Two essential questions are: “What’s the best way to invest the resources we have?” and “What are the alternatives to that investment?”

B. Reducing Unnecessary Overtime Expenses

Overtime is one of those indicators that helps us see where the system is having trouble. In a healthy enterprise, paying overtime is a tool that helps us deal with surges. Fluctuations can be seasonal or sustained parts of overall growth. Like the red line on a tachometer, overtime expenses point out possible trouble spots.

The first line of defense is a comprehensive picture. I need a tool that allows me to evaluate the situation across jobs, industries, regions and departments for starters. But the overtime question is bigger than that. Once we understand the places where there is a problem, we can move into the real financial analysis. The question is: what’s causing the extra money to be spent?

Evaluation of overtime expense opens the door to a richer conversation about value and alternatives for creating it. It’s about figuring out relative importance and value of one investment over another. I’d like HR to guide us through that analysis with the data that they collect.

Two essential questions are: “What’s the best way to invest the resources we have?” and “What are the alternatives to that investment?” No overtime analysis is complete without an estimate of effective yield. While overtime levels may cause a variety of problems, you can’t tell what’s going on without an idea of what you get for the money. An ongoing dialog must have solid, useful information about the other parts of the operation.

C. Cost-Effective Benefits Analysis

The value we get for every Benefits dollar we spend is declining. That means that we have to extract the maximum value from every dollar we spend. As costs go up, we are less able to deliver a predictable value to our employees. In their experience, the value of Benefits is declining even as our cost goes up.

Like everyone else, we are asking our employees to bear more and more of the overall expense. The company’s interests are best served by making Benefits a fixed cost. We are actively hunting for Benefits that matter to our employees and that are worth more than they cost.

Great Benefits analysis means figuring out how to deliver the best value in the face of spiraling costs. There are very few places where costs have become so difficult to control. We also need a clear picture of the ways competitors are using Benefits as a part of total compensation. Great talent will always flow towards greater value.

The right metrics are the ratio of the cost of Benefits to total payroll (by job, department, region, and industry), and the us v. them market analysis The key evidence of stability is fixed (or predictable) expense and consistent market positioning. The holy grail in this particular conversation is the workforce’s (and the potential workforce’s) perception of the Benefits value received.

This is a blend of effective employee-market communications and actual value. The internal goal is best bang for the buck. The external goal is a positive market perception of Benefits as a part of total compensation.

The series

• The View From The CFOs Office 1: Overview
• The View From The CFO’s Office 2: Overtime and Benefits Analysis
• The View From The CFOs Office 3: Turnover Analysis
• The View From The CFO’s Office 4: Training and Recruiting
• The View From The CFO’s Office: Conclusions (BI)