Achieving success at anything doesn’t just happen. In his 2008 book Outliers, Malcom Gladwell suggested the biggest contributing factor to success among those who are masters in their fields is practice — 10,000 hours of it, to be specific.

If you ask employers with a thriving, well-managed benefits program what their secret to success is, it’s likely most will say it involves strategy and planning, a little luck and a lot of hard work and effort.

Benefits programs are under tremendous inflationary strain these days stemming from several sources, including increased utilization of specialty drugs and increased rates of absence and disability due to mental illness. With these mounting pressures, it’s a challenge even for well-managed programs to maintain cost escalation at an acceptable level. And left unattended, costs can spiral out of control.

Employers are often looking for ways to better manage benefits costs without reducing coverage and value to employees. While there’s no easy fix, employers can decrease costs by looking beyond plan design, premium rates and insurer expenses.

Read: Employer-sponsored drug plans becoming risky business

In Morneau Shepell’s survey of human resources trends, employers indicated their top five priorities for reducing costs and improving efficiency in 2017 were streamlining administration of human resources programs (44 per cent) and reducing short-term disability costs (40 per cent); long-term disability costs (33 per cent); the costs of incidental absence (32 per cent); and employee compensation (29 per cent).

Four of the top five priorities deal with absence and disability management. The costs of those programs can be sizable, especially when considering internal administration, incidental absenteeism and indirect disability costs such as salaries for replacement workers, overtime pay and workflow disruption. Frequently, such costs fly under the corporate radar because companies don’t often track them and account for them in the same manner as insurance premiums and other direct benefits costs.

A 2015 survey by Morneau Shepell indicated 64 per cent of employers don’t monitor the cost of incidental absenteeism; 56 per cent didn’t know the average duration of their short-term disability claims; and 47 per cent didn’t monitor the incidence and cost of workers’ compensation. The potential for costs savings in those areas can be substantial. Having a significant impact on disability costs, however, takes effort, which can be challenging for overburdened human resources professionals, about half of whom said a lack of time is their most significant challenge in delivering on objectives.

Read: Freedom of choice may be coming to an end in drug plans

If organizations only have the time and resources to focus on one area, they can consider implementing an incidental absence reporting and management program. Fifty-two per cent of employees said their last absence wasn’t due to a medical issue, according to the 2015 survey. Reasons for absence included dealing with child or elder care or issues with co-workers. Organizations with higher levels of workplace stress and lower support for mental illness, combined with an ineffective or underused employee assistance program, are more likely to see higher incidents of employees taking time off for non-medical reasons.

For example, if companies only track absences greater than three days, some employees will miss large amounts of time in small increments. One large organization discovered an employee who was off 82 days in one year but never more than three days in a row, until the company implemented an incidental absence reporting and management program to help combat abusers. Organizations that track casual absences make employees more accountable. And managing employees with frequent absences isn’t only going to save on short-term disability costs but is also more likely to prevent some of th0se claimants from progressing to long-term disability matters.

Employers can manage costs without reducing coverage to employees by implementing tighter controls and looking for internal efficiencies. But like most success stories, it doesn’t happen without a little planning and effort.

Read: What’s keeping employers up at night?

Kenneth MacDonald is a senior consultant with Morneau Shepell in Calgary. These are the views of the author and not necessarily those of Benefits Canada.
Copyright © 2017 Transcontinental Media G.P. Originally published on benefitscanada.com

Smallbizadvisor

Check out this one-stop resource for advisors in the small group benefits and retirement markets.

Join us on Twitter

Add a comment

Have your say on this topic! Comments that are thought to be disrespectful or offensive may be removed by our Benefits Canada admins. Thanks!

* These fields are required.
Field required
Field required
Field required

*