Authored by Stephen Read, CEO
Seven years ago, before I joined Thomsons, I was working at a global enterprise software company, looking at how technology is used across business functions. I was struck by how underserved HR was. It seemed like none of the advances we had seen in consumer applications, or even in the rest of the enterprise space, had transferred over to the HR function.
We operate in a global business landscape, facilitated by technology. Most businesses are investing in enterprise technology and cloud software that drives their global business agendas forward and helps them make money. According to Gartner, worldwide IT spend was set to increase 2.4 per cent in 2017, with the enterprise software market projected to grow 7.6 per cent.
Over the last seven years, we have seen significant innovation and adoption of HR tech. Recent research by Bersin found that the highest performing HR organisations are revitalising the HR function by focussing heavily on internal development and investing in technology, analytics, artificial intelligence and data security.
This is an important transformation. Can you imagine a world in ten years’ time where employees are made to fill in paperwork as part of their day-to-day engagement with their employer? Any enterprise still reliant on such manual processes in a highly digital, connected world will seem like an ancient relic, and will surely struggle to attract and retain engaged employees, let alone gain their respect and admiration.
The skeleton in your closet
Yet despite these significant shifts, technology is yet to penetrate the whole of the HR function - and the employee benefits supply chain is one area that has been strangely overlooked.
There are 28 million people in the UK workforce alone – and for most of these, benefits will be delivered offline, in paper and in person. This shows just how under-penetrated this market is. As CEOs, it’s imperative that you use technology to your advantage across your business – for external and internal functions.
A typical organisation will spend something like 15% to 20% of payroll on employee benefits. This is a huge sum, and as CEOs, you must be asking “where is this spend going? An thomsonjune-2018-mpu d “how are we measuring its impact?” But are you confident the answers you’re getting are accurate, and give you meaningful insight to enable informed decisions? When the risks of getting benefits wrong are so profound, ranging from insufficient data compliance to employee disengagement and unnecessary spend – can you afford not to get it right?
Asking the benefits spend question
Truly effective employee benefits must be underpinned by centralised data and global technology. Our latest Global Employee Benefits Watch research found that when organizations implement both an HR shared service (HRSS) centre and a technology solution to run their benefits programs, they are more likely to achieve success against their global benefits objectives. Without technology and the data it provides, it’s impossible for you to have accurate visibility of spend and outcomes, and therefore ROI on your investment. You’ll also have no idea how you’re progressing against your strategy.
Timeliness is also a factor. Is there any value in data that’s already six weeks old by the time you receive it? Waiting several weeks to find out you’ve been spending a significant sum on a benefit with zero uptake is a waste of resources. My guess is that without a centralised, online system it would take your HR team a long time to come up with a comprehensive answer on benefits spend. Real-time, easily accessible data and analytics is needed to provide the level of insight you need at the right time.
Poor administration and auditing processes, and the knock-on effect this has on data compliance, is another huge issue. The potential for human error is all too high when data is entered manually. If we look at a company undergoing restructuring, for example, those employees who are leaving the business will need to have their medical insurance and pension records updated accurately. We’ve known instances where companies continued to pay pension contributions for employees who had left the firm because the process wasn’t automated - an unnecessary and costly headache for the business.
Then there’s the question of sensitive data, including employee health information. Ensuring that your data is encrypted, secure, and correctly handled will only prove more important with the arrival of GDPR. When processes aren’t standardised globally (taking into account local regulations), there’s a risk that local HR teams will store and transfer employee data to providers via spreadsheets over email – unencrypted. This is a disaster waiting to happen and poses a significant cyber security risk. You need to make sure you’re sufficiently compliant or else face huge fines.
Employee engagement must come into this equation, too. No employee enters a company disengaged, but if they are forced to navigate out of date, slow and counter-intuitive technology in their new role, they can soon find their enthusiasm waning. Employees are demanding single sign-on, mobile-first, consumer-friendly software as part of the digital workplace, and you need to make sure your organisation provides this. The employee experience is one of the most important ways to differentiate your company to your new employees. Without the tech to back it up, you’ve already made a bad impression.
Looking back to where we were seven years ago, organisations across the board should be proud of the leaps and bounds we have made in the use of technology in the HR function. Global HCM software has undoubtedly had a massive impact in how we manage global projects today, and also freed up precious time for HR professionals to focus on delivering real business impact in the places that matter.
Any value gained from this progress can be lost, however, if some functions remain offline and paper-based. We need to ask ourselves: are we doing enough to connect these digital dots across all of our functions and lifting up all areas of the business? If we achieve this, and make sure technology is applied effectively across the board, then we’ll soon see a more engaged, more committed, and more productive workforce.