The post-pandemic shortage of workers has increased the importance of CFOs thinking about employee health benefit plans.
No longer can CFOs view health plans as just another expense they need to contain.
They have to view them as benefits to a company by increasing productivity and retaining talent, said Paul Fronstin, director of the health research and education program at the Employee Benefit Research Institute.
“A health plan is a form of financial well being for workers,” said the Washington, D.C., think tank specialist. “If you drop it, people may leave. If you reduce it, people may leave.”
Kate Brown, leader at the Mercer Center for Health Innovation, said all business objectives relate in some way to the people you employ, and the best way to ensure that your business is healthy is to ensure your people are healthy.
Viewing benefits as an investment in your business, as opposed to a cost center, will yield success in meeting broader business objectives, she said.
Employee health benefits are a strategic asset essential in meeting business objectives because of the motivation they inspire and the costs they avoid, said Lorna Borenstein, CEO and Founder of Grokker, a company that offers employee health engagement solutions for global enterprises such as Delta Air Lines, CVS Health, and GE.
“Offering health benefits that offer employees a sense of purpose, belonging, and balance is key for keeping them engaged and productive and meeting all of the business objectives that stem from that,” she said.
The costs of poor employee health, she added, can be considerable. Employee disengagement due to poor health costs employers $530 billion a year in the U.S., $280 billion of which is productivity losses ($198 billion in impaired performance and $82 billion in the opportunity cost of absence), she said.
As businesses struggle to find and retain workers post-pandemic, Borenstein said, good health plans can be an incentive just as good as wages. “Employee health benefits are possibly the number one most important thing in attracting and retaining talent,” she said.
Borenstein pointed to surveys that have found 61% of people would be willing to accept a lower salary if a company offered a great benefits package while 42% say they are considering leaving their current jobs because benefits are inadequate and 73% of professionals they surveyed are seeking better health and wellness offerings from their employers.
“A company culture based on caring for employees as whole people is the most important driver of loyalty, performance, and results,” she said. “The impact is exponential, linked to a 56% increase in performance and 75% reduction in sick days.”
The importance of strong health plans was emphasized by Jim Morgan, CFO of CallRail, a business communications and analytics platform.
“In today’s competitive job market, employees are looking at all aspects of their compensation, and we have to remain competitive across our health benefits to attract and retain top talent,” he said. “In today’s market, every aspect of the overall compensation package is key. Companies can’t afford weakness in any area or they’ll be at a disadvantage in attracting and retaining talent.”
Morgan said a company can do its best at controlling health care costs by offering health plans that best match what their employees are looking for such as a health savings account versus a traditional health plan for employees who only rarely have health expenses or those who want greater freedom over how and when their benefits may be used.
Another way to rein in costs is to have an annual audit to ensure the population is being managed in a transparent way and employees and their families are receiving the care they need commensurate with employer offerings said Katie Rooney, CFO of Alight Solutions, a cloud-based provider of integrated digital human capital and business solutions,
“Many employers underestimate the costs associated with employees making ineffective, uninformed healthcare decisions,” she said. “Assisting employees through the plan selection process can help shift costs and steering them to the right providers can help reduce spend within the plan.”
Saving money can also be accomplished by putting in place proactive programs, including competitive wellness competitions. Those can help your overall employee base stay healthy and drive down premiums and support employee retention, which is directly correlated to cost savings and higher productivity, said Chad Gold, CFO of Salesloft.
Mercer’s Brown said one thing to keep in mind about the cost of a health plan is that many components of a benefit strategy may measure “value on investment” (VOI) as opposed to ROI, as there are many components of value beyond hard dollar savings.