When employee self-service technologies first appeared in the early '90s, many industry pundits predicted that these tools would fundamentally change the relationship between companies and their workforce. And as organizations started to roll out interactive voice response (IVR) systems and network-based tools, that claim didn't seem too far-fetched. Businesses quickly found that they could save time and money by making benefits information and retirement fund data available electronically. Unfortunately, employees didn't always share their organization's enthusiasm for these systems. Many workers routinely bypassed automatic IVR processes by selecting the option for a live agent. Or -- after pushing a seemingly endless sequence of buttons and listening to interminable benefit plan descriptions -- they gave up and marched into the HR office for help.
Even the introduction of Web-based self-service tools didn't change this situation radically. Companies discovered that they could easily set up systems that enabled employees to perform simple tasks online -- for example, recording a change of address or viewing a pay stub. But attempts to extend employee self-service to more complex activities, such as participating in open enrollment or managing retirement accounts, sometimes dropped users into a netherworld of complexity. Too often, employees felt lost and frustrated as they tried to navigate these Web sites. And poorly designed online forms generated a slew of errors and problems for HR departments.
Today, many organizations are revisiting employee self-service and looking for ways to ratchet up the efficiency and accessibility of these systems. "Companies have recognized that employee self-service is more than a transactional activity," says Jim Holincheck, research vice president in the Chicago offices of industry analyst firm Gartner Inc. "There's now recognition that the technology must provide advantages for both the employer and employee. Workers must view the system as a resource and feel as though it simplifies and improves their life."
And employers should feel that in addition to improving service, they're saving money. According to Alpharetta, Ga.-based consulting firm CedarCrestone, self-service systems reduce administrative costs between 46 percent and 79 percent, depending on which processes they automate.
"A well-designed system simplifies things for everyone," observes Tony DeNucci, national leader for pension administration systems with Watson Wyatt Worldwide in Minneapolis. "Ultimately, it helps employees become more involved in decisions, and it increases their sense of satisfaction."
It's increasingly clear, too, that best-practice companies also view employee self-service as a way to boost the organization's image. "But success doesn't just happen because an organization installs a great system," notes DeNucci. "It must understand the financial business case and provide the communication and education that's necessary for employees to use self-service effectively."
7 Steps to Effective Employee Self-Service
1. Determine costs and ROI up front. All too often, companies assume that any self-service technology will pay dividends. Unfortunately, not all systems and solutions are created equal. Analyze costs and potential returns before purchasing a system or turning to an outsourcing service provider.
2. Develop a strategic plan. While an organization might realize some benefits by implementing a self-service solution or two on the fly, a carefully considered, strategic approach helps program leaders identify opportunities and map out a course for the future.
3. Communicate and educate. Unless employees understand the benefits of the new system and know how to use it effectively, odds are that they will either ignore it or find it frustrating. An enterprise that rolls out any self-service module must provide training and information about the tool.
4. Offer the highest level of usability. Poor usability is one of the biggest failings of employee self-service initiatives. Companies often regard these projects as cost-cutting exercises. This self-serving approach ultimately leads to employee dissatisfaction, low usage levels and a sub-par return on investment. When everyone gains, everyone wins.
5. Keep an eye on the big picture and integrate systems. The biggest gains from an investment in employee self-service tools result from a holistic and integrated approach to implementation. When an enterprise effectively combines these systems with its installed technology base, usability, convenience and ROI all increase.
6. Monitor your outsourcing service providers. If you choose to work with outside service providers or decide to outsource a discrete function, ensure that you have performance standards and quality-of-service (QoS) levels in place.
7. Leverage finance's analytics and reporting tools. The right self-service tools provide valuable data about usage patterns, costs and claims. This information can help an enterprise adjust its processes and fine-tune its self-service offerings.
Automating Open Enrollment
Employee self-service is maturing and evolving. A growing number of companies are establishing Web portals; handling the entire open enrollment process online; and linking to third-party providers such as Fidelity, Vanguard and Prudential Financial to enable employees to oversee their 401(k) and pension accounts electronically. They're also putting retirees online.
As the Web and HR software have evolved, employ-ee self-service systems have kept pace. Functionality that helps users to perform basic tasks, such as recording a change in the number of their dependents, has become commonplace. Now many organizations are looking to the Web to help them streamline more complex functions and eliminate the enormous inefficiencies of paper forms and employees' phone calls and personal visits to the HR department.
A well-designed initiative can provide workers with more information -- and more targeted information -- so that they can make better decisions about their health-care benefits and retirement plans. That was the goal at First Horizon National Corp., a Memphis, Tenn.-based financial services company with $3.2 billion in 2005 sales, over 13,500 employees and offices in 49 states, when it implemented an employee self-service tool in early 2004.
Before the implementation, managing employee benefits, including retirement accounts, devoured significant time and resources. The company handled the entire process on paper. "We had people keying in forms, and we often had to deal with keystroke errors and other problems," recalls Karen Sones, senior vice president of operations and systems in the company's employee services division.
Then First Horizon National plugged into an electronic approach. Using a Web-based tool within UltiPro Workforce Management, from Ultimate Software, the company migrated to online open enrollment. Employees can now view informational materials and select their health-care providers and PPOs from their personal computers or kiosks at work or from their homes.
During the program's first year, First Horizon National gave employees the option of paper or pixels, but thereafter it made the electronic process mandatory, with only a handful of exceptions. Today 99 percent of the company's employees participate in open enrollment electronically.
First Horizon National also turned to The 401(k) Co., an Austin, Texas-based retirement plan administrator, to automate and streamline its 401(k) offering. New employees can set up their contributions at this provider's Web portal. The information is relayed to First Horizon National's HR department, which makes the necessary payroll changes.
The new Web portal also enables employees to view their employer match as well as their allocations and returns. "By moving to an integrated electronic system we've been able to create a single place for employees to get the information they need," Sones reports.
Employee self-service and online open enrollment, together with an electronic payroll system, have saved First Horizon National more than $40,000 a year in mailing costs and cut staff hours devoted to rekeying data from 240 to zero. In addition, these projects have enabled the company to maintain its HR and payroll head count at 30, even though First Horizon National is in a rapid growth phase; the company has added 3,500 employees over the last five years.
Savings You Can't Ignore
DeNucci reports that the move to online administration of health and welfare benefits has gained momentum in recent years. And he sees enormous opportunities for further growth and improvements. For example, many companies that offer pensions still haven't made all of their worksheets and statements available online.
"The mind-set has been that a pension is just there," DeNucci observes. "Many companies haven't traditionally discussed the topic." However, organizations that decide to make this information available electronically often trim the number of calls streaming into their service centers by 60 percent to 80 percent while keeping their workers better inform-ed about their benefits, he reports.
Numerous companies have groups of employees who are covered by a plan that's not the organization's standard offering; this might occur as a result of an acquisition, for example. For these workers, DeNucci recommends retaining paper-based processes rather than reprogramming systems. However, "it's not a reason to keep everyone else on paper," he says.
Some businesses are making pension and 401(k) information available online for deferred participants (people who are vested in the plan but no longer work for the company). And many organizations have expanded the information resources they provide for retirees.
In fact, employees and retirees are now clamoring for access to online self-service offerings. Gone are the days when companies faced an uphill battle to persuade their unskilled workers, field personnel and older employees to use these systems. "Virtually every age group and demographic now has access to a computer," DeNucci points out. "A company should set up employee self-service and then find a way to deal with the exceptions. The cost savings and ROI are too great to ignore."
The time savings can be significant, too, as Emulex Corp., a Costa Mesa, Calif.-based provider of storage networking infrastructure solutions, can attest. The 26-year-old company, which has about 560 employees worldwide, wanted to leverage employee self-service systems to streamline its HR processes. It implement-ed online open enrollment in July 2004. Before the switch, Emulex's four HR staffers bundled and mailed out upwards of 500 packages a year. The process swallowed a week of staff time, and keying all the paperwork into the HR system took another two weeks.
No longer. Using Web-based enrollment and employee benefits administration software from San Diego-based BeneTrac, the company has completely automated its open enrollment process. Emulex forwards changes in plan design and employee contribution levels to BeneTrac, which manages enrollment data and ensures that employees' options comply with the laws of the states in which they reside. Before Emulex implemented this program, its HR team spent about one-third of its time answering questions and helping employees during the open enrollment process. Now the calls and drop-ins have dwindled almost to zero, says Sadie Herrera, executive vice president of human resources.
Emulex has also launched an employee self-service system for its 401(k) plan. Working with Prudential Financial, it has established online access to general retirement information, a resource library and benefit calculators. Employees can allocate their retirement funds as needed via the Web.
The participation rate for the 401(k) is above 95 percent. "We've improved the level of efficiency and costs for the company but also made it easier for employees to use their benefits effec-tively," reports Herrera.
The Integration Imperative
Seamless data integration and superior functionality are crucial to a successful self-service initiative, notes Gartner's Holincheck. Companies that install a variety of self-service systems -- for example, travel and entertainment (T&E) software, training resources, and applications that provide access to payroll and benefits information -- must ensure that these solutions work seamlessly together. And they must carefully integrate offerings from outsourcing service providers to avoid a hodgepodge of interfaces.
Success also hinges on effective communication with employees, according to DeNucci. "Without a strategic plan -- especially a communication plan -- it's impossible to achieve maximum results," he notes.
CFOs can play an important role in an employee self-service initiative by evaluating software products and helping decision-makers understand the value propositions and ROI these systems offer -- for example, the potential to reduce costs within a call center or shared services environment. Finance owns the analytics and reporting tools that can help the organization identify the most promising opportunities.
"It's possible to compare benefits costs, claims data and usage levels and [determine] how the organization can deliver better service to employees at a lower cost," says Holincheck. "Employee self-service is all about wringing out inefficiencies and creating a greater level of involvement and interest among a workforce."