Employers should ‘double down’ on tech and benefits data analytics. Most still aren’t
Did you know: 53 percent of benefits leaders say the biggest challenge they face regarding effective benefits programs is gaining access to their data. Read this blog to learn why employers should 'double down' on technology.
Utilizing data to understand which health benefits will best work for employees is key to staying ahead of the curve, but just 18% of benefits managers believe their organization has the right tools to implement these programs.
That’s according to a new survey by Artemis Health, which found that while 88% of benefits leaders say data is somewhat to extremely important in designing and managing an effective benefits program, some 53% percent say access to data is their biggest challenge.
“Benefits analytics is the key to feeling confident in building better benefits programs for their organizations and their employees,” says Grant Gordon, CEO and co-founder of Artemis Health.
Obtaining this data is often the biggest challenge to understanding what companies should be offering and if it’s in line with the demands of their workforce, the survey found.
“When you look at data, you can make a hypothesis about what you should do, and if it's working, you double down. If it's not working, then you change tactics,” Gordon says. “But because data is so hard to get here, many benefit leaders don't have that reflex or muscle memory.”
Gordon spoke with Employee Benefit News about the role of data analytics in benefits planning and how companies can best utilize these tools.
Why is data such a critical part of benefits planning?
The top cited source of information that benefits leaders are relying on to define their benefits is employee feedback, and you absolutely have to have that. But if you take a step back from that, the role that I view data having is an objective way to look at what's actually happening with your employees and understand what the big strategic issues are. You may miss a silent group of people who really need help or an emerging trend that you need to address that you could have caught with data.
Most employers said that they didn't have the proper tools to use data effectively. Why do you think that is?
Just getting your hands on the data is a big challenge. You have to go the vendors that hold it, you have to give them assurances and sign legal documentation that you're going to use it appropriately and that you’ll keep it private, and that can take a long time. And then once you get the data, there's no really good data infrastructure in this industry to share data securely. So there's some orchestration challenges in shipping data around. You might get wrong data or you might get incomplete data. And then once you get it, it can be full of errors that need to be corrected. So before you even get to the starting gate, there's a big challenge.
Then you get to the next problem, which is that the data is very complex, and there's a lot of subject matter expertise that you need to have to understand it. And so in order to make this useful to a benefits person who's maybe not a deep, deep expert on medical, clinical knowledge or pharmaceuticals or certain programs, you need to simplify it so they can get to the trends. We can’t expect them to look at raw claims data and make anything of it. There’s a tooling challenge in getting the data and really making sense of it.
How can benefits managers bridge that knowledge gap?
Make sure that people get the healthcare and the benefits that they need. We saw [in the survey] that if they had more confidence in the moves that they were making, perhaps with data, they could get more things that are relevant to their employees into their hands faster, but it's just not the case today. So something needs to be addressed.
Get a data platform. I think some of the players that have been around for awhile, they do a fantastic job at data management and all those other things. I would look at something like Artemis or one of the newer companies, just to get a jumpstart on data-driven decisions on what's important and what's working and what's not. A lot of these companies work with advisers like consultants or brokers and many of them have inner resources internally. There are people who know the data really well who can really help you get more value out of that. So I would encourage them to make sure that they're asking specifically about getting data support from some of those advisers.
What does the future look like when it comes to utilizing technology and data in the benefit space?
If you look at other departments like marketing or finance or sales, they're all using data as a matter of course. It's a fabric that they weave the rest of what they do. The future of data here is making it easy for benefit leaders to understand all of those things and how to do those things and do them every day. When you're deciding what your major strategic initiatives should be for the year, being able to have that on tap in the data and actually being able to rely on that, and once you roll out a program or make a benefit change, measuring the impact of that.
SOURCE: Place, A. (12 December 2019) "Employers should ‘double down’ on tech and benefits data analytics. Most still aren’t" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/news/employers-should-double-down-on-tech-and-benefits-data-analytics-most-still-arent
Tech tools underused for workplace engagement: survey
Did you know: Only 45 percent of employers use technology to improve employee engagement, according to a survey of HR professionals. Read the following blog post to learn more about using technology to enhance workplace engagement.
Just 45% of employers are using technology to improve employee engagement, according to a new survey of thousands of HR professionals in organizations of varying sizes.
The research finding comes from the Next Concept Human Resource Association (NCHRA) and Waggl, a real-time engagement platform. HR tech industry professionals weighed in on the topic at the HR TechXpo 2019 and others as part of the latest “Voice of the Workplace” pulse survey.
Of those respondents, 92% said they would like to create a strong internal culture that affects results. In addition, 81% believed that investing in people-focused programs and skills such as onboarding, performance and employee engagement would help increase revenues and profit margins.
Lisa Hickey, VP of professional development at NCHRA, was “a bit surprised” that only 45% of her group’s members reported that their organizations are using technology to improve employee engagement in the face of business volatility and a tight labor market.
NCHRA and Waggl, both based in the San Francisco Bay Area, also distilled into a ranked list crowdsourced responses to a survey question about social media and gamification platforms as tools to increase employee engagement.
Several caveats were expressed. One HR leader, for example, cautioned that they need to be tied to the type of company and demographics, as well as the extent to which employees are willing to embrace change. Another respondent said it’s important that gamification not be “viewed as a nuisance and a distraction from accomplishing job tasks.”
The bottom line is that giving employees an opportunity to help shape their organization’s culture, experience, vision and execution enables them to “feel more connected to the workplace and empowered to drive change,” according to Alex Kinnebrew, chief marketing officer and head of growth strategy for Waggl.
Benefit brokers and advisers can play a critical role in helping their employer clients bridge the technology gap when it comes to improving employee engagement, Hickey believes. “From designing an offering that represents company goals to securing the best technology to administer the program, brokers are guiding you every step of the way and also helping utilize technology beyond benefits administration that delivers more services and solutions for the company,” she says.
Founded in 1960, NCHRA is the nation’s second-largest HR association — serving more than 30,000 professionals in 23 states and several countries and showcasing more than 100 annual educational events.
Waggl’s Employee Voice platform examines critical business topics that include culture, experience, vision and execution. The company’s management team includes executives from Glassdoor, SuccessFactors and Coupa. Customers include Paychex, eBay, City Electric Supply, UCHealth, American Public Media and Freddie Mac.
SOURCE: Shutan, B. (4 December 2019) "Tech tools underused for workplace engagement: survey" (Web Blog Post). Retrieved from https://www.benefitnews.com/news/tech-tools-underused-for-workplace-engagement-survey
6 steps to enhance your recruiting strategy
According to recent data from PwC, more and more potential employees are turning down job offers because of bad recruitment experiences. Often, when job candidates have a poor experience while applying for a job, they share the details of their encounter with friends, family and social media. Read this blog post for six steps employers can use to enhance their recruitment strategy.
Employers may be contributing to their organization’s bad reputation without even knowing it during the recruiting process
A strong labor market is presenting employees with more options, allowing them to weigh potential employers against each other, and eliminating the need to accept the first offer they get. Unique and inventive recruiting strategies are vital in attracting the right talent to your organization, but more potential employees are turning down job offers because of bad recruiting experiences, according to data from PwC.
Employers can develop some bad habits when it comes to recruiting, like dragging out the process and even ghosting candidates. When potential employees have a poor experience applying for a job with a company, they are going to share the details of that encounter with friends, family and the world at large thanks to social media.
“Job seekers today expect the hiring process to be streamlined, efficient and customized to their personal preferences, with effortless technology and sincere human interactions,” says Bhushan Sethi, a workforce strategy leader at PwC.
However, very few organizations are providing this experience, according to the PwC survey of 10,000 job seekers. Not only can a bad recruiting experience drive candidates away, it can also create lasting damage to an organization’s reputation as an employer.
“Leaders have an opportunity to gain an edge in the battle for talent by delivering a superior recruiting experience to every candidate, even those who don’t receive an offer,” Sethi says.
But there are ways to make a candidate’s recruiting experience more positive, even if they don’t ultimately get an offer. Here are six steps organizations can take to deliver a “first-rate” recruiting experience to potential candidates.
Find a balance between tech and human interaction
The human interactions candidates experience during the recruitment process makes a stronger impression than any digital experience, the survey shows. “Candidates want positive, direct human interaction throughout the recruiting process, whether that’s in person, over the phone or via email,” Sethi says. “Two-thirds of candidates said personalized initial outreach makes them more likely to apply for a position.”
Technology does have an important role to play in the recruiting process. However, recruiting technology is typically designed with the enterprise, not the candidate, in mind, Sethi says. Employers should look to utilize technology that streamlines routine tasks or makes the hiring process easier for job applicants. About 44% of those surveyed by PwC say they’re open to using automation and technology options for routine touchpoints and to get information during the recruiting process. Another 65% said they would like if an organization had an application dashboard so they could track their progress.
Communicate often and keep the process quick
More than half of job seekers (56%) said they would discourage someone else from applying for a job with a company where they had a bad recruiting experience, according to PwC data. A majority of job seekers (92%) said they’ve experienced poor recruiting practices at some point in their career. Candidates pointed out the two most frustrating behaviors by recruiters: dragging out the process by more than a month and recruiters who withdraw communication with no explanation.
“These practices are rampant: 61% of candidates said they’ve simply stopped hearing from an organization during the hiring process,” Sethi says. “And 67% gave up pursuing a role because the recruiting process took too long.”
Ask for social media details
About 50% of job seekers said they’d be willing to share their social media data with potential employers if it helps to determine a better job and organizational fit. Checking out a potential employee’s social media allows HR to understand more about the candidate. But candidates are only willing to share their social media data if the right privacy measures are in place. Recruiters can gain candidate’s trust by being transparent. About 78% of those surveyed by PwC said they expect the recruiting process to be clear on how personal data is used. About 77% of candidates said they wouldn’t apply for a job if they felt their privacy and information wasn’t protected.
Highlight the rewards potential employees most desire
Upskilling, personal flexibility and inclusion are three key aspects of workplace culture that have become more desirable among candidates than salary, according to PWC. Additionally, candidates are willing to give up 11.7% of their salary for more flexibility and training.
Give candidates a way to experience the company’s culture first hand
Today’s candidates are looking for more than a job, the PwC survey notes. They want an employee experience that provides a sense of purpose and pride.
“Culture is so meaningful that 33% of C-suite-level candidates said they’d take a pay cut to work for a mission-driven company that aligns with their ideals,” Sethi says.
It can be challenging for recruiters to provide an accurate sense of a company’s culture. Recruiters can help candidates experience this firsthand by holding networking and other social events.
Always be mindful of your reputation
When candidates have a bad recruiting experience it does more damage than recruiters realize. “It can cause lasting reputational harm and even hurt your chances of hiring the workers who are hardest to find,” Sethi says.
Almost half of candidates (49%) working in high-demand sectors like tech, banking and energy say they would be more likely to turn down a job due to a bad recruiting experience. Of those surveyed by PwC 71% say working for a company with a good reputation as an employer is more important than working for a well-known customer brand.
“That’s good news for small brands jockeying for talent with big-name competitors,” Sethi says. “You can gain an edge by cultivating and promoting a strong, positive reputation. It’s also a call to action for bigger brands: you can’t rely on name alone to attract talent.”
SOURCE: Schiavo, A. (9 December 2019) "6 steps to enhance your recruiting strategy" (Web Blog Post). Retrieved from 6 steps to enhance your recruiting strategy
Improving your employee experience during open enrollment
Is your company open enrollment hosted on an online platform? Employers often struggle with employee participation during the open enrollment season. Hosting enrollments online is one way to increase employee participation this year. Read on for more tips to help ease this open enrollment season.d
For HR professionals, open enrollment is one of the most stressful and demanding times of the year. Many employers struggle with employee participation and expensive, time-consuming roll-outs. They also have to provide resources to help employees make the right plan selections for themselves and their families. As we head into another open enrollment season, consider these tips to ease the process.
Switch your open enrollments to online platforms.
If you’re still relying on paper enrollment forms, you are likely spending more money and time than you need to in pursuit of your manual work process and its many inconsistencies. Online platforms provide optimum efficiency, accuracy and convenience for your workforce, offering employee self-service options that encourage employees to take initiative in selecting the best plan for their situation. Not only will members of your workforce benefit from the convenience of being able to explore their options on their own time, but you’ll be able to offer them multi-lingual enrollment materials and have more time to assist them than ever before.
Prioritize and diversify communication.
One of the top ways to ensure a smooth open enrollment period is to use multiple communication channels, including frequent reminders regarding open enrollment deadlines. Without consistent outreach on the part of your HR officers and general managers, you will likely find yourself hunting people down to meet your enrollment and extension deadlines. Using an online self-service portal as well as traditional in-person meetings allow you to remind your employees of critical dates and changes as enrollment closes in.
The robust benefits administration system you choose should offer enrollment tracking and reporting features so you can see at a glance who still needs to begin open enrollment, who has left enrollment documents incomplete, who has made changes to their benefits (such as adding a dependent) and more. You can arrange for the system to send automatic reminders to signal the employee that further actions are needed. Providing multiple reminders will improve participation and the completion of on-time enrollments.
Help employees choose the best health plan for their situation.
In order to have the most successful open enrollment period possible, educating your employees on the different plan options available will go a long towards ensuring employee satisfaction. Studies have shown that most employees don’t have the necessary understanding of terms like “deductible” and “coinsurance,” let alone the tools to know which plan is best for their individual needs. Incorporating at-a-glance comparison tools and charts into your online or print enrollment materials can help employees make the most informed decision possible. It can also be helpful to provide educational materials like videos and simplified plan charts or cost calculators.
Keep Up with Benefit Trends and Voluntary Offerings.
Given the current labor shortage and competitive talent market, you’ll want to make sure your company is up to speed on which new benefits your competitors are looking to add, as well as which ones are appealing to specific roles, locations or generations within potential candidates from your hiring pool.
Voluntary benefits, for example, are playing an increasingly important role in employee benefits portfolios and they don’t cost you anything. Some of the most popular voluntary benefits right now include identity theft protection, pet insurance, long term care insurance and critical illness protection. If you aren’t currently offering these types of additional benefits, they could be a cost-effective way to boost employee morale, increase participation in enrollment and attract more workers to your business.
SOURCE: Smith, M. (2 December 2019) "Improving your employee experience during open enrollment" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/improving-your-employee-experience-during-open-enrollment
A benefits wishlist for millennial employees
Did you know: 63 percent of millennials would struggle to cover an unexpected expense of $500. With millennials becoming the new core of today's workforce, many employers are tailoring their job postings, descriptions and benefits to correspond with the millennial wish list. Read the following article to learn more.
Millennials are the new core workforce. Their concept of work is different than the standards set by previous generations. They bring bold, new approaches of what work should be, how and where it should be performed, and what the rewards for work should be.
While this has made some employers uncomfortable, millennials are not likely to change their ways. Employers must reassess their concepts to bring out the best of the unique millennial personality.
When I look at the U.S. workforce, I see a dramatic shift in the attitudes, personalities and attributes of millennials, which makes up the majority of the workforce. Millennials bring many positive attributes to the table, including a preference for flat management structures, multiple degrees, technological skills, energy and self-confidence. They also have high expectations for themselves, prefer to work in teams, are able to multitask and seek out challenges.
However, millennials have the highest levels of stress and depression of any generation. About 20% of millennial workers have suffered work-related depression. Millennials want their own living space, but they’re less likely to become homeowners because of student loan debt. Only 6% of millennials feel they're making enough to cover basic needs, according to an Economic Innovation Group national survey of millennials. As a result, 63% of millennials would struggle to cover an unexpected $500 expense. This generation wants to live within their means, but they’ve never been taught how — they need and want to be educated on how to achieve financial independence.
Think about your corporate strategy for attracting millennials. Here are just a few of the ways companies are tailoring their job postings, descriptions and benefits to correspond with the millennial wish list.
Working with meaning. Millennials want to have meaning in their work. Past generations may have worked simply because they needed to pay the bills. Millennials want to get paid too, but they also want to know that their employer is doing more than making and selling products or services. They aspire to social causes and want to know why the organization exists and how they can personally participate and contribute in that culture.
Continued personal growth and career advancement. Millennials want to be coached and have work-life balance. They want management feedback, even if it’s negative. Regular pay increases and promotions are important to them too. It shows that you’re invested in their career path and value their contributions.
Flexible hours and the ability to work remotely. They want flexible hours and the option to work from a location of their choice. This flexibility also contributes to their desire for no added workplace stress. Technology has made it possible to connect 24/7 from anywhere on any device. If you have yet to adapt your culture to accept this new norm, you’ll likely be missing out on this generation of candidates.
Technology. Millennials are smart-device people. Who better to move your organization forward than the individuals who grew up knowing how to download and use an app, or create a widget that solves a problem? They think technology-first and is required for any organization looking to remain competitive.
Financial wellness. A robust financial wellness program that includes self-directed education, competitions, games and rewards will pique millennial interest. Products and services like financial coaching, cashflow tracking, early wage access and credit resources that address their financial challenges will keep them engaged. Above all, a financial wellness program must be tailored to each individual employee to achieve maximum participation and behavioral change.
Employers must be vigilant in order to keep the best and brightest talent. They should also be proactive in managing their employees on a personal level, especially millennials. Otherwise, they are likely to be disengaged and move on — and that will cost money.
As managers and leaders of the organization, it is your responsibility to ensure that millennials understand their future in the company and to communicate that they don’t have to go somewhere else to advance. Employers and leaders have a responsibility to provide millennials with a desirable place to land, and a culture that encourages them to thrive. Don’t give millennials reasons to leave your organization. We need to support them, engage them, reward them and give them reasons to stay.
SOURCE: Kilby, D. (6 November 2019) "A benefits wishlist for millennial employees" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/what-employee-benefits-do-millennials-want
Employers can help employees catch some Z's with new wellness benefit
Employers are starting to offer employee benefits that are focused on a long-ignored but crucial aspect of employee health - sleep. Read this blog post to learn more about this new wellness benefit.
Employers are taking a greater interest in employees’ emotional and physical well-being by offering specialized programs focused on mental health, weight loss, financial health, and now one long-ignored yet crucial aspect of health — sleep.
Beddr, a sleep health technology company, has launched a comprehensive, personalized solution to identify and treat the root causes of chronic sleep issues, though a voluntary benefits platform. The program leverages clinical data captured from Beddr’s app that uses an optical sensor and accelerometer to measure blood oxygen levels, stopped breathing events, heart rate, sleep position and time in bed.
About 45% of the world’s population has chronic sleep issues, according to a study in the Journal of Sleep Research. Poor sleep costs U.S. employers an estimated $411 billion each year, according to a report from Rand.
Employees using the Beddr benefit will have access to an expert-led sleep coaching program and a nationwide network of sleep physicians to provide targeted treatment options to help employees improve their sleep health. The program has the potential to save an employer up to $5,700 per employee, per year in productivity improvements, lower healthcare costs and decrease accident rates, Beddr says.
“Sleep is the foundation to every employee’s mental and physical health. High quality sleep has been shown to both reduce healthcare costs as well as improve productivity, but most employers haven’t found a comprehensive program that addresses the primary root causes of sleep issues and that benefits their entire workforce,” says Michael Kisch, CEO of Beddr. “We have seen a dramatic increase among our users relative to the overall population in their understanding of their sleep health and how their choices impact their overall sleep quality.”
Beddr partners with benefits teams to design a customized program specific to each employer and their employees. The company developed a screening process that makes it easy for an employer to engage their employee base, while providing Beddr the ability to identify employees who are a good match for the program.
In some cases, the company heavily subsidizes the cost of the benefit to employees, while in others it is the full responsibility of the employee. In the latter instance, the company negotiates a discount that is passed on to all participating employees. That discounted price is less than what an employee would pay to purchase the program directly from Beddr.
“Beddr was founded on the belief that the most important thing a person can do to improve their physical and mental health is to get consistent, high-quality sleep,” Kisch says. “We see employers as natural partners in fulfilling this mission because the goals of a company and its management are highly aligned with the goals of our program — to improve the health and productivity of employees. ”
SOURCE: Shiavo, A. (23 October 2019) "Employers can help employees catch some Z's with new wellness benefit" (Web Blog Post). Retrieved from https://www.benefitnews.com/news/beddr-app-helps-employees-get-more-sleep
7 HR technologies for managing the employee lifecycle
Employees are the foundation of any company, that's no secret, which is why many organizations consider their workforce its most valuable resource. That being said, often the best results come when great workforces are provided with great technology. Read this blog post for seven HR technologies that help manage the employee lifecycle.
It’s no secret employees are the foundation of any company: Without them, products can’t be made, services can’t be provided and customers can’t be satisfied.
That’s why an organization’s workforce is often considered its most valuable resource — because while great people can overcome a lack of process or technology, it’s much harder to forego having great people in place. Still, the best results come when great people are provided great technology and supported by great processes.
But the constant flow of employees in and out of an organization can make effectively and efficiently managing the support needed at each stage of the employee lifecycle a difficult task for employers and human resources teams. Luckily, these HR technologies can help with managing the employee lifecycle.
Applicant tracking system
An applicant tracking system is an online platform that simplifies and streamlines the entire recruitment process — from sourcing to selection — by allowing recruiters and hiring managers to seamlessly direct every stage of the process all from one electronic system, eliminating the never-ending paper chase of traditional recruiting. Every ATS is different, but most will include access to an online resume database, automated hiring workflows, communication capabilities and reporting tools.
Onboarding
Half of all new workers leave their jobs within the first 90 days of employment. Organizations with successful onboarding programs, however, have significantly better new hire retention rates.
A big component of a successful onboarding program is removing the hassle of all that tedious paperwork employees have to complete. The first day on the job is already stressful enough for a new hire without the added inconvenience of required employment paperwork. Investing in an online employee onboarding technology platform allows employees to complete the majority of this paperwork (like W-4s, direct deposit authorizations, I-9 forms and other consent forms) well before their first day. Electronic employee onboarding programs also reduce paper costs while minimizing the possibility of errors by providing new hires online access to all necessary employment forms so they can easily review, complete, sign and submit their forms within minutes.
Benefits enrollment
Switching from a paper-based benefits enrollment process to an online enrollment process comes with a wide array of advantages. Not only does an online benefits enrollment process save time, but it also gives employees the time and independence to make their own elections, and helps reduce costly mistakes and errors.
Time and attendance
Online time and attendance platforms not only reduce errors and help managers keep track of days of requests, they also are vastly more efficient for employees to use than paper-based timekeeping systems. (Along with some other really great advantages.)
Payroll processing
Payroll is one of the biggest line items in an organization’s budget. Processing payroll also can be one of the most time-consuming aspects of an organization’s HR functions, and when it’s not done right it can also be the source of some serious employee complaints.
Payroll technology platforms help minimize the potential for errors, and can greatly reduce the time it takes to process a payroll.
eLearning/learning management systems
With the “skills gap” widening as older employees exit the workforce faster than new employees can fill their shoes, employee development initiatives and corporate training programs have become a priority not only amongst large employers, but small and mid-size businesses as well.
Online learning management systems provide employers with convenient options to help train and develop their workforce’s skills and abilities.
Performance management
As with many employee management functions, employers are now taking advantage of online HR technology platforms that allow them to more efficiently streamline the performance management process. In many cases, an online performance management tool allows employers to more effectively evaluate and record employee performance, as well as providing a place for managers and employees alike to keep track of organizational and personal performance goals, record journal entries and maintain an ongoing performance record. These platforms tend to be more popular among larger organizations, mostly because small and medium-sized businesses often feel the price is prohibitive unless they can access discounted rates through an HR outsourcing provider.
SOURCE: Grijalva, A. (5 June 2019) "7 HR technologies for managing the employee lifecycle" (Web Blog Post). Retrieved from https://www.benefitnews.com/list/hr-technology-for-managing-the-employee-lifecycle
Concerned about cybersecurity? Here’s how to protect 401(k) plans
Do you offer a 401(k) retirement plan to your employees? A new emerging cybersecurity risk for plan sponsors is retirement plans. Continue reading this blog post for tips on protecting 401(k) plans from cyberattacks.
All companies that manage personal consumer data are already concerned — or should be concerned — about cybersecurity. The scope and scale of cyberattacks continue to rise worldwide, as demonstrated last year by a breach that compromised data of 50 million Facebook users.
Retirement plans pose a new risk. Lawmakers are keen to protect the personal information of defined contribution plan participants. Recently, Sen. Patty Murray (D.-Wash.) and Rep. Bobby Scott (D.-Va.) asked the U.S. Government Accountability Office to “examine the cybersecurity of the private retirement system.”
Fortunately for plan sponsors, record-keepers and other parties in the retirement services industry, the same solution designed to address the multiple problems stemming from the upsurge in small, stranded 401(k) accounts — auto-portability — can also augment existing practices that protect plan participants’ personal data.
Auto-portability is the routine, standardized and automated transfer of a retirement plan participant’s 401(k) savings account from their former employer’s plan to an active account associated with their current job. This solution is underpinned by paired “locate” and “match” algorithms which work together to locate participants with multiple 401(k) plan accounts, confirm their identities, obtain consent for rolling over their stranded accounts. These accounts can exist in former employer plans or rolled into safe-harbor IRAs before they're moved into active accounts in their current employers’ plans. In addition, consolidation can include a roll-in to the participant’s current employer plan.
The act of consolidating accounts reduces the number of small accounts in the 401(k) system through auto-portability, which makes plan participant data more secure. Consolidating a participant’s multiple 401(k) accounts reduces the number of systems that store a participant’s data, and also encourages participants, sponsors and record-keepers to become more engaged when it comes to keeping track of accounts.
Auto-portability meets cybersecurity best practices
While there is currently no central legal framework regulating cybersecurity in the retirement services industry, the SPARK Institute published a compilation of recommended cybersecurity best practices for retirement plan record-keepers in 2017. Auto-portability, which went live that same year, operates in conformance to the SPARK Institute’s cybersecurity recommendations.
For example, the SPARK Institute, a retirement policy center in Simsbury, Connecticut, issued 16 security control objectives, including the practice of encryption, which requires protection of both “data-in-motion and data at rest.” The institute suggests that the same data protection risk management standards be applied to suppliers. To address cybersecurity, the institute suggests these steps:
- Encrypt all sensitive information subject to auto-portability using Advanced Encryption Standard 256-bit encryption, an industry standard developed by the National Institute of Standards and Technology. There is no known type of cyberattack that can read AES-encrypted data without having the cryptographic key.
- Never combine a Social Security number with other personally identifiable information in any single file transfer. The objective should be to ensure there is never enough personal data in any single transmission for a hacker to use to steal an identity. In addition, any file with personal information should never include the identity of either the plan’s sponsor or the record keeper. That further thwarts a hacker from accessing an individual participant’s retirement account.
- Know that auto-portability supports multiple methods of exchanging secure data.
- Ensure that any information flagged during the locate-and-match process that doesn’t adhere to certain criteria requires additional verification to confirm an identity.
- Conduct full address-location searches to ensure that the correct participant is found and properly matched to multiple accounts.
When participants strand 401(k) savings accounts in former-employer plans, and nothing is done to transport them to active accounts in their present employers’ plans, there’s a strong chance that the worker may fall victim to a cybercrime. Plan sponsors can protect themselves and their participants from hackers, and strengthen their overall cybersecurity preparedness, by implementing auto-portability to cull small accounts and missing participants.
SOURCE: Williams, S. (25 April 2019) "Concerned about cybersecurity? Here’s how to protect 401(k) plans" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/how-to-protect-401k-plans-from-cybersecurity-risks
The HR tech disconnect: Are there too many digital tools?
According to a new survey of more than 500 HR employees, 87 percent of HR professionals reported that having tools that integrate with existing technology is key. Continue reading this blog post from Employee Benefit Advisor to learn more.
Investing in new technology that combines with current systems looks to be a priority for HR departments.
That’s according to a new survey of more than 500 HR employees from Reward Gateway, which found that 87% of HR professionals say having tools that integrate into their existing technology is key.
That priority is likely due to the fact that HR technology is siloed, the employee engagement technology company found. Many employers use separate platforms for tasks relating to employee communication, recognition, applicant tracking, onboarding and performance management.
More than a fifth of companies use 10 or more different systems and applications at work, and roughly 60% are using more than five systems every day. In addition, HR professionals spent 512 hours a year, nearly two hours a day, manually checking, responding to and keeping up with multiple HR applications, Reward Gateway says.
“Many companies have systems-of-record in place with up-to-date details on their employees,” says Will Tracz, chief technology officer at Reward Gateway. “Creating and maintaining data in other systems, outside of this, often takes time and is prone to error, particularly in fast-moving businesses.”
The new survey echoes similar findings, which indicate that while employers may be increasingly using HR tech, they may not be doing so efficiently. For instance, research from the Association of Executive Search and Leadership Consultants found that HR departments could be dropping the ball when it comes to using HR technology.
Karen Greenbaum, president and CEO of AESC told Employee Benefit News in November that total digital transformation is about more than just implementing new tech in the office.
“It’s not just, ‘Do they understand what artificial intelligence means,’ or what augmented reality means,” she says. “[It’s] ‘Do you really have an organization that can adapt to a new world?’”
Still, HR leaders are turning to tech solutions. Data from global talent acquisition and management firm Randstad Sourceright found that HR departments are going on a tech “buying spree.” The vast majority (92%) of those in the Randstad survey of more than 800 C-suite and HR leaders and 1,700 professionals believe that technology enhances the attraction, engagement and retention of talent.
Reward Gateway received similar responses. HR teams are hoping new tech will not only integrate with existing systems, but also help them achieve their goals, which include higher employee engagement, increased productivity and attracting talent.
SOURCE: Hroncich, C. (29 March 2019) "The HR tech disconnect: Are there too many digital tools?" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/news/hr-tech-disconnect-are-there-too-many-digital-tools?brief=00000152-146e-d1cc-a5fa-7cff8fee0000
Do paycheck advance apps improve financial health?
Do you allow your employees access to draw money from their paycheck before payday? Many apps now let workers have early access to their money. Read this blog post to find out more about paycheck advance apps and how these may improve financial health.
Fintechs that let workers draw money from their paycheck before payday through an app are having a moment.
Such apps, including Even.com, PayActiv, EarnIn, DailyPay and FlexWage, are designed for consumers who live paycheck to paycheck — roughly 78% of the U.S. workforce according to one study.
More than 300,000 Walmart employees, for example, use this feature, called Instapay, provided by Even and PayActiv. PayActiv, which is available to 2 million people, announced a deal with Visa on Thursday that will let people put their pay advances on a feeless prepaid Visa card.
Earnin, which lets consumers retrieve up to $100 a day from upcoming paychecks, received $125 million in Series C funding from DST Global, Andreessen Horowitz, Spark Capital, Matrix Partners, March Capital Partners, Coatue Management and Ribbit Capital in December. The Earnin app has been downloaded more than a million times.
In theory, such apps are useful to those who run into timing problems due to large bills, like mortgage and rent, which come due a few days before their paycheck clears. Getting a payday advance from an employer through an app can be less expensive and less problematic than taking out a payday loan or paying overdraft fees.
But do these programs lead to financial health? Or are they a temporary Band-Aid or worse, something on which cash-strapped people can become overdependent?
Volatile incomes, gig economy jobs
One thing is clear — many working poor are living paycheck to paycheck. Pay levels have not kept up with the cost of living, even adjusted for government subsidy programs, said Todd Baker, senior fellow at the Richman Center for Business, Law and Public Policy at Columbia University.
“That’s particularly evident when you think of things like home prices and rental costs. A large portion of the population is living on the edge financially,” he said. “You see it in folks making $40,000 a year, teachers and others who are living in a world where they can’t handle any significant bump in their financial life."
A bump might be an unexpected expense like medical treatment or a change in income level, for instance by companies shifting to a bonus program. And about 75 million Americans work hourly, with unstable pay.
“Over the last several decades, we’ve changed the equation for many workers,” said John Thompson, chief program officer at the Center for Financial Services Innovation. “It’s harder to have predictable scheduling or even income flow from your job or jobs. But we haven’t changed the way we pay, nor have we changed the way bills are paid. Those are still due every month on a certain date. This income volatility problem that many people experience hasn’t been offset by giving the employee control of when they do have access to these funds.”
Where on-demand pay comes in
Safwan Shah, PayActiv's CEO, says he has been working on the problems for consumers like this for 11 years. The way he sees it, there are three possible ways to help: by paying these workers more, by changing their taxes, or by changing the timing of when they’re paid.
The first two seem out of reach. “I can’t give more money to people; that’s not what a Fintech guy does,” Shah said. “I can’t invent money. And I can’t change the tax laws.”
But he felt he could change the timing of pay.
“I can go to employers and say, your employees are living paycheck to paycheck,” Shah said. “They’re bringing that stress to work every day. And you are suffering too, because they are distracted — a Mercer study shows employers lose 15 hours a month in work from these distracted employees.”
Shah persuades employers to let their employees access a portion of the wages they have already earned. His early wins were at companies whose employees frequently request paycheck advances, which generates a lot of paperwork. Employees can access no more than 50% of what they have already earned — a worker who has earned $300 so far in a month could at most get $150.
Employees pay $5 for each two-week period in which they use PayActiv. (About 25% of the time, the employer pays this fee, Shah said.)
PayActiv also gives users unlimited free bill pay and use of a Visa prepaid card. In July, PayActiv became part of the ADP marketplace, so companies that use ADP can use its service.
PayActiv's largest employer is Walmart, which started offering it via the Even app in December 2017. In October, Walmart began allowing employees to pick up cash through the app in Walmart stores, so users who were unbanked could avoid ATM fees.
Shah said the service helps employers reduce employee turnover, improve retention and recruit employees who prefer real-time pay. He also has a guilt pitch.
“I was first in the market to this, in 2013,” Shah said. “People looked at me and said, ‘What? I’m not going to pay my employees in advance. Let them go to a payday lender.’ Then I’d show them pictures of their offices surrounded by payday loan shops. I’d say, ‘They’re here because of you.’ ”
Does early access to wages lead to financial health?
When Todd Baker was a Harvard University fellow last year, he studied the financial impact of PayActiv’s earned wage access program. He compared PayActiv’s $5 fee to payday loans and bank overdraft fees.
Baker found that a $200 salary advance from PayActiv is 16.7% of the cost of a payday loan. Payday lenders typically charge $15 per $100 borrowed, so $30 for a two-week, $200 loan. If the borrower can’t pay back the amount borrowed in two weeks, the loan gets rolled over at the original amount plus the 15% interest, so the loan amount gets compounded over time.
With PayActiv, "there is always a full repayment and then a delay before there is enough income in the employee’s payroll account for another advance," Baker said. "It never rolls over.”
Baker also calculated that the PayActiv fee was only 14.3%, or one-seventh, of the typical $35 overdraft fee banks charge.
So for people who are struggling to manage the costs of short-term timing problems and unexpected expenses, Fintech tools like PayActiv’s are a lot cheaper than alternatives, Baker said.
“Does it create extra income? No. What it does is help you with timing issues,” he said.
Aaron Klein, a fellow at the Brookings Institution, said workers should have access to money they’ve already earned, whether that’s through real-time payments or through apps that provide pay advances.
“I also am on board with the idea that by saving your $35 overdraft and saving your payday loan rate, you’ll be better off,” Klein said.
But he’s not willing to say these tools solve the problems of low-income people.
“If the core problem is I used to make $35,000 a year, now I make $30,000, and because of that shock I’m going to end up accruing $600 of payday loan and overdraft fees, eliminating that $600 makes you a lot better off,” Klein said. “But it doesn’t negate the overall income shock.”
Thompson at CFSI says it’s too soon to tell whether earned wage access brings about financial well-being.
“We’re just beginning to explore the potential for these tools,” he said. “Right now they feel very promising. They could give people the ability to act quickly in an emergency and have access to and use funds in lieu of a payday loan or some other high-cost credit or consequence they would rather avoid, like an overdraft fee.”
What could go wrong
Thompson also sees a potential downside to giving employees payday advances.
“The every-other-week paycheck is one of the few normal structures we have for people around planning, budgeting and managing their money,” he said.
Without that structure, which is a form of savings, “we’re going to have to work hard to make sure we don’t just turn people loose on their own with even less structure or guidance or advice on their financial life.”
Another common concern about payday advance tools is that if you give people access to their money ahead of time, they’ll just spend it, and then when their paycheck arrives, they will come up short.
But Klein, for one, doesn’t see this as an issue.
“I trust people more to manage their money,” he said. “The people who work paycheck to paycheck spend more time budgeting and planning than the wealthy, because it’s a necessity.”
A related fear is that people could become addicted to payday advance tools, and dig themselves into a deeper hole.
Jon Schlossberg, CEO of Even.com, somewhat surprisingly acknowledges this could happen.
“Getting access to your pay on demand is a tool you can use the right way or the wrong way,” he said. “If you offer only on-demand pay, that could cause the problem to get worse, because getting access to that money all the time triggers dopamine; it makes you want to do it more and more. If you are struggling with a very low margin and you’re constantly up against it, getting more money all the time accelerates that problem."
Quantitative and qualitative analyses have borne this out, he said.
Even has granted users $700 million worth of Instapays; they typically use Instapay 1.4 times a month. Schlossberg doesn't see high use of the feature as success.
“You shouldn’t need to be using Instapay,” he said. “You should be becoming financially stable so you don’t have to.”
Baker said addiction to payday advances isn't a danger because they don't roll over the way payday loans do. With a salary advance, “It’s conceivable you could get $200 behind permanently, but it’s not a growing obligation and it’s not damaging,” he said.
Shah at PayActiv said users tend to withdraw less than they're allowed to — about 75%.
“When it comes to usage of their own salary, instead of asking for more, people behaviorally ask for less,” he said.
They see PayActiv more as a headache reliever like Tylenol, rather than an addictive candy or drug, Shah said.
Pay advances are just one of many tools that can help the working poor. They also need help understanding their finances and saving for goals like an emergency fund and retirement.
“This conversation about on-demand pay is a double-edged sword because people are paying attention to it now, which is good, but they’re viewing it as this magic tool to solve all problems,” Schlossberg said. “It isn’t that. It is a piece of the puzzle that solves a liquidity problem. But it is by no means going to help people turn their financial lives around.”
SOURCE: Crosman, P. (14 March 2019) "Do paycheck advance apps improve financial health?" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/news/do-paycheck-advance-apps-improve-financial-health?brief=00000152-146e-d1cc-a5fa-7cff8fee0000
Editor at Large Penny Crosman welcomes feedback at penny.crosman@sourcemedia.com.