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The benefits administration challenge

How can employers optimize spend and reduce HR's admin burden?

Health and Benefits|Wellbeing
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June 1, 2021

The key is to look for scalable, ready and integrated solutions that deliver maximum impact.

Employers that see the value of human capital take care of their employees, providing work and rewards that create exceptional employee experiences. With those rewards, however, often come a high level of administrative burden and cost.

How can employers achieve their goals and overcome an abundance of administrative and cost challenges? We spoke with Willis Towers Watson experts to gain their insights on best practices in benefits administration.

Meet our experts

Shannon Boyle
Head of Western Europe, Health and Benefits

Adam Maher
Director, Health and Benefits

Veronique Marchand
Sr. Director, Health and Benefits

What challenges do employers face managing and administering benefit programs?

Shannon Boyle: The challenges we observe are largely related to the complexity involved in making benefits work for employees. It's a process that is different from country to country and can involve a lot of paperwork, including signatures on documentation to prove eligibility or designate a beneficiary. Being able to handle this across multiple regions, in addition to legislative changes at various times, makes an already intricate situation even more challenging. It’s also difficult for employers to keep up with how they maintain and administer a plan to be compliant.

This complexity in benefits management often results in time consuming, manual daily tasks for employers. Operationally, this takes their HR resources away from doing the visionary strategic work for their firms that adds value to companies in the long term.

Adam Maher: The number of benefits employers need to manage has also increased over time, as the range of benefits has extended to include objectives around wellbeing and offering flexibility and choice. Employers are challenged to also better communicate what's available to give employees a better appreciation and understanding of their benefits. On top of that, there are different benefits relevant to different countries and regions. Often these benefits have been managed in a fragmented and manual way. The most effective HR programs deliver a wide and flexible portfolio of benefits, well understood and appreciated by employees and dependents. They’re cost effective, efficient, consistent and engaging, yet also scalable to offer more flexibility and choice. Quite the juggling act.

The most effective HR programs deliver a wide and flexible portfolio of benefits, well understood and appreciated by employees and dependents. They’re cost effective, efficient, consistent and engaging, yet also scalable to offer more flexibility and choice. Quite the juggling act.

What costs challenges do employers face with benefits administration?

Veronique Marchand: There are direct, indirect and sometimes even hidden costs to administering benefits, for example, when existing technology is used inefficiently or when system integration is limited. At times, we work with both domestic and global organizations that haven’t fully optimized their HRIS systems or they’re using their system inconsistently around the world. Data sent to benefits vendors isn’t triggered from the HRIS system. Data isn’t current. Redundant activities are happening within HR and between vendors. Automated secured transfer is not always used. Data is manipulated and put together manually increasing the risk of costly errors. These inefficiencies are things we can help an organization see and address.

Shannon Boyle: Benefits are also very personal, and they need to work when the employee needs them. When they don’t work, the cost and impact on the employee experience can be catastrophic. An employee’s perception of a failed benefits offering can tarnish a company brand and incur a significant reputational cost.

When benefits don’t work, the cost and impact on the employee experience can be catastrophic. An employee’s perception of a failed benefits offering can tarnish a company brand and incur a significant reputational cost.

Veronique Marchand: Absolutely, Shannon. We’ve seen companies in situations where an employee or their dependent was admitted to the hospital with a critical illness and the hospital did not want to deliver service without upfront payment. It’s critical for organizations to put the right processes in place, like receiving and processing new hires and life events in a timely manner (per local practice) and automating enrollment to avoid manual entry. This helps maximize efficiency and employee appreciation and minimize reputational risk.

Adam Maher: The traditional focus of employers on delivery and administration of core retirement and health benefits has also broadened. Employers today are delivering a wider portfolio of plans and providers to meet diverse needs among employees. This increases the appeal of benefits programs for employees, but it’s much more complex to set up and administer manually for HR. In addition to inefficiencies, there can be errors or omissions, and risks with data in different places. There’s reputational risk that the company won’t deliver on benefit promises. That is where the right combination of technology and advice can help bring all benefits together in one place with improved governance and efficiency.

How has COVID-19 impacted the benefit ecosystem?

Adam Maher: The pandemic caused an unexpected and dramatic impact on the demand for benefits. For example, during the pandemic we saw an increased demand for wellness services and less demand for travel benefits. We have had clients making temporary unplanned reductions in salary, which impacted employees’ ability to pay for the benefits they’ve chosen or for employers to deduct for those benefits. This emphasizes the value of a trusted advisor to help a business navigate those changes, answer employee questions and reassess the change in landscape to help them adapt their approach, on both a short- and long-term basis.

Shannon Boyle: We saw an explosion of tech startups trying to get into the virtual benefit space during the pandemic, whether it was tele-health or tele-pharmacy. They were marketing themselves directly to employer clients through social media and it could have been very easy for an employer to begin working with one of these vendors without a proper vetting of the organization’s offering or financial stability. Additionally, employers could commit to a new benefit program without a baseline understanding of their own employees’ needs.

In light of this, how can an employer optimize their benefits spend and concurrently decrease their administrative burden?

Adam Maher: Benefits are one of the most significant investments an employer makes in their employees, both in terms of the offerings themselves and in the way they support employees’ physical, emotional, social and financial wellbeing. As employers make plans to restore stability around the world, the employee experience and its impact on benefits is top of mind. Yet, the administrative and cost challenges remain.

Global employers today are looking beyond simple technology offerings to partners providing integrated services to reduce the administrative burdens of benefits management and increase their impact.

Global employers today are looking beyond simple technology offerings to partners provided integrated services to reduce the administrative burdens of benefits management and increase their impact. They’re looking to strategic advisors to optimize their resources and operations, bringing together broking, implementation, and administration support along with innovative technology to ensure their benefits are designed and managed in a way that’s fit for purpose and scalable to their unique needs.

Having a single point of contact to manage multiple benefits vendors and reduce the cost of the internal time spent on administration is also desirable. The ability to tap into a global network of experts around the world means employers don’t need local experts in every country for every benefit. In addition, employers don’t want to worry that their benefits won’t be competitive, compliant or meet market practice. A single point of contact provides that added value, readily connecting the employer to benefit products from best-in-class providers with pre-negotiated terms and discounts.

From a technology perspective, employers are also looking for platforms and interfaces, like Willis Towers Watson’s Benefits Access, that are secure, convenient and easily accessible to employees via mobile devices, and automated to efficiently route employee queries to quick resolution, easing the administrative burden on HR and freeing up resources to focus on more strategic issues.

Veronique Marchand: Any successful integrated solution will also support timely communication around COVID-19 or anything else of this scale, enable employee benefits coverage, provide customer support and automatically process data from end-to-end. When companies partner with stand-alone providers, these synergies are not as strong.

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