HRIS in the Small to Mid-Size Market

Technology Becomes Affordable to the Small and Midsize Market: Are You Still Doing the Paper Chase?

"We answer the same benefit questions over and over."
"Annual enrollment is a nightmare with all the incomplete enrollment forms."
"HR needs to be more strategic. But, we spend our day answering employee telephone calls, filling out insurance forms and handling address changes."

If this sounds like you and your colleagues, you are not alone. Many small to midsize employers continue to manage their employee data and transactions by telephone and paper.

Technology has been warmly embraced within organizational structures and its uses are evident in supply chain management, distribution, manufacturing and customer data management. The use of technology has helped these departments experience higher productivity and improved cost savings.

Yet, when it comes to our employees, often the perception is that technology is too expensive and the savings questionable - especially in the small to midsize market where cost control is even more critical. Often, the reasons why HR is the last department to use technology are common ones we've heard before.

"Our employees don't have access to PCs."
"We worry about the security of online systems."
"We don't have the IT staff to manage an online service."
"We can't afford to offer online services to our employees."

Let's take a look at each of these objections.

"1. Our employees don't have access to PCs."
In June 2004, Research and Markets reported that nearly 80 percent of all U.S. households have a PC. Most employees actually do use PCs at home, even if they have jobs that do not require the use of a PC at work. And the over age 65 population is one of the fastest growing segments for PC usage. So remember your retirees when thinking self-service.

"2. We worry about the security of an online system."
Security is an important issue for an online system. All data is accessed from a three-tier login routine via password-protected secure Web server. Sensitive data is encrypted (scrambled) to assure total privacy. Self-service firms use SSL technology, the standard for secure Web communications. This is the same system used by most large businesses that accept credit card information via their Web sites. This is an important factor when accessing confidential benefits and salary information.

"3. We don't have the IT staff to manage online self-service for our employees."
By outsourcing to a self-service provider, an employer can eliminate the need for IT staff to support the implementation or ongoing maintenance of applications. Employees and managers can access the self-service system at any time through any standard Web browser connected to the Internet. It's a completely external, yet secure, system.

"4. We can't afford to offer online services to our employees.
In a recent Towers Perrin report, HR departments cited cost reduction as the most critical issue they face. One of the surest ways to reduce cost is through self-service. Don't believe it?

A July 2004 report from IOMA (Institute of Management and Administration) reported that companies that move to self-service deliver immediate cost savings in the 18-20 percent range. After the initial investment, most clients see a return on their investment in two years or less. This is a result of improved accuracy in data collection, reduction in time to complete tasks, fewer calls to the HR department and faster turnaround.

A recent Cedar Survey indicated the cost of manually processing open enrollment forms could be as high as $77 per employee. You could implement self-service for enrollment and year-round administration for less than $10 per employee per month for groups with fewer than 250. For larger groups the monthly cost drops significantly.

In 2002, WellPoint Health Networks of Thousand Oaks California installed self-service for online annual enrollment. They estimate that the reduction in man-hours, paper costs and errors saved the company $400,000. (Workforce, January 2003).

Marcie Franklin of Tally Defense Systems of Meza, Arizona (300 employees) estimates that call volume to the HR staff has dropped by 75 percent since installing self-service. This allowed her to reduce her HR staff through attrition and yet still meet her HR obligations. (Workforce, January 2003).

Oracle Corporation documented that one of their clients used to spend around US$10 to process a change of address form before moving to selfservice. With self-service, the cost dropped to US25 cents. The $10 was the cost of the time it took the HR staff to copy the handwritten form into all the separate databases. With self-service, the employee enters the data once online and it is automatically updated in all the databases. This level of savings can be expected for every transactional task that employers move to self-service.

Self-service not only reduces paper and saves hard dollars, but it allows your HR staff to spend time on manager- focused HR programs, new-hire orientation and training for supervisors. This results in improved morale, improved employee relations and higher employee satisfaction with benefits.

Investing in HR self-service technology is not just an investment in your people, but also an investment in your business. Self-service not only reduces paper and saves hard dollars, but it allows your HR staff to spend time on manager-focused HR programs, new-hire orientation and training for supervisors. After the initial investment, most clients see a return on their investment in two years or less. This is a result of improved accuracy in data collection, reduction in time to complete tasks, fewer calls to the HR department and faster turnaround.

If you choose self-service to meet these goals, here are some tips to make the transition successful.

1. Remember you are changing behavior. If your current HR staff spends most of its time on transactional tasks, it will be a huge change in their roles to move to a strategic focus. This goes for managers too.

2. Take your time. Carefully study the available options. You can choose self-service for everything from benefits administration to performance management. Determine your needs before you select a vendor.

3. Don't buy services and products you don't need. You can overwhelm your HR staff and your employees with technology.

4. Once you've decided, allocate adequate time for preparation and implementation. Changing your system, attitudes and behavior takes time. If your managers are used to a lot of "hand holding" you will need to spend as much lead-time as possible preparing your HR staff and your managers.

5. Self-service offers more benefit to the HR Department than to managers. Self-service relies on managers to perform many functions previously completed by HR. Managers may see the change as more work for them. Getting "buy-in" from managers is critical to the success of this transition.

6. With all the excitement about cost savings, some employers forget their employees. Consider how you will provide customer service to your employees once you have implemented a selfservice system. One consideration might be a call center that can help employees and keep HR's time more focused on strategic behavior.

7. Communicate, communicate, communicate to employees, management and carriers. Just when you think you've communicated enough - start again.

If you take your time, choose carefully and communicate often installing a self-service system is an affordable way to lower your costs and improve the quality of your HR services. Your employees pump their own gas, use ATMs, access kiosks at the airport and check out their own groceries. Your more PC savvy employees bank online, shop online and attend college online.

While once affordable only to large employers, self-service has become reasonable for employers of any size. The cost savings more than outweigh the initial investment of implementation and improving service delivery to your employees while reducing costs is a winning combination.

It's time to trust our employees and offer them an easy, efficient and accurate way to manage their own employee data. Investing in HR self-service technology is not just an investment in your people, but also an investment in your business.

About the Author
Mary Kesel is the president of The Benefit Advocates, Inc., an employee benefit solutions company located in Winston-Salem, North Carolina. The company offers no-phone menu, high-touch call center/patient advocacy services, employee benefits communications, COBRA administration and employee training. Her self-service partner, Empliant, is located in Chapel Hill, North Carolina and provides tools for automated online knowledge bases, online benefits enrollment and administration, dynamic surveys and interactive transactions and HR administration. Together, Empliant and The Benefit Advocates provide a customized self-service system with a high-touch approach.