Building a top-notch employee self-service system requires attention to design and cost features that will make workers want to drink of the efficiencies.

The self-service craze born decades ago is the HR administrative choice of today, and requests for employees to do more for themselves have generally been well received by new generations of workers. While employee benefits are the clear leader in employee self-service (ESS), other human resource activities are also popular.

In all cases, the thinking is well established: Employers use ESS to both save money and to place more control in each employee's hands. And by allowing employees to change their addresses in company records or enroll in direct deposit or even select health benefit options, workers maintain a higher level of confidentiality.

But are employees ready, willing and able to use ESS? When individuals must seek out important information the employer wants them to see, will they take the initiative?

Creating links

While ESS frequently goes hand in hand with outsourcing, the combination is not a necessity. ESS may be linked with total outsourcing of an administrative function, such as employee benefits administration or employment and salary verification, or it may be part of an internal system using a company's intranet and employee Web portal.

Mike Smith, vice president of business development for TALX Corp., notes that the major nexus between ESS and a firm's human resource information system (HRIS) is employee portals, those Web windows to sites for information gathering or conducting transactions previously done by HR and employee benefit staffs.

Employers typically use Internet application if security is adequate, but place the employee portal on an intranet if security is a concern. In some cases, what draws workers to ESS is just a prelude to other possibilities.

"The big driver in the move to ESS is benefits enrollment," Smith observes, "but we have seen tremendous growth in other applications." Among them: employment and salary verification. In the system standardized by TALX, when an employee applies for a loan and the lender needs employment and salary information, the employee gives the lender access information to the TALX system, and data previously routed through the employer is provided automatically. Employers provide the employee data to TALX and thus remove themselves from the day-to-day process.

Other popular applications for employee self-service include time card entry, withholding/deductions, training registration, time reporting, electronic pay stubs and reissuing W-2s. The latter application is especially valuable to companies with high turnover, vendors observe.

The problems typically emerge after a former employee moves and requests missing W-2s around tax time, but solutions from leading vendors can similarly remove the employer from such day-to-day problems. Of course, the technology is not limited to employee self-service, since related tools allow managers to conduct many transactions previously involving paper processing, such as budget analysis, purchase orders/approvals, leave management and travel/expense management.

Among the examples of vendor systems in that arena, Reston, Va.-based Workscape Inc. offers a Manager Self-Service (MSS) Compensation Planning module that helps organizations manage the annual salary planning process. Managers enter ratings and proposed salary adjustments for each employee.

As each salary change is entered, a sum for the department is calculated and compared to a budget total. The system informs the manager if the planning process is complete and within corporate guidelines. The module supports merit, equity adjustments, promotion, bonus and variable pay options. The base product includes numerous pre-built, configurable components that can be readily interchanged or combined to create a customized version of the module.

Virtual service centers

In the mid 1990s, the concept of centers of excellence and centralized service centers took hold. While the service center is here to stay, some companies are looking to cut back on such operations in favor of greater self-service and what amounts to virtual service centers.

The good news is that with an ESS/service center approach, employees will be better informed when they do have discussions with representatives. How employees react to this newfound control — and responsibility — depends on the demographics of the work force.

An employee base of Generation Xers will not only embrace ESS, they will likely expect it. On the other hand, some baby boomers and pre-boomers may prefer the good old days when talking to someone was about as virtual as it got. Ken Landy of the Watson Group says the way their employer clients view employee self-service varies, generally dependent on how "e-connected" their employees are. "Most of our employer clients view interactive voice response (IVR) as too difficult and impersonal to be a useful self-service tool," he reports. Some benefits managers share the fear that, even with wide promotion of ESS, employees will only line up at the HR department's door to have someone go online for them.

Such experiences are not far-fetched or even atypical. Consultants with Hewitt Associates, for example, have compiled data showing that new Internet users tend to come from another self-service channel — the automated phone line.

Experience suggests that employees who would rather bypass self-service and speak to a person generally will not embrace the Internet channel without targeted communication and/or other changes in how benefits are delivered.

Smith, of TALX, points out that success of ESS depends in part on how it is implemented. If the whole thrust is how it will benefit the company, success may be difficult and disruptive. But if the objective is also to provide a real service to employees, the odds the process will be well received are better.

His advice: Find out what information employees need and want and give it to them. Don't force the latest technology on employees. Offer both interactive voice and Web transactions and back both up with the ability to talk to an HR or benefits representative. This sentiment is echoed by Bryan Doyle, business leader, benefit administration operations for Hewitt Associates. "For effective self-service you need to create a predictably positive experience for employees," he believes. "To do that, you must provide a simple, direct and intuitive path to the tools employees need — tools for inquiries, transactions, education, decision support and modeling capabilities. In effect, an employee's benefit home page."

IVR: not dead — yet

While the Internet is in the forefront of ESS, observers doubt that IVR will go away any time soon.

Many believe it will be several years before all workers are fully Internet-literate and linked. And in the meantime, technological advances in IVR, such as voice recognition, may assure its place in ESS programs.

Still, it is intriguing to note that among Hewitt Associate's new Internet enrollment clients, four organizations are offering the Internet as their employees' only self-service enrollment option this fall. An automated phone line will not be available. In another instance the employer will not allow benefit representatives to make the open enrollment transaction, but they will assist employees with using the IVR or the company's Web site.

Doyle says the most significant development for outsourcing in general, as well as HR and benefits outsourcing, will be greater utilization of the Internet. "I think it is going to change and enhance the customer experience. It will also allow providers to have broader relationships with clients and with business partners. In the case of Hewitt Associates, a benefit plan provider, we will see broader relationships with the plan participants that are in benefit plans."

High-tech and high-touch

The recently released Hunter Group 2000 Human Resources Self Service Survey of 342 companies indicates that more and more companies are combining Web-based solutions with live assistance via an employee service center. "The best systems marry high-tech with high-touch," says Alexia Martin, who directed the survey and is a principal consultant at the Hunter Group. "Employees benefit from the Web's one-click efficiency, but can also speak with a specialist when they have additional questions." While access to HR specialists is a significant component of HR service delivery (used by 79% of respondents), their role will change as Web-based solutions become increasingly common. The number of companies using Web-based self service will increase dramatically in coming years, from 46% to 82%, based on survey respondents' stated plans. Other noteworthy findings from the Hunter Group survey include:

• 70% of the employees represented now have a corporate email address, compared to 55% a year ago. Also, 70% have access to a company intranet, versus 50% last year.

• The most common data security approach is a single sign-on, which is currently used by 35% of respondents and targeted for use by another 40%. Single sign-on security allows the employee to enter a password once and gain access to several connected applications. The fastest-growing approach, however, is digital certificates, with 8% of respondents indicating they use this approach today, and almost 25% planning to adopt it.

• The most successful self-service deployments were marked by a cluster of common sense factors such as collaboration between HR and IT, executive commitment, a strategy/ plan, business process redesign, and internal marketing.

Cost barriers

According to the Hunter Group survey, the main obstacles to selfservice implementation are cost of ownership and limited budgets, although respondents report these barriers as only moderate severity. The average company surveyed spent $1.5 million on self-service, with per-employee costs ranging from $35 to more than $1,600, depending on company size and type of solution used.

Implementation times ranged from three months to two years per application, although the survey found that time and associated costs were reduced by up to 20% when projects were supplemented with third-party support. The initial cost for a basic ESS system can range from $250,000 to $500,000 or more. However, savings can also be substantial with the payback time relatively short. For example, the Hunter Group found that a typical open enrollment transaction has a manual cost of $77.58. Workscape reports its cost at $31.25 to process an open enrollment transaction. A company with 2,500 employees could save $115,825 a year in this one process.

With these cost levels, one might assume that only large organizations can benefit from ESS. While small companies are behind larger companies, employee benefit brokers and others are making self-service available to smaller organizations. Somewhat standardized systems are expected to eventually provide a wide array of ESS processes to companies of all sizes. Smaller organizations may benefit most of all by escaping administrative overhead, but also by gaining the ability to offer more competitive benefits and other programs to their employees within a consolidated standardized market of such services.

What about employees?

Will employees seek out the information they need? Will the employer's message residing on an ESS application ever get to them? Some organizations are placing the annual employee benefits statement on a Web site where employees can access their personal information, but will they?

The benefit value message sent by such statements is as important to the company as the pension projection is to the employee. Some techniques being used to generate use of ESS include e-mail communications and promotions requiring employees to use self-service for one specific activity. In theory, once they do so they will discover many other applications that presumably are of value to the individuals.

Here's an idea I'm working on at my own company: Imbed within the pages of your Web site a logo or picture. Move it from page to page at various times. The first employee to click on the logo during a specific period, say once a week, is rewarded with a special gift or points that can be used to purchase a gift of their choice. The Webmaster resets the logo as often as the employer chooses. Winners are widely publicized within the company.

A future vision

Self-service is more than allowing employees to make open enrollment choices on-line. It is more than launching a Web site. Both employee and manager self-service is really self-management.

The possibilities are limited only by one's imagination. There are scores of companies testing the limits of technology to reach new areas of self-management. In time, it is possible that all administrative activities will be done without a process between the emploee/ manager and the final action.

Checks and balances will be built into systems, and companies will be limited only by their ability to change the culture of their organization. In fact, a core competency for workers in the future will be the ability to embrace self-service in all its forms and to maximize its value to the organization.

Companies that do not actively embrace the move to self-service and the rapidly changing technology accompanying it will be left at a competitive disadvantage. As the TV commercial asks, are you ready?

Richard D. Quinn has over 38 years of experience in employee benefits and compensation.