Connecting Benefits to Your P&L: A CFO’s Perspective

For most CFOs, benefits often feel like a necessary cost rather than a strategic investment. They show up on the balance sheet as an expense—one that keeps growing. But what if benefits were viewed not just as a cost center but as a lever that directly influences your company’s financial performance?

With annual budgets being finalized, now is the perfect time to take a closer look at how benefits impact your bottom line—not just in premiums and claims but in productivity, retention, and long-term financial stability.

The Direct & Indirect Costs of Benefits

1. The Obvious: Direct Costs These are the numbers CFOs track closely—premiums, employer contributions, and administrative fees. But within those numbers lie key decisions:

• Are you paying for benefits employees don’t use?
• Is your current funding structure (fully insured vs. self-funded) the most efficient for your risk profile?
• Do your plan designs encourage cost-conscious decisions among employees?

A misalignment here means overspending on coverage that doesn’t serve employees well or, worse, missing opportunities to optimize your cost structure.

2. The Overlooked: Indirect Costs The real financial impact of benefits goes beyond the invoice from your carrier. The right benefits strategy affects:

• Turnover & Retention: Every time an employee leaves, replacement costs (recruiting, training, lost productivity) can be 50-200% of their salary. A well-structured benefits program that aligns with employee needs keeps key talent in place.
• Productivity & Absenteeism: Employees dealing with high out-of-pocket costs or poor healthcare access may delay necessary treatments, leading to more sick days and decreased efficiency at work.
• Worker Engagement: Companies that invest in benefits designed for their workforce see higher engagement, which translates to increased profitability. A disengaged workforce can cost a company up to 34% of an employee’s salary in lost productivity.

A Real-World Example: How One Company Cut Costs & Boosted Key Takeaways for CFOs

1. Benefits aren’t just a cost—they’re a financial strategy. Aligning benefits with company goals leads to stronger financial outcomes.
2. Indirect costs (retention, engagement, productivity) matter as much as direct costs. If you’re only looking at the insurance bill, you’re missing half the picture.
3. Funding models and plan design drive long-term savings. There’s often untapped financial efficiency in how benefits are structured.

If you're finalizing your budget and want to explore how benefits can positively impact your P&L, let’s have a conversation.

What’s one challenge you’ve faced when balancing benefits costs and employee satisfaction? Drop a comment or send me a message—I’d love to hear your perspective.