Magazine Article | July 20, 2006

Reduce Benefits Paid By $400,000

Source: Innovative Retail Technologies

A grocer saves $125,000 annually in fax costs and eliminates two FTEs (full-time equivalents) by integrating its personnel, payroll, and benefits administration systems.

Integrated Solutions For Retailers, August 2006

Administering benefits for 25,000 employees in 146 retail locations can be cumbersome, especially during yearly enrollment periods. Hannaford Bros. Co., a grocery retailer challenged by this, struggled to keep up with sales associate changes, benefit enrollment periods, and beneficiary changes.

The payroll/personnel department used a mainframe payroll and personnel system, which interfaced with the HR department’s client/server system for health benefits administration. The two systems transferred data weekly, but the systems were often out of synch (i.e. some employee changes were never completed because not all of the data expected was successfully transferred between the two systems). “These discrepancies led to costly insurance claims; employees sometimes had health benefit coverage longer than they should have because termination data wasn’t quickly transferred to the benefits system for various reasons,” says Jon Doody, team leader of HR and payroll technology. “Inconsistencies arose because the paperwork was submitted from store locations to the corporate office with incorrect or incomplete information. Employee paperwork was faxed from stores to the corporate offices, but was sometimes lost in the process. Moreover, HR and personnel employees spent the majority of their days completing data-entry tasks and researching disparities between the two systems. The HR employees dreaded the annual benefit enrollment period for months prior to it starting. While we used IVR [interactive voice response] technology, there was far too much manual work involved.”

As a result, a team of employees conducted an evaluation to find a way to integrate the company’s personnel, payroll, and benefits administration systems. The team also wanted to implement self-service applications and improve the yearly benefits enrollment period. They selected the Lawson Human Capital Management suite.

Lawson Human Capital Management suite version 7.2.5 was originally installed (they’re now using version 8.0.3) with one year of historical data fed into the system. With the new application, employees can access personal data, such as health benefit, beneficiary, and tax information using any Internet connection. Stores are also outfitted with kiosks that allow employees to access their personal information. The Lawson suite enables new employees to complete paperwork online, thus receiving paychecks during the first pay cycle, as opposed to a three-week delay, which was not uncommon in the past.

Reduce Turnover Rate By 11%
With the new system, the savings for Hannaford are many. “The HR and personnel employees no longer complete data-entry tasks, nor do they compare data between the two HR systems,” says Doody. “They now focus on strategy, exception processing, and customer service. Overall, we eliminated approximately 200,000 faxes between the stores and the corporate office, which saves at least $125,000 annually. We also eliminated two FTEs in the personnel department and revamped those employees’ roles. The personnel department previously experienced high turnover; since implementation, it has none. Generally, our retail employee turnover is now 48%, 11% lower than it was five years ago. We aren’t sure why this happened, but we believe it’s because new employees are now paid on time, they have control over their own benefit changes, and HR representatives at the store level have access to employee information in real time.”

After the Lawson implementation, an audit was conducted that identified more than $400,000 of benefit payments erroneously paid each year before using the Lawson system. This is attributable to the data discrepancies between the two systems. Data errors were significantly reduced because people are careful changing their own benefit information, and all forms are electronic with embedded calculations.

The benefits enrollment period is completed online for all employees now, which is seamless for the HR department. The use of the self-service component increased over time. The first year it was available, 75% of the employees who enrolled used it; 81% participated the following year, and Hannaford experienced 100% participation this year. Since deploying the Lawson suite, Hannaford acquired additional stores and grew by 4,000 employees without increasing HR or payroll/personnel staff.