Businesses failing to manage benefits plans efficiently

Businesses failing to manage benefits plans efficiently

Controlling the increasing cost of benefits packages is a high priority for global companies, but most are not using the tools that could help them to operate benefit plans most efficiently, according to a survey by HR consultancy Towers Perrin of 157 such organisations.

Alignment with business goals

• Only 5% of the sample believe that they are successful in aligning benefits with business goals, even though 55% say that the elements driving their benefit strategy relate to the company’ s key business challenges and goals.
  

• Half the companies had not reviewed their benefit strategy to ensure alignment with company objectives within the last two years, and almost 20% had never reviewed their strategy.
  
  

Without regular monitoring and periodic review, says Towers Perrin, companies can tie themselves to benefit plans that do not track business objectives. At best this can mean wasted money and at worst it can actually work against the business.

Involvement of finance department

Towers Perrin suggests that there must be interaction between internal functions, particularly between the HR and finance departments, if benefit strategy is to fit with business goals. But two out of three survey respondents said that the finance department was not involved in determining benefit strategy.

Communicating the benefits package

Although more and more employees have choice or some element of defined contribution in their benefit programmes, less than half of the survey participants felt that educating employees on the benefits available to them should be a high priority.

A similar proportion do not measure employees’ perceptions about benefits. The most prevalent methods used by those who do are:

• in-house questionnaires to all staff
  

• internal workshops/focus groups
  
• in-house questionnaires to selected staff
  
• an external provider questionnaire to all staff.
  
  

The survey also found that organisations are not making full use of technology to communicate information about benefits programmes, with over half of respondents feeling that technology is more effective in communicating the details rather than the value of the company’ s benefits programmes.

As the table below shows, there is greater use of technology in North America, which is unsurprising since flexible benefit provision is more prevalent there than in the rest of the world.

Use of different means of communication for annual enrolment plans (% of respondents per region)

Sample size: 157 global companies.

Source: Worldwide Benefits Management Survey, Towers Perrin 2001.

Promoting efficiency

Although some companies use particular tools to operate benefit plans efficiently, the majority do not.

Prevalence of tools and techniques to promote efficiency

Sample size: 157 global companies.

Source: Worldwide Benefits Management Survey, Towers Perrin 2001.

Survey details

Title: Worldwide Benefits Management Survey, Towers Perrin, October 2001.

Sample size: 157 global companies, ranging in size from 5,000 to 300,000 employees, responded to the survey. Some 57 respondents were based in the UK, 27 in the US and 17 in Canada.

Availability: Contact Katy Lepore at Towers Perrin in London, tel: 020 8895 3272, email: leporek@towers.com.

The Towers Perrin web site is at www.towersperrin.com

Posted 4 December 2001