CFOs View Employee Benefits as a Strategic Business Investment

Survey results from the IBI's 2015 CFO survey suggest many CFOs view investments in employee benefits and health programs are no longer just a cost of doing business, but rather a strategic business investment.

DOWNLOAD THE INFOGRAPHIC HERE

While 87% of 345 CFOs surveyed said cost control is one of their top five goals for health benefits, less than half (44%) stated cost control is their most important goal.  So other than cost, what matters?

For many CFOs, attracting, retaining, and motivating performance trumps lowering costs.  Results show that businesses that put more emphasis on competing for top talent and improvement are less likely to:

• increase high deductible plans
• increase out-of-pocket costs
• increase employee premiums
  
  

There is also a focus on improving individual health through helping enrollees be better health care consumers and better manage their health with wellness programs, linking premiums to certain lifestyle factors, and offering financial incentives for wellness programs.

You can't manage what you can't measure

Of CFOs surveyed, 53% say they would be able to make better decisions about benefits if health-related improvements in job performance were linked to business metrics.  However, only 6% of CFOs are measuring a return on these investments in their health benefits and only 23% measure any outcome at all.  In addition to health claims data you likely have access to today through benefit advisors and carrier/TPA partners, your firm could begin measuring other performance data and metrics that is available to tie into your health benefits investment evaluation:
​

• How many employees are participating in our wellness events? Increase from last year?
• What is the employee satisfaction level of our health benefits program?
• What are our retention metrics the last 12 months compared to the prior period? (benefits-related feedback on exit interviews?)
• How many sick days are being used PEPY compared to prior periods?
• What is the frequency of lost days of productivity due to disability or worker's compensation claims?
  
  

From here, your company can begin developing a population health management strategy that aligns with overall business objectives.

Transforming benefits into a strategic business investment
​
Rather than considering employee benefit programs as a necessary business expense, your business can reposition these investments into a revenue generator.  Connect with your senior leaders and assess what role health benefits currently play in your company and if they are assisting in achieving business objectives.  Ask your team, "what aspects of our benefits program are we measuring in order to determine if/how they are impacting our business?"  Work collaboratively to remove the silos that are often singularly evaluated so that your business can quantify and qualify investment returns of your employee benefits program.

With companies spending almost a third of total employee compensation towards employee benefit programs, they should be managed in line with an overall business strategy.  Analyzing and measuring your benefits program performance is critical in determining the appropriateness of the expense and begin to gauge a return on investment.

Author:
G. Scot Grooms
President & CEO

HOW WE WORK TOGETHER

Related Reading:
​Six Key Activities CFOs and CHROs Should Perform Together to Optimize Employee Benefit Programs