Looking back on 2012, CFOs faced a range of HR-related challenges—everything from new regulations related to health care reform to 401(k) fee disclosures to getting their companies and their employees through the aftermath of a major natural disaster. In addition, a U.S. Supreme Court decision and the presidential election lifted companies out of their holding patterns when it comes to preparing for health care reform. In fact, 2013 will be a watershed year for compliance as companies prepare for the rollout of the health insurance exchanges and the coverage mandate on January 1, 2014.
Looking at 2013 shows that there are still plenty of other new challenges ahead, while plenty of existing challenges remain. A Grant Thornton survey of 1,582 CFOs and comptrollers offers some insight into what companies are likely to be doing on the HR front over the next 12 months.
For the most part, CFOs see headcount holding steady (49%) or increasing (34%), while 17% expect headcount to decline. It also appears that salary increase trends are returning to the positive side of the ledger with 59% of respondents expecting salaries to increase in 2013, while 39% expect them to remain unchanged and 2% see salaries in their companies declining. Bonus payouts are a little more uncertain, with 55% expecting these payments to remain unchanged, 20% expecting bonuses to increase and 21% expecting bonuses to decline in value.
On the benefits side, companies are also holding the line on non-health care benefit costs, with the vast majority expecting no change in the costs of retirement plan contributions and stock options. There is good news and bad news when it comes to health benefit costs. Although more than half of CFOs (53%) expect health benefits to increase in 2013, that number represents an 18-point decline from six months earlier.
Interestingly, even though health care reform has long been expected to increase health care costs, 35% of respondents expect health benefit costs to remain steady and 11% expect these costs to decline. It is unclear whether these CFOs expect to hold the line on health benefit costs through their companies’ own efforts to rein in these costs or simply by increasing cost sharing with employees.
In the coming year, we will be covering a range of issues. Chances are good that any fiscal cliff resolution will have some implications for HR and employee benefits. Moreover, keeping in mind that human capital is both a company’s most critical and its most expensive asset, we will be doing a series of posts on the growing use of market-based compensation, what is necessary to get it right and how companies can forge a closer link between pay and performance.
At the same time, we will focus on other issues as they continue to evolve, including pension risk transfer, 401(k) plan management, employee wellness and health benefits cost control, health care reform compliance, and talent management, attraction and retention.
We will be here writing about these issues and we hope you join us. Happy New Year!