January 30, 2025

The Starting Point for Building a Balanced Benefits Strategy

Employee Benefits

2 min read

Both CFOs and CHROs have a needed perspective on an organization’s benefits strategy. The CFO is focused on the financial impacts of benefits while the CHRO is more attuned to implementing benefits aligned with the organization’s recruit and retain strategies.

The CFO understands the near-term budget and cash flow expectations, limitations, and its long-term value creation, forecasting, and risk tolerance. The CHRO considers its competitive position for employee benefits and evolving employee expectations as a key to the recruit and retain strategy. These two perspectives and expertise are essential for a “best fit” employee benefits strategy now and down the line.

Working together, your CFO and CHRO can evaluate the multi-year recruit and retain goals and programs, aligning them with your organization’s financial goals. It’s imperative they review these goals annually, as financial and workforce needs change. Throughout the year, they should monitor the financial performance of their employee benefit plans to eliminate surprise and help inform decision-making as their strategies evolve.

Identifying cost mitigation options while meeting employees’ needs

With the alignment of goals completed, your CHRO and CFO can turn their attention to cost mitigation opportunities. This starts with a thorough understanding of current health economics and market cost drivers. For instance, medical care costs follow inflation’s lead. Typically, medical inflation lags six to 12 months behind the Consumer Price Index.

Specialty pharmaceuticals is another ongoing cost driver as innovative, costly entrants to the market provide new viable treatments for rare and complex conditions. Gene therapies are multi-million dollar therapies that are expected to be one-time treatments to alter or replace absent or defective health-related genes.

While cost driver analysis is fundamental, benchmarking against factors such as industry or geography data may provide valuable insights into employee expectations. It can unearth new solutions and opportunities your organization may not be aware of. That said, it is important to keep in mind benchmarking is just one data point within the overall context of what is appropriate for your organization.

Armed with market cost drivers and competitive benchmarking awareness, together, your CHRO and CFO can evaluate areas for cost mitigation without creating, or at least minimizing, employee friction.

Are you struggling with developing a cost mitigation strategy for your employee benefits program? Our experts are ready to help. See the way forward by contacting us today.

With more than 10,000 clients managed in our National Employee Benefits Practice, Risk Strategies delivers the high-quality, cost-effective, and compliant benefits programs and solutions employers need and employees value. Visit risk-strategies.com for the latest observations in employee benefits.

The contents of this article are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.

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