Employee Benefits Chief Financial Officer Business Success

Why Employee Benefits Are a CFO's Best Friend

Is a good employee benefits strategy the key to a successful business?

According to your CFO, the answer is a resounding yes.

The average CFO maintains an extensive list of internal and external factors that affect the performance of their organization. But when asked what tops that list, a common theme emerges.

According to the latest CFO survey from Duke University's Fuqua School of Business and CFO magazine,1 America's financial executives rank their most pressing concerns as:

  1. Government policies
  2. Economic uncertainty
  3. Attracting & retaining qualified employees
  4. Cost of benefits
  5. Regulatory requirements
  6. Data security
  7. Weak demand for product/services
  8. Employee productivity
  9. Corporate tax code
  10. Rising wages and salaries

Government policies, economic uncertainty, regulatory requirements and the corporate tax code are all factors beyond the average CFO’s direct control. This leaves six issues that CFOs can impact within their companies.

And if you look at those six, four of them are - directly or indirectly - tied to employee benefits (hint: I'm not talking about data security or weak demand for product/services).

So more than half of the controllable issues that CFOs most care about (i.e., the things that can have the most impact on a company's success) depend largely on a well-run benefits program.

Here's why.

Attracting & Retaining Qualified Employees

Quality employees create more value for companies, and turnover can wreak havoc on the bottom line. So, naturally, being able to bring in talent and keep it is paramount to maintaining a healthy business.

In recent years we've seen the job market tighten up, requiring companies to present themselves as an "employer of choice" to attract and retain top talent. 

And research shows that benefits play a key role in becoming such an employer. According to a report from Aflac2:

  • 72% of employees say a benefits package offering is extremely or very important to their job satisfaction
  • 64% say a benefits package is extremely or very important to their employer loyalty
  • 58% say they're at least somewhat likely to take a job with slightly lower pay but a more robust benefits package
  • 41% say improving the benefits package is one thing their employer could do to keep them in their jobs

There you have it. The better a company's benefits package, the more likely employees are to gravitate to and stick with that company.

So CFOs must look to you, their benefit professionals, to help develop well-rounded benefit programs that address the varied needs (and demands) of a diverse workforce. Increasingly, as health and wealth intersect, employees are looking for more personalized benefit options that ultimately serve to protect their financial wellness.

But it's more than just the products offered that makes a company's benefits program so vital to talent attraction and retention - it's also how well those products are communicated to and understood by employees.

A company may have a world-class benefits package but not see any results from it because employees are simply unaware of how good it is. Some more stats from Aflac2:

  • 53% of employees don't fully understand their benefits
  • 72% say reading about benefits is long, complicated or stressful
  • 80% agree that a well-communicated benefits package would make them less likely to leave their jobs

That's why CFOs need you to think more like a marketer to engage employees in new and innovative ways, using a multimedia communication strategy to reach every employee with a message that resonates on a personal level.

For more on how benefits can be a talent magnet, check out this free on-demand webcast.

Cost of Employee Benefits

No surprise here. Benefits, particularly health care benefits, are expensive, accounting for a third of your company's total compensation costs. And while we've seen some deceleration recently, health care costs continue to rise substantially every year.

What is surprising, though, is that the majority of CFOs feel powerless when it comes to managing health care costs.For many financial executives, paying out boatloads of money in medical claims is simply the cost of doing business.

It's up to you to convince them otherwise - by developing a benefits strategy focused on plan efficiency.

Much of the overspending that occurs in employer-sponsored health care can be attributed to over-utilization, which is a symptom of poor employee/plan fit.

Employees who have more health care coverage than they need obviously are wasting their employer's premium dollars. Plus, there is the possibility that simply having the coverage may encourage these employees to overuse it. For instance, an employee might wake up with a runny nose and think, Well I might as well go to the doctor and get a bunch of tests done. Call it the "all-you-can-eat-buffet effect." The employee may not feel the financial impact, but your CFO certainly will.

Under-insurance can wreak havoc on claims costs, as well. While less coverage can mean lower costs for employers in the short term, the long-term effects are potentially catastrophic. Under-insured employees may forgo necessary treatment because they can't afford the expense, increasing the likelihood of more serious (i.e., expensive) care down the road.

Your CFO is relying on you to 1) identify and implement benefit plans that are most likely to fit the health care needs of your employee population, and 2) help employees better understand their health care needs and guide them to coverage that makes the most financial sense for them.

Learn more about how you can build a benefits program tailored to your workforce in this on-demand webcast.

Employee Productivity

Productivity at work, or lack thereof, is often a result of the work environment: the layout of the work space, the equipment, processes, communication methods, etc. And companies work hard to get these things right.

But before employees can take advantage of an optimized work environment, they need to feel secure in their personal lives. That's where benefits come in.

You offer benefits to employees to give them financial security and peace of mind, so they can put forth their best work - unencumbered by the fear of a sickness or other emergency completely derailing their lives.

It's well documented that happy and healthy employees are productive employees.4 And employee benefits, at their core, are all about protecting health and happiness. Ergo, employee benefits are all about productivity. The better the benefits, the more productive the company.

Your CFO is looking to you to ensure that employees have the benefits they need to stay happy and healthy. 

That starts with rightsizing health coverage. In the previous section we discussed the claims impact of under-insured employees putting off care. But this behavior can also result in lost work days (absenteeism), or you may have employees coming to work in poor condition - a situation known as "presenteeism", which can actually cost a business 10 times more than absenteeism.5  Inadequate health coverage can also create serious financial stress for employees, which is sure to negatively impact job performance.

The issue of financial stress, in particular, is major opportunity for your benefit program to create value for your company. Student loan consolidation and repayment, legal insurance, identity theft protection and other voluntary benefits can be great ways to give employees the financial breathing room they need to flourish at your company.

To learn more about the tools you can provide to help employees be more productive, click here.

Rising Wages & Salaries

This one's pretty simple. CFOs are worried about having enough money to offer competitive wages. But a good benefits strategy can give CFOs more money to work with.

Think about it. If you're offering benefits that fit the makeup of your employee population (i.e., offering more cost-effective plans), and you're helping employees find the coverage that best fits their individual needs (i.e., driving more cost-effective decisions). your company is likely going to find itself with a bit more room in the budget to go towards compensation.

Additionally, if you're using a cloud-based benefits management technology platform that minimizes error-prone manual processes, amplifies employee communication efforts and requires minimal upkeep by internal resources, the resulting savings should give your bottom line a substantial boost.    

You can also pick up some extra cash by conducting a dependent eligibility audit on your health plan. 

To learn just how much an audit could save your company, click here.

Now what?

Ready to become your CFO's best friend?

Get your free roadmap to a benefits program that will attract and retain top talent, trim the health care budget, boost productivity and create opportunities to reinvest in your employees. Click here to download now!

1Duke CFO Global Business Outlook
2Aflac Workforces Report
3Castlight Health: CFOs feel powerless when it comes to managing healthcare costs, new poll finds
4Warwick University: New Study shows we work harder when we are happy
5EHS Today: Presenteeism Costs Businesses 10 Times More than Absenteeism