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Plug Employees in with Online Benefits.

Each time one of your staff members communicates benefits information to an employee, your company takes a risk. The level of risk depends on both the accuracy of the information delivered to the employee and the employee's correct interpretation of that information. If a breakdown in communication occurs, your organization is vulnerable to time-consuming and costly litigation.

For the first time in history, technology provides the means to consolidate, organize and make human resources and benefits information available to every employee throughout an organization. The promise of knowledge at our fingertips and employee self-sufficiency is a tantalizing prospect. And from a risk management perspective, thoughtfully employed communication technology can contribute to risk avoidance.

Traditional HR Model

In the traditional model, HR personnel respond to employees on a one-on-one basis. The advantage of this approach is that a technologically unsophisticated workforce feels more comfortable receiving one-on-one guidance. This approach is labor-intensive, and therefore, costly. In addition, because the communication process is uncontrolled (and to some extent unauditable), it leaves an organization vulnerable to litigation.

Call centers may augment or replace staff in addressing employee questions. A modern call center relies on software and a complete benefits database that allows the call center professional to drill down to issues and answer employee questions. While call centers are effective in some situations, the employer remains responsible for investing in software and maintenance, training call center personnel and communicating with employees.

All traditional methods of communication necessitate the creation and distribution of printed materials to employees, thereby incurring costs of developing, printing and distributing materials in one or more languages.

Each approach, by itself or in combination with another, can meet the objective of providing benefits communication to employees. The question for the risk manager is: What is the ultimate cost of each approach? To answer that question, the risk manager must take into account not only the expenses for providing the service, but also the costs incurred by unpredictable human communication.

Web Advantages

Placing employee benefits information on the Web streamlines communication by minimizing inquiries involving routine questions. This reduces the overhead for HR, freeing staff to focus on more strategic tasks.

From an employee perspective, direct access to information gives them a sense of control and empowerment. They can go online to learn about their benefits and feel confident that the information is up-to-date. Having access to this information enables them to deploy their benefits in the best way to better their lives and contributes to job satisfaction.

From a corporate viewpoint, the advantage of Web-based employee benefits communications is the ability to provide all employees with information that is standardized, approved and readily available. Disseminating benefits information via the Web gives employers a high level of control that ensures the information is accurate, complete and meets all requirements.

For example, posting the Summary Plan Description (SPD) to the Web has several advantages. First, supplying the SPD via the Web meets the requirement (PWBA part 2520) for employers to provide all employees with a copy of it. Second, an electronic SPD, like all other Web-based benefits information, is easier to maintain and saves the cost of providing employees with printed documents that must be updated on a periodic basis.

Also, such a system satisfies the requirement that companies educate employees regarding an employer-selected 401K retirement plan, and provides an objective environment that does not guide or influence the employee in making investment choices. When a company uses a Web-based employee benefits information system, in the event of litigation, it is easier to prove that all employees have access to the most current version of the policy or information in question, and that the data is standard and uniform.

Lastly, an employer with a Web-based system has reduced the risk of staff communicating inaccurate benefits information to employees. The communication of accurate information is particularly valuable in small- to medium-sized companies in which the business owners or administrative staff (individuals not trained as HR professionals) often assume the human resources functions.

Web Disadvantages

The disadvantages of Web-based employee benefits communications are the potential challenges one might expect from using Internet technology. They include allocating the resources necessary to:

* implement a Web-based HR application;

* provide employees with computers;

* train human resources personnel and employees.

Whether an organization opts to build its own site or implement a purchased application, it must dedicate resources to determine business needs, customize the application to meet its needs, and approve and maintain content. In each situation, the HR staff assumes additional roles in the creation of the benefits Web site.

In an organization that elects to build its own Web site or add functionality to an existing site, HR should work with the information systems function to determine the flow of information within the site and build, approve and maintain its content. In organizations that choose to purchase an application, HR will be called upon to identify and review the software, and later, to implement, customize and maintain that application.

Once the application is available, human resources staff and employees must have access to computers and be trained to use the Internet and the benefits application. This may be a challenge in those industries with employees who are unfamiliar with technology due to age, occupation or personal preference. In California, for example, agribusiness workers are in the field all day and are often unfamiliar with computers. They may be migratory and English may be a second language.

Still, Web-based employee benefits communications can be advantageous to this employee base. In the example above, a kiosk approach could give employees who work outside the traditional office environment access to benefits information. The flexibility, freedom, and privacy to access their benefits information could boost morale. Both employees and their employer would benefit from the system.


The cost to provide Web-based employee benefits information depends on a broad range of factors. At the high end are human resources information systems that are customized and combined with Enterprise Resource Planning applications. Technically complex, these systems can be adapted to meet the needs of virtually any employer, but require specialists to administer them. These applications usually take months (or more) to implement and can cost millions of dollars. At the other end of the spectrum are free downloadable applications that provide basic functionality. Of course, a wide range of functionality and costs lie between the two extremes.

The real issue for the risk manager is risk avoidance. To achieve this objective the risk manager should clearly identify the problems to be averted and the requirements for an ideal solution. Planning is essential in selecting an application that employees find easy to use, intuitive, fast and complete. Otherwise, they will not use the application and the risk that the system was installed to avert remains.


Large organizations have the resources and infrastructure to pursue large-scale applications and installations. However, the melding of computer technology to HR applications has created a new breed of Web-enabled applications that are easy to use and moderately priced. This now places the functionality within reach of small- to medium-sized businesses.

Following sound software evaluation and acquisition practices, almost any size organization can identify and purchase a Web-based employee benefits solution. An overwhelming amount of information is available through Internet research, tradeshows, publications and referrals. In researching options, the corporate insurance agent or broker who handles benefits programs may also offer suggestions, or provide a solution.


The bottom line in measuring the effectiveness of Web-based employee benefits communications is reduced risk and cost avoidance. Hard savings include resources averted, such as the savings realized from not printing and distributing SPDs and other collateral. The cost savings of reducing human resources staff time in face-to-face, phone and e-mail handling of employee questions is also quantifiable. Web-based benefits can also save the company money in respect to staff training expenses. These savings should be balanced against the actual cost of the product and internal soft costs, such as product evaluation, installation, training and maintenance.

The total cost (hard and soft) should be weighed against the possibility of litigation. The cost of litigation is measured by the total sum of resources dedicated or affected by it. These include personnel, legal fees, damage to company image, reduced employee morale and productivity, as well as the actual damages or settlements, among others.

Whether an organization builds or buys an human resources Web application, the time invested in posting employee benefits information to the Web is offset directly by the time required for HR staff or supervisors to discuss benefits with employees, coupled with risks involving human communication.

Implementing an intuitive Web-based employee benefits information system avoids or clarifies the litigation process by reducing the gray areas. It is a proactive approach to providing superior employee communications, and a form of insurance in which the risk manager controls information and, as a result, litigation and cost exposure.

Robert Phaneuf ( is the national sales manager of LifeMap Communications of Walnut Creek, California.
COPYRIGHT 2000 Risk Management Society Publishing, Inc.
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Comment:Plug Employees in with Online Benefits.
Author:Phaneuf, Robert
Publication:Risk Management
Geographic Code:1USA
Date:Jul 1, 2000
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