By far the biggest concerns for companies planning a flexible benefits plan are administration and communications. These elements were identified as major disadvantages of flexible benefits by 76 per cent and 55 per cent of employers respectively in a recent survey (Employee Benefits/MX Financial Solutions Flexible Benefits research 2003). These issues are considered below.
It is imperative for the credibility of the flex plan that administration is carried out effectively. However, this is true of all benefits programme administration, and flexible benefits administration is not necessarily more complicated than (for example) pensions administration.
When considering flexible benefits administration, before examining factors such as what software package to use, methods of capturing preferences, etc, it is instructive to think through the fundamentals of what administration is trying to achieve.
The flexible benefits administration system effectively sits in the middle of a process that involves flows of information and money between a number of different parties and systems, as shown in Figure 1
Figure 1: A flexible benefits administration system
Possible IT approaches include:
§ a bolt-on to existing payroll, benefits or HR software;
§ an off-the-shelf package from a software supplier or consultancy - in reality some tailoring will be built in to the system;
§ a newly written system from an external supplier;
§ an approach developed in-house - this is most likely to be relevant for employers whose organizational competence is in this area, for example firms in the IT or banking sectors;
§ a spreadsheet or database using proprietary software - this can be effective for a simple plan or a small population.
There are consultancy and software firms that will provide an outsourced approach to administration. This can be an effective approach and costs have been reducing recently.
A communication strategy is a vital component to the successful implementation of a flex plan. A clear communications strategy should be developed as the design is clarified covering the types of message, timing and media. The main stages of communications are as follows:
§ Consultation. Any staff consultation undertaken as part of the design work can be a useful way of highlighting that a plan is coming, providing expectations are managed appropriately.
§ Building awareness. The idea here is to let staff know a plan is coming, familiarize them with the idea of flexibility and build a brand for the flex plan.
§ Principal initial communication. The purpose here is firmly to embed in participants' minds that they will have the opportunity to participate in the plan. They should be given an outline of plan basics such as which benefits are covered and how to make choices. Approaches might include: workshops/road shows; a video; e-mail/intranet; briefings via line managers or a large conference.
§ Back-up materials. These materials are the reference sources that participants will use to understand the plan details. There is a need to balance readability and comprehensiveness, and the balance between these elements may be influenced by the extent to which 'live' approaches to questions are available (see below). These materials may be delivered in the form of a booklet or online.
§ Dealing with queries. Methods here will be very dependent on the size of the plan, and possible approaches will include: an internal or outsourced telephone or e-mail help line; group meetings (eg at lunchtime); one-to-one clinics; or appointing a local 'expert' for each department or site.
§ Reminders. Reminders may be issued to coincide with the renewal or regularly throughout the year.
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