While employers increase their use of technology to streamline benefits administration, HCM technology vendors—and benefits technology vendors in particular—have a growing opportunity to deepen their customer relationships by including educational and other benefits-related content in their offerings.
That was one of the hidden takeaways we found in Guardian Life Insurance’s fifth annual Workplace Benefits Study. Titled Game-Changer: The Digitalization of Employee Benefits Delivery, this year’s report says nearly three-quarters—73 percent—of organizations believe helping employees make better benefits decisions is “highly important,” a notable leap from 2014’s 47 percent.
Most employers have increased their spending on benefits-related technology over the last five years, and roughly half expect to spend even more between 2018 and 2021, the report found. And bear in mind, that’s set against a background of increasing investment in HCM technology in general. Since 2012, investors have put more than $14 billion into the space.
Workforce demographic shifts are driving changes in the operation of both HR and benefits functions, Guardian reports. Not surprisingly, the company points out the influence of the Millennials, who favor tools and solutions that are more intuitive and personalized, and thus engaging.
At the same time, employers are strengthening their end-to-end user experience, with 75 percent focused on improving the effectiveness of self-service platforms, compared to 61 percent in 2014.
Consultants Should Pay Attention
All this is good news for tech vendors, but Guardian notes it also bodes well for consultants. When it comes to reviewing and selecting benefits solutions, the study found most employers, especially small businesses, need specialized expertise.
“The wide range of selections creates confusion about which vendor to go with and what capabilities will best fit their needs,” Guardian observed, adding that nearly 40 percent of such firms see developing a benefits technology strategy as “a significant challenge.”
Interestingly, only 40 percent of employers who use benefits brokers have spoken to them about benefits technology, even though half expect their brokers to recommend solutions.
That means brokers need to become more proactive. But it’s also another reason that tech vendors who provide the right content could have a leg up as they compete in an increasingly crowded and complex market. Since 2015, Guardian said, one in five employers have increased the number of vendors they use to administer their benefits programs. Chances are companies with 1,000 or more workers use multiple vendors to handle benefits chores like enrollment, record-keeping, eligibility processing and COBRA administration, the report said.
With 36 percent of employers saying they plan to integrate more functions into their benefits administration functions over the next three years, the work of managing programs will only become more challenging and is sure to require more specialized training. That’s another opportunity for vendors.
“Our lives increasingly revolve around new technologies and digitalization, and this study confirms that benefits technology is reshaping how employers think about their benefits strategy,” said Marc Costantini, Guardian’s executive vice president for commercial and government market. The complexities of managing a multi-generational workforce, combined with increasing pressure to contain costs, simplify benefits and stay compliant “are prompting employers to make this a priority,” he said.
That dynamic is part and parcel of today’s business world, as is the increasing dependence on technology to help employers successfully juggle these often-competing priorities. Guardian contends that benefits technology has become a strategic imperative, just as executives have come to rely on HCM technology for cost-savings and increased efficiency. “More than 40 percent of all employers say that expanding their use of technology will be among their top benefit strategies in the next five years,” Guardian said.
Also notable is how this trend continues to grow beyond medium and large businesses. According to Guardian, one third of businesses with between five and 24 employees plan to adopt SaaS solutions by 2020.
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