Much has been written about the COVID-driven dramatic increase in corporate benefit investments over the past two to three years. And, while the components of a benefits portfolio are certainly important when it comes to serving employee needs and creating a culture of caring, how benefits are accessed and delivered is also key.
However, harnessing the power of benefits-related technologies might be one of the hardest jobs benefits leaders face today. “It’s a very messy, complex and crowded market,” Stacey Harris, chief research officer and managing partner of Sapient Insights Group, told me. “And it’s going to get messier before it gets simpler.”
Related: HRE expert Steve Boese suggests 3 strategies for using benefits tech to enhance EX
According to Sapient Insights’ most recent HR systems survey, only 14% of respondents said their current benefits technology solutions meet the needs of their company and employees all of the time. Interestingly, but perhaps not surprisingly, small and mid-sized companies are seeing the greatest churn in applications used. Thirteen percent of respondents from companies with fewer than 500 employees said they were assessing technology options; 26% had decided to make some kind of technology change; and 19% had active RFPs in progress. Only 42% of companies in this category had no plans to make any technology changes.
Where is benefits tech falling short?
So, what is causing the market churn and a less-than-satisfied perception of the offerings in this segment? Likely, it’s a combination of significant functional gaps. Following are several problematic areas:
- Customization. Thirty-seven percent of respondents to Sapient’s annual survey cited difficulties in customizing their systems to reflect and track wellness goals or new requirements without advanced technical knowledge and coding. Since benefits offerings can change frequently to meet evolving workforce needs, employers are looking for systems that can flex as needed.
- Integration. As benefits portfolios expand to include diverse offerings, integration between point solutions and enterprise systems becomes increasingly complex and often painful. Integration challenges are compounded for companies with workforces in different states and countries.
- Personalization and accessibility. A 2022 MercerMarsh Benefits survey found that approximately 40% of respondents had difficulty accessing available benefits through some kind of technology. About the same number of respondents felt they did not have a “consumer-quality” experience. The analysts I interviewed agree that personalizing benefits is critically linked to adoption. “You have to make sure every single employee feels as if they’re getting what they need while at the same time ensuring equity across an often diverse workforce,” says Janet Mertens, vice president of research for The Josh Bersin Company.
- Scalability. As companies grow, expand into new geographies, and rely more and more on remote workforces, limitations in support start to appear. Harris points out that this is one reason that small and mid-sized companies are more likely to change vendors or service providers.
Where are companies today?
For decades, companies have outsourced benefits administration to consulting or brokerage services or bundled it into payroll services. Today, the benefit applications landscape is a complex mix of enterprise system vendors, point solutions and total benefit solution providers.
See also: 4 critical benefits and compensation issues facing employers this year
Sapient Insights’ data shows technology vendors Workday, Oracle and SAP with high levels of adoption for enterprise organizations; these systems continue to operate as the primary source of employee truth. UKG Pro, Ceridian Dayforce, ADP, isolved and Paycor have high levels of adoption for mid-sized and small companies.
Total benefit solution providers such as Alight, Fidelity, Mercer and Willis Towers Watson all have their own technologies but focus heavily on their consulting services to best address the enterprise needs. In contrast, benefit point solutions such as ADP Health and Wellness, Businessolver and Benefitfocus offer services but are more focused on providing supporting technology. Small organizations are likely to leverage whatever benefit solutions are provided by their HRMS or payroll providers or to completely outsource services to a broker.
Most executives are recognizing the importance of an attractive, competitive benefits portfolio for recruiting, employee retention and satisfaction, and overall productivity. And while spending may decline some from pandemic highs, it’s unlikely that benefit offerings and administration will ever again be a C-suite afterthought. Vendors know this and are scrambling to up their games.
Buyers are going to see technology solutions that offer better optimization of benefit selections, hyper-personalization, and decision support and education tools. Chatbots and embedded AI intelligence will be increasingly common. The demand for a holistic benefits experience—spanning traditional health and wellness offerings as well as financial, family care and education benefits—will require improved integrations and will likely spur the desire for comprehensive wellness platforms. While only 29% of respondents surveyed by Sapient currently have a comprehensive wellness platform, 36% are budgeting for implementation within the next year or are assessing an implementation sometime during the next two years.
Making sense of a messy tech market
Mertens of The Josh Bersin Company sees the benefits tech market as suffering from the “too much” paradox: too many benefit options and too many tech offerings for easy decision-making.
To confront this challenge, the starting point for any effective benefits tech strategy is to take stock of what you currently have—the various benefit offerings and all supporting technologies—and what is actually being used. Mertens also emphasizes the importance of getting feedback from across the workforce—not just one or two pockets of employees. For instance, your portfolio might inadvertently be more useful for tenured employees rather than those new to the workforce. Or you might be skewing offerings to those with young families but not supporting those caring for aging parents. Also critical is to make sure your company is taking a holistic approach to benefits by building in offerings that promote financial security, education, mental health and career support.
The next step is to determine how employees can best access and manage the benefits available to them. Ideally, access should be as streamlined as possible and highly personalized.
This is one of the most volatile areas of HR. Technology innovations are making their way into the market on a regular basis, and benefit needs can change as businesses grow, contract or evolve. Building flexibility into your strategy, ensuring easy customization and integration, and making best use of data for continual monitoring and decision support are all essential. Survey data can help you stay on top of market players and identify the vendors and providers that should be included in RFPs. Research into the practices and processes that yield the biggest business benefits will help you prioritize and focus.
The last three years have put a bright spotlight on the role of benefits leaders. Certainly, there is increased scrutiny that comes with bigger investments and greater attention. But, with the right strategy and tech support, benefits leaders have the opportunity to make a real difference in employee lives and deliver on creating cultures of care.