Employee Benefits: How to deal with the data chaos
In the previous articles of this series, we examined the importance of gaining control over employee benefits (EB) costs and management. As a foundation for action, the Head Office should consider its data acquisition and evaluation. In practice, this is much more complicated than it sounds.
The biggest challenge is that EB data flows from different sources (Benefits Networks, insurers, brokers, TPAs, accountants etc.) to subsidiaries and then to HQ or, in some cases, directly to HQ. These data sets come in different formats, languages, currencies, time periods and degrees of quality. As a result, the central management (e.g., CFO) has different and often outdated information compared to the subsidiaries’ management.
Some attempts have been made to solve this problem with software tools that allow stakeholders to enter their data into a central data base. The concern with these tools is that they do not address the problems associated with:
- Different formats – an Excel file is not the answer here; the format of the content is more important
- Inconsistent terminology (e.g., health insurance or medical insurance)
- Different currencies and/or different exchange rates
- Varying levels of information (e.g., are dependants included in the cover?)
So, to achieve the necessary level of control in EB, the problems above must be solved through digitalization. Of course, manual data entry is the most difficult challenge to overcome and the cause of many problems. One way to address this is to integrate automatic data exchange between HR/Finance software to a central tool.
Another way is to task an internal or external expert to overview and verify the entered data. According to our experience, the optimal solution is a mix of the above.
As such, the support of EB specialists is essential in placing the control of EB organisation into the hands of C-level management at both local and Head Office level. Only with such support and knowledge can organisations with international operations optimise their EB management and find the right balance between costs and benefits.