Managing the most important aspects of any business – its finances and its people – is frequently entrusted to two distinct individuals, each with their unique priorities, motivations, and personalities. The roles of CFO (Chief Financial Officer) and CHRO (Chief Human Resources Officer) play pivotal roles in the success of mid- and large-sized enterprises. However, harmonizing these roles to foster strategic collaboration and establish shared objectives that align with the company's overarching goals can often be a formidable challenge.
In today's dynamic business landscape, the concept of working in silos is becoming increasingly obsolete. While certain aspects of business may thrive in isolation, employee benefits management is undoubtedly not one of them. Companies invest a significant portion of their total employee compensation into benefit programs, underlining the importance of managing them as an integral part of the overall business strategy. Rather than viewing benefits as mere expenses, it's essential to analyze their performance, much like any other company initiative, to assess their appropriateness and gauge the return on investment.
Here are 6 key activities that CFOs and CHROs should do collaboratively to optimize their employee benefit programs:
1. Advanced Strategic Planning
To ensure the effectiveness of your benefit programs, strategic planning should begin 9 to 12 months in advance of the group insurance renewal date. This phase should involve thoughtful discussions on questions such as:
2. Collaborate to Align HR and Finance Metrics with Company Objectives
While cost containment is a shared concern, it's crucial to explore the connection between benefit expenditures and retention metrics. Is a division with high healthcare costs experiencing decreased productivity? Begin gathering baseline data for future measurement, aiming to align HR and finance metrics with broader company objectives.
3. Evaluate Outsourced Partnerships
Assess the suitability of your benefit advisors and insurance carriers for your organization. Are they meeting or exceeding your service expectations? Collaborate with the right partners during advanced strategic planning to set realistic goals and expectations. Create a measurement framework that enables annual evaluations or a frequency that aligns with your organizational needs.
4. Utilize Technology to Drive Efficiencies
Explore HR technologies that can streamline routine administrative tasks, allowing more time for strategic discussions and planning. These technologies can also offer valuable metrics on company personnel and activities, enabling CFOs and HR leaders to identify trends and areas for improvement.
5. Measure Everything
As the saying goes, "You can't manage what you can't measure." While you may not be able to measure every aspect of employee benefits, look beyond healthcare cost increases. Consider evaluating turnover rates, days off, disability claims, and employee feedback through surveys, among other relevant factors.
6. Educate and Value
When making collaborative decisions and addressing complex questions, take the time to understand each executive's perspective, objectives, knowledge, and expertise. Value diverse viewpoints and foster an environment of mutual respect and learning.
The effective management of employee benefit programs requires a united front where CFOs and CHROs work hand in hand. By adopting a strategic, data-driven approach and embracing collaboration, organizations can not only contain costs but also enhance the overall wellbeing and satisfaction of their workforce, ultimately contributing to long-term success and growth.
CFOs View Employee Benefits as a Strategic Business Investment
Editor's note: This post was originally published in July 2015. It has been updated and republished for accuracy and comprehension.
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