Why & What to Measure with Your Benefits

Our guest blog series, where we feature a few of our friends and partners on the blog to give readers the opportunity to read expert advice from leaders across the analytics, wellness and health industries, reconvenes this week with a post from Steve Cyboran, CEO and Consulting Actuary of Cyboran Consulting, LLC. Steve has worked extensively with leading employers across the country to articulate a vision for a healthy and effective workplace culture, develop a total rewards strategy to support that vision and brings deep benefits expertise with a behavioral approach and sound analytics to achieve and measure the desired outcomes.

Imagine a company making a multimillion-dollar capital investment in a piece of mechanical equipment without a clear vision for how they want to use it. Would it be installed without appropriate monitoring equipment? What investment would be made for maintenance? Would it be run non-stop until it breaks down before they took any action? If the company wanted to make an investment to increase its productivity, would executive leadership sign off without any analysis of the value of that investment?

For many companies, the largest single investment made is the investment in their personnel. Yet, the amount of money invested to indemnify and restore broken down human capital is one of the top capital expenditures. Often, companies lack a clear vision for that investment or even a basic understanding where the money is going. Each year, companies expand this investment, without a plan for obtaining additional value from the investment. More alarming is the fact that many companies treat their people just like that neglected piece of equipment; investing nothing in preventive maintenance and rolling along waiting for a defect to happen.

The good news is that many HR departments are now being tasked to develop a strategy with a clear vision for how these investments will be used to advance the mission of the organization and to measure the effectiveness of their investments like other operational departments. With benefits being the second largest investment in people after compensation, organizations need metrics to determine if the spend provides value. A good metrics analysis helps to determine if you are on track in achieving your vision, allows you to pivot if you are off track, demonstrates the relationship between population health and productivity and upholds the value of that investment or redirects your company if it isn’t worthwhile.

Identifying Measures to Evaluate

A trap that many people fall into is trying to boil the ocean with measurement. There are so many metrics that can be evaluated* that you can get overwhelmed digging through data to find something that is meaningful and useful. A good metric allows you to measure progress toward an end goal or a vision. As such, an organization must first articulate a vision for its end destination. As the great philosopher Yogi Berra said: “If you don’t know where you are going, you will end up somewhere else”. That vision will then drive the measures and metrics important for your organization. For example, many organizations start to identify their area of focus by analyzing where they spend the most money. This leads them to focus on a set of disease states, hospital and ER costs, certain health risks, and perhaps absence and disability. As such, their implied vision would be to provide the highest level of quality care for the lowest cost. This strategy is focused on addressing the absence of health and lost productivity.

Conversely, an organization may have a vision to achieve the healthiest and most productive workforce. Thus, they need to determine the series of metrics that will enable them to measure workforce health and productivity. Perhaps some of their measures will include capturing the fitness level of the population, mental and emotional capacity and measures of financial health. There will then be a series of measures associated with engagement, satisfaction, changes in behavior, process, utilization and outcomes. As you can see the vision needs to drive the measures in each organization and what they are going to capture.

Providing a Context

Metrics only make sense with the appropriate context. Develop a scorecard that includes a balanced set of metrics with both leading and lagging indicators to help key stakeholders understand how well the programs are doing in categories such as participation, satisfaction, engagement, well-being status, behavior change, quality, cost, utilization, process efficiency, and workforce outcomes. There may be measures on the scorecard that vary based on the role of the stakeholder. For example:

  • Executives need to see high-level population measures that provide insight into the performance of the workforce such as health and absence cost levels, annual full-time equivalent absences per year by program, employee productivity levels, efficiency and satisfaction. In addition, share measures that provide insight into workforce morale, stress, and engagement, such as tardiness, voluntary turnover, rate of claims for anxiety, rate of hardship withdrawals from the retirement program.
  • HR leaders may need to also view measures related to compliance and employee impact, such as DOL complaints, employee relations open issues, claim appeals, rates of utilization, response time and administrative cost levels.
  • Program Managers also need to see more detailed measures that get to the performance and effectiveness of the vendors, such as claim payment accuracy, claim process time, compliance with evidence-based practices, rate of change in behavior, program loss ratios.
  • The risk manager needs to be able to understand the impact of population health on workplace safety, accidents, and worker’s compensation costs.

To facilitate efficiencies, this can be presented in individual dashboards for leadership, HR and program managers with metrics from the scorecard that include relevant measures and benchmarks that are important to or can be impacted by the audience.

Properly selected benchmarks offer reference points that provide a context for the metrics included on the scorecard and goals for measuring progress and to identify areas for focus. The benchmarks can provide a comparison relative to other business units, industry peers, or national benchmarks such as IBI or HEDIS measures. Benchmarks may include various levels of comparison. For example, as a threshold matter, an employer or business unit leader should expect to do better than 50% of a comparison group. Then a target should be to perform better than 75% of the comparison group and set a stretch goal of outperforming 90% of the comparison group. Some organizations may prefer a different set of threshold, target and stretch goals (e.g., 25th, 50th, and 75th percentiles).

When considering the importance of the workforce along with the significant investment employers make in benefit programs, it is essential to view them like critical capital investments. This requires a clear vision for the investment and appropriate maintenance and monitoring of the effectiveness of your efforts. To support effective monitoring, establish a scorecard of the metrics that matter to your vision with dashboards of the metrics that matter for a leader’s role. These dashboards help draw in the stakeholders as they find areas where their metrics lag their peers and see how their metrics align with their business performance.

Steps for Selecting Measures

To select the measures for your initiative, take the following steps:

  1. Envision desired state
  2. Determine strategic priorities
  3. Identify measures for each priority
  4. Calculate metrics for each measure
  5. Establish goals for each metric
  6. Design dashboards for reporting
  7. Develop process for populating and disseminating dashboards

To learn more about Steve’s consulting work, visit him online here. To learn more about how DHS Group can work with companies and executives looking to put analytics into action to gain metrics for monitoring click here.