What can employers measure from their benefits technology? Helen Swire discovers the power of the data happening behind the scenes
This year has been all about the sparkle of new technology, and how employers and providers can present their employee benefits and reward via hubs, portals, mobile apps and so on.
A seamless user experience is, of course, key to uptake – but to persuade employers of the importance of spending their time, manpower, and in some cases finances, with this tech, a solid case for the return on investment needs to be made.
For most, this comes in the form of the data analytics gained from the ‘back end’ of hubs or apps: measurable, reportable information.
“People data will always have a place in a business, and big data can build stories that affect the business strategy,” says Andrew Woolnough, Equiniti’s director of employee platform & engagement. “It not only informs but contextualises how the reward and benefit strategy affects the wider business strategy, and how the employee value proposition (EVP) works with the business strategy.”
The fight for talent – and retaining it – has been creeping back into UK businesses, and the function of HR is increasingly sitting alongside board-level decision making. It is here that data analytics can really come into play in the business and investment information they provide.
Managing what you measure
In the most straightforward sense, data gathered from employee technology should form a core of a company’s reward strategy building. With a full understanding of staff needs, as well as bottom-line requirements, employers should be able to focus their spend where it is needed: with a resultant growth in both employee engagement and benefits return on investment.
Data and strategy building
“The power of data analytics is that it lets us combine many sources of data, so it allows us to form a holistic view, which enables us to build tailored solutions and measure the success of all key elements,” says Anna Spender, principal at PSHP.
The more employers can make sure that they are providing benefits that are of most value, the more they will attract the best candidates for roles, as well as helping to keep staff.
Spender advocates treating employees as customers. “In a similar way to how a lot of companies use data analytics to understand their customers and support product development and distribution strategies, turning that same type of lens internally means that they can understand their workforce. They can develop reward and benefit strategies and distribution methods that resonate with their staff, improving engagement, retention and productivity.”
Through breaking down benefits data around the demographics of their workforce – whether age, life stage, gender, job role or location and so on – businesses can meet their individual needs.
But, as Spender points out, this becomes even more powerful when combined with data around health, absence, protection and medical insurance claim statistics, and other wellbeing insights. Statistics here can really inform business productivity through revealing to employers the key risk factors the company (and each employee) faces.
Data and ROI
As well as helping to build the strategy, data analytics are vital in discovering what is working – and what isn’t – in a benefits programme. Even if you have discovered what your people want and communicated your benefits in a way that is reaching the entire workforce, you still need to ensure that what you have put in place is providing a genuine return on investment.
Take-up rates can give a clear indication of what is being most valued, and conversely what is a wasted spend. A low take-up rate could indicate a problem with the communication strategy.
For example, Spender identifies a problem: “Recent research by the trade body Group Risk
Development (GRiD) suggests only 16% of employers regularly communicate their group protection benefits, which means existing valuable benefits are not being utilised.”
“Data uncovers things you’d never have guessed,” agrees Paul Waters, head of guided outcomes at Hymans Robertson. “Employers can find some really interesting features about the way people are behaving, see problems their different demographics might have, and examine how HR can manage them.”
Data and communications
Analytics don’t just inform how a benefits strategy should be built: they can also be a key element in guiding employers on best practice for roll-out and communication about the benefits on offer.
“This data helps employees communicate more successfully because they can start to see what populations are engaging with certain aspects of the reward proposition and what populations aren’t, and use that data to target communications more effectively,” advises Waters.
There are two factors to the measurement of comms data: the impact on benefits usage – but also how the way in which you communicate suits your workforce.
Communications are central to the success of any strategy, and employers who are not measuring who is actually interacting with their comms are falling at a key hurdle.
Is a central intranet accessible to your home workers? Are emails reaching your warehouse workers in non-desk jobs? Are mobile communications more important to your younger generations?
Data around everything from attendance at benefits seminars to clicks on company newsletters can provide valuable information about what is connecting with your workforce.
This usage of data does come with a health warning about removing or replacing the direct interaction between HR and employees.
“It’s allowing HR to be a lot more scientific about the way they communicate things – but it’s important to still have conversations with employees,” cautions Waters. “Nonetheless, the data is much richer than it used to be, and so better than anecdotal evidence.”
The data analytics opportunities are such that it would be easy to get carried away by the possibilities. But in the case of very personal information, for example health claims or personal finance figures, they must also remember that there may be employee concerns around how this data is used, and who can access it.
“There’s a challenge with the clash between what can be done and what the business is hoping to achieve, and what is actually possible in terms of data protection,” says Helen Hall, legal director at DLA Piper. “You have to make sure that you’re using your employee data in a compliant way.”
Arguably, younger employees are less concerned about the proliferation of personal data, as so much of life is now lived out via social media – but on the other hand, they are also more aware of just how much data on them could be held.
“Some people don’t have a problem with the big issues of data protection – until they actually stop to think about what’s being held and what’s being done with it, then they become concerned,” says Hall.
“But data protection rules are toughening up, and a key part of basic compliance with data is that you have to give people that visibility about their information: what data you hold, who has access to it, what it’s being used for and so on.”
With the Information Commissioner’s Office providing a breakdown of the Data Protection Act for employers, there is a safety net available in terms of compliance: but for many, sensitive data remains an uncomfortable conversation.
Hymans Robertson’s Waters says: “There’s a discomfort from the HR perspective of asking people to give data which they might deem sensitive, even if it is anonymised, and a fairly strong aversion to asking people for more data than is necessary for the core purposes of what the employer is trying to do.”
He gives the example of pensions data. “We look at the minimum amount of data that’s needed to run a scheme and support people in general – but we don’t collect information, for example, on the amount of personal debt.”
Typically, however, even the most compliant employers will have to review their data protection over the next 12 months as new European Union data protection regulations are due to be live by March 2018.
There is already an EU directive that deals with data protection, but each country has its own – different – rules.
“In the UK our sanctions are not that strong and there’s a light-touch approach to enforcement, which means that UK employers don’t worry too much,” says DLA's Hall. “But the new legislation is a single piece at EU level. There’ll be much more requirement for the European data protection authorities to comply and be more consistent, and the fines will be much bigger, creating a very different picture in terms of how far employers need to go in compliance terms.”
What will happen in this space after Brexit is enforced is still open to debate. However, what is clear is that the regulations will be introduced before the UK leaves the EU, so employers must be aware of what they have to comply with.
Regardless of what happens with Brexit, “if we want data to keep flowing to this country, then our data protection will have to come to some agreement with the EU”, says Hall.
International businesses will need to consider how they interact with the EU regulations, and with Prime Minister Theresa May stating she will trigger Article 50 – beginning the formal Brexit negotiation process – by the end of March 2017, it is to be hoped that how the EU rules will affect UK businesses will become clear.
Changing regulations aside, what is the analytics picture likely to look like in 2017?
Equiniti’s Woolnough, suggests that health and wellbeing data is the next step forward: “In terms of the issues around things like workforce risk, absenteeism, presenteeism and so on, stress in the workplace is prevalent. If an organisation understands that prevention is better than cure, they can use their analytics to predict where they should invest.”
Beyond healthcare, however, there is a real emphasis on the holistic overview of benefits: using data to make the whole package fit together – and to ensure that all elements of the decision-makers are working together to formulate a strategy.
“Companies run the risk of functioning like an ‘orchestra of soloists’,” Woolnough argues. “HR plays a fundamental role in bringing the people data together with the reward and benefits strategy: and that’s where the analytics can really help.”
“If HR takes ownership of the data, they can be the conductors, bringing that orchestra together.”