Grant Thornton, a large accounting company, conducts a survey of CFOs every quarter and their second-quarter survey of 2021 yielded some insights on how finance leaders are thinking about talent shortages and rising employee benefit costs.
CFOs and People Leaders See Rising Health Plan Costs as a Challenge
The key takeaway is that human capital tops CFOs 2021 concerns. As benefits consultants, our role is to help finance and people leaders understand how to turn their health plan into an investment and a tool to accelerate business growth by supporting the recruitment and retainment of key talent.
Critically, 56 percent of the CFOs surveyed chose attracting and retaining key talent as their most important human capital priority for the next 12 months. On top of this, 68 percent agreed that their organization may suffer a shortage of human capital to the point that short-term strategies may be at risk.
Anecdotally, we have heard from clients and recruiters that the talent market is very tight right now. This means that everything matters in keeping talented employees and recruiting new people to an organization. And when most businesses require new talent to grow, it’s no surprise that financial leaders recognize the risk to business growth if they were to experience a talent shortage.
Tension between Attracting and Retaining Talent and Controlling Benefits Expenses
Every company wants to do everything they can to attract and retain talent, especially in today’s competitive market. But they are constrained by rising compensation and benefits expenses.
67 percent of the respondents agreed that employee benefit costs are a major expense they need to control, with 72 percent of respondents agreeing that healthcare costs specifically needed to be controlled.
This desire for better cost containment from finance leaders stems from the year-over-year increases to small and large group health insurance rates that we have seen for years. Reporting from the Kaiser Family Foundation that found the average premium for family coverage has increased 22 percent over the last 5 years and 55 percent over the last ten years and the 2021 Milliman Medical Index which found a 4.1 percent increase in its medical cost index from 2021 to 2019.
And 67 percent of surveyed CFOs said employers need to do something to control all benefits.
The central dynamic expressed in the data is the push-pull between controlling the cost of total rewards and recruiting talent. Will a company look to save on costs or spend to bring on needed talent?
Investing in Health Plans and Benefits to Attract and Retain Talent
Employee health plans can either be an investment or a cost center, it’s all about perspective.
From our perspective as benefits consultants, we see some companies invest in their plans and employee healthcare to great results, and we see other companies fall into a downward spiral of cutting benefits and losing their recruiting edge to competitors.
As a cost center, most health plans incentivize employees to delay care and miss out on preventative care. Employees reactively receive care once they are sick, hence the term “sick care,” and this drives up costs and inhibits proactive preventative care.
As an investment, health plans provide employers data on claims and care so leadership can invest in preventative solutions that address key underlying health concerns for the employee population. By addressing sources of waste, unnecessary spending, care gaps, and medically equivalent substitutes, health plans can be a source of investment into an employee population and generate a positive ROI.
And as the CFOs and leaders expressed above, a company competing in today’s marketplace for talent must invest in a quality health plan to win.
Our role is to help leaders invest in their health plan and win.