Employees prefer digitized benefits, are employers ready?
What defines the Indian workforce?
The people, who are part of the workforce and gearing up to lead tomorrow - where do they work, how do they live and how do they get on with life? Unless we stop to consider these facts, we will never understand what they need the most to fulfill their duties at the workplace.
Basis an understanding of the social landscape, it is safe to conclude these are people mostly living in tier one or tier two cities, working in private sectors, extremely tech-savvy and almost feel an emotional connect to their gadgets. Quick, curious and hooked onto mobile phones - almost a 100% of the time - this workforce needs assurance that their way of life can be replicated at the workplace as well.
Employees and reimbursements:
Needless to say, we were not surprised when the first-ever study on employee benefits - The Zeta Employee Benefits Study commissioned to Nielsen India - revealed employees have shown a massive support for digitized processes in filing and claiming reimbursements in India. A staggering 90% have said they would prefer a digital process for submitting reimbursements for tax-saving benefits over a paper-based physical process. Tax-saving reimbursements here refer to flexible pay elements for salaried employees such as fuel benefits, telephone/internet allowances, LTA and so on.
The group attributed its reason for this support to less time-consuming processes and zero paperwork. While 73% said time was a major concern, 70% said no paperwork was their reason to support digitization. These reasons obviously reflect the urban employee’s way of life that is fast and carefree. No storing paper bills, no filing forms manually and no wasting time in something that can be done in lesser time.
Other issues in paper-based processes:
It would, however, be presumptuous to attribute this employee preference towards digitized reimbursements simply to a ‘tech-savvy way of life.' The physical processes of distributing and receiving reimbursements are genuinely ridden with several other shortcomings and inconveniences. The study on employee benefits revealed some quick points as well.
Did you know, on an average, your employee has to spend 23 minutes to submit a reimbursement claim? That is almost half-an-hour of a day gone in submitting one reimbursement claim. This time becomes particularly significant because most employees need to submit at least one form per bill or one form per type of claim, according to the study.
This means, if a company is offering fuel benefits, telephone allowances, internet reimbursements and LTA, each employee is at least filling six forms and spending almost three hours making these claims in the middle of a workday.
The dilemma does not just end here. For each reimbursement, an employee has to get at least two approvals or more. The process still has glaring loopholes because most employees (38%) are informed over emails about the rejection of claims and there is a fair chance they may miss the mail. There is no way they can track their claims easily.
Are companies ready to address these issues?
While the good news is employees have actively laid down their preference for a digitized reimbursement process, the bad news is most Indian companies have not been able to keep up to the pace of the changing mentality of their workforce. More than half of the companies surveyed - about 53% - use completely physical processes for reimbursements while 94% use some kind of a physical claim submission format.
Even with solutions available that can digitize the entire reimbursement process in a company, most companies are either not aware of the benefits of such a solution or feel they are better off without them. While ignorance is one thing, we cannot possibly agree companies do not need digitization in running employee benefits.
About 34% of companies take more than 15 days to process employee claims. This means, by the time they finish clearing one set of claims in a month, the new set for the next month is already in. Moreover, invalid and illegible bills together form the biggest challenge amongst companies in processing bills.
At this juncture, it is important to take a convenience-first approach to re-define employee benefits. By convenience, we mean convenience for both employees and companies offering the benefits. It is time companies pay heed to what employees want and, in the process, help themselves manage their process better.
There is also the bigger picture to consider. India as a country is rapidly moving towards a digitized payments system. The Modi Government's initiatives to familiarize India with digital currency and even the RBI’s changing policies in the PPI space to encourage digitized benefits, such as the abolition of paper-based vouchers in favor of digitized meal vouchers, are a clear sign it’s time to move on from age-old and archaic manual solutions. Even the emphasis on e-assessments in Budget 2018 reflects the government's attempts to reduce the interface between income tax departments and taxpayers and increasing efficiency and transparency. At this point, where automation of processes is a trend and digital payments are steadily gathering steam, no corporate should stay stuck with manual methods.
Tax saving reimbursements mean free-money on the table and there is no reason why employees should be avoiding this extra purchasing power in their hands. There are some 30 to 35 million tax-paying salaried employees in the country and when all of them are able to claim their tax benefits without any hiccups, it would mean a growth of purchasing power in their hands, thereby offering a push to the economy.
So, let’s take this opportunity to change how we know employee benefits and make it more suitable to the times.