Benefits administration

What is benefits administration?

Benefits administration, also known as employee benefits management, encompasses the design, coordination, and maintenance of non-salary perks for employees. The primary objective is to create an attractive, tailored offering that meets the needs of the workforce while supporting the company’s strategic goals in employee motivation and talent retention.

Benefits administration is a core responsibility of the HR department and involves several critical stages:

1. Needs analysis stage
   This stage focuses on assessing employee preferences and expectations regarding benefits, taking into account demographic diversity and varying life circumstances.
2. Benefits offering design stage
   In this phase, the goal is to select benefits that are both appealing to employees and cost-effective for the organization. It also involves aligning the offering with market trends and ensuring compliance with local legal requirements.
3. Implementation stage
   This stage involves preparing targeted communication for employees and potential candidates. The messaging highlights available benefits, guidelines for their use, and instructions for accessing them.
4. Operational activities stage
   This includes administrative tasks such as enrolling employees in retirement plans and other benefits, as well as monitoring associated costs and evaluating the effectiveness of the offerings.
5. Evaluation and optimization stage
   The final stage entails analyzing how employees utilize the benefits and refining the offering to meet the evolving needs of the workforce, ensuring alignment with organizational objectives.

This structured approach ensures that benefits administration contributes strategically to both employee satisfaction and organizational success.

How to oversee a benefits strategy?

To ensure the company's benefits strategy remains relevant and effective, it is essential to define KPIs (Key Performance Indicators) that evaluate the impact of benefits on both employees and the organization. Key metrics include:

• Benefits utilization rate: How many employees actively use the provided benefits?
• Employee retention: Do the benefits programs contribute to longer employee tenure with the company?
• Employee satisfaction: Do the benefits meet employee expectations and needs?

Regularly collecting and analyzing data related to benefits enables the company to address employee needs more effectively while optimizing the costs of benefits administration.

For example, research from the Wellhub platform shows that companies providing access to this solution experienced an average 35% reduction in healthcare costs. Among employees who used the platform at least five times per month, healthcare costs dropped by 21% within a year of implementation. A key factor in this success was improved access to preventive care, which significantly reduced expenses for acute treatments.

Why offer employees a diverse range of benefits?

A well-designed and tailored benefits administration strategy delivers numerous advantages to the organization:

• Enhances employer branding: Distinguishes the company in the job market, attracting top talent and meeting the expectations of younger generations.
• Boosts productivity and engagement: Increases the performance, commitment, and loyalty of current employees.
• Addresses diverse needs: Adapts the benefits offering to suit employees at different life stages and with varying priorities.
• Strengthens employer-employee relationships: Builds a positive employer image and fosters better relationships between employees and the organization.
• Reduces turnover: Helps retain employees, contributing to team stability.
• Improves employee well-being: Enhances employee health and well-being through wellness and healthcare-related benefits.
• Cultivates a positive culture: Promotes work-life balance, sustainability initiatives, and a supportive organizational environment.
• Supports diversity and inclusion: Addresses the unique needs of different employee groups.
• Optimizes long-term costs: Reduces expenses related to turnover, absenteeism, and low engagement.

5 tips for effective benefits administration

1. Understand employee needs before implementation

According to the ICAN Institute report, employee expectations often do not align with what employers offer. Regularly assess team preferences and needs through tools like surveys or one-on-one meetings to avoid investing in benefits that employees may not value.

Example: Hilton Hotels annually conducts a comprehensive survey with about 50 questions, including open-ended ones, allowing employees to share their opinions on current and planned benefits.

2. Address diverse needs

Design a benefits package that caters to the varied needs of employees, encompassing areas such as health, personal development, physical activity, culture, and entertainment.

Example: Mercer’s report suggests that in addition to standard private healthcare, employers should address emerging employee needs, such as psychological support due to extreme weather conditions. They can also offer caregiving assistance, including support from doulas or midwives during pregnancy and postpartum, medical caregivers for illnesses, or physiotherapists for post-illness rehabilitation. Partial reimbursement for medical procedures, such as infertility treatments, can also be a compelling benefit.

3. Leverage multiple communication channels

Ensure information about benefits is clear and easily accessible to both candidates and employees. Use various channels like career sites, knowledge bases, HRM platforms, newsletters, messaging apps, or team meetings to explain what benefits are available, how to use them, and their value for employee well-being and development.

4. Regularly update the benefits offering

Stay competitive by responding to changing employee needs and market trends in benefits. Monitor legal developments, such as regulations on leave or healthcare, to keep your benefits package attractive and compliant with current standards.

Example: If pets are no longer allowed in the office due to safety or health regulations, offer alternatives like veterinary care packages or pet insurance. A Pethelp survey revealed that 94% of respondents found such benefits valuable.

5. Utilize HRM platform for benefits administration

HRM platform simplify and enhances benefits administration:

• Use survey tools to gather employee feedback on their needs and expectations.
• Create communication templates and plan mass announcements for new or updated benefits.
• Leverage an up-to-date employee database to stay informed about family situations, health needs, or developmental goals.
• Integrate benefits-related tasks into the onboarding process, enabling new hires to quickly familiarize themselves with available options.

Non-salary benefits are an investment that yields significant returns, including stronger teams, reduced turnover, and enhanced business outcomes. By treating benefits administration as an integral part of the company’s long-term strategy, organizations can achieve systematic, impactful results.