The COVID-19 pandemic has prompted many companies to make changes to their health benefits strategy. Whether these changes will outlast the coronavirus emergency will depend in large part on the ability of HR and benefits professionals to demonstrate business value — particularly to the CFO.
CFOs are playing a larger role in benefits strategy. A recent Integrated Benefits Institute study found that more than half of CFOs made all or most of their companies’ benefits decisions. Yet far from focusing narrowly on programs’ costs or ROI, these executives manage benefits as a portfolio of investments in a healthy, productive workforce. They participate in benefits decisions as strategic, collaborative partners who consider big picture value. Even in the context of cost containment strategies, findings from other studies similarly point to their partnership with stakeholders such as HR.
In other words when it comes to the value of benefits, for CFOs, money isn’t everything. Nearly half of the CFOs and senior financial executives surveyed did not agree that controlling health care costs was the most important consideration in their company’s health benefits decisions. Only one in six strongly agreed.
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In many cases, companies did not have financial information that could inform an economic case for benefits. Nearly half of CFOs said that their company did not track health care spending to determine whether their benefits strategy was meeting its goals and only 30% tracked financial ROI.
On the other hand, most welcomed more information about employees’ health and business performance. Four in five CFOs agreed or strongly agreed that linking employees’ health to operational metrics would help their company make better health investment decisions.
Yet among many benefits professionals, there is still a perception that CFOs won’t buy-in to a business case unless it shows reduced healthcare costs or a favorable ROI. The most convincing financial case would use a company’s own data for both individual employees and business units over time, and connect all the dots between workplace interventions, improved health, reduced health care spending on low value and high-cost services, fewer wage replacements for absent employees, and the productivity value of improved job performance.
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Many companies have some of the data they need to solve part of the value puzzle. But if benefits professionals believe that only the final dollars matter to CFOs, they may overlook opportunities to share more intermediate data that show a program’s success at achieving other important business priorities.
The key benefits question for many CFOs is not necessarily how will this control costs? but rather, how do our healthcare, sick day, disability leave, and well-being policies support employees’ abilities to contribute to the success of the business?
We can get an idea of this by how CFOs connect their employees’ health to different business outcomes. When it came to recognizing the most serious business consequences of employees’ health issues, CFOs often ranked non-financial outcomes such as increased demands on other employees and the chances of business errors as highly as they ranked revenue impacts — and higher than they ranked wage replacement and overtime expenses.
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CFOs also indicated that tracking any program data and metrics was better than nothing when it came to their confidence that benefits promote a healthy, high-performing workforce. However, because companies tend to measure multiple program outcomes, tracking healthcare spending made no meaningful difference in CFOs’ benefits confidence. Tracking financial ROI improved confidence in the business value of benefits. But by itself, ROI was not as impactful as data on employee’s health status and satisfaction with benefits and was only slightly more impactful than data linking health to business units’ key performance indicators.
These results show that a small number of metrics focused on employees’ physical health, mental well-being and health engagement, with an emphasis on both operational and financial performance, could form the foundation of a powerful, durable business case for investments in a healthy workforce.
The bottom line: if your CFO insists on seeing an ROI for your health benefits efforts and you have all the data components to make a compelling case, you’d be wise to emphasize financial savings. But you may stand a better chance of getting CFOs’ buy-in if your business case includes non-financial data showing your programs’ contributions to employee health and productivity as a business strategy.
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