Copywrite C 1999 PMi HUMAN RESOURCES MANAGEMENT SYSTEMS Benefits and Pension Programs Chapter 12

Copywrite C 1999 PMi Human Resources Management Systems: A Practical Approach n By Glenn M. Rampton, Ian J. Turnbull, J. Allen Doran ISBN X Carswell

Copywrite C 1999 PMi Benefits and Pension Program Requirements n achieve the objectives of the organization; n remain competitive in terms of attracting and retaining employees; n satisfy employee requirements as defined in collective bargaining; n satisfy ever-changing government legislation n fulfil its values/responsibilities as a good corporate citizen.

Copywrite C 1999 PMi Demand and Supply Demand may derive from: n information about the strategic plan of the organization along with what employees expect/want. n market surveys of what other organizations are providing to their employees. n pressure to satisfy employee wants/needs reflected in labour negotiations.

Copywrite C 1999 PMi Demand and Supply (Cont’d) Benefits supply derives from benefits that are available from carriers, government, and other sources

Copywrite C 1999 PMi Demand and Supply (cont’d) Benefits planning/coordination is used to determine how the demand for benefits is to be satisfied with the supply. The demand for benefits becomes translated into the specific features of the various benefits programs; while, benefits availability/cost will have a bearing on the employee needs/wants.

Copywrite C 1999 PMi Benefits Programs n health related plans - medical, dental, and vision programs n insured programs - life insurance, short and long term disability, workers compensation n safety programs - occupational health and safety

Copywrite C 1999 PMi Benefits Programs (Cont’d) May also include: n educational upgrading n top-up of maternity and paternity leave n stock options n financial counselling n employee assistance programs n day care n elder care

Copywrite C 1999 PMi Pensions May be: n defined benefits n money purchase n mixed n company supported RRSP

Copywrite C 1999 PMi An HRMS Benefits/Pension Module Must: n identify all employees, both active and inactive, who are eligible for the various benefits n allow for efficient enrolment of new members, preferably, as a normal part of the staffing process n accurately monitor benefits eligibility, whether on enrolment, or on change in employment status n accurately track benefits coverage for each employee especially as changes occur during an individual's career n facilitate the accurate collection and storage of both current and historical benefits and pension data

Copywrite C 1999 PMi An HRMS Benefits/Pension Module Must (Cont’d): n be easily updated to reflect legislative, union contract, and policy changes affecting employee benefits; n allow automated monitoring of claims performance; n interface with the data basis of other functions which may or not have been integrated into the HRMS such as payroll, occupational health and safety, workers compensation, and medical records; n process claims payments; n automatically effect payroll deductions through the payroll function;

Copywrite C 1999 PMi An HRMS Benefits/Pension Module Must (Cont’d): An HRMS must also allow the ready but secure transfer of information, e.g.: n reports and returns on pension and benefits information to government agencies n pension and benefits cost data to, and from actuaries, auditors, and outside consultants n rate and coverage information to, and from, insurance carriers n information on monies available for investment, investment strategy, and investment performance from investment managers, and plan trustees.

Copywrite C 1999 PMi An HRMS Benefits/Pension Module Must (Cont’d): An HRMS must be able to: n provide information flexibly and quickly in formats that are tailored to the requirements of the situation. This can include information to senior management decision making, strategic planning, or for labour negotiations n support modelling and analyses of benefits data so that problem areas may be identified, and the implications of usage, cost, and other trends explored n support cost control by automating benefits administration, and providing the means for monitoring excess use, abuse, and inefficiencies, as well as the means for taking corrective action

Copywrite C 1999 PMi Coordination of Benefits Increasing numbers of "dual career families", may lead to "double coverage" in that each employer may cover both spouses. This can lead to unnecessary expenses since coverage by just one of the plans is required. Premiums in the other can be saved through coordination across plans. When both spouses are employees of the same organization it should be a relatively simple matter to ensure that this coordination occurs.

Copywrite C 1999 PMi Flexible Benefits In an attempt to offer a greater range of benefits while controlling costs, some organizations are offering “flexible benefits” in which individuals are generally provided with a basic "core set of benefits" and then allowed to pick from a menu of additional benefits, until the cost of the benefits chosen equals a predetermined amount.

Copywrite C 1999 PMi Flexible Benefits (Cont’d) In flexible benefits, employees tailor their benefits program to their needs, by selecting those components that are most useful to them, and not being compelled to pay for others that are not. This places more demands on the benefits module of an HRMS, which must be able to keep track of and report on, what are, essentially, unique benefits programs for each employee.

Copywrite C 1999 PMi Flexible Benefits (Cont’d) In traditional “defined benefits” program usage and cost are balanced out over all participants. Individuals will select flexible benefits components that are most “valuable” to them, and therefore, will also select components that they feel are likely to be most valuable to them, in terms of frequency of usage and cost. Those developing a flexible benefits program must take this into account, and build safeguards into the system or risk increased overall costs.

Copywrite C 1999 PMi Flexible Benefits (Cont’d) In the design and development of a flexible benefits program, an HRMS benefits module must be able to support research (including employee surveys), analyses and modelling to help predict employee usage of each of the benefits components. Then, after the program has been implemented, the regular and ad hoc HRMS reports will be important to ensure that the program is management effectively, including achieving its objectives, within cost limitations.

Copywrite C 1999 PMi On-line Communication Organizations are increasingly providing employees direct on-line computer access to benefits and pension information. This may be done directly via screens that the individual may call up on a computer (with, of course, appropriate security safeguards under “password” protection), which may, or may not be supplemented with “help menus”, or automated tutorials. Employees may even be allowed to select benefits options in this way.

Copywrite C 1999 PMi Question 1 It is sometimes said that employers tend to emphasize the "cost of benefits", while employees are mainly concerned about their "value”. Does this have implications in the way that the annual benefits statements should be formatted and presented? How about other methods of communication? What is the role of the HRMS likely to be in the communications process?

Copywrite C 1999 PMi Question 2 n What are the advantages of flexible benefits programs? What complications do you see in the information requirements of this type of program over more traditional programs? What role might an HRMS play in meeting these requirements?

Copywrite C 1999 PMi Question 3 What are some of the benefits program monitoring and analysis capability that are likely to be important in an HRMS? Do you feel that the presence or lack of this capability should be an important criterion in selecting a new HRMS? Why? How would one assess whether the HRMS can do all that is required in this area?

Copywrite C 1999 PMi Question 3 Do you think that giving employees direct access to the HRMS to update their benefits and pension information is a good idea? What advantages or problems might it pose for HR personnel. How about employees? The organization at large? How might one deal with each of these problems? How about the issue of confidentiality?