There is an old adage in business: "Change is our friend; you go first." The message certainly applies to benefits management programs, as employees' resistance to change and fear of change is one of the top challenges faced by organizations looking to successfully manage a benefits program.

That is among the key findings of recent research from Aberdeen Group, in the July 2008 benchmark report, "Taming the Benefits Management Beast: Driving Costs Down and Satisfaction Up."

Aberdeen surveyed more than 330 organizations on their experiences with benefits management. The resulting data include the top external pressures driving organizations to invest in benefits programs and the top challenges they face internally to be successful with the efforts.

Dollars and change

The obvious top challenge with benefits management programs, according to surveyed organizations, is budget, cited by 72% of organizations. That comes as no surprise, since the cost of providing benefits programs at a competitive level is skyrocketing. The principal reason is the cost of providing health care coverage, which for many companies is becoming a budget buster. Following budget, the next top challenge identified by organizations is resistance to change (24%).

Survey data and anecdotal evidence from companies interviewed for the report reveal that organizations are looking for ways to reduce the cost of individual benefits to employees while remaining competitive with the overall benefits plan. This requires a better effort at involving employees in their own plan management and finding the right balance of need-to-have and nice-to-have offerings.

The resistance to change is caused by confusion among employees on why specific benefits are being changed or eliminated, and why they are often asked to shoulder a larger share of the cost, whether it involves paying a higher premium contribution or higher copay.

Measuring performance

Aberdeen collected data against 10 metrics assigned to distinct workforce management elements to determine performance in areas related to revenue, retention and recruiting. Four key performance indicators were then used to classify organizational performance as best-in-class (top 20%), industry average (middle 50%) and laggard (the bottom 30%).

The key performance indicators were:

1. Employee job satisfaction.
2. Employee retention.
3. Benefits cost per employee.
4. Administrative burden on human resources.

Both survey data and anecdotal interviews confirm that the most successful benefits management programs are those in which employees have a clear view of program offerings and how they serve their individual needs.

Best-in-class organizations are more aggressive at providing employees with access to the full benefits menu and offering descriptions (cited by 75%), versus industry-average organizations (cited by 58%) and laggard organizations (cited by 58%).

Further, the best-in-class companies are more aggressive at providing employees with direct online portal access to their individual plan information (cited by 56%), while 45% of industry-average organizations provide such direct employee access, and only 39% of laggard organizations.

Steps to success

Employers can take specific steps to engage employees in their benefits programs, ensure the proper benefit offerings are included in the overall plan and evaluate the benefits program on a regular basis.

• Investigate employee wants. Survey employees about the benefits they currently receive, and how they would change them. Only 12% of laggard organizations currently survey employees on their views of the benefits program they receive.
• Evaluate employee satisfaction. Review benefits programs at least every six months to ensure that employees remained satisfied with their program offerings. Only 17% of laggard organizations are reviewing their program effectiveness with employees on a regular basis.
• Communicate. Among the top challenges cited by industry-average organizations were a lack of visibility into the overall benefits program (18%) and lack of knowledge regarding benefit plan specifics (8%). Clearly there are major communication problems at play.
• Expand benefit offerings. The workforce is changing, and different demographics require a more robust benefits program that includes benefits to satisfy each demographic group, without going over budget. Only 6% of industry-average organizations indicated they are doing this.
• Provide access to plan specifics. In addition to detailing the broad menu of benefit offerings available, employers should provide an online portal where full plan information and an enrollment can be accessed by all staff when needed. Of industry-average organizations, 51% provide such access.
• Offer disease management and wellness programs. The best way to counter the high cost of health care is to make it unnecessary in the first place. Forty-five percent of best-in-class organizations provide disease management, and 48% offer a wellness program.

David Weldon is a writer who covers topics related to business, technology and careers. He served as research analyst at Aberdeen Group and is author of this report. Weldon can be contacted at DWeldon646@comcast.net. Read more about Aberdeen's findings in the December EBN.

 Table 1: Top Performers Earn Best-in-Class Status

Employer designation Performance

Best-in-Class, Top 20%:

• 66% have improved employee retention
• 65% have increased employee job satisfaction
• 59% have decreased benefit per employee costs
• 44% have reduced the administrative burden on human resources

Industry Average, Middle 50%:

• 14% have improved employee job retention
• 14% have increased employee job satisfaction
• 14% have decreased benefit per employee costs
• 10% have reduced the administrative burden on human resources

Laggard, Bottom 30%:

• 4% have improved employee retention
• 3% have increased employee job satisfaction
• 1% have decreased benefits per employee costs
• 4% have reduced the administrative burden on human resources

Source: Aberdeen Group, June 2008