I learned somewhere that if you rub two sticks together you can start a campfire. Honestly, I’ve never tried it. If given the choice between sticks and a lighter, the lighter wins every time.
In the constantly evolving field of health and productivity, we are overwhelmed with new tools to judge the performance of our health-related programs. But sometimes the right tool is the one that’s easier to use.
As benefit practitioners working for employers, we are challenged year after year to meet the high expectations of controlling benefit spending. If we are unsuccessful in managing these costs, the trickledown effect affects both employees and the business.
It’s a challenge for employers to judge program performance when there is too much data on some programs and too little on others. It’s often a struggle to get even the basic everyday tasks of benefits program management accomplished when professionals are faced with staff shortages, inadequate knowledge about data analysis strategies and underperforming programs.
Given these realities, what is an employer to do?
In my experience, there are four steps to start addressing these challenges:
1. Start broadly. Benefits professionals often don’t see the forest for the trees. We tend to focus on individual tactics without having a clear approach to a solution. Take, for example, evaluating the impact of a return-to-work program. The people participating in the program may be getting back to work sooner, but if that group is a small part of the overall disability experience and costs, you still may have a problem on your hands.
2. Define a limited set of metrics and data. Let’s face it, few benefits pros today have staff with deep expertise in data or analysis, yet more often we are called upon by senior management to justify our programs with data. Defining a limited set of easily understandable metrics that help illustrate the health of the workforce, medical care delivered and outcomes achieved puts us in a position to have a compelling conversation with senior management about what we are doing, why and where opportunities for improvement exist.
3. Communicate metrics and data needs. Most employers manage their programs in separate silos — health benefits in one place, disability benefits in another and workers’ compensation in a third. Information on incidental absence is often distributed across multiple parts of the organization. Thus, holding our external partners accountable for providing those data in a useful form is a critical part of success. Employers often don’t exert their leverage with their external partners around data. The more effectively data is integrated, the clearer our understanding becomes of the opportunities to most effectively improve program effectiveness.
Outside of the benefits team making sure they have all of the right measures, it’s also important to listen to the management team and then relate what these measures mean in terms of what they view as important. Building internal relationships, trust and partnerships brings great returns when future investments are being considered that will impact business operations.
4. Benchmark results against peers. Benchmarking, in simplest terms, is just comparing against a standard. To benchmark usefully, employers need to understand what the standard is based on and what the comparisons are telling them. For benefits professionals, the easiest and most straightforward standard is how other similar companies are doing. This may not be a precise comparison, but it does tell the employer where companies in their industry are doing better and provides guidance about how to improve the employer’s own results.
Benchmarking at a high level also helps deal with the real challenge of scarce financial and time resources. No one has the time to drill down on every single issue that looks interesting. Drilling down should only be done in areas that are important to your company and where you believe your actions can improve your results.
What if your company’s numbers are not where you want them to be? One can argue that it is certainly better to know how your programs are performing than to not know. But let’s be more strategic than that. Benchmarking against industry peers quickly shows you where you stand on various dimensions and where there may be opportunities for improvement. Using short-term disability as an example, consider two metrics: incidence and duration. Both are influenced by underlying diseases in the workforce and by plan design (elimination period, wage replacement rate and maximum benefit duration).
It’s important not to be too focused on medical or disability claims as the sole sources of data. For example, understanding key plan design features that influence cause and effect will put you in a position to better determine whether programs like wellness and disease management should be restructured to lead to the improvements you are seeking.
Benefits managers have rarely been under the pressure they are now to perform at a high level with the limited resources at their disposal. In this era of “big data,” we need to be smart about how we respond. By leveraging data and expertise, you can use limited resources to your best advantage and light a fire with your senior leadership to take you in the direction most successful for your business.
Chris McSwain is the vice president of U.S. benefits at Walmart and the board chair for the Integrated Benefits Institute.
This blog originally ran on the blog Employee Benefit Views, by Employee Benefit News, EBA's sister publication.
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