flexible benefits scheme, says Jenny Keefe

An employer’s relationship with its flexible benefits provider can make all the difference to a scheme’s success. And although an employer cannot do a provider’s job for it, it can do its bit to make sure the scheme runs smoothly.

That might seem self-evident, but organisations need to ensure they choose the right provider for their particular situation. Kelly Gajjar, consultant at Lorica Employee Benefits, says: “The best providers in the market invest time and do not fix the scheme around a standard solution. They know they need a clear understanding of the employer’s culture, issues and goals, and ensure the scheme reflects these.”

Once they have found a good provider, what can organisations do to get the most out of the relationship? The trick is to make their requirements explicit, says Phil Hollingdale, chief executive officer and founder of Staffcare. “It is essential employers understand and articulate their requirements fully before starting a project with a provider,” he says. “Employers can be liable for additional charges if the scope changes or if they cannot meet the agreed timelines.”

Most experts advise agreeing on a fixed fee and insisting on signing off any off-plan work before it is carried out. Charlotte Godley, senior flex consultant at Mercer, says: “Employers should work with their provider to ensure the project scope is fully documented and all parties understand the costs for each element. The provider should be clear about what the fee does and does not cover, and explain potential extra costs.”

A project plan should also consider how a provider might attack upcoming obstacles. Julia Turney, head of benefits management at Jelf Employee Benefits, advises including a ‘risk register’ that sets out potential risks, consequences and contingency measures. If problems emerge in the scheme, employers also need to know they can reach senior people, so should write escalation provisions into the contract.

Service-level agreement

The heavy-duty weapon to make sure the relationship stays on track is a strict service-level agreement setting out realistic objectives. Areas to be clear about in any contract include response times, query resolution and system performance, with fixed penalties for getting it wrong.

“Service-level agreements are key,” says Gajjar. “They should include everything from design and testing to ongoing administration. They should also consider speed of call handling and system downtime. Ask [providers] to map out key dates for testing, handover and going live to employees.”

A capable project manager is another decisive factor. Staffcare’s Hollingdale says: “Employers should particularly look at what support is provided as part of their ongoing contract. They should look for a dedicated account manager, who will act as their advocate throughout the contract.”

With the planning stage complete, it is time to focus energy on administering the scheme. The key areas to consider here are monthly changes processing and answering data queries on time. Mercer’s Godley explains: “If the scheme works well, it is very much a partnership between the employer and the provider, as each depends on the other to get files sent in agreed formats by agreed dates. If one slips, the other ends up getting squeezed.”

Employers can measure whether the provider is a help or a hindrance by analysing management information, looking at take-up, costs and savings. They can also canvass employees for their views on service levels.

Good communication and two-way feedback are crucial to get the best from a provider. At the implementation and renewal phase, employers should be in touch at least once a week, with a post-enrolment meeting to discuss room for improvement. Many day-to-day decisions will result from informal communication between HR and the provider’s administration team. However, experts usually suggest a call every month and face-to-face meetings every quarter, to cover system charges, budgets, and legislative and tax updates.

Meetings are an important talking shop, says Lorica’s Gajjar. “They provide an opportunity to talk also about market updates, trends and scheme usage, as well as prepare for the annual refresh,” she says. “Flex is constantly evolving.”

Market developments

It is also vital to ensure the provider has a grip on market developments. Andrew Morris, employee benefits director at NorthgateArinso Reward Solutions, says: “Every now and again, something comes along that changes the way you do business. The providers that embrace and lead change are the ones that will be of most value to the employer. For example, right now the auto-enrolment agenda is evolving.”

One way of checking that a provider is up to speed is to scout its website and newsletters for updates. Also check whether it is visible in Facebook, LinkedIn and Twitter, as well as industry publications. Staffcare’s Hollingdale says questions that employers should ask themselves include ‘Does the provider carry out any research?’, ‘How much does it spend on research and development?’ and ‘Do any of the leading employee benefits providers use the technology?’

It is always a good rule, even if an employer is happy with a provider, to benchmark it against others. Employee Benefits/Towers Watson Flexible benefits research 2011, which was published in March, found 45% of employers had reviewed providers in the previous year to obtain a better deal, and 40% intended to do so in the coming year. Employers should size up the competition by inviting other providers to present regularly and chatting to other employers about service levels.

NorthgateArinso’s Morris says: “Contracts tend to run for between three and five years, and it is sensible for employers to consider their options at the end of each term. However, moving provider can be messy and the ideal scenario is to build a long-term relationship with a provider that gives a good level of service at a fair price. If either of those two ingredients is lacking, explore possible alternatives.”

Richard Stewart, director at benefits provider Redbourne, adds: “Every provider will have its own strengths and weaknesses. It can be quite hard to do benchmarking, because every flex scheme is customised and used in different ways. Realistically, the best way to carry out a formal benchmarking exercise would be to use a reward consultant with expertise in that market.”

Read more articles from the flexible benefits supplement