Employees want to have it THEIR way.
Before the rise of the Internet, employees hated being put on interminable hold to find out how much vacation time they had left or the current value of their 401(k) plan. Now that they are used to trading stocks online and doing their Christmas shopping at 2 a.m. from their computers, they REALLY hate being put on interminable hold to add a new family member to the health plan.
SynHRgy HR Technologies, an HR outsourcing vendor in Houston, Texas, monitored the usage of its 500,000 participants last fall. Sixty-five percent of the enrollees used the Web or its interactive voice response (IVR) system in lieu of talking to a live representative, reports Kraig Koester, Midwest regional director for SynHRgy. He points out the outsourcing vendor's 35 clients range from high tech companies who couldn't live without their Palm Pilots to unionized heavy industry whose employees work with their hands not computers.
"The old benefits process doesn't make sense," says Christine Ferrusi Ross, a human resources (HR) analyst at Forrester Research in Cambridge, Massachusetts.
At the same time, HR administrators are searching for a way to use the Web to streamline the process and save money, benefiting the corporate bottom line. Ferrusi Ross says managers are putting their HR departments under a microscope to dissect how they are spending their time. The analyst says Web-enabling the benefits area can produce cost savings that are "pretty substantial.
Self Service Is a "No Brainer" for the Employer
Ferrusi Ross says the move to self-serve HR benefits was "driven by the employee side. But it didn't take much for employees to agree. There is no reason not to do it. It's a no-brainer."
"The HR administrator is caught between a rock and a hard place. He must reduce the cost of delivering services, yet improve them at the same time," says Morris Applewhite, vice president of sales and marketing for Employee Care at Convergys. Convergys, located in Jacksonville, Florida, is an outsourcing provider of HR management solutions for large multinational corporations. All of its buyers have employee rosters of 10,000 or more.
HR is moving from a paper driven process to an automated one, he points out. The Internet "is bringing more self-service into the equation," he says.
Currently, Koester estimates less than 50 percent of all HR transactions happen at the self-service level. But in five years he expects that number to reach 80 percent.
CNA, a Chicago, Illinois insurance company, is a good case study of the current HR challenges companies face. The second largest commercial insurance company in the United States was "concerned" about the service level of its internal support center, reports Kenneth Cook, vice president, total compensation and consulting for CNA. The insurer had no Web capability and lacked an IVR system.
Its current system required users to talk to a live representative. These folks worked banker's hours, 8 a.m. to 5 p.m. week days. Once an insured called with a question, he or she had to wait as long as two weeks to get an answer to the question. "We wanted more instantaneous feedback," says Cook.
However, the insurer shied away from the capital investment - he estimates it required several million dollars -- needed to "make our systems state-of-the-art." Instead, it outsourced that function to Hewitt Associates LLC, a HR outsourcing vendor in Lincolnshire, Illinois, in late 1998.
The Benefits of Outsourcing to Hewitt
Outsourcing the HR benefits function had many benefits. Hewitt provided the Internet accessibility CNA wanted with no capital expense. The fact that Hewitt could implement the changes quickly was important to the insurance company.
It also provided cost savings. Applewhite says Convergys can save its outsourcing customers from 20 to 60 percent of their original HR costs.
Cook says his labor costs at the service center were always on the rise. The insurance company had to pay rent and utilities for the office space. One big spot in the budget with a sucking sound was the old computer system. Cook says the insurance company was spending "a lot of money" fixing it. "We were on a downward spiral," he notes.
Applewhite points out legacy HR systems are driving companies to outsource. "They are causing major headaches because they don't have the functionality and they are inflexible," he reports.
Outsourcing has now freed the HR staff at the insurance company to focus on the insurance, its core business. "We don't have to spend a lot of time on the day-to-day operations in the call center," says Cook. Instead, the HR executives can contribute to the bigger picture. "The HR executive is being invited to the table - for the first time -- to help chart the corporate strategy of the organization," says Applewhite.
Outsourcing had two unexpected bonuses for CNA. Web-enabled benefits "have made us a more attractive employer during the days of low unemployment," reports Cook. The insurance company has been able to lure "more quality people now."
He says the new recruits are "impressed" by how the company handles its benefits. Even if they decide to call Hewitt's call center, Cook says the vendor can answer the question while the employee is still on the phone 90 percent of the time.
Applewhite says Convergys is able to mine the data of its buyers to track trends. "Something may pop out of that trend report," helping the company make better decisions about its future, the outsourcing executive continues.
Koester says the biggest hurdle to self-service transactions are old-time HR managers who are wary of giving up control and relish being the gatekeeper. Before SynHRgy conducted its survey, it asked HR managers to predict the percentage of Web and IVR usage among their users. They guessed 25 percent. The actual usage turned out to be 65 percent.
Lessons from the Outsourcing Primer:
- Employees are driving their HR departments to create a Web-enabled self service benefits model. They like entering the data and checking on their benefits themselves.
- Outsourcing HR benefits allows companies to have self service capabilities quickly and without a major capital investment.
- Old and inflexible HR computer systems were very costly to fix without providing the functionality today's employers need.
- Self service benefits have allowed the HR manager to concentrate on more strategic missions.
- Self service benefits attract better candidates.