Executives are demanding that HR become more strategic. As a result, we’ve seen the emergence of workforce analytics. Workforce analytics play a big role in overall organizational success, according to a joint study by MIT and IBM. Companies using workforce analytics realize:
- 8% higher sales growth
- 24% higher net operating income
- 58% higher sales per employee.
With data like this, it’s easy to see why companies are embracing HR analytics. In my previous post, Workforce Analytics Must Include Data from All Your Benefits Programs to Deliver Real Value to Your Bottom Line, I talked about the importance of including benefits program analytics as part of your workforce analytics strategy to deliver even more results that improve the health of your employees and your company’s bottom line.
Benefits Analytics Delivers Results
Early adopters of benefit analytics strategy are seeing big dividends. According to Thomsons Online Benefits, HR programs that use benefits analytics, “harness it to drive better measurement of their programs and influence key outcomes, such as budgeting, vendor management and, ultimately, employee engagement.”
According to the report, 60% of multinational corporations have adopted benefits analytics, and they are:
- Twice as likely to budget and predict global costs
- Twice as likely to be offering benefits employees want
- 95% more likely to be offering benefits that impact and drive strategic business objectives.
If those stats don’t get your attention, check out the savings. The companies are:
- Three times more likely to see a reduction in administration errors
- Twice as likely to see a reduction in carrier overcharges.
How much of your benefits costs are lost to errors? Would you like to have that money back?
You can, if you adopt a benefits program analytics strategy. And you don’t have to be a multinational corporation to do it.
How Benefits Analytics Will Improve Your Decision-Making
Knowing what is happening in your population is helpful. That’s what you get from a report. But understanding why problems are occurring is critical if you want to fix them. That’s the value of analytics.
When you uncover the root or hidden causes of issues, you can target programs or interventions that specifically address them. You won’t be making decisions blindly or with limited understanding. And your benefit programs fit your population’s needs, which can greatly impact retention and recruitment.
Benefits of Collecting Data Across All Your Programs
The more data sources you collect, the greater the actionable insight you’ll have to make strategic decisions that will impact your company’s bottom line. For example, if you collect only medical data, you won’t see how your population’s health is impacting productivity, absenteeism, workers’ compensation, safety, etc.
Bringing all your silos of health and welfare, or better yet, all your human capital data together will give you the most comprehensive view of your benefits program performance. You’ll be able to correlate health benefits risk with workplace risk to assess your employees’ ability to safely and productively perform their jobs. If you include 401(k) data, you can see how employee finances are impacting productivity and the retirement readiness of your workforce.
Do you know how your benefits programs stack up to competitors or regionally, where you are competing for talent? This is critical information for recruitment and retention efforts. But benchmarking can tell you so much more, like how much you’re paying for medical services or prescription drugs compared to others in your region. Your advisor can use this information to negotiate better rates with your insurer or pharmacy benefits manager.
A vendor report might show you how your programs are trending, but past performance is not a reliable indicator of future performance. You need to be able to predict future performance so you can project where issues may arise. With this insight, you can make changes today that will mitigate the issue. For predictive analytics to work, you need current and historical data. There is a lot of value in historical data, so make sure to collect at least 3 years-worth.
4 Steps to Developing a Successful Benefits Analytics Strategy
There are 4 critical steps you need to take to ensure your analytics strategy will be successful.
- Make sure you understand what your corporate objectives are so you can align your goals to improve business performance.
- Identify key performance indicators, aligned with those objectives, then measure performance. Share the information with your HR team and executives to prove the value of benefits analytics.
- Make sure you and your advisor have access to all your data and that you integrate the data across all your programs.
- Select a vendor that allows you to mine the data so you can get the answers you need to make informed decisions that target the right issues.
Your executives will appreciate the strategic value HR is delivering with benefits analytics, and how you’re using it to drive productivity, recruitment and retention, employee satisfaction, and other areas critical to your company’s success.