In my last post, I described the nightmare that CEOs in America face when dealing with employee health costs, which have become the third-largest expense in business. I also promised to outline the simple steps that CEOs can take to rein in these spiraling health costs.
My first suggestion is to employ a tried and true management technique that every CEO learned in business school — one that gets economic incentives working for you rather than against you. I’m referring to the old adage: If you want to achieve a business objective — be it launching a new product or reducing employee health costs — you need to incentivize your managers to help you succeed.
Yet, I doubt there’s a CEO in America who offers bonuses or other incentive pay to the HR and benefits managers who can most effectively reduce these crippling employee health costs.
Why not? Isn’t that just basic Management 101?
Ironically, incentivizing your HR and benefits managers doesn’t cost you any money, it doesn’t require an outside consultant, and it can happen in a matter of minutes regardless of the size of your company. Just tell your HR and benefits managers that if they manage to reduce employee claims costs or the cost of your company health plan (but not its benefits), you’ll give them a financial reward.
Giving a piece of any savings in health costs to the people who can make it happen is just common sense — no different in essence from paying a higher commission to your best salespeople.