joining forces: forging an hr/finance partnership to shape employee rewards for the future (towers...

Joining Forces

Forging an HR/Finance Partnership

to Shape Rewards for the Future

Finance and HR see eye-to-eye on critical issues related to rewards and health care reform. This is important not only because of the impact of health care reform decisions on cost and talent, but also because the experience of the last few years of corporate belt-tightening has shown companies the risks of making workforce investment decisions in a vacuum.

Joining Forces: Forging an HR/Finance Partnership to Shape Rewards for the Future 1

Table of Contents

Executive Summary 2

The Role of Rewards 6

Preparing for Health Care Reform 10

Driving Reward Decisions: Today and Tomorrow 13

Bottom Line 14

Joining Forces

Forging an HR/Finance Partnership

to Shape Rewards for the Future

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Against the backdrop of a tough economy,

tight labor budgets and continued escalation

of health care costs, concerns about the

impact of health care reform have the

potential to expose sharp diff erences in

views from the two organizational functions

closest to cost and talent issues. Yet a new

Towers Watson-Forbes Insights survey of

more than 300 fi nance and HR executives at

organizations across the U.S. reveals far more

agreement on cost and talent objectives than

many might expect.

Executive Summary

Health care reform presents unique challenges and opportunities for employers that sponsor health benefi t plans for their employees and retirees. In particular, the prospect of an individual coverage mandate, the opening of Insurance Exchanges and the availability of federal premium subsidies for low-income workers in 2014 require employers to decide whether to play (sponsor a health benefi t plan that meets specifi c minimum requirements) or pay (forgo plan sponsorship, pay a penalty and require employees to secure coverage for themselves through the Exchanges).

But the decision is more complex than simply play versus pay. There is a spectrum of approaches to help employers optimize

their own costs in 2014 and beyond, while at the same time directing employees to advantageous coverage options — either within the employer’s plan or in Health Insurance Exchanges.

Employers need to select the approach that aligns with their total rewards philosophy and strategy, and provides optimal value in terms of both cost and talent. Other factors to consider include the demographic composition of their workforce, the consequences of alternate approaches (e.g., federal penalties and/or subsidies) and the choices made by other employers in their industry.


This is welcome news for companies grappling with the complex set of decisions triggered by the new health care legislation (see sidebar below). Regardless of whether and to what extent they revise or even terminate their health care plans, their decisions will have a direct impact on their broader set of employee rewards. And changes to rewards will, in turn, have immediate and longer-term consequences for both cost and talent management.

Organizations that base their choices purely on cost could end up at a competitive disadvantage in the labor market, potentially impeding their growth goals, especially when the job market heats up again. But those moving aggressively to acquire and retain talent face other risks in the form of an uncompetitive cost structure. The right decisions need to refl ect an appropriate balance — between investment in the workforce and return on that investment in performance and productivity. Achieving that balance depends to a great extent on a mutually benefi cial HR-fi nance partnership.

The pressures brought about by health care reform heighten the stakes for close collaboration between the two functions. Assuming nothing

changes fundamentally in the current legislation, its implementation will reshape the roles and responsibilities of all the players in health care delivery, from providers, to employers, to consumers. This, in turn, is likely to bring about a systemic change in the employment relationship and, in many cases, the employer’s total investment in that relationship.

Organizations that plan ahead by anticipating business risks, modeling the broad range of potential responses to reform and evaluating the impact on their total rewards program — from both a cost and talent perspective — will be better positioned to make good decisions as aspects of the Patient Protection and Affordable Care Act (PPACA) begin to take effect. And that planning needs to occur with both fi nance and HR at the table.

Our survey results show there are numerous areas of confl uence to serve as the foundation for closer collaboration in the planning process. Some differences emerged as well, suggesting each function can gain better insight from working more closely with the other. What follows is a summary of these fi ndings in four broad areas.

Optimal play Play and redirect Selective play Pay and redeploy Pay and exit

Continue as a plan sponsor for all employees.

Restructure contributions to qualify low-paid employees for federal subsidies.

Limit eligibility to employer-sponsored plan, and direct ineligibles to Exchanges.

Discontinue plan sponsorship and provide some fi nancial top-up for employees.

Discontinue plan sponsorship with no fi nancial accommodation for employees.

A Spectrum of Responses to Reform

Spectrum of Opportunity PayPlay

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Role of rewards: Critical in managing talent

and a competitive asset

• The vast majority of both sets of respondents agree their reward programs are important to their organizations. Interestingly, fi nance ascribed greater importance to virtually all the rewards tested, with roughly two-thirds (62%) citing compensation (pay plus bonus) as most important, followed by training and development (58%). For HR, by contrast, the order was fl ipped, with training topping the list and just edging out compensation (51% versus 49%), perhaps in recognition of the need for a more diverse array of skills in the future.

• Overwhelmingly, both groups agree their reward program gives their organization a competitive edge in recruiting and retaining talent and, to a lesser extent, engaging employees.

• Their confi dence in their competitive position may stem from their belief they are investing at least as much as, and often more than, others in their industry on reward programs, presumably strengthening their position as an employer of choice. Between 30% and 40% of fi nance respondents believe they are outspending competitors on most reward programs, especially in compensation and retirement benefi ts. At the same time, their equally strong belief in the importance of these rewards suggests many see a positive value-to-cost ratio. HR respondents, by contrast, were more likely to view their reward spend as on par with competitors.

• Both groups also agreed on some common areas of underinvestment. These clustered around so-called career and environmental rewards, and included training, career management and, notably, fl exible work arrangements, where roughly a third of the HR respondents and a fi fth of the fi nance respondents indicated that their costs fell below competitive norms in these areas.

Factors driving reform decisions: Cost

predominates, with competitor actions

second

• Both groups cited cost as the most important factor in determining their organization’s response to health care reform, with competitor actions a somewhat distant, but still important, second. The competitive issue was far more important to HR respondents, given concerns about their ability to attract and retain talent if they fall out of step with major labor market competitors. In a sign that each group has already begun to infl uence the other, the HR respondents put more emphasis on cost than the fi nance respondents did (82% versus 69%), while conversely, fi nance emphasized workforce productivity to a greater extent than HR (29% versus 15%).

• The viability of the health care Exchanges didn’t rank strongly as a factor in decision making about reform, perhaps because there’s insuffi cient information available to focus attention on it now. It barely registered with fi nance, but ranked higher with the HR respondents, who may be skeptical that the Exchanges will provide a viable alternative to employer-sponsored plans.

The post-reform picture: For most, a

commitment to health care coverage in some

form — and the expectation of higher costs

• In one of the survey’s most surprising fi ndings, a majority of fi nance respondents (two-thirds) anticipated maintaining coverage for active employees in some form once the PPACA takes full effect — matching the responses of their HR colleagues. Finance respondents did rally to a greater extent than HR around other “play” options, including structuring contributions to move low-wage earners into the Exchanges and maintaining coverage until the excise tax is triggered. But only 15% of fi nance respondents and 13% of HR respondents expected their

“The right decisions need to refl ect an appropriate balance —

between investment in the workforce and return on that

investment in performance and productivity.”


Organizations that have begun to use reward optimization tools (see sidebar below) have found they can shift the mix from higher- to lower-cost rewards in some areas, with little or no impact on key employee outcomes like retention or productivity. More to the point, they can make adjustments to their mix and level of investment in ways that more directly support their business and talent strategies and improve employees’ view of perceived value.

Who owns rewards: Collaborating on setting

strategy and budgets

• Both the HR and fi nance respondents see changes ahead in their own roles in the reward arena from a strategic and budgetary perspective. Today, both acknowledge strategy belongs largely to HR. But in one of the more signifi cant differences to emerge from the survey, fi nance believes strategy will be much more of a shared role in the future, while HR believes it will continue to drive that element, with minimal fi nance involvement.

• In the area of budgeting, views between the two groups differed as well, although neither sees much change ahead. Finance respondents say they have the predominant role now and will in the near future. HR respondents, however, already see budget setting as more of a shared role now and expect that to continue as well.

organizations to eliminate coverage and pay required penalties, demonstrating that despite an apparent savings from exiting health plan sponsorship, fi nance executives understand the deeper implications on total rewards and employee relations.

• Both respondent groups anticipate an increase in health benefi t costs irrespective of the choices they make under reform. Those planning to pay versus play, however, see a somewhat rosier cost picture, with a quarter expecting some to signifi cant reductions in cost (compared to just 6% of those maintaining coverage themselves). Their expectation of higher costs may result from over a decade’s worth of steady cost increases and a lack of confi dence that reform will change that trend. Or it may refl ect skepticism that reform can actually address some fundamental cost drivers in the nation’s health care system.

• Perhaps the most surprising survey fi nding, given the nearly universal agreement that costs will rise, is that neither respondent group sees any change in the mix or cost allocation for their overall reward programs in the next few years. Both groups also expect an increase in the total budget now dedicated to rewards. Is that inevitable? While current patterns may lead respondents to think so, there are actually numerous ways to manage costs through changes to the reward mix and the way costs are allocated across that mix.

Total rewards optimization (TRO) allows a company to determine the rewards that have the biggest impact on employee attitudes and behaviors, and then create reward portfolios that deliver the highest return on investment to the organization. It helps an organization answer three critical questions:

• What is the right level of total investment in rewards? • What is the best way to allocate that investment across reward elements to maximize the employee behavior we want to drive (for example, retention and engagement)?

• How do these results vary across targeted employee segments (for instance, professional group, age, job level, tenure, location and performance level)?

Answers to these questions give decision makers insights to design a reward program that both minimizes organizational investment and delivers high perceived value to employees. Through the methodology, organizations can:

• Calculate the ROI of different reward strategies (cost versus the value generated by changes in employee behavior) in a rigorous and reliable way

• Decide which reward strategies produce the optimal combination of fi nancial cost to the organization and perceived value to employees

• Communicate about rewards to employees and other stakeholders in a way that creates understanding and supports needed behavior change

Inside Total Rewards Optimization

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0% 20% 40% 60% 80% 100%

HR

Improving workforce health and productivity

Finance

HR

Sustaining strong employee engagement

Finance

HR

Maintaining a positive public image/reputation

Finance

HR

Attracting key talent

Finance

HR

Retaining key talent

Finance

1313

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99

55

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99

99

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99

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1818

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7878

7575

7777

7878

7373

7373

6767

6767

6666

6464

Figure 1. Effectiveness of rewards in supporting talent objectives

Strongly agree/Agree Neither agree nor disagree Strongly disagree/Disagree

HR and fi nance respondents have virtually identical views about the effectiveness of their reward programs in attracting and retaining their fair share of talent relative to competitors (Figure 1). Their level of agreement drops slightly when it comes to the role of rewards in sustaining employee engagement and supporting workforce health and productivity, but even in these areas, affi rmation remains quite high.

Small but interesting differences emerged, however, around the relative importance of various elements in the reward mix. And those differences were also echoed in respondents’ views about the cost of various reward elements relative to their competitive set.

Finance respondents, not surprisingly, focused on compensation as the most critical element in the reward mix. But more unexpectedly, close to or slightly over half rated all the reward elements tested as extremely important — exceeding their HR colleagues by considerable margins in some areas (Figure 2). Only a relatively small percentage of both sets of respondents felt any rewards were unimportant, even those in areas like career management, training and fl exible work arrangements. This may be a sign of the extent to which companies have come to recognize the shifting needs of the modern, generationally diverse and geographically dispersed workforce that crosses borders, relies increasingly on technology and works in a 24/7 environment.

The Role of Rewards


0% 20% 40% 60% 80% 100%

Bar title 12

HR

Health care benefits

Finance

HR

Flexible work arrangements

Finance

HR

Retirement benefits

Finance

HR

Career management programs

Finance

HR

Training/Development

Finance

HR

Compensation (pay plus bonus)

Finance

44

66

1212

1010

1616

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22

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5050

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4949

4444

2020

2424

3434

4848

4646

2828

Figure 2. Importance of reward program elements

Absolutely critical/Very important

Somewhat important Not very important/Not at all important

Although views about the cost competitiveness of their organization’s reward programs were somewhat more varied, note that signifi cantly more than half of both groups believe their level of investment is on par with, or actually below, those of their labor market competitors (Figure 3). In fact, in looking at where respondents think they are below market, we can infer areas ripe for increased investment — most particularly in those self-same environmental rewards highlighted as important in the total mix. Fully 30% of HR respondents, for instance, feel they’re behind the competitive curve when it comes to investing in career management and fl exible work arrangements, and a mere 9% believe they are ahead of competitors in these increasingly important areas.

Of course, cost is also where we can see the largest discrepancy between the functions. Close to a third of fi nance respondents believe they’re already ahead of the market in areas like career management and fl exible work arrangements, and only roughly a fi fth think they’re behind competitors.

“Signifi cantly more than half

of both groups believe their

level of investment is on

par with, or actually below,

those of their labor market

competitors.”

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0% 20% 40% 60% 80% 100%

Bar title 12

Health care benefits

Finance

HR

Flexible work arrangements

Finance

HR

HR

Retirement benefits

Finance

HR

Career management programs

Finance

HR

Training/Development

Finance

HR

Compensation (pay plus bonus)

Finance

1313

1111

1616

2222

1919

3030

1313

1919

1010

1616

4848

6767

4747

5656

5252

6161

4848

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5757

5252

3939

2222

3737

2222

2929

99

3939

4343

3333

3232

2222

3030

4747

6161

3131

99

Figure 3. Relative cost of reward program elements

Far higher/Higher than competitors

About the sameas others

Far lower/Lowerthan others

At the same time, a reasonably large segment of the fi nance group sees evidence of potential overinvestment in all reward areas — more so than HR with the one exception of retirement. As the keepers of corporate budgets, this perspective isn’t surprising, and we don’t know whether their perception of their competitive position is accurate or not.

Even in today’s economic climate, some companies choose to reward above market. And more may feel that pressure as the economy recovers and the labor market tightens again, especially for the skills most critical to growth. That gives rise to another question: What will the reward mix look like in the next few years, especially once health care reform is fully implemented? What shifts are respondents anticipating?

Interestingly, some contradictions emerged in this area as well. On the one hand, none of the respondents in either function expect any signifi cant shift in their cost allocation now versus the next few years, indicating little change in the overall mix (Figure 4).

On the other hand, both groups, but particularly fi nance, anticipate some signifi cant shifts in their core reward philosophy over the next few years (Figure 5). Specifi cally, more than half of the fi nance respondents expect reward programs to provide more fl exibility in the future, presumably to refl ect changes required by health care reform, or shifts in business priorities, the composition of their workforce or the economic environment. By contrast, only slightly more than a third (37%) of the HR respondents anticipate more fl exibility in their reward programs, and a fi fth actually think fl exibility will decline.

“Both groups anticipate some

signifi cant shifts in their core

reward philosophy over the

next few years.”


58% Base pay

14% Bonus or incentive pay

13% Health care benefits

9% Retirement benefits

6% Other monetary rewards

58% Base pay

13% Bonus or incentive pay

14% Health care benefits

9% Retirement benefits

6% Other monetary rewards

Figure 4. Current and expected cost allocation for rewardsCurrent cost allocation (all respondents)

Expected cost allocation — 2014 and beyond (all respondents)

58%

9%

6%

14%

13%

58%

9%

6%

13%

14%

56% Significantly/ Moderately increase flexibility

26% No change

18% Significantly/ Moderately reduce flexibility

37% Significantly/ Moderately increase flexibility

42% No change

21% Significantly/ Moderately reduce flexibility

Figure 5. Expected change in reward philosophy over the next two to three yearsFinance

HR

56%

18%

26%

37%

21%

42%

Just as businesses can’t stand still, neither can their rewards model, especially in the face of dramatic and ongoing shifts in the global business environment and economy. An effective total rewards program must align with business strategy — what the business needs and what’s required from employees — and give shape and dimension to the broader employee value proposition that defi nes the “give and get” between employer and employee.

Through the total rewards framework, an organization can identify the right combination of rewards for all or parts of its workforce — from the foundational, like pay or retirement, to the performance-based, like incentives, to the environmental, like career management — and

The Changing Face of Total Rewards

optimize that combination to ensure it is allocating its spend in ways that drive the right behaviors, deliver high perceived value to employees and improve its return on investment.

Bus

ines

s R

esul

ts

Bus

ines

s Str

ateg

y Organizational Context

Human Capital Strategy

Brand Promise

Employee Performance

Financial Performance

Customer Engagement

Environmental RewardsCareer and

Employee Value Proposition

TotalRewards

Foun

datio

nal

Rew

ards

Performance-B

ased

Rewards

E C

tio

na

ewar

dserformRew

a

Optimize

Drive

Alig

n

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Finance HR

0% 20% 40% 60% 80% 100%

Viability of state Health Insurance Exchanges

Organization’s public image/Reputation

Organization’s reward philosophy

Existing collective-bargaining agreements

Impact on employee engagement

Ability to attract key talent

Ability to retain key talent

Complexity of administering health care benefits

Impact on workforce health and productivity

Actions of competition in our industry

Impact on costs

Figure 6. Critical factors in making decisions about health care reform

69

82

30

48

29

15

29

28

27

31

20

29

16

15

14

11

12

10

11

7

8

21

Preparing for Health Care Reform

Cost was by far the most important factor for both sets of respondents in making decisions for their organization about health care reform (Figure 6). In fact, the HR group put even more emphasis on cost than the fi nance group did, while fi nance was almost twice as likely as HR to cite workforce health and productivity as a factor.

For the HR respondents, taking note of competitor actions was also important — for obvious reasons. If their organization moves too far ahead of the pack, or falls too far behind, it could face signifi cant consequences in terms of recruiting and retention, not to mention cost.

Despite their focus on costs, the vast majority of both HR and fi nance respondents expect at this stage to maintain health care benefi ts for their active employees (Figure 7). Roughly a quarter of the fi nance respondents and more than a third (38%) of the HR respondents were unequivocal on this issue. At the other end of the spectrum — exiting coverage — were merely 15% of fi nance respondents and 13% of HR respondents. Between the extremes of “full play” or “full pay” were a range of play alternatives, from maintaining coverage while moving low-wage earners into the Exchanges, to providing coverage until triggering the excise tax or another infl ection point.

Note, too, that a signifi cant minority (18% of both groups) indicated they weren’t yet in a position to know how their organization might respond — no doubt a result of the considerable uncertainty continuing to surround the PPACA, especially in light of the U.S. Supreme Court’s decision to review the law’s constitutionality and questions about the viability of Insurance Exchanges.

Regardless of their organization’s decision regarding reform, the majority of the fi nance and HR respondents expect their health care costs to rise (Figure 8). The players were more likely than the payers to anticipate higher costs — by a 20-percentage-point margin. And a quarter of the payers actually projected a decrease in health care costs, compared to just 6% of the players. But in both scenarios, only roughly one in 10 respondents anticipated costs would stay the same.

“Cost was by far the most important factor in

making decisions for their organization about

health care reform.”


Finance HR

0% 10% 20% 30% 40%

Don’t know

Other action

Exit employer-sponsored health coverage, pay penalties and direct employees to Exchanges

“Pay” options

Adopt a defined contribution approach by providing monetized value to employees, pay penalties and direct employees to Exchanges

Provide employer-sponsored health coverage until an inflection point other than the excise tax

Provide employer-sponsored health coverage until the excise tax is triggered

Provide employer-sponsored health coverage, but structure contributions and communication to encourage low-wage earners to qualify for subsidies, and pay penalties for those subsidized

“Play” options

Provide employer-sponsored health coverage for the long term

Figure 7. Most likely responses to health care reform

26

38

20

8

15

10

6

11

9

11

6

2

0

2

18

18

Figure 8. Expected change in health care costs after implementing the PPACAOrganizations likely to “play”

Organizations likely to “pay”

83%

6%

11%

62%

26%

12%

83% Significantly Increase/ increase

11% No change

6% Significantly decrease/ Decrease

62% Significantly increase/ Increase

12% No change


It’s no surprise, therefore, that respondents see an equivalent rise in their reward investment on a per-employee basis (Figure 9). If costs for health care coverage, especially for the players, continue to rise, and respondents expect no change in their reward mix or allocation, it stands to reason both total and per-employee reward costs will increase. Yet in this set of fi ndings lies what may be the biggest opportunity for companies to hold the line on costs without sacrifi cing important talent objectives, chiefl y by considering more effi cient ways to remix rewards. Many companies are already pursuing this goal, taking a fresh look at their total rewards strategy and approach, and testing the effi ciency and effectiveness of different portfolios on cost and employee outcomes. What may ultimately distinguish those likely to be most successful in reframing rewards will be an active fi nance-HR partnership that can fi nd the right balance between cost and talent needs.

Figure 9. Expected change in per-employee investment after implementing the PPACAOrganizations likely to “play”

Organizations likely to “pay”

72%

8%

20%

63%

20%

17%


20% No change



17% No change


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0% 20% 40% 60% 80% 100%

2121

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Figure 10. Impact of implementing the PPACA

Significant/Slight positive impact

No impact Significant/Slightnegative impact

Sustaining strong employee engagement

Play

Pay

Pay

Attracting key talent

Play

Pay

Retaining key talent

Play

Pay

Maintaining a positive public image/Reputation

Play

Pay

Improving workforce health and productivity

Play

While uncertainty comes through in many areas relating to health care reform, respondents willing to predict their organization’s play-or-pay response also have a fairly clear view of how that response will affect various talent and workforce issues (Figure 10). One-third to one-half of those planning to pay rather than play anticipate negative consequences in a range of areas, with retention topping the list, followed by recruitment and engagement. By contrast, at least three-quarters or more of those intending to maintain coverage generally anticipate positive outcomes (or no change) in retention, recruiting, engagement, and workforce health and productivity.

“What may ultimately

distinguish those likely

to be most successful in

reframing rewards will

be an active fi nance-HR

partnership that can fi nd

the right balance between

cost and talent needs.”


Currently, both respondent groups report that HR plays the dominant role in setting reward program strategy. But their perception of dominance differs a bit (Figure 11). Just over half of the fi nance respondents acknowledge that HR has greater involvement in strategy, while a quarter see involvement as relatively equal, and a fi fth believe they are actually more involved. The HR respondents, by contrast, report very little fi nance involvement right now.

The disparity is even greater around budget setting. Finance sees itself as the dominant player here, with only about a fi fth acknowledging greater HR involvement. By contrast, just under half of the HR respondents indicate they are more involved in budgeting, while roughly a third see the role as shared, and just a fi fth cede greater involvement to fi nance.

Looking ahead, both groups think the balance will shift more toward fi nance to varying degrees. In terms of setting strategy, HR respondents continue to see themselves in the lead, although to a slightly lesser extent than today. The fi nance respondents, however, see a bigger change, with just under two-thirds indicating they would have an equal or greater role than HR in this area. For budget setting, the fi nance respondents see virtually no change ahead. More than half identify their function as primary now and expect that to hold. HR respondents see the current situation differently — with far more primary or shared involvement right now — and believe that will hold in the near future, albeit with more of an emphasis on joint involvement.

0% 20% 40% 60% 80% 100%

Bar title 12

Expected role

Expected role

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Figure 11. Changing roles of HR and finance

HR much/Slightly moreinvolved than finance

HR and finance equallyinvolved

Finance much/Slightly moreinvolved than HR

Developing Strategy

Finance

Current role

HR

Current role

Expected role

Expected role

Setting Budgets

Finance

Current role

HR

Current role

Driving Reward Decisions: Today and Tomorrow

“Organizations that can bring both functions to

the table in determining the right response to

reform will be far better positioned to maintain

both a competitive labor cost structure and be a

talent magnet as well.”

14 towerswatson.com

Despite a common presumption that fi nance and HR share little common ground due to fundamental differences in their respective (and sometimes confl icting) areas of focus, data from this survey indicate these functional leaders see eye-to-eye on the most critical issues related to rewards and health care reform. This is important not only because of the impact of health care reform decisions on cost and talent, but also because the experience of the past few years of corporate belt-tightening, particularly around rewards, have shown companies the risks of making workforce investment decisions in a vacuum.

Organizations that can bring both functions to the table in determining the right response to reform — and to reward investment more generally — will be far better positioned to maintain both a competitive labor cost structure and be a talent magnet as well. But that won’t occur without genuine and consistent collaboration between fi nance and HR, each of which has critical insights and perspectives to bring to the process.

Health care reform is a total business issue that infl uences benefi ts, the overall reward deal, workforce planning, administration and fi nances. HR executives will generally have a greater familiarity with the intricacies of health care reform and the potential impact of their various options on their employee value proposition, other reward programs, the complexity of benefi ts administration, and worker health and productivity. Finance executives will generally have a fi scal fl uency that can create a viable cost structure to balance fi nancial realities with talent pressures and needs — both in the short and long term.

With so much at stake, savvy organizations need to act now to responsibly assess the business implications, model different scenarios and consider the impact of each reform option on their entire reward program. This is also an important moment in time to revisit their total rewards philosophy and strategy, and understand what kinds of changes may be necessary to meet their business and growth goals, their shifting talent requirements, and the fi nancial pressures they continue to face. Organizations that are currently conducting this kind of comprehensive analysis — factoring in broader cost and talent implications — will no doubt have a leg up on their competitors as the economy improves and the implementation of health care reform becomes clearer.

At the end of the day, our survey fi ndings show that both HR and fi nance see themselves as playing a stronger role than the other in setting strategy and budget for their reward program going forward. That tension augurs well, for it is diffi cult to conceive that an organization can face the demands of reform and other business shifts — or take advantage of the opportunities — without the input of multiple perspectives, particularly those of HR and fi nance.

About the Survey

This survey was conducted in partnership with Forbes Insights and fi elded in September 2011. More than 200 fi nance and more than 100 HR executives at global (65%) and U.S. (35%) organizations shared their opinions about the impact of health care reform on reward costs and risks by 2014. Survey respondents represented a broad cross section of industries. Companies ranged in size from 1,000 employees to 25,000, with a mean of nearly 14,000.

Bottom Line

“Savvy organizations need to act now to responsibly assess the

business implications, model diff erent scenarios and consider the

impact of each reform option on their entire reward program.”

Copyright © 2011 Towers Watson. All rights reserved.TW-NA-2011-20999

towerswatson.com

About Towers WatsonTowers Watson is a leading global professional services company that helps organizations improve performance through effective people, risk and fi nancial management. With 14,000 associates around the world, we offer solutions in the areas of employee benefi ts, talent management, rewards, and risk and capital management.

About Forbes InsightsForbes Insights is the custom research practice of Forbes Media. Forbes Insights’ research covers a wide range of vital business issues, including: talent management; corporate social responsibility; fi nancial benchmarking; risk and regulation; and

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