Cost is the main barrier to implementing flexible benefits , according to 64% of respondents to the Employee Benefits/Towers Watson Flexible benefits research 2014 , published in April 2014.
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- Employers should ensure their technology providers have project management capabilities.
- Core benefits should not necessarily be disregarded.
- Flex pots should be communicated in pounds and pence rather than as a percentage of salary, which may vary.
But there are a number of ways in which organisations new to flex can minimise the cost of implementation.
First, employers should identify their flex needs. For example, why are they are implementing flex, how will they structure it, will they offer it to all or some staff, and which benefits will they include?
Employers should then research the flex provider market thoroughly before making an appointment to ensure their final selection meets all their needs. For example, does their preferred provider have project management experience?
Richard Stewart, head of flexible benefits and platform services at Mazars Employee Benefits, says: “Flex implementations are typically a complex project, and a well-designed plan with a clear specification will yield significant implementation savings compared with projects that lack clarity or continually change as the implementation progresses.”
This can also help to control costs throughout implementation. Matt Duffy, head of online consultancy at Lorica Employee Benefits, says: “Costs can escalate where projects are not measured effectively and where the scope is not determined upfront, [for example] when, at the eleventh hour, someone comes and says ‘I thought we were going to have this’ and then the platform needs to be reworked and potentially incurs additional costs to build.”
Fixed-cost basis
Duffy advises employers to enlist a provider that works on a fixed-cost basis and is experienced enough to project-manage the plan for them. “This involves making sure that it scopes the exercise upfront to determine exactly what is in and what is out for that project year, and making sure all key stakeholders are involved upfront, such as payroll, IT, finance and executives,” he says.
Employers should also consider whether a provider can help to manage multiple enrolment windows , although this should not be as much of a challenge, says Duffy. “Most of the more modern, proactive providers will have systems that can cope with multiple windows and there won’t be any additional cost,” he adds.
Ultimately, employers must ensure they can work effectively with their chosen provider to optimise their flex plan’s success.
Benefits selection
In the initial scoping exercise, employers need to decide which benefits they will offer staff under their flex plan. This does not necessarily mean getting rid of established benefits, says Duffy.
“Employers still think that because they are moving to flex, that means they have to get rid of everything they currently have and give staff a pot of money to do whatever they want with,” he says. “It doesn’t mean that at all.”
Duffy advises employers to begin by identifying which core benefits they will use to manage organisational risk, such as healthcare benefits, and develop their flex proposition from there. “The responsibility is for employers to enable staff to increase the level of cover or add dependants, or to have access to corporately procured terms that they can opt into voluntarily ,” he says.
He adds that employers should view flex as a risk management tool with which they can control their costs.
As part of their benefits selection process, employers should also consider the fact that some providers, such as group risk benefits providers , may take longer to produce quotes, which may increase project costs if this variable is not built into the project’s timescale.
They should also consider benefits that may be offered through salary sacrifice arrangements , such as bikes for work and childcare vouchers .
Data preparation
Once employers have made these decisions and appointed a flex provider, they need to prepare their employee data.
Data preparation is a key part of a flex implementation project, and requires HR and benefits professionals to ensure that all the employee data they hold on file is accurate, up to date and complete.
Richard Morgan, director of consultancy services at Vebnet, says: “A lot of fairly basic data about employees is required to be able to run a flex programme, but we often come across daft things like missing addresses, bits of information in the wrong data fields and salaries that aren’t correct, through to missing or incomplete information about employees’ dependants.
“So, it does require employers to spend some time upfront to ensure their data is accurate and complete.”
This groundwork can help to ensure employers’ flex projects remain on track and on schedule, further minimising the costs of implementation.