What role can management information play in designing benefits strategy?

Benefits strategy debate - management information

One of the challenges for HR and benefits professionals can be working out just where they should focus their energy and resources in terms of benefits provision, factoring in what employees want, what is most effective from an engagement and retention perspective, and which elements offer the best return on investment (ROI).

This is where effective management information (MI) comes in. Richard Morgan, head of Vebnet, says: “It covers a very broad spectrum from engagement surveys to looking at the staff turnover rate and evaluating the number of job offers that are accepted. From a purely benefits perspective, it’s lifting the bonnet on what’s happening underneath. It can help [employers] work out what’s happening with particular demographic groups, locations, job roles or salary bands and identify any hotspots that [they] have got within [an] organisation where it’s proving difficult to retain or motivate people.”

From a financial perspective, such an exercise can evaluate levels of take-up and subsequent impact of specific initiatives on employees. “It can look at hard savings through salary sacrifice [arrangements], and even things such as absence and productivity,” says Morgan. “We sum it up as helping employers have happier, healthier and wealthier employees, and having that management information helps to work out which are the important bits for us that [they] need to include, which elements [they] are less interested in, and what is the true ROI for the business.”

Making the business case

This can be particularly useful in helping to make the case to the board, says Debra Corey, group reward director at Reward Gateway. “If you have a [chief executive officer] CEO who doesn’t get it, it’s a way of transferring it into business language,” she explains. “That’s where it really helps, because if I can show those kinds of CEOs how not doing something is going to hurt the bottom line, then I’m more likely to get it approved.”

Such analysis can even be applied to less obvious areas such as health and wellbeing, using metrics around absence data and productivity. “If [employers] have got a joined-up approach, so are keeping people healthy in the first place by having an on-site gym and having healthy food in the staff canteen, eventually that’s going to feed through to absence rates and then to [private medical insurance] PMI costs,” says Morgan. “As part of a long-term strategy, there are quite a number of metrics [employers] can use.”

Engaging employees

Effective use of management information can also engage employees in particular initiatives, says Alan Ritchie, head of employer and trustee proposition at Standard Life. “It can really help employers to see the woods for the trees,” he says. “We recently did a report for one of our pension clients, where we provided the key data that we thought it would be useful for it to know, and that sparked a brilliant conversation.”

This revealed issues such as a large number of high earners only paying a small amount into their pension pots, and a number of older workers who were in danger of not saving enough to retire on. “With that kind of information, you can start to think about a consolidation campaign with those people to increase their engagement in the scheme in the first place, and the value they feel they get from it,” says Ritchie.

Such analysis can also be used to understand trends that may otherwise not have been spotted. Morgan cites the example of one employer that had a benefits take-up rate that was three times higher in one location than in the rest of the country. “Is it because of a different management style in there, or is it because people in that location happen to be happier than anybody else in the country?” he asks. “[Employers] need to really do a lot of analysis to look at individual groups of employees to understand where those variations are, and then they can start to put other communication strategies around it.”

Corey, meanwhile, intends to use employee feedback from the rollout of five new benefits to help shape future strategy. “I’m sending an infographic out to summarise all the changes we’re making, and at the end of it I’m doing a survey, just to ask them how engaged they were with benefits before we did this, how engaged they are now, and how they think they align with our new principles,” she says. “I need a bit more feedback; I’ve just spent all this time and money on this, and I want to know which ones are ticking the boxes, and which ones weren’t the right things to do.”

Impact of communication

Monitoring the impact of communications can also provide useful information. “[Employers] can look at things such as whether anybody actually responds if [they] send an email out on a Monday morning versus doing it on a Friday lunchtime,” says Morgan. “That can keep costs down, because they can eliminate campaigns that they know historically have not had any impact. Being able to pull all of that together can give a really rich picture of what’s going on.”

The nature of analysis offered by providers is changing, too, says Charles Cotton, performance and reward adviser at the Chartered Institute of Personnel and Development (CIPD), which is helping employers and advisers identify trends. “It’s moving away from big heavy sets of data to dashboards and graphics, which are very visual,” he says. “It makes it easier for people to recognise the impact, and see what employees are doing, or not doing.”

There are, however, a number of issues that organisations face when looking to make use of data. Cotton points out that while most organisations have plenty of resources they could draw on, these tend to be scattered throughout the business. “If [employers] want to know about the impact of the sales incentive scheme, they have got to go to the sales department, and if they want to get more information about employer shares plans, they have got to go to the secretariat,” he says. “In many organisations, [employers] have got multi-sites, multi-divisions and different pay roles, so they have to try and get all that information together and then reposition it for their purposes.”

Often the data is housed in disparate IT systems, which can make it even harder to pull together, says Morgan. “While you might have a flex or reward platform that enables you to go straight through to your pension servicing, typically the share plan providers can’t reciprocate a single sign-on or an exchange of data in there,” he says. “Ideally, as well as seeing what your pension value is on your homepage, you’d have your current share plan value too, but often that’s just too difficult.”

It is a similar situation with healthcare providers, where joining up disparate products can be problematic, he adds.

Measure the right data

Duncan Brown, head of HR consultancy at the Institute for Employment Studies, believes HR does not help itself by failing to measure the right data. “The statistics that you see are the things that [employers] can measure, such as take-up rates, but how important is that really? Okay, they don’t want zero, but does it really make a difference whether it’s 30% or 40%?”

Market data, where employers effectively compare themselves to their peers, can be another source of frustration, because this fails to take into account the individual workforce demographics. “If my workforce has an average age of 20 and another has an average of 50, why am I going to care what their most popular benefit is?” says Brown. “But market data works like that, and if you look at why employers provide quite a lot of benefits, often they’ll say it’s because their competitors do.”

Employee engagement surveys are also limited, adds Corey. “In a lot of HR programmes you just look at the engagement scores, but in the engagement surveys, there’s often just one question, which is whether [employees] are satisfied with their benefits,” she says. “It doesn’t really help [employers]. We need to take the data to the next level.”

Her approach is to run her own research, through focus groups rather than formal surveys. It can also be useful to know what take-up rates are so these can be benchmarked against others in the sector, providing an indication of how well the benefits team is doing.

Cost is also a factor, and much of this comes down to whether an organisation genuinely buys into benefits and engagement initiatives. “It goes back to business strategy and what the organisation is trying to achieve with its culture and brand,” says Cotton. “Some organisations have very sophisticated HR information systems that can do a lot, and then there are others where it’s held together with Post-It notes, Excel spreadsheets and whatever is in the filing cabinet.”

Whether an organisation is prepared to invest is often determined by its own individual situation. “It depends on just how much of a priority it is, and what’s happening, so whether [it has] got a massive attrition rate and needs to do something urgently, or if there a merger going on that requires it to do something more efficiently and bring people together,” says Morgan. “There’s usually some catalyst like that, which makes the board think it’s worth spending the money.”

Unsurprisingly, how well employers do this varies. “We’ve got two groups of employers: one that hasn’t got the data, isn’t doing any analysis, and just runs with whatever is there,” says Brown. “Then at the other extreme we’ve got some[organisations] that have got tonnes of data but they’re not really keeping up, and they don’t know what to do with it.”

There is also a risk that organisations do not really know why they do what they do, says Cotton. “Often you talk to organisations that are collecting information, and they’re not sure why they’re collecting it in the first place; they’re doing it because they’ve always done it,” he says. “That is the time to start thinking about what they are trying to achieve as an organisation. That should then inform what they try to measure, rather than looking at what data is available and trying to retrofit it.”

Using providers’ expertise

Providers also have their part to play in helping to drive take-up of management information, by ensuring systems have the right information in a way that can be easily accessed. “You’d expect the data to be there with any platform, so it comes down to how easy it is to use and understand,” says Morgan. “Employers need a nice simple headline dashboard that they can understand in 10 seconds, but with the ability to drill down where they need to.”

Making it simple to use is the over-riding concern for Corey. “The role of the reward professional has grown so much in recent years, so I need providers to help me understand what the data means, make it a bit more user-friendly, and help me figure out what to do next,” she says. “We probably have higher expectations from providers these days.”