Rising health care costs

The cost of health insurance continues to rise, and, in many cases, companies are addressing these increases by passing off more of the costs to their employees. Almost 65 percent of the survey respondents indicated that they are responding to rising health care costs by increasing the co-payments required of employees. Increasing deductibles and employee contributions to premiums are also popular methods of addressing this issue.

But businesses are also looking at more creative ways to manage health care costs. Nearly half of the survey respondents indicated that they had implemented health savings accounts or reimbursement plans for employees, and 40 percent indicated that they had added a wellness or disease prevention program to their benefits packages. But 60 percent of CFO respondents worry that they can’t keep shifting rising costs to employees without harming workforce morale.

The challenge of recruiting

It’s not simply the cost of health care benefits and its effect on company profits and employee morale that have CFOs concerned. While 80 percent of respondents said that they were “extremely” or “very” concerned about the effect of these costs on profits, 43 percent were similarly worried that efforts to contain those costs will have negative ramifications on employee recruiting and retention, particularly in company finance departments.

Almost half of all survey respondents indicated that was difficult to find qualified, full-time finance staff in 2005. Reasons for this include an expanding job market; years of finance departments having to do more with less, creating a less pleasant workplace than in years past; and Sarbanes-Oxley compliance work that has put accountants in high demand.

In response to this, pay and benefits packages are being increased, in order to attract qualified employees. Companies are also splitting up job responsibilities and easing workloads for employees by bringing in temporary finance staff.

An aging workforce

By 2010, 25 million employees in the United States will reach retirement age — a potentially costly loss of knowledge and skills across many industries. It’s an issue that is gaining more attention among CFOs. Although only 14 percent of respondents classified themselves as “very” worried about the issue, 63 percent of respondents overall are at least a little bit worried.

To address this, many CFOs are investing in additional training for younger employees and 37 percent said they plan to create formal mentoring programs so that older workers can pass on their knowledge to younger ones.

HR’s ability to manage human capital

Overall, more than 90 percent of the surveyed executives believe that human capital management is one of the most important factors in the success of their company, but only 13 percent believe that their company’s human resources department ranked as “very effective” when it comes to managing these important human resources. More than half the CFOs surveyed believed that greater line-of-business involvement in human capital issues was going to be needed to improve human capital management. A little more than 40 percent felt that reengineering the human resource function would be necessary.

And although 42 percent said the increased use of technology was necessary to improve human capital management, only 36 percent of the CFO respondents indicated that they planned to invest more in HR technology in the coming year.