Sky is using data to develop a benefits strategy treating its employees as consumers. Owain Thomas examines how the project is transforming the firm's outlook
Sky is building a long-term benefits plan using employee data
Employee demographics, claims rates, attrition rates and benefits choices can provide significant insight
Sky saved 40% on its musculoskeletal healthcare costs after analysing claims data
A direct, consumer-based approach can prove attractive and effective with employees
From little acorns, big oak trees grow – thus it is at Sky.
What started out as a simple tender to operate a flexible benefits platform has morphed into a complete overhaul and examination of the way benefits are provided for a workforce of 25,000 across the country.
As Sky internal benefits consultant John Whitaker explains, the pay TV and internet services provider had been slowly developing analytical capability internally because it had a substantial amount of data on its employees and what they did with regards to benefits. However, it had not yet applied this to the firm’s longer-term plans: an evolving three-year strategy of looking at what it would like to do.
“That plan wasn’t based on anything concrete; that was more based on our temperature-checking the business, what we thought employees might like and the legislation changes for pensions, auto-enrolment, the at-retirement piece, and where we would need to plug things in,” he explains.
So after initially appointing Capita Employee Benefits to manage the benefits administration, Whitaker handed over the outline plan and some key data, including employee demographic and benefit selection figures.
“They crunched through that and came back with a report which set out things that we should be doing, things that we should start doing, and things that we should be thinking about doing,” he says.
“It validated some of the other stuff that we have been doing and confirmed to us that it was correct and accurate – the stuff that has been on the agenda – and identified areas based against a market benchmark where we could be doing more to increase those engagements or where the engagement within Sky was below market.”
The workforce was further segmented into different generational groups (X, Y, Z and baby boom) and locations to understand where engagement was good and where it was bad, and to identify the hot and cold spots of benefits engagement and how employees were engaging. This also ran across the voluntary benefits offering and the share save engagement.
“It was a snapshot across all of our employee benefits to identify where we had strong engagement and where we didn’t have strong engagement, and whether it was actually an issue for our business or not,” Whitaker continues.
“That is now both supporting and feeding into what our next three- to five-year strategy looks like, taking into consideration the internal factors that we have in Sky, as well as the external factors in the marketplace and other things that are happening. We’ve put this all on the table and started to map this in.
“So we know if we’re looking to do something in July 2016, for instance, we also know that’s our re-enrolment date and we can then work back from that and understand exactly what we need to be doing and when we need to be doing it. Working with Capita on the agenda means the systems are where we need them to be and we can make an informed decision to say we should be doing that or we need to be focusing on re-enrolment in this instance.”
Capita head of benefits strategy Alex Tullett has worked alongside Whitaker throughout the process. “We got into a conversation about what they are trying to achieve. They have a very strong brand with their employees – a very clear strategy of what they want to do,” he says.
“We are now starting to work with them and how they promote some of their internal things for employees, such as their friends and family benefits. One of the things that has come up a few times is that they have quite a lot of engineers – people who use ladders and equipment – so helping them to understand the protections that are available to them through benefit programmes and making sure they take full advantage of that is important.
“Obviously, Sky goes a long way in working to prevent it from happening, but if they do have an accident at work (or anywhere else) then they can take advantage of the protection benefits. That’s about having very specific targets and goals.”
Indeed, this section of the workforce has provided one of the initial big positive impacts from using data to target specific parts of the benefits package.
Sky found that it was seeing a high number of claims for injuries to its engineers so it worked with healthcare provider Aviva to introduce a self-referral pathway.
The resulting approach has almost cut its healthcare expenses on musculoskeletal claims in half.
“We now have in place a quick-access self-referral physiotherapy option. It’s a pathway so that employees who have musculoskeletal or physiotherapy requirements can get treated a lot quicker than they would traditionally in a normal PMI scheme or even on the NHS,” Sky’s Whitaker continues.
And it has been successful, reducing healthcare costs by about 40% for musculoskeletal injuries because of the pathways and early interventions that staff are able to take.
“It makes it more relevant for employees as well. There’s no point having a private medical scheme if no one is going to use it because you’ve configured it in such a way that you’re treating illnesses and injuries that are not common within your workplace,” he explains.
“If you’re an engineering firm or a building firm, you’re probably going to have a higher ratio of musculoskeletal issues, whereas it may be cancer claims or lifestyle issues if you’re a professional services company. And I think what we should be doing is showing in the statistics that we receive from Aviva, and it means you can have a much better conversation with Aviva and Capita to say, ‘Right, this is what we’re seeing in the data. What should we be doing? How should we change things? Do we need to change anything? Are we happy?’”
All of this can be used to maintain the stability of a medical scheme. Keeping it relevant to typically healthier staff prevents the vicious circle of high claims costs for less healthy employees pushing premiums ever higher and forcing out those healthy members not using it.
Theory of relativity
This brings us on to one of the key themes for Capita’s Tullett: relativity. He is keen to point out that too often insurers and other providers have been too generic in their offerings, and schemes have not reflected the range of employees across a firm. Instead, they, and employers, should be treating employees as consumers – at least in the way they use benefits.
“All this talk of engagement – engagement is nothing without relevance. You will not get engagement unless you make benefits relevant and you will not make benefits relevant unless they are sustainable and affordable. Those are the key watchwords. Sky is definitely down that road with what it is doing and we’re seeing other employers going that way too,” he explains.
“Sky also has a very straightforward attitude – a very direct way of communicating with staff. The tone of voice is very matter of fact and adopts the approach of saying to people, ‘God forbid you fall off a ladder, but if it should happen then things like personal accident and income protection will make sure your family isn’t out of pocket’.”
This is not the first time that Whitaker and his team at Sky have ventured into the world of data analytics. And although there was some significant success, there were also problems with getting data to match up across different systems.
“We had a couple of starts at this ourselves and came up with some quite good correlations between employees who select more than one benefit in each year, and the attrition rate. We also recognised that, with our high-performers, there was a correlation between the percentage of high-performers engaging in benefits compared to low-performers engaging in benefits,” he concludes.
“And there was a whole host of other things that we looked at, including absenteeism, benefits engagement, and absenteeism compared to healthcare engagement. What we were effectively doing was coming up with figures that we thought would be correlated in some way and then trying to crunch through the various data sets to see if this correlation was proved. The first two were completely proved; the others not so.”
Now, the firm has further developed this approach and is able to take a much more scientific view on what the data is telling it, and it can make a decision about which benefit to introduce.
It can also help uncover potential unseen consequences on other benefits or employee actions – not so much predicting the future, but learning from past behaviours of similar people.
Hargreaves Lansdown and Liberty SIPP have again been named as the slowest two providers to move pensions through Origo's Transfer Service.
The Pensions Regulator (TPR) increased its use of frontline powers by 32% over the last year, it confirmed in its annual report and accounts.
The Pensions Regulator (TPR) is considering plans to combine its 15 codes of practice into a single, shorter code as part of its 'clearer, quicker and tougher' initiative.
HM Revenue and Customs (HMRC) does not know how many people it has fined for breaching pension tax relief rules, a Freedom of Information request has revealed.