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Dave Foxall 3 Operational Advantages of Benefits Automation Software

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 By Dave Foxall

The Business Case for Benefits Administration Software

The CedarCrestone 2011 HR Systems Survey identified five ascending levels of HR operational excellence: administrative, service delivery, workforce management, talent management, and performance/workforce optimization. The first level includes benefits administration and is often targeted for automation in order to free up HR resources for more value-added work higher up the scale. With increasingly complicated benefits plans, rising health costs, and health care reform, the level of challenge for benefits management software is on the rise but so too are the potential advantages for organizations that choose to automate. The majority of organizations (91% according to the 2011 Towers Watson Annual Enrollment Survey) have automated their benefits administration; either via outsourcing or by insource management of a cloud-based HR software service. Yet, the question remains: just what exactly are the key business advantages to be leveraged from the latest multi-featured benefits software?

Benefits Software Advantage #1: More Sophisticated Communication

"With health benefit costs continuing to increase with no end in sight, and benefit plans and choices becoming more complex, communicating with employees has never been more important," says Tower Watson's Jeri Stepman. Accurate, rapid communication of options and plan changes to employees is crucial to effective benefits administration; particularly during open enrollment. The Towers Watson survey found that although 84% of respondents used primarily e-mail to communicate benefit choices in 2010, other channels were also seeing increased usage – podcasts, web-based videos and online chats were used by 33% of respondents. Face-to-face meetings were also more widely used (60%), suggesting that benefits administration automation offered opportunities for a more sophisticated, 'blended' approach to communication, widening the scope of employee engagement. Furthermore, both Towers Watson and Jennifer Benz of Benz Communications see an emerging trend in engagement on employee health and welfare issues via social media. Usage in 2010 was low but significant and expected to have become much more widespread during the next few years.

Benefits Software Advantage #2: Increased Engagement

The Towers Watson survey identified the main challenges as, "helping employees understand new plan features, handling an increased number of calls to service centers and explaining price changes to employees." The introduction of more holistic employee self-service (ESS) options to benefits administration software is key to meeting these challenges – The Society for Human Resource Management (SHRM) 2011 report, Transforming HR Through Technology states, "Although there are multiple ways that an organization can pursue an e-benefits approach, underlying each of these is the use of employee self-service."

Further, as the HR Outsourcing Association (HROA) states, "Conducting HR and benefits transactions through self-service generally reduces administrative processing time and increases accuracy since data validation and approval paths are built into each transaction." Indeed, the more information channels that an organization has available, the greater the involvement (and therefore ownership) of employees in the benefits administration process. In the HROA's view, "Chat and mobile devices are two variations of self-service that are gaining momentum in the marketplace." Chat options can take more time than a phone conversation but the key saving is in the fact that an operator can handle multiple chat sessions at once and chat can often be provided offshore, reducing costs through labor arbitrage. As can be seen, the ever-widening range of access methods (particularly via the inclusion of mobile devices), increases 24/7 availability of services and by extension increases employee engagement and adoption.

Benefits Software Advantage #3: Compliance Assistance

Compliance with legislation – including COBRA, HIPAA and FMLA – is a major concern for benefits administration in the U.S. and a major driver to outsourcing and the use of automation. Case studies have seen processing error rates drop to 1% or less with software use, compared to 4-5% in non-automated approaches. In the opinion of SHRM, "Many mandated benefits programs carry significant financial penalties for noncompliance. E-benefits applications often can have a positive ROI in a relatively short time, not only by reducing transaction costs, but also by avoiding fines and penalties."

Benefits Administration Software – The Bottom Line

Selecting the right HR software for the needs of employees and the business is an absolute pre-requisite to automating business processes, ensuring consistent services and gaining access to much needed information reporting and analysis. The Towers Watson survey not only found that communications and technology solutions were the most important enrollment issues but also that 69% of employers blame their dissatisfaction with enrollment on inadequate HR technology. Out of date systems provide limited advantages and with the latest benefits software the real bottom line operational advantage is of course, financial. A 2010 Bureau of Labor Statistics survey, Employer Costs for Employee Compensation suggests that benefits costs now average 43.6% of wages and salaries. The automated delivery channels, better-informed employees, greater employee engagement and control, and simplification of processes mentioned above can result in a significant and sustained reduction in the costs of administering employee benefits. End

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Indeed, the more information channels that an organization has available, the greater the involvement (and therefore ownership) of employees in the benefits administration process."


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