Time is Money: Maximizing Return on Benefits and Compensation Technology
1 Mar, 2004
By: Tim CliffordWhen Benjamin Franklin coined the phrase “time is money,” he wasn’t thinking about better systems to help human resource professionals manage their company’s benefits administration and compensation planning processes. However, HR professionals today know that wasted time is wasted money. Almost every board challenges their HR leadership to reduce costs while maintaining the delivery of competitive services that attract, retain and motivate its workforce.
Two of the most business-critical workforce processes with ample cost-containment opportunities are health and welfare benefits administration and compensation planning. For example, until recently, many companies relied exclusively on individual spreadsheets to manage their annual merit planning. Regardless of how “well” a line manager completed the spreadsheet, aggregating the morass of spreadsheets uncovered misinformation and functional inconsistencies, resulting in only a limited view of compensation distribution across the workforce. Without an integrated view of the employee base and the ongoing allocation process, managers often exceeded their merit budgets—something HR learned only after the planning period was completed and when corrections would become more laborious to implement. Given the challenges of such a manual system, the burden still fell on the shoulders of HR. Without the right technologies, HR’s ability to really contribute to the organization’s productivity and growth was significantly hampered.
Labor-intensive transactions, such as benefits administration and compensation planning, involving multiple workflows, resources and deadlines, have caused HR professionals to turn to technology—specifically the Internet—to create the process efficiencies that save both time and money. But, even after investing in the latest technology, HR has learned that these applications can only solve critical business problems and maximize return on investment when the workforce accepts and adopts them at high rates. Technology that languishes from lack of use can never deliver the enterprise-wide results promised.
As a result, organizations, particularly those with high turnover such as contact centers, are in search of the right technologies to contribute to the organization’s productivity and growth through realizing high adoption rates.
The Right Technology for the Job
When Benjamin Franklin coined the phrase “time is money,” he wasn’t thinking about better systems to help human resource professionals manage their company’s benefits administration and compensation planning processes. However, HR professionals today know that wasted time is wasted money. Almost every board challenges their HR leadership to reduce costs while maintaining the delivery of competitive services that attract, retain and motivate its workforce.
Two of the most business-critical workforce processes with ample cost-containment opportunities are health and welfare benefits administration and compensation planning. For example, until recently, many companies relied exclusively on individual spreadsheets to manage their annual merit planning. Regardless of how “well” a line manager completed the spreadsheet, aggregating the morass of spreadsheets uncovered misinformation and functional inconsistencies, resulting in only a limited view of compensation distribution across the workforce. Without an integrated view of the employee base and the ongoing allocation process, managers often exceeded their merit budgets—something HR learned only after the planning period was completed and when corrections would become more laborious to implement. Given the challenges of such a manual system, the burden still fell on the shoulders of HR. Without the right technologies, HR’s ability to really contribute to the organization’s productivity and growth was significantly hampered.
Labor-intensive transactions, such as benefits administration and compensation planning, involving multiple workflows, resources and deadlines, have caused HR professionals to turn to technology—specifically the Internet—to create the process efficiencies that save both time and money. But, even after investing in the latest technology, HR has learned that these applications can only solve critical business problems and maximize return on investment when the workforce accepts and adopts them at high rates. Technology that languishes from lack of use can never deliver the enterprise-wide results promised.
As a result, organizations, particularly those with high turnover such as contact centers, are in search of the right technologies to contribute to the organization’s productivity and growth through realizing high adoption rates.
The Right Technology for the Job
When Benjamin Franklin coined the phrase “time is money,” he wasn’t thinking about better systems to help human resource professionals manage their company’s benefits administration and compensation planning processes. However, HR professionals today know that wasted time is wasted money. Almost every board challenges their HR leadership to reduce costs while maintaining the delivery of competitive services that attract, retain and motivate its workforce.
Two of the most business-critical workforce processes with ample cost-containment opportunities are health and welfare benefits administration and compensation planning. For example, until recently, many companies relied exclusively on individual spreadsheets to manage their annual merit planning. Regardless of how “well” a line manager completed the spreadsheet, aggregating the morass of spreadsheets uncovered misinformation and functional inconsistencies, resulting in only a limited view of compensation distribution across the workforce. Without an integrated view of the employee base and the ongoing allocation process, managers often exceeded their merit budgets—something HR learned only after the planning period was completed and when corrections would become more laborious to implement. Given the challenges of such a manual system, the burden still fell on the shoulders of HR. Without the right technologies, HR’s ability to really contribute to the organization’s productivity and growth was significantly hampered.
Labor-intensive transactions, such as benefits administration and compensation planning, involving multiple workflows, resources and deadlines, have caused HR professionals to turn to technology—specifically the Internet—to create the process efficiencies that save both time and money. But, even after investing in the latest technology, HR has learned that these applications can only solve critical business problems and maximize return on investment when the workforce accepts and adopts them at high rates. Technology that languishes from lack of use can never deliver the enterprise-wide results promised.
As a result, organizations, particularly those with high turnover such as contact centers, are in search of the right technologies to contribute to the organization’s productivity and growth through realizing high adoption rates.
The Right Technology for the Job
With specialized, Web-based benefits administration and compensation planning tools, employees and managers can initiate their own transactions online while ensuring that the guidelines and business rules established by HR are being followed appropriately. For example, in the case of benefits administration, employees become empowered to control their own personal information and benefit decisions. As a result, HR professionals spend less time performing non-value-added data entry activities such as updating employee information profiles or processing changes of address, while being able to focus more on timely payroll and funds distribution requirements.
An analogy of how this complex process works is perhaps best found in the global supply chain. In the average apparel supply chain, there are numerous (sometimes hundreds of) manufacturers, importers, exporters, shippers, etc., that help move unfinished goods—zippers, buttons, fabrics, etc.—to completion so that finished merchandise appears on the shelves of local department stores. Automating benefits administration via the Internet means data flows throughout the “HR supply chain” from the employees’ fingertips to all parties that touch the employees’ benefits decisions—the HR department, payroll, insurance carriers and other relevant parties. Both data quality and data timeliness are vastly improved, ensuring better organizational decisions and more effective compliance with state and federal employment standards.
Clearly, there are time and cost savings in minimizing HR’s involvement in the transactional aspects of benefits enrollment. HR professionals gain back the time previously spent on administrative duties and focus their efforts on high-level business initiatives, such as acquiring, developing and rewarding top talent in the organization. Errors created by handwritten documents and manual data entry are reduced, and the ability to communicate electronically with external vendors is greatly improved.
Web-based benefits solutions can also include “help” features that provide supplemental content and eligibility guidelines, even financial calculators, that help guide employees to select the right plan options, thereby decreasing enrollment errors and phone calls to the HR department both during and after the enrollment period.
When Time Is Money and Money Is Money
More companies are moving away from traditional compensation planning that relies on anniversary-based promotional raises and, instead are adopting focal periods for reviews and merit increases. To create competitive advantages, each organization seeks to reward higher levels of employee performance and to provide incentives for desirable employee behavior. Each compensation program has its own unique set of guidelines for allocation. As a result, compensation programs have grown increasingly complex in recent years, with numerous company guidelines and compliance issues driving not only base pay decisions, but also numerous variable and incentive pay components, such as annual bonuses, and stock compensation.
An easy to use Web-based solution that automates the intricacies of compensation planning can manage budget allocations and ensure that the company’s pay guidelines are being interpreted accurately throughout the organization. According to a 2003 study conducted by The Cedar Group, salary management applications are on the rise and have grown in use by more than 80 percent since 2002.1 Effective compensation planning solutions also deliver measurable time savings and improved data accuracy. Compensation that is informed, timely, fair and accurate is appreciated by the workforce and can lead to increased employee satisfaction and retention.
Clearly, there are time and cost savings in minimizing HR’s involvement in the transactional aspects of benefits enrollment. HR professionals gain back the time previously spent on administrative duties and focus their efforts on high-level business initiatives, such as acquiring, developing and rewarding top talent in the organization. Errors created by handwritten documents and manual data entry are reduced, and the ability to communicate electronically with external vendors is greatly improved.
Web-based benefits solutions can also include “help” features that provide supplemental content and eligibility guidelines, even financial calculators, that help guide employees to select the right plan options, thereby decreasing enrollment errors and phone calls to the HR department both during and after the enrollment period.
When Time Is Money and Money Is Money
More companies are moving away from traditional compensation planning that relies on anniversary-based promotional raises and, instead are adopting focal periods for reviews and merit increases. To create competitive advantages, each organization seeks to reward higher levels of employee performance and to provide incentives for desirable employee behavior. Each compensation program has its own unique set of guidelines for allocation. As a result, compensation programs have grown increasingly complex in recent years, with numerous company guidelines and compliance issues driving not only base pay decisions, but also numerous variable and incentive pay components, such as annual bonuses, and stock compensation.
An easy to use Web-based solution that automates the intricacies of compensation planning can manage budget allocations and ensure that the company’s pay guidelines are being interpreted accurately throughout the organization. According to a 2003 study conducted by The Cedar Group, salary management applications are on the rise and have grown in use by more than 80 percent since 2002.1 Effective compensation planning solutions also deliver measurable time savings and improved data accuracy. Compensation that is informed, timely, fair and accurate is appreciated by the workforce and can lead to increased employee satisfaction and retention.
The Motivation for Automation
While reducing administrative tasks, realizing time savings and improving data accuracy are all rewards of automating an organization’s compensation and benefits processes, touting the gains of automation without delivering a solution that is rapidly adopted by the workforce reduces its effectiveness—and a company’s ultimate return on investment—dramatically.
A solution that is beneficial to the bottom line is only beneficial if it is actually adopted throughout the organization. It’s important to note that deploying the solution alone isn’t enough to improve organizational performance. Adopting and embracing the solution needs to happen at all levels—HR, employee and manager—for organizations to recognize the value promised.
The push to automate these complex transactional functions is primarily driven by the internal mandate that HR organizations do more with less. Operating efficiently with fewer resources is usually part of a larger corporate strategy that involves deploying technology for better service delivery.
Replacing paper-intensive manual processes provides genuine improvements in workforce motivation, HR administrative operations and vendor interactions. To provide a rapid return by radically changing how these processes unfold means the technology must be adopted by the workforce quickly and thoroughly.
What makes the adoption of technology a success in some instances but not in others? According to a 2003 survey by The Gantry Group that polled more than 370 large enterprise HR professionals in the United States, the number one selection criteria driving their benefits solution buying decision was that the solution was “easy to use, learn and navigate.” The study underscores that rapid acceptance and adoption by the workforce can only happen when a solution is clear and intuitive enough to be embraced by employees across the enterprise. 3
Limit the Learning Curve
An easy-to-learn and -navigate interface, requiring minimal training, gets the workforce using the solution quickly. Users today are increasingly familiar with standard Web interfaces. A standard browser-based solution delivers information in a channel that is recognizable to them and lowers the learning curve necessary to navigate through the system. Limiting the learning curve also reduces the chance of users becoming frustrated with the system and encourages them to use online help tools rather than escalate transactional inquiries to the HR staff or call center, defeating the cost savings benefits of the system.
Customizing the delivery of information also eases the usage process for employees. When information is personalized based on the needs and job functions of each employee, the decision process is simplified and the chance for error is decreased.
When choosing an automated compensation planning solution, a solution that incorporates corporate pay guidelines, employee salary history, tools such as online calculators, and other guidance content into the system will ease the burden of calls to HR to explain allocation options, pay eligibility or other system basics.
Fluidly bridging the gap between employees and third parties such as benefit insurers will also build employee confidence and encourage adoption throughout the organization. Employees need to have the assurance that their selections were appropriate and accepted by the insurer. Should their choices be rejected, employees expect clear feedback that helps diagnose and correct the error.
Crossing the Finish Line
How else can a company accelerate the rate of adoption? According to the same Gantry study, an effective communications plan can make the difference between a successful implementation and one that isn’t readily embraced by the organization. Developing a successful communications plan should start with an in-depth analysis of the workforce to determine how employees think, what they know and what they need to know. By having a firm understanding on the best way to communicate the value of the new system and how it will benefit the end user, adoption is more likely to occur, and at a faster rate.
Usability surveys and training also help encourage use and migration to a new system. Although a system that requires minimal training is preferable for widespread adoption, for many organizations, instructional guidance is still an essential part of the equation. A provider that understands the complexities of human resources—from health plans to technology enhancement to organizational changes—can help implement a communications strategy that will increase usability.
Choosing the Right Partner
When adopted throughout the organization, specialized Web-based applications for compensation planning and benefits enrollment offer resource savings and business process efficiencies as well as increased employee satisfaction. Organizations interested in deploying automated solutions to maximize cost efficiencies should apply due diligence in choosing the application that best suits the needs of their organization.
• Look for an expert provider with a focus on best-of-breed self-service solutions that have proven effective over the long term. Even if your company has excellent internal technology resources, keep in mind that costly consultants may be required to create an in-house product, which still may lack the flexibility and scalability of best-of-breed products that can be tailored to your needs.
• Time is money. Choose a vendor that can deliver a rapid, professional implementation.
• Ask for proof points with regard to expected return on investment and total cost of ownership. The full range of costs associated with your application should be in proportion to the anticipated benefits. Moreover, the costs need to be identified, controlled and measured throughout the entire process.
• Choose a system that is intuitive, easy to use, and that includes customizable fonts, logos and color schemes. The system should support the global workforce by displaying a user’s language and the currency. These factors promote rapid acceptance and adoption by employees, which allows you to reap the benefits of self-service much sooner.
• Make certain that functions within the employee and manager self-service application are fully integrated. A complete solution supports workflow and generates efficiencies—for example, by spawning additional content and actions due to an employee change—that deliver higher levels of productivity.
• Pick a solution that will leverage, unify and coexist with existing ERP or HRIS systems already installed, whether they are vendor-provided or “home-grown.” This will protect your prior technology investment, as well as allow the savings from costly integration projects to be redirected for other strategic purposes.
• Work with a vendor that offers a range of flexible deployment options (e.g., on-premise software, hosted software, ASP or mixed deployments) to ensure the best fit for your company.
• Choose a vendor that can deliver a platform built to scale and ensure the applications installed on that platform will adapt to your organization’s business processes. Applications that are unable to change as a company changes often result in costly and time-consuming customization work, factors which can reduce overall ROI. Look for a vendor that demonstrates an innovative vision and has HR domain expertise coupled with a proven track record of customer and market responsiveness. Such a vendor will not only meet your immediate needs but will also provide a framework for the future based on your company’s business drivers.
Having the right technology in place streamlines and supercharges HR. When time is money, Web-based benefits administration and compensation planning solutions improve workforce services, deliver the most efficient use of resources, and give employees and managers more time to focus on the company’s core business activities.
A leading West Coast bank implemented an annual focal review process for approximately 2,500 employees, involving 250 managers who make direct pay decisions. Without automation, the process required more than three months of calendar time, multiple iterations by all involved, and multiple data-entry steps into several back-end data sources, creating an administrative and customer satisfaction challenge among the employee base.
By automating the compensation planning process with a Web-based solution from their vendor, Workscape, all of the planned increases were entered, approved and sent to payroll in a two-week period. As a result, the managers were free to focus on their primary responsibilities: taking care of the bank’s customers and bringing in new business.
