Employee Benefits: Methods of Communication

The communication of benefit plans to employees is now regarded as a highly sophisticated task. No single method of communication is likely to accomplish all the desired objectives, so several methods should be combined. To meet these objectives, many employers hire communications experts who generally report to the person who is responsible for employee benefits. Other employers use the services of benefit-consulting firms, many of which have developed specialized units for advising their clients in this particular area. Benefit plans can be communicated to employees in audiovisual presentations, in face-to-face meetings, through printed materials, and, more recently, with computers.

Audiovisual Presentations
Audiovisual presentations are a very effective way to communicate benefit plans to new employees or to explain significant changes in existing benefit plans to current employees. It is much easier to require employees to view audiovisual presentations than to read printed materials. In addition, if properly done, audiovisual presentations can convey the employer's concern for the well-being of its employees, and they can explain proper benefit use more effectively than printed materials. In the past, many audiovisual presentations have been dull and sometimes uninformative. Recently, however, many employers have adopted more sophisticated communications methods, and they view these presentations, if not their entire communications program, as a way of advertising their employee benefit plans. In fact, some employers have actually hired advertising firms to design not only their audiovisual programs but other aspects of their communications program as well.

Meetings with Employees
Face-to-face meetings with employees can also be an effective way to explain employee benefit plans and to answer employees' questions. For small employers, this technique is generally used to present benefit plans to new employees or to explain the changes in existing plans. Large employers often combine meetings with audiovisual presentations. It is obvious that whoever conducts these meetings—be it the employer, agent, broker, consultant, or provider representative—must be truly knowledgeable about the plan. In addition, it is just as important that they be able to effectively communicate this knowledge to the employees.

The number of employees that attend a meeting may have an impact on its effectiveness. A large meeting may be satisfactory if its purpose is primarily to present information. However, a series of small meetings may be more manageable and appropriate if employees' opinions or questions are being solicited. These small meetings can be used in lieu of a large meeting or as follow-up meetings to a large group presentation. When employees must make decisions regarding their benefit plans, meetings with individual employees may also be necessary.

Group meetings can be used for purposes other than explaining new or changed benefit plans. They can be held periodically to reexplain benefits, to answer employees' questions, or to listen to employees' concerns and suggestions. In addition, every employer should have a procedure by which employees can have ready access to a knowledgeable person when they have any problems to discuss or questions to ask. Although this can often be accomplished by telephone, face-to-face meetings should be used when necessary.

The employer's attitude toward a group meeting can influence its effectiveness. Employers should not regard these meetings as necessary formalities; rather, they should view them as a way to communicate their concern about the security of their employees and the benefits with which they are provided. The success of face-to-face meetings may also be affected by when and where they are held. To achieve maximum employee interest and attention, the facilities should be comfortable and not overcrowded. In addition, meetings should be held during normal working hours, but not at the end of the working day, when many employees may be concerned with whether the meeting will end on time.

Printed Materials
Virtually every employer provides employees with some printed materials about its employee benefit plans. At a minimum, this material consists of group insurance certificates and the information that is required to be distributed under the disclosure provisions of the Employee Retirement Income Security Act (ERISA). The next most commonly provided source of information is the benefit handbook. If there is a typical benefit handbook, it can best be described as a reference book that summarizes the benefit plans that are available to all employees. In addition to describing group insurance benefits, it will include information about an organization's retirement plan, vacation policy, and possibly other benefits, such as educational assistance. Each plan will be described in terms of eligibility, benefits, and what employee contributions are required.

Traditionally, these benefit handbooks merely described each benefit plan separately; they did not discuss the relationship between the various benefit plans or what social insurance benefits might be available. Newer benefit handbooks are more likely to focus on the potential causes of lost income to an employee or his or her family. For example, rather than discuss short-term and long-term disability income plans separately, they will include a single section on disability income that describes how a short-term disability plan will initially pay benefits, and at what point it will be replaced by the long-term disability plan and Social Security.

Because of the general nature of benefit handbooks, many employers also give each employee a personalized benefit statement, usually on an annual basis. The most common form of personalized benefit statement specifies the plans for which the employee is eligible and what benefits are available to that particular employee (or his or her family) under each of these plans. (Note that such a statement will comply with the personal benefit statement that is required for qualified retirement plans.) Figure 2-3 shows a portion of one such statement. In addition, some employers feel that employees will better appreciate the value of their benefits if they are aware of the magnitude of the cost to the employer. Figure 2-4 is an example of one form that is used for reporting this information.

Interactive Voice-Response Systems
Employers are increasingly turning to newer technologies to communicate and manage benefit plans. One of these technologies is the telephone and the use of interactive voice-response systems. At one extreme, a telephone system can be as simple as merely giving information to all employees about such matters as times for employee meetings, enrollment deadlines, and plan changes. However, this use of the telephone requires all employees to have either a telephone or some alternative method to receive the information. From this point, telephone systems can get increasingly complex. At the next level, the system can allow employees, through a menu of options, to request general information and materials such as enrollment forms. Carried even further, the system can enable employees to obtain specific information about their own benefits, such as the amount of life insurance they have or the balance in their 401(k) account. Of course, if personal information is available, employees will need to be given a personal identification number to access the information. At the most complex extreme, telephones can be used to allow employees to make benefit elections and changes. For example, an employee may be able to change investment options for a 401(k) plan or to change from one medical expense plan to another during open enrollment periods.

There are both advantages and disadvantages to the use of telephone systems for benefit communication. Among the advantages:

- Employees can have 24-hour access.

- Employees can get quick and accurate responses.

- Employees can maintain a degree of anonymity by not having to disclose information to in-house personnel.

- Human resources personnel have more time to spend on issues other than routine phone inquiries.

However, there are also drawbacks and limitations, some of which can be overcome with proper planning and design:

There is a lack of human interaction. This by itself will discourage some employees from using the telephone system if they can obtain the same information and perform the same transactions by calling someone personally. If the telephone system is the only way that employees can request certain information or initiate certain transactions, it is important that a new system be well publicized and possibly established in small increments. A well-designed system will be simple to use and not leave employees in an endless maze of pushing buttons. It will also give employees a method to reach a real person when they feel it is necessary to speak to one.

Telephone systems can become increasingly expensive as they are expanded to allow employees a wider range of options. For some firms, the cost may outweigh the benefits.

To the extent employees can make benefit changes and elections by merely pushing a button, there is the possibility of mistakes being made. Therefore it is necessary for the telephone response system to confirm all transactions over the phone and allow employees to enter needed corrections. In addition, a written confirmation should be sent to employees, possibly requiring the return of a signed copy of the confirmation.

Telephone systems are not conducive to inputting data such as the name of a new dependent for purposes of obtaining medical expense coverage.

Computers
While telephone systems can be used effectively for obtaining information and simple benefit plan enrollments, computers enable employers to use technology to a much greater extent.

The majority of computer benefits systems are intranet-based over a local area network of company computers. These tend to have the advantage of speed and to minimize security concerns, whether they be perceived or real. Firms can also use Internet-based systems over a public network that is secured by password access. A major advantage of the Internet is that employees can be allowed access from home or while they are traveling. In addition, the Internet is often better for providing employees with links to other useful Web sites because, for security reasons, a firm may not wish to have other links with its intranet site. A few firms have benefit systems on both its intranet and the Internet. Computerized benefit systems can be on either employees' personal computers at their workstations or on computer terminals located at centralized stations. Employees may also be able to access these systems from their home computer or from other locations. By pressing the appropriate key, an employee can get a general description of the company's various plans. By inputting appropriate data (including an identification number), an employee may also be able to obtain information about his or her own particular situation. For example, an employee could determine a potential disability income or retirement benefit. An employee may also be able to obtain the answers to "what if" questions. For example, "If I contribute $100 per month to a 401(k) plan that is expected to earn 7 percent annually, how much will I have at age 65?" Or "If I elect these options under a cafeteria plan, will any additional employer dollars remain for other benefits, or will I have to make an additional contribution through a payroll deduction?"

Employers are increasingly using the computer to allow employees to make benefit selections. To have some verification in writing, a form is either printed on the spot for an employee to sign and return or generated in the personnel office, reviewed, and sent to the employee for signing. Computers also facilitate data input, such as the name of a new beneficiary for life insurance coverage or the name of a new spouse who is being added to an employee's medical expense coverage.

Computers can be used to educate employees as well as provide benefit information. For example, employees can be given information comparing the pros and cons of a managed care plan with those of a traditional indemnity plan. Employees can also be given information to help them in their overall personal financial planning, often through links to other Internet sites.

Finally, employers are beginning to use computers to disseminate legally required information, such as summary plan descriptions.

Many of the same advantages and disadvantages of using telephone systems also apply to the use of computers. A major drawback to a computerized benefit system has been cost in relation to return on investment. (However, this drawback is becoming less of an obstacle as more employees have computer access.) Moreover, the success of such a system requires a high level of technical competence at the human resources and management information systems levels. There must be an understanding that computer communications often need to be approached differently from printed communications. Finally, employees need to feel comfortable using computerized benefit systems. This is continuing to occur as employees become more computer-literate and intranet and Internet sites evolve.