Finance: The flexible way to benefit employees
Wednesday 14 April 1999
The main area in which companies are delivering choice to staff is in benefits. This is, in part, driven by the need to rethink the way benefits are offered and still allow companies to remain competitive, while keeping a tight control on costs.
We are also beginning to see more companies offering choice over other aspects of work. The motivation is clear. Providing your employees with that choice and how they are remunerated gives a good impression to the marketplace - progressive, leading edge, responsive. But how practical is it and what can be done to help with the management of such flexible initiatives?
At Arthur Andersen we conducted a survey of companies' attitudes towards flexible benefit schemes. There were startling conclusions. Sixty per cent of companies operating flexible benefit schemes find that administration is complex, and 35 per cent say explaining the scheme to employees is difficult.
On closer inspection, the survey shows companies introducing flexible benefits spend relatively little on administration systems, use systems that carry out only core functions, and run their "flex" systems rather autonomously. Communication with employees sticks mainly to memos, e- mails and presentations.
We feel the tremendous advances in technology should be used to help the management of flexible benefit schemes - cutting paper flows, integrating with human resources, payroll, accounting and other internal systems, and enabling easier communication with those outside the company involved in providing benefits.
Systems can be adapted to allow employees to see projections of different remuneration packages, showing how the flexibility on offer would affect pay. The effective use of technology could also help with the management of other initiatives, such as flexible working. But companies do not seem to be taking advantage of these possibilities, and the reason seems to be, simply, money.
In our survey, more than 60 per cent of companies considering introducing flexible benefits expect administration to be complex and costly, and more than 20 per cent expect communication to be difficult. But these firms do not expect to spend much on systems and technology - a few thousand pounds to purchase, set up, install, test and run a system to administer their multi-million-pound benefit programmes.
One cannot imagine such small investments being made on other systems, such as payroll. The result will be companies using systems that are inflexible, non user-friendly and liable soon to be obsolete.
We have developed a flexible reward management tool, taking the name for the system from the very thing it is aimed at managing - Choice! It is designed to help companies communicate the choices for employees in a clear and understandable way and help administer and manage the choices.
The system enables companies to communicate and administer benefits plans effectively and efficiently, thereby minimising the demands of running either traditional or flexible benefits schemes
At Arthur Andersen we have introduced our own system, Alpha. This is a traditional flexible benefits scheme giving employees a combined remuneration and benefits budget, to cover benefits including medical and dental insurance, retail vouchers, cars, financial planning and tax return preparation. We also use Choice! as our main information and administration system.
Ultimately, Choice! could be used to administer much more far- reaching concepts such as Flexible Reward, where employees can choose how their entire package is delivered, and the Flexible Working Environment, where employees are given choice over aspects such as their office accommodation, working hours, business travel and equipment. The extension of flexible rewards to cover the entire working environment is probably beyond most companies at the moment.But we have the technology to implement such a concept.
The author is a partner in Arthur Andersen's human capital services division
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