At employers nationwide, the HR department’s job is aligned with what is best for employees, while the finance office and the CFO need to make sure an employer has enough funds to exist and to maximize the output of each employee.
While these goals might sound complimentary, they often are not. These different perspectives make it hard for HR, CFO and broker to communicate, said Hugh O’Toole, founder of Hartford, Conn.-based consultancy Viability Advisory Group, at a summit sponsored by AFS 401(K) Retirement Services in Washington, D.C., last week.
HR uses words, but the CFO almost always wants to see numbers, making it hard for the CFO to get onboard with HR’s great ideas, said O’Toole, who was formerly senior vice president of client and sales management at MassMutual.
“In a business world, if you don’t get the [CFO] onboard, you can’t help the employees,” he explained. “When talking participant outcomes, HR [gets] it, but finance” doesn’t.
Spending a summer speaking with 50 CFOs of large corporations, O’Toole repeatedly heard from them that an employee’s financial wellness is not their responsibility; rather their responsibility was to make sure the company stays in business.
That has caused employees to be stressed, as more and more benefits become voluntary. Based on each individual’s socioeconomic persona, benefits are very different. “As we got into the need for price to be as cheap as possible, we split benefits into three areas and an employee has three dollars to [purchase] but only has one dollar to spend,” O’Toole said.
Overcoming the challenge
One way to overcome these challenges is through technology, which is being used to disrupt other industries and making the benefits industry more in tune with consumer behavior, said Alex Assaley, managing principal at Bethesda, Md.-based AFS 401(k).
“These factors … require us to rethink and reshape how we approach employee benefits and retirement in particular,” he said. “The industry is overwhelmed with a number of new ideas, new solutions, new products and new services that can, from time-to-time, blend together like a marketplace or colorful bazaar that employees are expected to navigate.”
Employees are making decisions based on what they believe, not what necessarily is true, added Jason Crane, executive vice president and managing director of retirement plan sales at Transamerica Retirement Services Corp in Providence, R.I.
“They seek the information they want to underscore those beliefs,” he added.
That means to get their attention the key is contrast. “The key is to have a message that stands out from the crowd,” Crane said. “One has to take actions that look and feels different … from other organizations.”
Yet, O’Toole said it is about making a financial case specific to each unique employer. “Employers have been led ot believe that employee retirement risk has been fully mitigated with the shift from benefits funder to benefits facilitator,” he explained. “The risk has not gone away; it has just changed.”
By analyzing numbers, O’Toole said is one way HR and brokers can truly make their case to finance of what impact not funding programs will have down the road to an employer’s and employee’s bottom line.
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