Speech to Louisville Employee Benefits Council
February 9, 1999
Richard L. Hannah, Ph.D. CEBS rlhannah@frank.mtsu.edu
Feel free to distribute or quote, but please reference me as the source.
The Fuzzy Boundaries and Benefits of Cyberspace
I extend my gratitude to Sherry Porter and the Louisville Council for
working with me to make this presentation possible, and I appreciate the
opportunity to visit Louisville and enjoy the hospitality of your city.
My microeconomics principles students also send a special appreciation for
being spared my lecture this afternoon on production and cost theory--with
titilating special reference to the different views between economists and
accountants on these topics. They only half jokingly suggested that I
deliver that lecture to this group instead, and conceded that if you liked
it, they would welcome it with the greatest enthusiasm.
While economists can usually twist some relevance into or out of any
topic, I've thought better of the students' offer, and decided not to
spoil the freshness of the delivery for them, and to stick to the topic
for you. In this spirit, however, my principles students invariably
exhibit more humor than students in my benefits class, who for reasons I
hope to make apparent by the end of these comments, may view my being here
with some reticence.
I've titled my comments today, The Fuzzy Boundaries and Benefits of
Cyberspace, because the indefinite nature of these words captures the
uncertainties of sweeping changes brought by the Internet evolution. Our,
and I really mean our (academics' and practitioners') traditional notions
of commercial and educational boundaries and activities are no longer well
defined. Quite frankly, I find the Internet an interesting technical
metaphor for what has been happening in our personal, social, and even
political lives of today--transparency. In this context the Internet can
be a bright star or cosmic abyss. The difference of course lies in how
we, as individuals or corporations, or professional associations,
intermediate our objectives and needs with the risks and opportunities
afforded by new technology, and how well we understand the differences and
nuances of online cultures.
Like most audiences I've addressed about related topics, I presume the
Internet literacy of this group ranges from unconcerned to intimate with
web philosophies, discussion lists, and electronic commerce. So I think
my most productive comments should center on two categories.
The first is the big picture of Internet activity from the business
perspective. That is, what flavor of critical wisdom seems to emerge with
respect to whether individual or organizational resources should be
expended on this medium? (Gratuitously speaking, I refer to the superior
definition of resource use from the economist's rather than the
accountant's perspective ;-) The second category is the benefits activity
and resources that have emerged on the Internet. If I employ unfamiliar
terminology in the next few minutes, please keep the word in mind and I'll
be glad to offer clarifications during the Question & Answer period, and
I'll hang around as long as necessary to try to be helpful in this regard.
The Big Picture
Whatever our view of the hype surrounding the Internet, there is one
inescapable observation--size matters. I once heard an apt description of
the Internet as more about more. In many of our lifetimes that's perhaps
the definitive characterization. With a measured 36.7 million hosts drawn
from 223 million possible hosts, and a potential of 4.3 billion hosts I do
think we can conclude there is a lot of people interested, or potentially
interested, in what's happening out there in cyberspace. What do we know
about current users?
As reported in the 1998 Georgia Tech/Vanderbilt survey, at least in the
U.S. Internet users are increasingly representative of the general
population. Recent data indicate that 38.7 percent of users are female
(but 52 percent of new users are female), the average income is $52,000,
and 50 percent have at least a college education. However, I confess some
perplexity in the age distribution data. Users in general are more likely
to be either under 20 or over 50, but experienced users are 21-30. With
respect to Internet purchases, 32.5% of respondents purchased $100-500 of
products and 29.5% purchased more than $500 worth of products through the
net. Finally, with respect to information seeking behavior, 92% of the
respondents relied on the Internet to seek detailed information about
those products and services.
How much money is involved with respect to electronic commerce? No one
really knows. I've seen estimates ranging from $3 billion for only
business-to-business exchanges (for 1997) to $68 billion projected for
2002 (for Internet telephone service substitution only). I must confess
that one of the fundamental academic and practical problems in need of
solution is a more useful accounting framework. I.e., how do we count
Internet expenditures?
Balanced commentary requires that I conclude this general overview by
mentioning a few observations that highlight the negative side of the
Internet's technology and economics.
Major reasons why Executives Don't Use the Net (from 1997 AMA Survey)
60% too slow
57 unfriendly search engines
67 web sites poorly designed or unprofessional
67 cost is too high to develop or maintain
67 technology not available to use effectively
Rating the success of Internet advertising
4% extremely successful
34 somewhat successful
7 unsuccessful
2 very unsuccessful
50 don't know
Now, in most speaking engagements here's where I always take a pause and
remind myself that I'm an economist, and everyone doesn't share the
economist's exuberance for data and clever digital torture that validates
one's preconceptions. So, I'll simply add a few considerations to keep in
mind when evaluating data and documents you might access through the
Internet. There are four basic questions to ask.
(1) Is the information credible? I.e., who produced it, why, and has it
been subjected to scholarly review or screening by qualified
professionals, or some test of market ethics?
(2) Is the information accessible? I.e., is it free, in effect offered as
a public service, or at least provided as an add on service to
professional organizations vs. part of a teaser advertisement?
(3) Is the site stable and reliable? I.e., is the site maintained in a
way that you can go back to it.
(4) Is there some way to assess privacy and security of information
transactions (digital tracing)?
Of particular interest among intellectuals who ponder the future of the
Internet is what it may spawn. For example, consider a corporate
philosophy or mission based in part on an applied framework of
intellectual capital, which is in turn geared to an "Internet
intelligence" network. You wake up one morning and discover many of the
highly useful sites are no longer accessible because the academics who
maintained them decided their uncompensated time was not worth the
trouble, or the government decided to privatize the management of its
data. Key listservers have crashed, security of your online cataloging
system has been compromised, and the personal privacy of all your clients
has been violated because all their records were transmitted to irs.com
rather than ira.com. While I exaggerate to make a point, you should
detect a faint familiarity with the Y2K frenzy.
At this point I'll end this broad brush of the Internet landscape. I hope
this has been enough to stimulate your thinking about how the Net may, or
may not, fit into your personal or your organization's future. I'd now
like to take up a few details specific to the benefits terrain.
Resources for above: for detailed study and reporting of the Internet's
evolution see:
Hobbes' Internet Timeline
Internet Domain Survey
GVU Survey
1997 AMA Survey
The Benefits Picture
I'm sure that many of you are far more qualified than I to comment on the
restructuring of the benefits service industry arising from increasing
conceptual complexity and computerized administration. From a theoretical
perspective, I can only guess that the tipping point of decisions to
outsource or rationalize your firm's internal systems is driven by
economies or diseconomies of scale, determined by whether there is an
adequate complement of the right expertise with the right information
technologies. Well, I can see that's about all the economic theory you
all will tolerate today, so let's cut to the chase.
The companies that apparently have devised the most comprehensive online
benefits administration systems are those in the information technology
business--e.g., Apple and Oracle. The general evolution of related
activities is characterized as a pattern that has progressed as follows:
(1) Simple communication about benefits plan content, plan changes, or
instructions for traditional processing of employee events,
(2) Personalized status reports on enrollment, retirement, savings and
medical plans, and
(3) Transactions, event recording, and alternative computations.
That these processes have become gradually more computerized is not new to
this audience. The difference lies in the tailoring to an electronically
networked medium--i.e., whether this evolution now proceeds through an
Intranet, Extranet, or the Internet. The obvious administrative plus is
the ability to service widely dispersed employees, including expatriates.
An interesting and less obvious issue is the accelerated shift to employee
benefits self-service. If you'll forgive a bit of visionary waxing here,
I'd like to pose the question to you as practitioners as to whether this
kind of networking has now elevated the information medium itself to the
status of a benefit. I.e., and I'm thinking as an entrepreneur here, to
get ahead of the curve, should we not be thinking of electronically
networked benefits information and information transactions as an employee
benefit?
So what kind of benefits resources are available online? There are two
basic categories. The first is web pages. If you are in need of federal
government data, it's out there and I must compliment the early and
lasting leadership of the federal government in this effort. If you're
curious as to what big firms are doing online, it's out there. If you
want a widely sampled range of government and private resources, I highly
recommend a page my wife maintains. [The address is given at the end of
this section.] If you want an academic maverick's approach to web page
compilation and infusion into a benefits course, it's out there. I
maintain the oldest and, without apologies, the lowest tech pages in this
category. Non-profit foundations and professional associations also tend
to present some very good access points.
And yes, brain death by browsing is possible. So I again recommend the
advice previously given about credibility, access, and reliability for
sake of your own sanity and efficiency of time allocated to this sometimes
addictive medium.
The second source I want to mention is one with which I'm most familiar,
discussion lists. To determine whether I'm on common ground here I'd like
to ask that you raise your hand if you are or have been a subscriber to an
Internet discussion list, chat room or web board that is relevant to
benefits topics. [Explanation if needed--imagine everyone in room
networked from remote locations.]
Benefits are discussed within a wide range of HR and other related online
forums. But I can't suppress my vanity and must assert that I founded and
manage the first and I think still the largest list devoted exclusively to
benefits issues and practice, Benefits-L, with about 500 members dispersed
throughout the U.S. and internationally.
While costly in terms of personal time to manage the list, my experience
with Benefits-L has been both intriguing and rewarding because my students
and I have access to the day-to-day issues and practical problems of
professionals like you. The discourse ranges from difficult policy
issues, such as domestic partner coverage, to practical matters, such as
benefits software applications. One of the more interesting recent
examples was Viagra coverage. Quite frankly, I was surprised when the
usual inquiries went down the slippery slope to a few testimonials, not
something I expected from the usually excessively subdued benefits
administrators.
In many respects highly disciplined and well managed discussion lists are
unsurpassed as a network for practitioners, although it is perhaps time to
stretch beyond the limited technical thinking in terms of listservers and
explore the bundling of list services that can be pushed through these
networks. Two other phenomena about lists that intrigue me are how they
might evolve economically (e.g., from a free public service to a
commercial venture) and the significance of the electronic pooling of so
much experience and intellectual talent. But our time runs short, and
this is the stuff of other speeches.
Accounting and Benefits Resources on the Internet
Benefits-L Resource Document
Concluding Remarks
I earlier relayed a description of the Internet as more about more. In
such an unbounded world the expanding horizon of our choices often
diminishes the clarity of what personal or organizational direction is
best. But I don't want to leave you with the impression that the
technoglitz of the Internet specifically, or information technologies in
general, is a universal catalyst for opportunities in the benefits
profession. I know you know better. However, perhaps I can only offer a
bit of advice and an example that fits my personal experience from which
some small insights may be taken.
I recently had the interesting experiences of combined media presentations
including satellite, cable TV, Internet, and networked telephone links.
The complexity of intellectually managing the conveyance of content across
these media convinced me that I am not very good at multitasking and that
technology should offer ways to clarify and simplify, rather than
complicate, the achievement of our objective or multiple objectives.
This presentation is a good example of what I mean by the power of the
Internet to simplify. All these comments are linked to a web page from my
homepage on my business card. This page in turn contains links to several
of the data and document resources I've utilized herein. But that's not
enough. I had to solve a couple of other problems to enjoy this visit.
First, since I didn't meet my benefits class last night, in good
conscience, and to let them know they get their money's worth, I gave them
a "remote" assignment--to read these comments. Graduate students must
write a paper on entrepreneurial opportunities presented by the
application of the Internet to benefits. This exercise introduces
possible test questions, including:
(1) Describe how the Internet can change the nature of international
benefits administration, and
(2) Describe three common problems and solutions when integrating Internet
into benefits plans.
With respect to my fuzzy boundaries and benefits analogy, this
multiplicity of purposes underscores more subtle possibilities of
interplay between academics, practitioners, and students through the
networked environment. Our roles are changing and new challenges and
opportunities abound. But we need different regimes of thought and action
to proceed effectively into this very different frontier. If the Internet
is more about more, to reap the Internet's bounty, the individual or
collective Intellect must be better and better. As an educator, I believe
that if we build this model around the core value that putting
intellectual development of the students first, the rest will fall in
place. As practitioners, I have no doubt that this organization must have
similar guiding principles in order to have maintained a viable council
for 40 years.
In that context, allow me the privilege of a bit of marketing. I'm always
looking for opportunities to place high quality students in the benefits
or employment relations profession and hope you will keep me in mind if I
can help with a talent match.
Finally, my mama always told me that I'd make a good lawyer because I
liked to argue. I note this meant she was not particularly taken with my
public speaking skills. But she also said that if I stood up straight,
looked them in the eye, and didn't cuss, I could probably get by. You've
been very generous with your time and attentiveness. I would be glad to
answer any questions. Thank you.
[Business cards available with web page address]