When the benefits budget lands on the CFO's desk, the conversation usually starts with "what can we cut?" But at Daikin, a $8 billion HVAC manufacturer in Houston, HR and Finance have spent 16 years rewriting that script together. In this episode, host Dane Thorwaldson sits down with Andor Molnar, Vice President of Human Resources, and Billy Shipley, Chief Financial Officer at Daikin, to unpack what happens when the people who control the budget and the people who need it stop negotiating and start partnering. With over four decades in HR and two decades in finance respectively, Andor and Billy describe the plant shutdown that cemented their working relationship, why fixed benefit ceilings push leaders toward padding instead of honesty, and how an informal, open-door culture replaced 26-page memos and autocratic budget mandates.
When the benefits budget lands on the CFO's desk, the conversation usually starts with "what can we cut?" But at Daikin, a $8 billion HVAC manufacturer in Houston, HR and Finance have spent 16 years rewriting that script together.
In this episode, host Dane Thorwaldson sits down with Andor Molnar, Vice President of Human Resources, and Billy Shipley, Chief Financial Officer at Daikin, to unpack what happens when the people who control the budget and the people who need it stop negotiating and start partnering. With over four decades in HR and two decades in finance respectively, Andor and Billy describe the plant shutdown that cemented their working relationship, why fixed benefit ceilings push leaders toward padding instead of honesty, and how an informal, open-door culture replaced 26-page memos and autocratic budget mandates.
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“When it comes down to what we can have and what we can't have, it is a mutual discussion. And then, at the end, going in fully armed with what we can have. So it's never a surprise when it comes up to the higher corporate that we have to go for this and without that, I'd be shot. Because I'd be sitting here thinking, "I've got a $200 million budget," and, "Sorry, Billy, that's what I spent." We're fully armed knowing what we're doing and predicting of what we're spending in that.” – Andor Molnar
“After our lieutenants and me and Andor get aligned, we go into the office arm in arm, like we are there arm in arm. It's the right thing to do. But in order to do that, obviously, we negotiate and we push and pull and so on and so forth and say, "What's the best way to communicate this?" I haven't had one bad budget review on the HR side. I have others that are a challenge, but not on the HR benefits side. Those go very well because we're aligned.” – Billy Shipley
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Episode Timestamps:
*(01:29): Andor's 43-year career in HR and benefits
*(02:37): Billy's finance journey and why benefits are personal to him
*(04:43): The default CFO mindset on benefits budgets and where it breaks down
*(06:43): The challenge of operating under a fixed budget ceiling
*(15:00): Turning the relationship on its head: trust over adversarial negotiation
*(22:03): Investing in prevention: flu shots, physicals, GLP-1s, and Hello Heart
*(38:13): Advice for HR leaders on building trust with finance + the "blank page" exercise
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Links:
Connect with Andor Molnar on LinkedIn
Connect with Billy Shipley on LinkedIn
Connect with Dane Thorwaldson on LinkedIn
Learn more about Collective Health
Learn more about Caspian Studios
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The views expressed in this podcast are those of the speakers and do not necessarily reflect the views or positions of Collective Health, its affiliates, sponsors, employees, or customers. This podcast is not intended as legal, medical, or financial advice. If you have any questions or concerns in these areas, please consult with a qualified professional.
[00:00:00] Dane Thorwaldson: Healthcare costs are rising, benefits are confusing, and the system doesn't always work for the people who need it most, but it doesn't have to be that way. Smart employers and their consultants are flipping the script, cutting costs, making things simpler, and creating a health benefits experience their people love.
[00:00:23] Dane Thorwaldson: Welcome to the Benefits Playbook. I'm your host, Dane Thorwaldson, and in each episode, we uncover the bold strategies that are rewriting the rules of self-funded health benefits. Hello, and welcome back to the Benefits Playbook podcast. My name is Dane Thorwaldson, your host, and today we've got a little bit of a different setup.
[00:00:43] Dane Thorwaldson: So we have two guests from the same company who are on opposite, maybe I'd say opposite sides of the benefits budget conversation. This is a company that is near and dear to my heart, especially considering that I live about a five-minute bike ride away from Daikin Park in downtown Houston. So joining me today from Daikin are Andor Molnar, who's the vice president of human resources, and Billy Shipley, the chief financial officer.
[00:01:14] Dane Thorwaldson: So Andor, Billy, thank you so much for joining us today.
[00:01:18] Billy Shipley: Great. Thanks for having us. This is great.
[00:01:20] Andor Molnar: Thanks, Dane.
[00:01:22] Dane Thorwaldson: I'm excited. Some, some fellow Houstonians here in the house, so I'm, I'm excited. My first question, you all have big, big backgrounds in this industry. So Andor, I'll pick on you first. You have spent over twenty-five years in HR with a focus a lot of times on compensation, benefits.
[00:01:39] Dane Thorwaldson: You've had stops at Bell Canada and Dell, as well as Goodman Manufacturing. So, so what has kept you in this specific corner of HR and benefits for so long?
[00:01:52] Andor Molnar: Well, Dane, it may, it may seem a bit motherhood, but working with people and making sure our people are very well looked after from, you know, a compensation, a benefits side of view has kept me in this.
[00:02:04] Andor Molnar: And I ju-- I was just looking the other day, I actually passed forty-three years in HR- Wow, congratulations ... a few months ago. Okay. So it, it's, it truly is being here and being part of the organization and seeing our people grow and that.
[00:02:19] Dane Thorwaldson: I love it. Wow. So the twenty-five plus years must have been from an old biography, huh?
[00:02:26] Dane Thorwaldson: That's incredible. What a career, Andor. I love it. That's fantastic. Yeah, and I, I love your, your rationale behind it too. That's, this is a passion driven industry for sure so. Now, the other side of the table, Billy, your, your path runs through Emerson, Hydrill, the Navy, and Goodman as well before, before Daikin.
[00:02:46] Dane Thorwaldson: So what would you say it's like being a finance leader who has been or has stayed so close to this benefits conversation?
[00:02:55] Billy Shipley: Well, first of all, obviously it's a major spend item, so it's something we certainly have to pay attention to, and I've been at this place, at Goodman Daikin, for 22 years now, so this is also very personal to me.
[00:03:11] Billy Shipley: I grew up on the shop floor, so my first job was cooling plant controller. We had about 15, 1600 people, and I got to know so many of them, still good friends of mine today. So it's not just, it's not just money, but really how, how our decisions impact our employees is also near and dear to my heart.
[00:03:33] Dane Thorwaldson: Now, you mentioned that you've been with Goodman and then Daikin for 22 years, and, and Andor, I know that you were at Goodman before it became Daikin as well.
[00:03:42] Dane Thorwaldson: So how long have the two of you been partnering on benefits decisions together?
[00:03:48] Andor Molnar: Well, I don't have 22 years like Billy. I've got 16 years, so it's pretty close to 16 years. Okay? So-
[00:03:56] Billy Shipley: Yeah. I went back and looked at my resume. I moved-- I had manufacturing and sales, and I came to FP&A, the corporate planning function, right at 2010, so right at 15, 16 years, so right when Andor came over.
[00:04:11] Billy Shipley: We've, we've been working together a long time.
[00:04:14] Dane Thorwaldson: Well, that's plenty of time to build some, some chemistry. That's plenty of time to have made a lot of changes, I imagine had maybe even some friction that we can talk about as well. So 16 years is a pretty impressive tenure for you all to be working together, and I, I have a little bit of a slight advantage because Andor and I have known each other for a handful of years, and, and I've gotten to talk with him a little bit about how Daikin might do things a bit differently.
[00:04:40] Dane Thorwaldson: So before we jump into that, I wanted to ask you, Billy, so when you think about the approach that most companies take, especially sitting where you sit at from the finance side, when they're approaching a benefits budget, what would you say is kind of the, the default mindset that you see, and, and where might that break down?
[00:05:01] Billy Shipley: Yeah. So we're an $8 billion company now, so we've got, you know, giant expenditures, benefits being one of the, one of the larger ones. I think certainly it's very easy to go and focus on cost. So let's just focus on cost. I think the other thing, like you-- it's like setting a budget is a lot of hard work. You negotiate with sales and manufacturing and procurement and distribution, very complex organization.
[00:05:28] Billy Shipley: And I think where finance leaders could just... It's an easy lever, right? I can just go boom. I can raise the cost of my health insurance to my employees and hey, that's X million dollars and all I had to do was send one memo, right? Update one handbook, right? So I can tweak my 401k benefits and go whoop boop, there's X million dollars, right?
[00:05:52] Billy Shipley: I can do it. That was so easy. So I, I think and again, you know, the finance leader's job is very complex, but many, I'm sure stay, keep the strategy and the overall health of the company within sight. But it's an easy lever to pull and just a, the shortcut that maybe isn't best for the company in total.
[00:06:11] Dane Thorwaldson: I hear you.
[00:06:12] Dane Thorwaldson: And both of you sound like you're very people-focused as well. And, and Andor, I know that, that you sitting at Daikin, you've got your way of doing things that you and Billy have developed over the years, but you've sat in other seats as well, and, and so have I. And so I have been a benefits leader where I operate under a fixed budget, and then every year I have a fixed number that I have to stay under.
[00:06:39] Dane Thorwaldson: So that's, that's typically handed down and, and set some level from finance. So f- coming from the HR side, Andor, what, what does that feel like to operate kind of under the fixed ceiling model?
[00:06:52] Andor Molnar: Well, it's, it's quite tough, okay? Because I can't predict how many of our employees could y- have cancer treatments this year.
[00:07:03] Andor Molnar: I can't predict how many heart attacks are gonna happen or how many people are gonna acquire diabetes over the year and that. Now, the easy part in talking to Billy is where can I start? Where have we been? What do we wanna do for our people? The predictability in the past was, was quite easy. Before COVID, quite frankly, we, we lived in a 5, 10% world, and we could trade off a few things here and there, okay?
[00:07:32] Andor Molnar: But, you know, with, with the impact of COVID and the hospitals being caught in such a bad situation of non-pays and having to treat, they're gonna have to pass those costs on to somebody, and that become the insured side, right? And, you know, Billy and I have had the conversation, why us? Why do we have to pay for this?
[00:07:51] Andor Molnar: Why are the hospitals passing this on? Our carrier's Blue Cross Blue Shield, who is probably one of the toughest insurance negotiators in probably North America, okay? And You know, they do the best they can to keep the budget down for us because it's, it's a kind of a snowball effect, okay? They tell us it's this amount, I got to go to Billy and say, "Hey, Billy, you got 15 million for next year?"
[00:08:15] Andor Molnar: And, you know, Billy's already been tasked with six other budgets of cutting back, and how do we turn around and tell our employees we can't provide these benefits anymore, right? So it's really tough. There, there's ... The, the fixed benefit, if Billy comes to me and says, "Hey, your budget this year is eight million more than last year," and I'm going, "I can't do that," then it comes down to, what are you going to cut?
[00:08:40] Andor Molnar: And usually our conversation is nothing because we're already bare bones as it is by, like millions of other companies, okay? Everybody's in, in, in the same boat. So how do we manage this, okay? So we, we've turned around here and said, "Okay, let's put some wellness programs in. What can we do to get people aware of how to avoid certain cardiovascular issues or muscular skeleton issues, things that go on?"
[00:09:07] Andor Molnar: They are paying off a little bit, but at the end of the day, there's nothing predictable in our business when it comes to health benefits. Okay? Fixed budgets are a tough one for anybody in benefits.
[00:09:21] Dane Thorwaldson: Absolutely. And when ... If that's the starting point, I mean, you, you both have referenced it that there's going to be trade-offs, and if you just start with the conversation being what are we gonna cut, then we might be starting with, with the wrong question.
[00:09:38] Dane Thorwaldson: So I do think that there's a, there's a lot of wisdom to kind of having a needs-based approach versus here's what you get kind of approach. And Billy, I'm sure you just have 15 million laying around anyway though, right? So it's not, not that big of a deal. I kid, obviously. Nobody does. But, but maybe Billy, you can help me kind of walk through what it actually looks like when you're sitting down with Andor and, and how do you focus on, all right, what do you need?
[00:10:06] Dane Thorwaldson: What do our people need? Rather than saying, "Here's what you get as a fixed budget."
[00:10:12] Billy Shipley: I remember it was my third or fourth year here, very early. And when I started, we were family-owned, and then private equity, and then New York Stock Exchange private equity. So we were for sale all the time. I remember one Christmas, it was early December, and we had to hit a number on our cash flow inventory, so we shut down the last two weeks of December so that we could hit a number.
[00:10:39] Billy Shipley: I participated in the decision. I, you know, ran the numbers and said, "Look, CFO, boss, this is what we, this is what we get out of it. We can cut inventory 100 million." Great. Awesome. I-- it was a wake-up call because I negatively impacted a lot of people. And I mentioned, you know, growing up in manufacturing, it was a great job.
[00:11:01] Billy Shipley: We worked hard, we played hard. You know, I made a lot of enemies, but also, like, people that were close to me, right? And then their employees and so on and so forth. So I think, I think just, you know, from the beginning early on, that's just never, that's just never been... Since then, you know, we all learn our careers.
[00:11:19] Billy Shipley: But yeah, since then, I think it's always been great to stay close to HR. And I think Andor and I'll both agree, like our communi- our, our communication is, is the key. You know, we're open and honest and updating all the time. So yeah, like that's the key.
[00:11:38] Andor Molnar: Well, let, let me add something to that. So in, in that shutdown that Billy talks about, we didn't receive benefit money from s- from any premiums or...
[00:11:48] Andor Molnar: You know, obviously people were not working. And we kind of had a policy that if you didn't work, you would have to pay your benefits up over the next sets of payrolls. And we had a significant number of people coming back to us, and I'm talking hundreds, that said, "Wait a minute here. I didn't choose not to work last week.
[00:12:07] Andor Molnar: I would've liked to have gotten paid, you know, and you shut down the plant, and I couldn't pay my benefit premiums on that. Why are you hitting us?" So we had to make a decision and, you know, do we forego those two weeks of benefit payments? Our, our hourly people are paid on a, a weekly cycle. So we take their monthly benefit cost divided by 4.34 and come up with a premium payment each month.
[00:12:32] Andor Molnar: And, you know, when all of a sudden 4,000 people are not contributing, you're going, "Ooh, that's a big hit." And I, I can almost remember that discussion, Billy, you know. And it was, "Well, we got to do something." We had to forgo it. We did. We made a tough decision. But I think, I think where you're going with this, Dane, too, is that it solidified Billy and I's relationship that we can talk among ourselves.
[00:12:55] Andor Molnar: Our previous CFO had a very autocratic style of managing the budget. You will do what you're told, you will work with the way you're told. Okay. That's okay if it's predictable. Okay. But in this case, we had to do something drastic. We had to make a decision and, you know, work together on it. And honestly, most of my career outside of Goodman was to a CFO I didn't really know.
[00:13:21] Andor Molnar: Okay. It was like, I'd send up 26 pages of documents, why this is increasing, what's happening in the market, everybody else is with this, and I'd get a note back, "So I don't care what's happening in the market, you make 3% work or not." And I'd send a note back, "3%'s not gonna work with another 26 pages of why it's not gonna work."
[00:13:41] Andor Molnar: And maybe I'll get five now, okay? But Billy's about 10 offices away from me. We can make some time together and go, "What am I going to do? Help me out on this," okay? 'Cause this is not real. And then we've got Kristine's group, who is actually the people who pay the bills each week for us, and all of a sudden there's a four million weekly payment to our carriers because, you know, they do all the administrational paying and that, and it's like, "Oh my God, Andrew, I didn't plan for four million.
[00:14:10] Andor Molnar: You told me it was gonna be about three million." "Well, we had a certain claim this mon- week that cost us this." We now have kind of a group that we can just talk openly, and I value that, okay. This is not something that I take for granted, and I'm not kissing up to Billy 'cause I'm gonna take my budget next week.
[00:14:27] Andor Molnar: But it's something that if you don't build this, you're not-- you're always gonna be kind of at odds of, "Jeez, what is HR doing to me? What's the benefits group doing to me?" So I can sit here at comp time, basically predict that we're gonna use a 3% budget. We've got a billion dollar payroll. "Billy, I need $3 million, yes or no?"
[00:14:48] Andor Molnar: Then we go to our CEO with our numbers and say, "Here's what we got to sell. Do this," blah, blah, blah. It's done. Benefits is not that simple. That's the tough part. Okay.
[00:14:59] Dane Thorwaldson: Hmm. Well, so I mean, you turned it on its head, it, it sounds like. And, and Billy, you mentioned communication, Andor you mentioned this, this type of candor that you've been able to use when having those conversations with Billy, and that's, that's a huge shift.
[00:15:14] Dane Thorwaldson: I mean, when, when I've sat in that seat, it, it feels like almost an adversarial negotiation. It's, it's that question, Andor, that you said, "Well, too bad. You're getting 3%, so figure out how to, how to dance in, in that square." And then you have to either maybe even hold things back in order to make sure that you can take care of your people.
[00:15:35] Dane Thorwaldson: So you all really turn that on its head. And so that, that kind of open communication, open dialogue, you're approaching each other to say, "I need help here. How can we do this? We, we have a shared, a shared goal, a shared objective to take care of our people." So it's probably difficult to formalize that, but has this become more of a formal process at, at Daikin, or is this more just from your working relationship and mutual trust?
[00:16:05] Billy Shipley: Yeah, we certainly have budget timelines and turn the numbers in here and there. First and foremost, I'll say the informal part is really where the, you know, where everything happens. So Andor says he doesn't just come in and open my door, but he does, and that's fine, 'cause I do the same to him, by the way.
[00:16:22] Billy Shipley: But he's like, "Hey, we just got some numbers back and this is looking like this and that," and like, "Oh boy, what are we gonna do?" So also our, you know, our lieutenants work very well together. They're going through that. So there is a certainly a process to roll the numbers up. In my chair, I, I keep the large numbers in my head.
[00:16:41] Billy Shipley: I've got a plus or minus X million for this and that, and so on and so forth. So it's really good for me to know informally from Andor and his team. So that's, that's good. On the formal process side, what I'll say, and, and Andor knows this, and so does Kristy, our Kristy Pittman, our SVP of HR, we're aligned.
[00:17:01] Billy Shipley: Like, we are absolutely aligned on whatever is being turned in by HR. And then what I do, one of my roles as we're a Japanese company, so that approval process is very formal. So Andor does a, you know, he mentioned his 26-page PowerPoint. It's got to be translated as well . So we have a very thorough review, and I think after our lieutenants and me and Andor get aligned, we go into the office arm in arm.
[00:17:31] Billy Shipley: Like, we are there arm in arm. It's the right thing to do. But in order to do that, obviously we, you know, we negotiate, and we push and pull and so on and so forth, and say, "What's the best way to communicate this?" And then those I, I haven't had one, one bad budget review on the HR side. I have others that are a challenge, but not on the HR benefits side.
[00:17:50] Billy Shipley: Those go very well because we're aligned.
[00:17:53] Andor Molnar: Yeah, and I think, I think Lee made a really good point there, Dane, which I, I, I want to make sure you know I'm not sitting here in a vacuum. I've got a SVP I report to is, she's been in the benefit business for 30 some odd plus years, and the openness that we get to speak is the big part of this, okay?
[00:18:11] Andor Molnar: Because nobody wants to walk in with an unexpected $2 million hit that's gonna get a lot of airtime or, you know, perception on, "Oh my God, what are you guys doing?" Well, one of the things we're doing is we're helping someone who's sick and trying to make sure they get better, okay? You know, sometimes from a pure financial, you know, profit and loss spreadsheet, that doesn't always sit that well.
[00:18:35] Andor Molnar: So what are we gonna try to do to make sure that doesn't happen again? Or how are-- You know, what are we gonna bring in? And I g- I'll give, you know, a fair amount of credit to our brokers as well, 'cause they're tasked to going out there and finding us ways of helping avoid some of these costs. And then, and that's what a lot of them happen to be is cost avoidance.
[00:18:53] Andor Molnar: They're not always savings, right? But we teamed up with Hello Heart, who they've got about 60 of our people who are in the high risk level of cardiovascular. What do we do there? We monitor them. Are you eating properly? Is your blood pressure up? Are you seeing your cardiologist? You know, so we'll spend 2,000, 3,000 now before $90,000 for a full heart attack, you know, a stent replacement or even an open, you know, fully bypass surgery, right?
[00:19:21] Andor Molnar: So those are the things that I can walk into Billy's office and say, "Hey, we're gonna do this, okay? It's gonna cost me a few bucks here, but I'd rather spend it here now. But what I can't promise you is $10 million off next year's budget." We'll, we'll try to... And that's where, that's where I get the smirk.
[00:19:38] Andor Molnar: "Okay, so you're gonna spend a million, but you're not gonna guarantee me 10?" "No, but I've put the screws, by the way, to our other carriers." I mean, they come in with, I saw an 18% original budget this year. We've got them down to 11, okay? And I'm thanking goodness they're go- and they're going with 11 because we've been with them a long time.
[00:19:58] Andor Molnar: Now, Billy's point is, "11? Couldn't you get them to eight? Maybe five?" You know, like, "Hmm, okay." We'll go back and say, and I, I use Billy's crutch quite often. My CFO is not the least bit happy with this number. Somebody's got to out here. And maybe we'll find another point here or there, okay? But it, it all comes down to the trust factor.
[00:20:19] Andor Molnar: Billy knows that I am not padding or Fabricating or coming up with a number that people wanna see, and then, you know, we cut to our end of our fiscal year and somebody says, "Oh my God, you're $26 million over." I let knowing throughout the year that these things are happening. Kristine Carroll, who's part of Billy's team, she comes back, says, "Andor, what are we gonna do?"
[00:20:41] Andor Molnar: "Well, here's what we'll try to move around," and I leave it up to my friends in the finance world to find us money. But at least we know the snowball's getting bigger, okay?
[00:20:53] Dane Thorwaldson: Hmm. Well, yeah, nobody wins if you're either padding numbers or trying to obscure losses, for sure. That's, that's a losing game. You, you talked, Andor, about, you know, w- we might have some, some unexpected costs or some variability from month to month or even year to year, and you gave a, a real quick example that I wanna kinda hone in on where you say, "At the same time, I need a million dollars to invest, and here's why."
[00:21:23] Dane Thorwaldson: And so I, I know from personal experience that, that you are very strategic, and you and your team are thinking about three years ahead, five years ahead. And so even taking into account that variability from month to month, you are experimenting with, you are researching, you are trying different benefits options.
[00:21:44] Dane Thorwaldson: You mentioned Hello Heart specifically. You mentioned a wellness program. You mentioned musculoskeletal vendors. So I'm curious, how do you balance that, and, and do you, do you bring a proposal like that differently now to your peers and to the finance team now that you have this relationship? How do you balance that forward-thinking strategy with the variability that's happening right now?
[00:22:09] Dane Thorwaldson: And, and are-- do you have any examples?
[00:22:12] Andor Molnar: Yeah, so a great question because early next week, we just finished our action plans that we put together for the next five years to try to figure out where are we gonna get this, okay? So what have we done that's worked? What have we done that hasn't worked, okay?
[00:22:26] Andor Molnar: 'Cause there's a few things that I'm not overly thrilled about that cost a few bucks, and it didn't pan out, and they're not with us anymore, that, that group, okay? I'll give you a good example. We've got flu shots coming up, okay? In our, in our factory here, one of the biggest things our manufacturing vice presidents talk about is lo-loss of production 'cause of flu season, okay?
[00:22:49] Andor Molnar: We will incent people. We give them some points towards a, a program we have here where people can get gifts. You save your points up, and you can even get a trip, you know, to Disney World and what have you, okay? It's, it's run by a third-party company, but that's, that's an hour-long story. Anyway You get a flu shot with us, we now have an 80% chance that you're gonna be with us through the full flu season.
[00:23:12] Andor Molnar: We're not gonna lose productivity because you're off sick or somebody comes in who has the flu and infects the whole department, and all of a sudden one of our lines shuts down. Okay? We're a seven-day-a-week manufacturing organization here with, I think, around 6,000, 7,000 people in the plant each day. Okay?
[00:23:31] Andor Molnar: We lose 100 people for a day because of some type of virus or whatever, and we didn't predict that, it ca- it can affect our sales, basically everything. Okay? So we do the flu shots. It costs us some money up front. We have Memorial Hermann come in, they look after this, they do it out, and it's been working well.
[00:23:50] Andor Molnar: We incent our employees to go out and get a physical each year. All of my executives have to go through a very serious physical exam once a year. For my expats, the, the, the Japanese people who are our executives who were sent over by Daikin Japan, it's an absolute they must do it. And we send the results to Japan, and if there's anything that shows up, we then take further action on it.
[00:24:16] Andor Molnar: Okay? So we encourage our employees to get their physical. Find out today your prostate is a bit bigger than it should, and we can treat it. Don't do anything, and it's a worst case situation then. You know? So that's a, a, a big thing of our action plans is what are we trying to do to prevent? We can't predict, but we can try to prevent some of the issues that are coming up.
[00:24:37] Andor Molnar: I, I know the world is all over GLP-1s right now, and you know, it's a very expensive site. We've managed how we can use that in our diabetes world, and it's not a vanity GLP-1. And I, I hope I don't offend anybody by saying it that way, but, you know, the GLP-1s are really needed for people who have an illness already we need to predict.
[00:24:59] Andor Molnar: Now, the other side of the coin is people are saying, "Well, that's gonna help soften possible diabetes programs or heart issues and obesity, things that go on. So we're looking at that carefully. What's our cost? We're gonna go through this. You know, you, you even get into dental programs here. We discuss everything, and I really do have in front of me my, my sheet here.
[00:25:21] Andor Molnar: And then here, here's the toughest discussion we have to have each year, is how much of our increases are we gonna pass on to our employees? Right. Okay? We've had a couple of tough years, and our manufacturing people have not received as much overtime as they've had in the past. And a lot of people predict their benefit costs or their, their cost of buying benefits through their total, you know, cash each year.
[00:25:44] Andor Molnar: And, you know, how much of that-- Or pardon me, how much of the increase can we put towards them? So if we gotta move our premiums up $10, you know, per level, how much does that affect our employees? And how many are not going to buy a benefit package because they can't afford it anymore? So many different elements that come into this, and that's what we present each year.
[00:26:06] Andor Molnar: And then we say, "We've done the best we can," and, you know, we'll squeeze a million out of our, you know, 18,000 employees, but the company's gonna have to pick up the other 12 million or whatever the magic number happens to be. And I'm just hypothetically- Yeah ... throwing numbers here. But that, that's really how we do it. Billy?
[00:26:24] Billy Shipley: No, you're absolutely right. A few things to consider there. Again, cost is-- it does matter, right? It is certainly something to keep an eye on. But the, the key things are the impact to our employees, and Andor's mentioned, you know, the shop floor employees, and I'm, I'm sorry, I don't-- I hope I don't offend anybody either, but SVPs are gonna be fine.
[00:26:46] Billy Shipley: You're gonna be okay. The folks that are on the shop floor, they are, they are the backbone of the company, and if they come to work and they're happy and they feel appreciated and well compensated, and we take good care of them with these wellness programs and such, that's a good investment for us. So always keeping that in mind.
[00:27:04] Billy Shipley: And also, really their expectations, right? So that is something we do consider if, you know, there's, you know, health insurance costs are up 18% across the country. I, I think, you know, we certainly, you know, evaluate that and contemplate that and said, "Hey, if we can come in under that for them," you know, that's, that's a, a factor, too.
[00:27:26] Billy Shipley: So really employee expectations and the impact to the backbone of our company.
[00:27:32] Dane Thorwaldson: So you both are still starting from the same place, which is, you know, how do we take care of our people? But then it's-- we live in the real world, and there are budget numbers, and there are costs associated, and there are trade-offs that are required.
[00:27:47] Dane Thorwaldson: So I understand that there's, there's some difficult decisions that, that do need to be made. And Andor, you talked a little bit about the data, and if we make this investment here, then we might avoid these folks being off the floor with the flu. And, and so all of the interconnectedness of this data, I-is, is it you and your team that is bringing that to Billy and his team?
[00:28:12] Dane Thorwaldson: How are you trying to kind of drill down into that data and, and, and how do you turn that into a proposal for finance to evaluate?
[00:28:20] Andor Molnar: It's probably not that formal, Dane, to be honest. What we share is basically we had 23 brand new cancer cases last year, 2025. How did that impact us? Okay, why didn't we kind of know that was happening?
[00:28:35] Andor Molnar: And I'll be, you know, Billy says, "We had 23, you didn't know this was gonna happen?" I said, "Yeah, I kinda didn't." Okay. But here's what we're doing. Here's how we're going to... You know, what has reared its ugly head in this and, you know, where, where are we at? Now, the other side of that coin is, you know, we're trying to partner with some of the hospitals and some of the clinics out there.
[00:28:57] Andor Molnar: Some of these new, if I can have two seconds to moan here, these new NSAs in Texas are killing us, okay? These pop-up clinics that turn around and say, "Hey, come on over to us and, you know, we'll look after you. We won't charge you a penny," but we'll charge your company $1.5 million of extra costs we weren't predicting.
[00:29:18] Andor Molnar: These are the ugly things that come up that we're going, "Oh my goodness, what do we do? How do we do this?" So a lot of times that's a discussion with m- Billy, the finance team saying, "Okay, I can't combat this, so what can we do?" Okay. Mm. We, we get so much data. I mean, now we're in, you know, e- every graduate coming out of school has some type of degree in data science, right?
[00:29:42] Andor Molnar: And okay, here's a page where you can go to Copilot and say, "Summarize the worst things that happened this year in our budget." A- a- and knowing all that, the biggest side of what we have to do is the people, okay? 'Cause I could very easily turn around and say, "Hey, we'll cut these eight items out of here," and how does that hurt people?
[00:30:02] Andor Molnar: That's what I have to think about, okay? If all of a sudden, you know, somebody's child no longer gets a treatment because we've cut that out of our benefit plan, how does that make us look? And I, I... You know, I'll-- The biggest credit I'll give to our company is we really are a people company. We have a program called People-Centered Management here.
[00:30:22] Andor Molnar: The tough part of our parent company in Japan is they're in a social medicine economy, okay? They don't know what it means for a hospital to be profitable or, you know, a little nonprofit, but still having to charge everything under the sun. They don't get that, okay? So we have to explain that to them, that we got to look after our people, and this is what it costs to be able to do that.
[00:30:45] Andor Molnar: And they're very honest to that with us. And, you know, that's, that's a discussion Billy and I have, and Kristine and, and Christy together. I mean, between the four of us, we're spending probably $125 million a year of, you know- Nonprofit money to us, right? I mean, that hits our OP. So at the end of the year, Billy's got to tell, and that this is where I get off the hook, okay?
[00:31:09] Andor Molnar: Billy gets to tell our Japanese executive and says, "Hey, yeah, we're, we're just kind of 120 million in benefit costs this year." "Okay. Thank you, Billy." I know it doesn't go, "Thank you, Billy," but you know, I thank him for me not having to do that. Sure. But yeah, if we didn't have the relationship, though, honestly, between Billy, Christy, Kristine, and I, it would go south, okay?
[00:31:31] Andor Molnar: 'Cause I know earlier one of your questions about fixed costs, I could run a benefits program with fixed costs. It would be very detrimental to our people because the only way I get to do that is cut, cut, cut or, you know, say, well, then I would be padding, and, you know, there's nothing even sh-shareholders, you know, get hurt more on is if all of a sudden we're 20 million under budget, and I knew that was gonna be 20 million 'cause I pad it.
[00:31:57] Andor Molnar: You know, so I don't have to do that with Billy and the finance team, which makes my life easier and, and it's true, right?
[00:32:05] Billy Shipley: Yeah, Dane, I think your, your question about the data piece, it's, it's, it's both. It comes both ways. So it's not Andor's pulling a report and coming down and sharing, "Hey, we have a problem."
[00:32:15] Billy Shipley: Sometimes I'm like, "Hey, Andor, we have a problem. What's going on?" So again, our lieutenants work very well together, you know, really all the, all the way down through the organization and, and it is, it's trust and that, that's, that's the key piece of it.
[00:32:29] Dane Thorwaldson: So you, you, you go back to trust, and I think that that is kind of the linchpin.
[00:32:34] Dane Thorwaldson: You mentioned communication. You mentioned trust. So you've done a, a, a pretty great thing here at Daikin with your relationship together. But either sitting at other companies or in different roles, Billy, what, what do you think the, maybe a, a misconception that some finance leaders might have when HR is asking for something, is requesting something for benefits?
[00:32:59] Billy Shipley: Cost, of course, but also, you know, let's not be too accommodating. So it's like, God, these guys, you know, wanna, you know, make everything easy and put everything on the company, and we've got, you know, we've got profit commitments to hit, right? So I, I, again, I think it's a factor, it's a reality, something to consider.
[00:33:20] Billy Shipley: For all of our, all, all of our expenditures, whether it be advertising or consumer rebate programs or HR benefits, I've coached my team and my philosophy is I, I wanna optimize them. I don't wanna cut them, right? So w- that's the key piece. Like if we... If you just cut the cost, then you've, you've messed up something strategically, possibly.
[00:33:47] Billy Shipley: So I think that's something really important to balance.
[00:33:50] Dane Thorwaldson: I think so too, and there's... You're, you're not starting with the needs of the team or the needs of the organization, which both of you have said are important. And I, I must admit that I've been guilty in the past as an HR leader of, of the, the thought that I'm only gonna get one or maybe two things off of my wish list each year, and so I have to be very influential.
[00:34:18] Dane Thorwaldson: Or the other side of this is I have to ask for five things because I know I'm only gonna get one or two. Mm. And so you, you kind of, you start to stray away from what the organization needs if you might need a new HRIS, and you might need a bigger merit increase at, at the same time. And so- Right ... being able to have that needs-based discussion sounds like a much better place to start.
[00:34:41] Billy Shipley: That's right. A- and on, on that, you know, ask for five so you get two, I mean, Andor and I, we absolutely, we will, we, we will play the corporate game as needed, but then I think, like I said, w- we go in that room arm in arm, and we have a good strategy to go through some of those. And, and, and having a Japanese owner, not just on HR benefits, but they don't have a litigious society.
[00:35:08] Billy Shipley: They have a much different even industry, HVAC industry. So w- we understand the differences and, you know, we will certainly have to explain and, and go through those different iterations, but again, I don't... I can't remember not agreeing with Andor at the end of the day, right? We certainly go through the things, and we, we do what's best for, for the company.
[00:35:31] Andor Molnar: Just to finish up on Billy's point there. When it, when it comes down to what we can have and what we can't have, it is a mutual discussion. And then, and then at the end, going in fully armed with what we can have, okay? So it's, it's never a surprise when it comes up to, you know, the more, the higher corporate that we have to go for this.
[00:35:53] Dane Thorwaldson: Right.
[00:35:54] Andor Molnar: And without that, I'd be shot, okay? Because I'd be sitting here thinking, "I've got a $200 million budget," and, "Sorry, Billy, that's what I spent." You know, we-- I've never had to walk into, in all the years I've been doing this with Kristy and the whole match, of coming in and saying, "Oops, I'm sorry, I didn't know I'd spend this."
[00:36:11] Andor Molnar: We're fully armed knowing what we're doing and predicting of, you know, what we're spending in that.
[00:36:19] Dane Thorwaldson: So if we can try to maybe expand this to some of the, the other listeners who might be tuning into this. I'm, I'm curious, Bill, you've, you've outlined a way that, that seems to be working for you and for Daikin and for your, your people-centered company.
[00:36:37] Dane Thorwaldson: So what, if anything, would you say to a CFO who might be hearing this and saying, "That sounds good, but I'm, I'm just too nervous to move away from a, a fixed benefit ceiling, I-- a percentage world"? Do you, do you have anything you would tell to a nervous CFO right now?
[00:36:57] Billy Shipley: Again, look, look at the health of the company.
[00:36:59] Billy Shipley: And, and I think, like, it's not just, "Hey, increase all your benefits X percent." I think it's important to benchmark. I think one of the things as a CFO, we have to be able to tell our story. Like, "Hey, we've made this investment, we've increased this benefit, and here's why. And we think it's good for our employee base and our company in total."
[00:37:19] Billy Shipley: So there's certainly ways to get and do what's right for the company and, you know, stay strategic. The other piece is, and this is something, again, coaching my team, is, is listen. So I'm sure there's adversarial conversations with, you know, the HR leader and finance leader, and yes, there are conflicting objectives for sure.
[00:37:41] Billy Shipley: But yeah, as, as best you can, you know, it's, it's easy to say, "Well, you guys just need to get in a room and make it work." But if that is certainly the thing that... Uh, again, being here 22 years, lots of growth, lots of excitement, but I've-- I truly enjoy working with almost everybody and/or most days, right?
[00:37:59] Billy Shipley: But that's the key, right? Just the, the relationships certainly do matter here.
[00:38:03] Dane Thorwaldson: I think that's very helpful. And, Andor, in the, the, the inverse of that, you've been able to build this relationship with, with Billy and the finance team. So do you have any advice or guidance for an HR leader who might be hearing this and, and wants that kind of partnership with their CFO but might not have it today?
[00:38:23] Andor Molnar: Well, I probably can sum it up in one real good word is honesty, okay? I, I mean, I don't walk into Billy's office with a bunch of BS and going, you know, "I'll tell you it's 10, but I really mean it's eight," or anything like that. It, it, it is what it is. And at the end of the day, whether we're finance, marketing, IT, we're a team a- and a corporate team that has to play together.
[00:38:46] Andor Molnar: And yeah, we've had some good discussions on, you know, why are we doing this and why is it costing that. And, you know, it's, it's a matter of just being open and, you know, developing that trust. And I know Billy's not out to hang me on a benefit budget, and it's not personal at the end of the day that, you know, I overspent 10 million or I didn't predict whatever was gonna happen.
[00:39:10] Andor Molnar: It comes down to, what are we gonna do to manage this? Okay, Billy, how do you want me to work with this? I can go back to the carriers, I can squeeze them for a point here or a point there. You know, we can find another way around some of this, but it's a joint effort at the end of the day, okay? Would I love to have a white blank sheet and just spend as the day go by?
[00:39:32] Andor Molnar: Absolutely. Okay? But that's not reality. And as long as we all-- we're all in the game together, we, we succeed at the end of the day Okay. And we have happy employees, okay? I mean, here's the other thing. We're, you know, here in Houston, we're in a real competitive market for talent, okay? And we've got to play with the oil and gas industry that has a lot more zeros on their balance sheet than we do, and if all of a sudden I cut out one big benefit, I could lose 500 people.
[00:40:01] Andor Molnar: And how much does that cost us at the end of the day? So Billy and I, we talk about that very closely, okay? 'Cause every, you know, piece of data that comes through, I was looking at one this morning that next year's, you know, benefit cost over CPI will be 8.2% versus the 2.9 CPI. I'm not gonna increase people's wages by 8%.
[00:40:21] Andor Molnar: What does that mean? We're not gonna cut 400 people either to make up that six-point difference. So that's where as long as you have a relationship and you can talk about these and talk openly, you'll do fine. And that's what Billy and I have developed, okay? So, and by the way, that makes it valuable for you, like us personally, to wanna stick around that we- we're working with people we can trust.
[00:40:43] Dane Thorwaldson: Right.
[00:40:43] Andor Molnar: Okay? So, 'cause at the end of the day, if all I ever do is go home and moan and groan about my CFO- ... my wife will just say, "What the hell? Why don't you just pack it in and find somewhere else to be?" So you've got to have good relationship. I think honesty, relationship is the big part of this.
[00:40:58] Dane Thorwaldson: I do wanna put both of you on the spot here.
[00:41:01] Dane Thorwaldson: You opened up, you opened up the door, Andor. So you said you would love to have just a wide open blank page where you could, you could set your own budget, you could ask for anything you like. Let's just do a little thought exercise. What would you ask for? Sky's the limit. Is there something that you're really excited about that you may have lear- learned about or that you see coming down the pike?
[00:41:25] Billy Shipley: I, I wanna say before he answers, Dane, like, I feel like this is a good dating game question. Like, I should write down his answer- ... before he answers 'cause I, I have a good idea where he's gonna go, but go for it. Go for it, Andor. It,
[00:41:38] Andor Molnar: it would... So we've, we've got good programs working here, good parts of our benefit plan.
[00:41:43] Andor Molnar: It would come down to reducing the cost to our employees. That's where it would come down, okay? If I could all of a sudden take our co-pays down 1,000 a year and, you know, the ma- the maximums or even premiums down to zero, that's where I would be starting. So it'd be in the people side. But when it comes to what we're covering, we, you know, we're, we're pretty much the same as any other organization on our benefit structure and that.
[00:42:08] Andor Molnar: But it w- it would be on the people side. Did I get it right, Billy?
[00:42:11] Billy Shipley: Nope. I thought you were- ... I thought you were gonna go 401k, but-
[00:42:15] Andor Molnar: Oh, I... Okay. I, I was thinking more of the be- oh, okay. So- Not just yet ... Billy is correct. Okay. I thought I forgot about 401k at that moment.
[00:42:23] Billy Shipley: Yes, yes. Yeah.
[00:42:23] Andor Molnar: Yeah. He, he, he is right. That's, that's definitely number, you know, 2.5 on the, on the list of three.
[00:42:30] Billy Shipley: And again, that's part of our communications. Like I, I know, I think our employees' contribution to health insurance is, is competitive and reasonable, but health insurance costs are just, I mean, flying through the roof. So we're gonna have to evaluate that this year. I see Andor's got a packet on his desk I can't wait to see.
[00:42:48] Billy Shipley: That's fine. I'll be ready. But yeah, the other thing is, like, we, you know, the competitiveness of our 401k, it's something we're evaluating. It's been an issue for some time, but I think those are things that as we can, and the timing's right, and, you know, the market conditions are favorable, we'll, we'll work those things in.
[00:43:05] Dane Thorwaldson: Well, it sounds like you will. And, and it sounds like you're headed in a good direction. Daikin is such a, a household name. It's literally cooling my house right now, and it's, it's fun to have the Daikin Park right down the road, and so excited to, to spend time with you all today. I, again, I do have the advantage of, of knowing Daikin well and knowing Andor and his team well and, and seeing all of the care that you all put into these decisions.
[00:43:32] Dane Thorwaldson: And to know that, that that is reflected even in the relationship with finance is something that I, I just, I had to talk with you all about- Sure ... 'cause I think it's so important. There's a lot to learn from. So thank you. Thank you, thank you both for joining the podcast. Where, where can folks learn more about Daikin, maybe follow the work that you're doing?
[00:43:52] Dane Thorwaldson: Any- anywhere they could tune into?
[00:43:55] Billy Shipley: I'm more active on LinkedIn than I have been, so I just looked just to check it. It's Billy Shipley. Yeah, and then daikincomfort.com. Lots of good stuff out there. We also have Amana and Goodman brands, also very good. Among the highest, you know, market share products that are out there.
[00:44:13] Billy Shipley: So we're super proud of our people-centered management. We're super proud of our accomplishments, all of our growth that we've had. It's been a lot of fun, and again, the, the people are the center. So I appreciate Andor and his team bringing us those opportunities, and we do what's right for the company.
[00:44:31] Andor Molnar: And anybody who's over 30 who knows what I mean, I'd say ditto to what Billy just said. Okay? So anybody who, you know, listening to this and wants to give me a call up and ask, you know, and we... I'll- I'm more than happy to chat with them. I've gone to the client accounts advisory board meetings, and we've talked about this there.
[00:44:50] Andor Molnar: So it's, it's a small world for us, okay? But yeah, anybody wants to follow up through this, drop us a note. My LinkedIn's not as active as Billy. I'm not a real good social media person, okay?
[00:45:02] Dane Thorwaldson: No, but you're great on the main stage, though. I've seen it.
[00:45:04] Andor Molnar: You've seen... Well, that's only 'cause I've had good people like you helping me, so.
[00:45:09] Dane Thorwaldson: Oh, fellas. Yeah. Well, thank you so much, gentlemen. I really appreciate your time today, and I know that the listeners do, too. So this is really big stuff, and thank you, thank you, thank you.
[00:45:19] Andor Molnar: Awesome. Thank you, Dane.
[00:45:20] Billy Shipley: Thanks, Dane.
[00:45:21] Dane Thorwaldson: If you're enjoying The Benefits Playbook, we would love your support. Please take a moment to rate and review the show wherever you listen.
[00:45:28] Dane Thorwaldson: It really helps others discover us and join the conversation. And while you're there, don't forget to hit subscribe so you never miss an episode. If you know a colleague or a friend who'd enjoy the conversation, share it with them, too. Thanks so much for listening, and we'll see you next time.
[00:45:45] Producer: This podcast is brought to you by Collective Health. In health benefits, conventional wisdom says you have to choose better care or lower costs. We give you both. As the leading independent TPA with over 800,000 members and counting, we unify plan administration, cost management, and a member experience your employees will actually love all in one place. If you're an HR leader or consultant ready for a more transparent benefits strategy, get in touch at collectivehealth.com/playbook.