© Copyright 2000 Rogers Media. The following article first appeared in the January 2000 edition of BENEFITS CANADA magazine.

Techno-benefits

Innovative pension and benefits software makes it easier to administer your plan online. And this is only the beginning.

BY SONYA FELIX

When employees at TransAlta Corporation in Calgary want to get information about their pension plan, get a retirement fund calculation, move their defined contribution (DC) plan funds, enrol in a flexible benefits plan or ask for a copy of their personal benefits statement, they don't have to wait in line outside the human resources (HR) office. Nor do they have to leave a dozen voice mails. Instead, they can sit down at a computer, log on to the company Web site and click their way to up-to-date pension and benefits information. And they can do it whenever it's convenient for them--in the middle of a sleepless night, during their coffee break at work, or after dinner in front of the home computer.

Using the Internet for pension and benefits communication and online transactions is gaining momentum across North America as HR departments continue to look for ways to lower costs and boost the efficiency of administrative tasks.

And why not look to the net? According to a national Angus Reid Group/Globe and Mail poll conducted in June 1999, 55% of Canadians are already online--a 13% jump in two years. The Web has revolutionized how we do banking, buy consumer goods and airline tickets, trade stocks and get and share information. It's instant, it's at your finger tips and it's relatively inexpensive. Pretty good reasons for a growing number of companies, like TransAlta, to set up sites that allow employees immediate access to their pension and benefits plans.

TransAlta decided to go with an employee self-service (ESS) Web site for its 2,200 employees and 800 retirees as part of outsourcing its pension and benefits administration to the Morneau Technology Centre in Toronto.

The benefits portion of the site went live a year ago and recently expanded to include pensions as well.

Shirley McIntyre, director of HR at TransAlta says the expense of setting up a site that allows transactions required that the whole function be outsourced. "There's a lot of competition for our HRIS resources and the Web site wouldn't have been a high priority."

Yet, some companies who have centralized administration of pensions and benefits and kept it in-house, have also chosen to implement Web-based ESS. "Most of our clients have outsourced, but some who do their own administration have also moved to electronic enrolments to speed up and streamline the process," says Angela Goodchild, national marketing leader, benefits administration at Towers Perrin in Toronto. "For example, when flexible benefits enrolment is done electronically, the tool edits and checks the data, reducing both errors and cost."

HOW IT WORKS

The ease of pulling up a company Web site masks the sophisticated technology behind it, however. While a static site that simply provides content such as policies is relatively simple to set up using Web publishing software, a site that allows an employee to make transactions online must be hooked into a database holding the records related to the transaction. The information available for editing by employees on an ESS Web site might actually be housed in more than one system. So any changes made may need to be fed to multiple systems through interfaces if the databases concerned aren't integrated.

Although there are variations in how companies have adopted Internet technology to meet their own specific needs, the typical ESS tool has some common features. One of the most important criteria is security, says Randal Phillips, executive vice-president, Morneau Sobeco, TransAlta's outsourcing vendor which set up the company's pension and benefits employee self-service Web site. "You have to make sure the site is encrypted and is as secure as online banking."

And, because sites are customized for each company and personalized for each employee, there must be a secure log-in process using a personal identification number (PIN) and password. Once an employee has logged on, a pull-down menu shows the options available--how to find more detailed information about his or her pension and benefits plan or how to perform a particular transaction or calculation.

One of the advantages of a Web site is the ability to provide the most current information about policies and procedures. "The vast majority of our employees like our Web site because they know the information is up to date," says McIntyre. "Books are usually out of date as soon as they're printed and it's more expensive to keep reprinting them than it is to update the Web site."

Another popular feature is a forms library that can be downloaded and printed. Although many changes, such as adding or deleting dependents or changing a name or address can be made on-screen, government regulations still require hard copy documents naming beneficiaries to be physically signed. "But, even though people still use a paper copy, being able to print it off the Internet speeds up the process," says Goodchild.

To make information and transactions easier to understand and follow, many of the Web site's functions are often life-event driven with check lists popping up to show what should be done if a certain event occurs. For instance, new hires or those who have been recently married are directed to a certain area of the site, says Phillips. "It's easy to make changes and usually get confirmation within a day or so." The Web's drill-down capability also allows the user to get definitions of terms and more details of plans.

Other features include instant pension calculations for retirement planning, a frequently asked questions page, a tutorial on how to make choices and changes to benefits and links to related sites such as provincial health offices or insurance carriers. An e-mail link to the Web site allows employees to receive reminders that it's time to enrol in the benefits plan or to simply ask a question. Some sites show service standards that tell employees how long it will take for a change to be made. For managers, an instant report function allows them to pull up information on how many new hires there were last month, how many people have enrolled in particular benefits or who hasn't made their flex benefits selections. They can also see how many hits there are on each page of the site.

ONLINE GROWTH

Canadian companies are just beginning to establish Web-based ESS, but there's no doubt that the number who adopt Internet technology will continue to grow. "I can't imagine that five years from now people won't all do things this way," says Phillips. "It's affordable and effective. Not all sites will have integrated one-stop shops, but there's a definite trend to that."

As technology evolves and usage increases, all kinds of functions will be added to ESS sites. "One area we're working on with clients is HR communication," says Goodchild. "Web technology holds potential for the whole aspect of corporate communications strategy."

Phillips predicts that there will be more active content on Web sites, such as video clips, tutorials and modeling tools. "It's important to keep up with the constant evolution of the technology," he says. "You want people to keep coming back to the site--it can't be boring."

EASING INTO CYBERSPACE

Kraft Canada Inc., based in Toronto, recently outsourced administration of pensions for its 4,600 employees. It started with an interactive voice response (IVR) system but plans to add an online system in the coming year. "In the U.S. our company has a Web site that's just for looking things up," says Janet Corey, HR director for Kraft. "That's better than nothing, but we want to have self-service on the Web so people can make their own changes. We already have a company Internet site which contains information about the company and the latest comments from the president, so people are used to it. We've been slow putting HR online, but by 2000 we'll have pensions online and we'll add the ability to make address and name changes. In three years, we hope to have benefits enrolment and selection online, too."

Alberta-based Petro-Canada, on the other hand, has had an HR site on its company intranet for about three years. The site is continually being improved, including a major face-lift about six months ago. "Our human resources information centre is a key medium for providing the human resource information and tools that employees need to perform at their best," says Lee Drewry, manager HR business practices responsible for the HR intranet site.

Employees at Petro-Canada can make changes to personal data--such as their home addresses, emergency contacts and bank accounts--by using the intranet site. They can also view vacant jobs and apply for them directly using an online personal resume, view departmental business plans and build their own work plans and access information on developing skills in key competency areas.

Plans are in place to continue to add information and tools, such as allowing employees online enrolment to benefits plans. "Leveraging human resource-related information and technology is a priority for us," says Drewry, "and our intranet site will be critical to ensure we deliver this priority."

MERGING ONLINE

It may seem that only big companies can go the self-service route, but that's not the case. AgrEvo Canada, a 300-employee company based in Regina, Sask., recently merged with Rhone-Poulenc to become Aventis Crop Science Canada. As a result of the merger, AgrEvo had to develop a new pension and benefits program. "We reviewed how we were administering pensions and benefits, and developed some best practices that led us to find a new way to deliver services," says Gord Johnston, manager of HR at the newly merged company. AgrEvo already had an intranet site so employees were used to receiving e-mail about the merger.

By expanding the site to include the new pension and benefits program, employees can review previous information related to beneficiaries, dependents and how many health credits are in their account as they begin enrolling in the new pensions and benefits. "It's all individualized and live information pops up by entering a PIN," says Johnston. "People can go in and make changes and do retirement calculations."

THE E-LITERACY CHALLENGE

A major concern for plan sponsors contemplating ESS is whether or not employees have access to computer terminals and whether they know how to use them. "Computer literacy is a challenge, especially in heavy manufacturing [sectors] and for retirees who may not have ready access to work stations," says Steve Welkie, business group manager for administrative practices in Canada at Hewitt & Associates' Toronto office.

Although some industries don't think Web access would be universal enough for their employees to benefit from ESS, says Goodchild, the old stereotype about blue-collared workers not being as computer literate as salaried staff isn't holding water. "As we talk with clients, more are telling us stories about who actually is using ESS. They thought it would be salaried people, but they've been surprised to find that a lot of unionized workers have computers at home, maybe for their children, but still accessible. Plan sponsors are finding that their initial assumptions about access and literacy aren't necessarily true."

And providing computers for employees who don't have them at work or home isn't a major investment, says Phillips. It's relatively inexpensive to set up a kiosk with a computer for people to go in and use the ESS Web site.

That's what they've done at TransAlta, where about one-third of employees don't use computers at work. "We've set up kiosks so people can use them during their coffee breaks, at lunch, before or after work," says McIntyre.

But, even with access, will employees actually use ESS sites? TransAlta has had good results. "Last August alone we had 923 hits on the Web site out of 2,200 employees--and that was during the time of high vacations," says McIntyre. "We've seen a lot of Web activity and most popular right now is the ability to transfer money to different DC funds."

Before setting up its site company-wide, TransAlta held focus groups of 60 people to test it and get feedback. "The comments were very thoughtful," says McIntyre. "People came back and told us what was good and bad. If they said something wasn't explained clearly enough, we told Morneau and they fixed it right away. It's worked well, but, if I had to do it again, I'd do more focus groups."

Despite a few technical glitches related to the tight time lines used to set up its ESS Web site, Johnston at Aventis says the transition has gone well. "Not everyone likes it--as with any change some still wish we were doing things the old way."

That's true at most places--there are always some people who resist change. One way companies are getting around problems of access and employees who are techno-shy is to combine a Web-based ESS with a call centre or IVR. "Employers know they can't hit everyone with one tool, so many combine the Web with voice service," says Goodchild. "The call centre can help coach people how to use the Web and answer more complicated questions. It adds value."

McIntyre says that retirees, in particular, are more inclined to call the toll-free number, but some of them do use the Web site. "A lot are frustrated by voice mail," she says. But, although actual calls are still high, she says that people who call in are more knowledgeable because they've got their first level of information from the Web.

Adding Internet access to IVR can be a boon for employees who are frustrated with trying to do flexible benefits enrolment or to designate a beneficiary with a touch pad on the phone, says David Thomson, president of Wright Mogg in Waterloo, Ont. "There's a lot of intolerance with non-visual communication. IVR has been around for about 10 years and there's been a lot of disappointment with it. Unlike the Web, you can't keep adding to the scope of IVR. But investment in the Web has a long lifetime because you can keeping adding more functions."

Still, it can be a culture shock to expect employees to go from paper-based to paperless Web sites and voice response, says Corey at Kraft. "It's interesting to see who is upset by it. Many employees are used to going to the HR office and sitting down with the staff. There's been a lot of hand-holding and it's painful for some to change. At the same time, however, a lot of people love the turnaround time of ESS. From July to September, Towers Perrin's call centre took 2,000 calls from our employees asking for pension calculations."

And when Kraft expands ESS to the Web, employees will be able to do the calculations themselves online. Adds Corey: "Before, all those calls would have been tying up staff at our HR office."

Sonya Felix is a Toronto-based freelance writer and a regular contributor to BENEFITS CANADA.

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Taking ESS online

Four ways it will benefit your plan.

1. Cost. Although the initial cost of setting up a Web site to handle transactions is considerable, this technology can reap huge administration savings in the long term. Consider this example of banking costs per transaction: According to Canadian Business in August 1999, the cost of performing a banking transaction in-branch is US$1.07. By telephone it costs 52¢ and by ATM it costs 27¢. Using direct-dial PC banking, the cost falls to 1.5¢ and drops to 1¢ if the transaction is done via the Internet. As well, when human resources (HR) staff aren't tied up with inquiries and filling out or reading forms, fewer people are needed in the process.

2. Efficiency. If HR staff members don't have to act as the intermediary between employees and the various recordkeeping systems, they have more time for strategic planning and communicating policies to employees.

3. Accuracy. Once online, people who looked at their pension and benefits data saw how incorrect a lot of it was, says Randal Phillips, executive vice-president at Morneau Sobeco. "People saw that the data sometimes listed spouses to whom they were no longer married or kids that had grown up and left home. It resulted in cleaning up the data to be more accurate."

4. Empowerment. Giving employees the information and tools to take charge of their own pensions and benefits can be empowering for the employee and a relief to HR staff. "People can't come in and say, 'Why was this never changed,' " says Janet Corey, human resources director at Kraft Canada Inc. "Now we can say, 'It's because you didn't change it.' "

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The payroll connection

Web-based employee self-service (ESS) has focused on pensions and benefits, but payroll ESS is on the way. "ESS is where opportunities for further cost reduction and efficiency lie," says Ian Mise, president of LeadingEdge Payroll Applications Inc., based in Oakville, Ont.

A few organizations are already beginning to use ESS for electronic pay statements, TD1 forms and voluntary deductions for credit unions. Employees can log on to the company's Web site and print off forms or even fill them out electronically because these transactions don't require signatures.

LeadingEdge is currently developing an ESS Web site for clients who've outsourced to its payroll outsourcing arm, Pinnacle Payroll Solutions Inc. The ESS site is designed so that even non-outsourced companies can use it by linking it to a human resources package.

Although the Web site contains standard fare like changing bank accounts, addresses and emergency contacts, there are also some more intricate features such as a tax modeling component that allows employees to check out how a move from Alberta to Newfoundland, for example, would affect their taxes.

Employees can also print out pay statements and view a payroll calendar onscreen. And, there's a what if feature where the employees can see what pay changes would occur if they changed their gross salary, added dependents or made registered retirement saving plan contributions. ESS also has the potential for electronic time and attendance, says Mise, and instead of manually collecting paper time sheets, the numbers are keyed into the system electronically.

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