The ongoing challenges of health care reform compliance only promise to grow with the key elements of the law, including the insurance mandate and the state insurance exchanges, coming online in just 24 months. One outcome of these challenges is a growing collaboration between HR executives and CFOs as they grapple with the decisions and changes health care reform requires, particularly how these decisions impact total rewards and talent management programs. However, the parameters of this collaboration are still a work in progress.
This is the key finding of a survey of 104 human resource executives and 201 finance executives conducted by Towers Watson and Forbes Insights. These executives are from U.S and global companies ranging in size from 1,000 to 25,000 employees in a broad range of industries.
While HR executives and CFOs see HR taking the lead in total reward strategy right now, CFOs expect to play a more prominent role there in the coming years. While 38% of finance executives believe strategy development will be much more of a shared role in the future, just 24% of HR executives see finance playing a larger role.
Perhaps the biggest surprise from the survey was the alignment between HR and finance on the question of whether to continue offering health care benefits once the state insurance exchanges are up and running in 2014. More specifically, two thirds of both HR and finance executives expect to maintain health care benefits for active employees even though these executives fully expect health care costs to continue to increase.
"Health care reform has created the opportunity for employers to exit sponsorship of health benefits," notes Randall Abbott, a senior consulting leader with Towers Watson in Boston. "You might expect that CFOs would see this choice with a very black-and-white monetary perspective and ignore the broader total rewards implications. However, finance executives are very aligned with the mindset that they would want to continue maintaining health care benefits."
There are other areas of agreement between CFOs and HR. In fact, HR is more focused on costs than finance in some cases. For example, more HR executives (82%) emphasized cost than did finance leaders (69%) when it comes to making decisions about health care reform. In addition, even as health care costs continue to increase neither HR executives nor CFOs expect health care costs to take over a significantly larger percentage of the total rewards budget.
This collaboration is good news for HR, finance and companies as a whole. HR and finance have always had complementary skill and knowledge sets. The trouble has been these two groups' reluctance or difficulty working well together. The advent of key elements of health care reform is a good test case for a stronger HR/finance partnership.
"Health care reform is a significant business issue. With so much change ahead, it highlights the need for both groups to start working more closely to leverage their respective expertise and knowledge," said Abbott. For example, companies with a strong HR/finance working relationship are likely to be better positioned to take advantage of the opportunities of health care reform in ways that balance cost control and talent management needs.
We will have more about this survey in our next post.