HUMAN RESOURCES MANAGEMENT SYSTEMS

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HUMAN RESOURCES MANAGEMENT SYSTEMS

Benefits and Pension Programs

Chapter 12


Human Resources Management Systems: A Practical Approach By Glenn M. Rampton, Ian J. Turnbull, J.

Allen Doran

ISBN 0-459-56370-X

Carswell


Benefits and Pension Program Requirements

achieve the objectives of the organization;

remain competitive in terms of attracting and retaining employees;

satisfy employee requirements as defined in collective bargaining;

satisfy ever-changing government legislation

fulfil its values/responsibilities as a good corporate citizen.


Demand and Supply

Demand may derive from: information about the strategic plan of the organization along with what employees expect/want.

market surveys of what other organizations are providing to their employees.

pressure to satisfy employee wants/needs reflected in labour negotiations.


Demand and Supply (Cont’d)

Benefits supply derives from benefits that are available from carriers, government, and other sources


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.


Benefits Programs

health related plans - medical, dental, and vision programs

insured programs - life insurance, short and long term disability, workers compensation

safety programs - occupational health and safety


Benefits Programs (Cont’d)May also include: educational upgrading top-up of maternity and paternity leave

stock options financial counselling employee assistance programs day care elder care


Pensions

May be: defined benefits money purchase mixed company supported RRSP


An HRMS Benefits/Pension Module Must:

identify all employees, both active and inactive, who are eligible for the various benefits

allow for efficient enrolment of new members, preferably, as a normal part of the staffing process

accurately monitor benefits eligibility, whether on enrolment, or on change in employment status

accurately track benefits coverage for each employee especially as changes occur during an individual's career

facilitate the accurate collection and storage of both current and historical benefits and pension data


An HRMS Benefits/Pension Module Must (Cont’d):

be easily updated to reflect legislative, union contract, and policy changes affecting employee benefits;

allow automated monitoring of claims performance;

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;

process claims payments; automatically effect payroll deductions through the payroll function;



An HRMS must also allow the ready but secure transfer of information, e.g.:

reports and returns on pension and benefits information to government agencies

pension and benefits cost data to, and from actuaries, auditors, and outside consultants

rate and coverage information to, and from, insurance carriers

information on monies available for investment, investment strategy, and investment performance from investment managers, and plan trustees.



An HRMS must be able to: 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

support modelling and analyses of benefits data so that problem areas may be identified, and the implications of usage, cost, and other trends explored

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


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.


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.


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.



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.



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.


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.


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?


Question 2

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?


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?


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?

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HUMAN RESOURCES MANAGEMENT SYSTEMS