Technology streamlines benchmarking

Getting information on what the competition offers has never been easier
By Maureen Premdas
|Canadian HR Reporter|Last Updated: 05/13/2003

H

ave you ever wondered how many companies in your industry offer employees drug cards, or whether most long-term disability plans are employee-paid or employer-paid? Thanks to technology, it is easier than ever to benchmark plans, whatever your definition of “competitor.”

In the past, organizations relied on surveys to provide them with benchmark data. It was typically an extremely labour-intensive and time-consuming process that limited the breadth and depth of research that could be done. In recent years, companies have turned to benchmarking databases that unveil an unprecedented amount of information within minutes.

In some cases technology has completely transformed business processes. In others, the basics remain the same but technological advances have enabled organizations to do them much more efficiently. Such is the case with benchmarking. The basic principles of benchmarking are the same, but it’s now possible to make comparisons faster and with less effort: after providing detailed information about employee programs, (which is entered into the database by the benchmarking organization) participating organizations have quick and easy access to the information of other organizations in that database. Simple queries to the benchmarking organization can be met with extensive results and analysis in minutes. While fewer and fewer organizations guard program information as a secret, participating organizations are entitled to anonymity if they want it.

A robust benchmarking database allows data to be sliced in any number of ways. An organization can specify a comparison group based on any combination of parameters such as number of employees, industry, province, union or non-union, active or retired, hourly or salaried, to name just a few.

And what about depth? Most benchmarking databases contain general data such as a life or long-term disability benefits schedules, health deductibles and reimbursement levels. Increasingly, very detailed information is available, such as whether or not an organization’s dental orthodontics coverage pays for adults, or how a plan defines disability.

Technology also allows information to be retrieved more easily. There is no need to spend time sifting through data because databases provide the answers to specific questions, and quickly. Sometimes it is just a simple question. For example, “Do most of my competitors pay 100 per cent of their employees’ health premiums?”

Other times it is a series of questions for several benefits, to find out what the spread of practices is in a broad environment. For instance, let’s say one-half of your competitors are offering one times salary in life insurance coverage. What about the others? Perhaps they offer three times salary? Or is it somewhere in between? Benchmarking databases allow for very specific queries, like “What’s the annual maximum for orthotics?” Tables for each question can be produced with all the statistics needed to make good decisions about the plans.

The speed and robustness of benchmarking data allows for creative customization. More and more, organizations are benchmarking themselves not just against their own industry, but against groups of specific companies that hire people with similar skills. Database technology allows employers the flexibility to customize searches by choosing a sub-set of plans from the database and seeing how they compare to this group.

At other times, quantitative analysis may be required to accompany a comparison. Quantitative analysis can give the employer an idea of whether they are higher or lower than the competition — for both individual benefits and in total. This too can be done quickly and accurately, customized to specific employee profiles or based on a specified employee group demographic profile.

When making comparisons, it is always important to remember that benefits are a piece of the total compensation package. Combining this information with pension and salary compensation information is key.

Also important are the applications for fast and accurate benchmarking in other situations, at the negotiating table, for example. Plan sponsors could compare theirs against other plans within the same union, or against plans in other unions, based on the most up-to-date information. As well, benchmarking technology helps companies quickly determine the cost implications of introducing one or a combination of benefit changes such as increasing the vision care maximum and changing the health reimbursement level. Thanks to technology, reliable, factual information is available to employers right at the bargaining table.

Technology also makes it possible to identify plan design trends. Are more hourly plans implementing flexible benefits? Who’s putting in a drug card? What plan changes did the latest round of union negotiations bring? And how many organizations are changing retiree benefits?

Technology has made the task of benchmarking far more efficient, allowing human resources professionals to focus on analyzing information rather than gathering it. If only access to all information was this easy.

Maureen Premdas is a senior consultant with the Health and Group Benefits practice of Mercer Human Resource Consulting. She can be reached at maureen.premdas@mercer.com or (416) 868-2000.

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