TouchPoints: The Empyrean Blog

Optimal Gear Alignment for Benefits Administration: Critical Path for Operational, Technological, and Cultural Success

May 3rd, 2016

Introduction

As an HR leader, you are constantly challenged to do more with less – and tasked with providing high-quality benefits and programs despite constant increases in costs.

This pressure may lead you to compromise your health and welfare benefits strategy, and more specifically, compromise how you enable or execute your strategy, which in HR’s case is your core benefits administration processes. However, such compromises often mean passing along additional costs to your employees, more administrative work for you, and contorting your strategy to force-fit limited systems and providers, versus them working optimally to support your strategy.

Good companies make unnecessary compromises to their strategy all the time, often because they are unaware that there are better solutions available. These compromises ultimately warp your company’s operational, technological, and cultural paths – diminishing opportunities for success and reliability when it comes to administering your benefit plans.

Think of your Operations, Technology, and Culture as gears that must work together as part of your benefits administration engine. If one or more is out of sync, your entire engine’s performance is at risk, and you will not be able to achieve your organizational goals or realize your strategy.

This At-A-Glance will cover these three major gears – Operational, Technological, and Cultural – because if these three critical areas are not aligned within your benefits administration engine, your benefits strategy and success are at risk.

 

Gear 1: Operations

Benefits administration commands the lion’s share of your overall budget, usually 30% or greater, and managing and reporting on the many moving parts of all your employee benefits may seem to take an even larger percentage of your time and attention.

In your everyday HR operations, you are dealing with unprecedented complexities related to benefits administration – and are responsible for minimizing risk and costs, maximizing rewards and benefits, and driving employee satisfaction, retention, and engagement. It’s easy for any of these aspects to get out of alignment and negatively affect cost, time, and expectations.

From everyday issues to yearly Open Enrollment needs, you’re faced with actively managing operational challenges across many disciplines:

  • Risk
    Internal risks, such as ensuring your employees receive correct coverage, have increased. As your company’s complexity grows, you must ensure all employee plan variables are not only correct, but are also compliant with federal and state regulations  – not the simplest of obligations. The risks of heavy government fines for failing to meet Affordable Care Act (ACA) compliance and reporting requirements remain omnipresent.
  • Costs
    While you are constantly challenged with controlling the rising costs of your benefits program, you’re likely also under immense pressure to reduce those costs while increasing the quality of your employees’ options: A fairly untenable situation. As for soft costs that continue to escalate: Your internal support team’s time and capacity is increasingly stretched attending to employees’ cost and coverage questions, along with coordinating the proper handoffs and tracking of employee data files from your various carriers.
  • Diverse Options for Employees
    As mentioned above, you not only face demands to increase the quality of your current employee benefits and rewards, but also are challenged with providing more diverse options – responding to consumer trends as employers and employees get progressively savvier about the coverage options they need…and want. At the same time, companies are becoming more transparent and aggressive concerning their benefit offerings to influence and improve recruitment and retention.
  • Reporting
    It’s critical that you are able to execute and measure your performance against annual, quarterly, or even weekly demands to ensure accountability and overall strategic success. The information you and your management requires may include data regarding return on investment (ROI), employee engagement, employee satisfaction and retention, and other key performance indicators (KPIs). It is no longer sufficient to simply report the data; the data must also be analyzed and provide points for benchmarking and recommendations for improvement. As an HR leader, it’s one thing to know where you stand, but entirely another to determine where you should be going.

While daily demands may make it difficult to expand views beyond everyday pressures when planning strategically, your benefits administration success is highly contingent on remaining accountable and data-driven for all various inputs and outputs of your HR investment.

Controlling and predicting costs for employee benefits and benefits administration is one of the biggest reasons why clients seek out a better partner. Such companies have usually compromised for years on the unexpected and often unnecessary costs that result from changing process flows to fit new technology needs, creating customized reports, or changing reporting frequency.

This is where Operations and Technology intersect. Technology can play an integral part in helping manage and regulate much of this, but the technology is only as good as the strategy behind it. There are many benefits administration options available; it is difficult to wade through what is vital, what is important, what is in demand (today and perhaps tomorrow), and what is superfluous beyond the surface level. Let’s explore this further with the second gear.

 

Gear 2: Technology

Your benefits administration technology is the nervous system responsible for executing your strategy. Let’s drill down further into how your technology platform should be serving your strategy goals.

Legacy technology solutions are often comprised of outdated and convoluted programming that is constantly being retrofitted and reworked to address new issues. This is similar to customizing a car with different parts, all from different manufacturers made during different eras. The outcome may look homogenized and use the same fuel (data) – but it will likely break down and require constant maintenance, and is not at all likely to run as efficiently or reliably as a modern, singularly designed, and more streamlined solution.

Putting this in real world terms, you may be dealing with a core benefits administration system originally built to support very unique employers with very specific needs. From there, your current solution might have specialized enrollment programming bolted-on, or be limited to a bank of reports that require extensive system customization, or there may be other one-off needs which then complicate the platform and impact responsiveness further.*

On the other end of the spectrum, you may be looking at a “newer” technology provider. While the front-end and user experience may seem consumer-friendly, the backend rules engines, system scalability, open integration capabilities, and other critical components can often be limited. These types of systems are usually based on simple plan managers, product distribution systems, or an exchange built to promote a particular product, and are not designed for comprehensive benefits administration and management.

Even with a newer system, you may still be compromised by limited strategy and transactional capabilities, or find you are unable to deliver the services for which your employees may be asking – or worse – needing. Both legacy and most new technology systems have limitations, one way or another, that may prevent you from delivering your benefits strategy effectively.

It’s critical to know and understand what these limitations are, because what you can’t see can hurt you. And it’s not only important to have this understanding as it relates to your requirements today, but also how it impacts your requirements in the future as your business grows and changes.

While the task of finding the right solution may seem daunting, there are robust platforms available that can confidently meet your needs without compromise. Companies find the most success with platforms that are designed to adapt to their changing needs and have the ability to respond to change quickly and effectively.

These are the variables that help drive a successful strategy in the form of reporting, costs management, participant activity tracking, managing risk exposure, staying in compliance, etc. If your technology can adapt and respond, instead of remaining static or requiring costly and time-consuming alterations, it will give you the flexibility and freedom to remain proactive and enact your strategy as you see fit.

* Your data integrity may also be compromised with certain technology providers given their system setup or architecture. We invite you to explore Empyrean’s At-A-Glance on Data Integrity and Accuracy for more detail.

 

Gear 3: Culture

HR professionals are under more scrutiny and pressure to deliver on a shrinking budget, navigate ever-evolving regulations and processes, and justify certain costs…many of which can be unpredictable or unknown. You may have the processes and operations, and you may have the technology and insight, but your culture must be adept at change and be accountable to create and lead your strategy.

At Empyrean, we see two seismic changes that are most critically impacting HR: 1) Introducing technology is now a requirement to fully enable a robust benefits strategy, and 2) the technology landscape and available options are ever-changing and evolving rapidly. Both represent a shift in what is required and expected from HR departments: Being agents of change, data driven, marketing plans (recruitment and internal communications) that are best for the company and employees, serving as plan advisors…the list goes on and on.

The evolution of technology and partner choices has necessitated a change in HR culture.

The HR teams that are most successful in navigating these two major changes maintain the same cultural DNA internally and externally. These teams create the strategy, align those around them, hold themselves accountable, and lead themsleves and their employees through these changes.

They also look for and partner with culturally-aligned providers, to ensure their solutions meet their needs in terms of both capabilities and values.

How do you do this?

There are many ways to approach the solution. As you establish a more accountability-based culture, you naturally need to hold each of your outsourced providers and their technology systems to the same standards – looking at cost, value, and outcomes.*

The result?

You are valuing and understanding baseline benchmarks when evaluating internal and external team performance. You are also quantifiably justifying, over time, the investments you make and the value you and your team provide to the company’s bottom-line.

An important aspect to consider when evaluating a potential partner’s cultural fit is the means by which you and your benefits administration provider measure the success of your solutions and services. It’s critical that performance be measured beyond the quantitative metrics of typical Service Level Agreements (SLAs).

Your vendor should demonstrate a commitment to the same culture of accountability set for members of your own internal organization. Utilization of a Subjective Service Level Agreement, combined with fees put at-risk for both quantitative and qualitative performance satisfaction, ensures your values remain aligned and that your partner’s success remains dependent on your success.

* Smart dives into your benefits administration technology should also provide smart insight into your costs, risk management, and compliance to provide peace of mind and further benchmarks for improvement.

 

A Prescriptive Path for Alignment

Taking into account the three major gears for benefits administration platform success, we encourage you to ask the following questions of your current system or the systems you are currently reviewing:

  1. With technology, there should be a constant practice of measuring the expected value of your system versus the value actually delivered. Are you getting what you expected? Is your technology partner responding and delivering as needed and as promised?
  2. Similar to the point above, what was the expected annual/contract cost of the platform, versus what it has actually cost you? Are these additional costs due to additional features and reporting needs that you requested, were promised, and then had to unexpectedly pay extra for?
  3. Are you operationally nimble to change? The needs of your business change fast enough. You dedicate enough work to managing that internal change. Does your technology respond to, or is flexible enough to change to, your needs as they evolve? Or are you having to dedicate time and do more work just so your systems can keep up?
  4. Is your internal culture suited to respond to organizational, company, and technological change?
  5. With your benefits administration technology comes the company and team that creates and supports it. Is your technology partner a true partner? Do they listen, not just as a vendor, but as a group that considers itself a part of your own team – and is their success determined by your success? Do they provide resolutions to your questions and issues, or create more headaches and unresolved problems? Is your technology partner’s culture one that is committed to resolving issues and delivering with a sense of urgency, and one which is aligned with your own?

As an HR professional, you are under pressure to respond – while still guiding, serving and leading. A good partner is responsive, and is quick to measure and show the same level of accountability for which you are responsible. If your current processes and supporting systems are hampering your ability to execute those goals, your ability to deliver what is demanded by both your executive management and employees is compromised.

 

Compromises = The Wrench in Your Operations, Technology, and Culture Gearbox

What unnecessary compromises are you making with regards to your benefits administration technology? At Empyrean, we see five common compromises hindering companies’ success with most technology platforms. These compromises ultimately fall into at least one (and often more than one) of these buckets:

  1. The current system no longer fits.
  2. We work too hard.
  3. Our partner isn’t responsive.
  4. The current system no longer works.
  5. The current system costs too much.

Your benefits administration strategy should not be based on compromise. We encourage you to evaluate your Operational, Technological, and Cultural alignment. If you think the gears of your benefits administration engine may be misfiring, contact us for an initial conversation.

We help companies of all sizes, shapes, and complexities across all industries, and we’d welcome the opportunity to help yours.