The pace of business continues to quicken, which means CFOs are pulled in multiple directions every day. Finance executives have increasingly become involved in setting the vision for their organization. Today, if a business is standing still, it’s falling behind. That’s a lot of responsibility to go along with competing priorities.
- Maintain compliance in the face of rising complexity.Government regulations related to healthcare reform are more plentiful and complex than ever before and there has and will be a renewed commitment to enforcement. Employee benefits compliance is a topic that keeps many CFOs up at night. Consider this: since 2005, my company has never brought on a new employee benefits client that was fully compliant. Typically, the issues we find will draw the attention of regulators. (Hint: check your 5500 forms). CFOs need to ensure their organizations are prepared to respond to government regulations in order to avoid fines and penalties.
- Preparing to be compliant with the Affordable Care Act (ACA). As you are aware, the Affordable Care Act (ACA) employer mandate was pushed back 12 months. Employers with more than 100 full-time employees will have to comply with the ACA as of January 1, 2015. For those with fewer than 100 full-time employees, you now have an extra year to prepare. We have been advising our clients to work toward full compliance in 2014 instead of waiting. Think of the upcoming months as a “preseason,” an opportunity to comply fully with the law and experiment without any downside penalty for not quite getting it right. The incentive to comply is compelling, particularly since the ACA will cost large U.S. employers as much as $5,900 per employee. This could mean up to $200 million per employer over the course of a decade; a number that CFOs won’t overlook. But making adjustments to employee health insurance offerings as a result of the ACA can help reduce costs.i
- Invest in technology. Technology continues to change the way business gets done. Between cloud-based solutions, emerging work and collaboration platforms, and the burgeoning “bring your own device” movement, there are a lot of moving parts. CFOs need an understanding of emerging technology, but also where things are headed. CFOs must remain agile enough to change course as technology changes. And they need to lead a commitment to governance as a way to ensure that the organization utilizes the technology as efficiently as possible. SAP’s CFO, Werner Brandt, is looking at purchasing Software-as-a-Service firms of nearly any size because he knows that future cloud technologies will help its clients eliminate hefty network server costs over time. ii
- Fuel innovation. CFOs are positioned to be the drivers of innovation in their organizations. However, many are holding back. Accenture research shows that fewer than 20% of executives believe they derive competitive advantage from their innovation strategies, largely because they are too risk-adverse.iii This is a conundrum. CFOs need to risk more, but they generally don’t like it, and because they don’t risk enough they rarely see the upside. The result can be stagnation. CFOs obviously must make risk assessments when it comes to positioning their business to innovate. However, there should – and some would argue – be a willingness to encourage experimentation with the organization. One of the reasons why Google is the most innovative company today is because it pushes the limits of creative innovation. Google’s Calico, for instance, will focus – not on the web – but on creating solutions to aging and associated diseases; a far but innovative reach for an internet company. This forward-thinking is not being driven by CEOs alone. According to a Deloitte survey, 51% of CFOs said they’ve been tasked by their CEO to play a key role in evaluating, financing and driving innovation in their company. iv
- Attract talent without breaking the bank. In this era of free agency, attracting talent is critical for the success of any business. The winners are not always the employers who pay the highest salaries; they’re businesses that create the best work environment. As salaries have leveled off in many industries, health benefits have risen in importance for employees, and a comprehensive package is an important enticement for attracting and retaining a quality workforce. IBM and many others are attracting talent by fostering flexible workplaces – a tactic that results in a 20%+ improvement in productivity and cost savings. v
- Better utilizing group employee benefits as an organization. Many employers think of employee health insurance as a cost. However, it’s possible to switch that approach and turn benefits into an investment that pays dividends. According to a MetLife surveyii, 75% of employees place high value on benefits. They rank it higher than company culture, advancement opportunities and work-life programs. Smart employers are creating group employee benefits programs that work for their population. Doing so requires data collection and analysis, but it can enable a benefits program that works better for employees, while at the same time delivering savings to the organization. The CFO that contributes to these types of initiatives has an opportunity to transform the organization.
- Keeping the finance department running smoothly in uncertain times. One thing I can pretty much guarantee: Something crazy will happen in the next 12 months, whether it’s new government regulations, a change in market conditions, or something within your industry.
CFOs need to keep their head on a swivel. The job requires them to balance many competing priorities. They must have their finger on the pulse of what is happening today, but also remain focused on the horizon. No, it isn’t easy. However, those who succeed will be critical drivers of their organization’s success and are of the utmost importance to CEOs and the entire organization.
iAmerican Health Policy, ACA Cost Study
iiReuters, “SAP Finance Chief Says Could Look at Big Acquisitions Again”
iiiAccenture, “Why Low Risk” Innovation is Costly”
ivMetLife, “Study of Benefit Trends”
vSHRM, “CFOs Asked to be More Innovative”
©2015 Corporate Synergies Group, LLC. No part of this material may be republished or distributed without prior written consent.