Do you think it is part of your job to ensure your employees are healthy? If not, I would argue that you should, writes Brett Tromp.
According to a recent business outlook survey, four of the top ten key challenges facing finance leaders today are employee-related. They are: employee productivity, rising wages and salaries, attracting and retaining qualified employees, and employee morale. As finance and business leaders, there’s no question about investing in information technology, marketing, and infrastructure to remain strategically competitive. But we all know that human capital is an asset too – why then has the promotion of wellness in the workplace rarely been prioritised?
The average employee takes eight days of sick leave annually, costing employers about R10 000 a year. In fact, work absenteeism costs the South African economy an average of R16 billion a year. In light of a challenging economic landscape, keeping workers healthy is vital.
For too long, workforce health has been seen as only a human resources issue. It is time for businesses to redefine wellness as a state of being that is shaped by engagement and other workplace factors as much as by physical and psychological health. Some suggest that this has already been addressed through the current requirements of traditional occupational health and safety (OHS). However, OHS largely addresses job risks, whereas health promotion addresses life risks.
THE CHALLENGE: UNHEALTHY LIFESTYLE BEHAVIOURS
Diseases of lifestyle play a significant role in employee illness, increased absenteeism, and presenteeism (levels of employee engagement and productivity), as well as reduced levels of employee morale.
Evidence of the increasing burden of non-communicable diseases (NCDs) has come to the fore in recent years. Comprehensive research by the Oxford Health Alliance has concluded that three lifestyle behaviours (physical inactivity, poor nutrition, and smoking) cause four chronic conditions (cardiovascular disease, lung disease, cancer, and diabetes) which result in 50% of deaths worldwide. These diseases can be prevented or significantly controlled by individual changes to one’s lifestyle – creating the opportunity for employers to influence their workforce for the better.
As an example closer to home, the benefits of engaging with a wellness programme in the workplace have been demonstrated by an analysis of the health, wellness, and productivity data of employees that are members of the Discovery Health Medical Scheme and Discovery Vitality. Here’s what some of the findings have shown:
- Employees that are engaged in a wellness programme exhibit lower absenteeism: Using a data set of around 9 000 employees, the average number of sick days takenwas reduced between 2009 and 2011 – but this reduction was only significant among those employees who were actively engaged with the Vitality programme.
- The greater the engagement of employees with a wellness programme, the lower the healthcare costs of the employer: An analysis of the claims experience of Discovery Health Medical Scheme revealed that employees with greater levels of Vitality engagement had lower associated healthcare costs relative to those who were less engaged with the Vitality programme.
- Healthier employees are more productive: A study linking measurable health and productivity data using approximately 5 000 life years over the period 2009 to 2012 found a statistically significant link between the immediate productivity of employees and their health. It also found that an improvement in health status lead to increased productivity. Findings at call centres even proved that non-smokers performed better than smokers and their risk of error was lower.
Overall, research into the performance of a portfolio of companies recognised as award-winning for their approach to the health and safety of their workforce between 1997 and 2003 showed a 3,0–5,3% per annum outperformance of this portfolio relative to the S&P 500.
Companies that play a greater role in promoting and creating a sustainable culture of health help sustain the wellness and job engagement of their employees. This not only reduces the impact of NCDs, but also enhances productivity and serves as a mechanism to attract and retain talent.
SO WHAT SHOULD COMPANIES DO?
The solution is integrating health metrics into corporate reporting.
Successful businesses of today understand the strategic value of reporting on non-financial measures. Companies should reassess the worth of measuring and accurately reporting on workforce health. I would go as far as to say that highlighting the importance of NCD prevention within businesses ought to be a national strategic imperative as the wellbeing of the country’s workforce is at risk.
Discovery Health recently partnered with the South African Institute of Chartered Accountants (SAICA) to initiate a conversation with senior business and finance leaders on the merit of integrating health metrics into corporate reporting. Such integration aims to build leadership and advocacy both internally and externally. It also enables investors and other key stakeholders to consider the health of employees as a critical data point for decision-making, not only for ethical reasons but also due to its significant impact on the bottom line. This, in turn, places increased pressure on companies to consider employee health as a critical component of business strategy.
Health metrics in corporate reporting is becoming a global priority. The Vitality Institute in the US convened a working group of global business leaders to propose the development and implementation of comprehensive health metrics by the end of 2015. The goal is to establish workforce health metrics as an integral indicator of overall organisational performance within the broader corporate accountability framework by 2020. Their recommendation with regard to the three principles to follow when selecting the number of health metrics are materiality, measurability, and understandability.
Materiality refers to the principle that each metric should have significant impact on the health of employees and on the financial bottom line of a business. Measurability refers to the fact that, in order to ensure consistency, each metric should be easily measureable across whole employee populations in organisations of all sizes. Finally, each metric should be clear and understandable to employees and non-health professionals.
This reporting should not encourage employers to discriminate against potential employees at any point of employment, but should rather encourage companies to invest further in health promotion and disease prevention. Making wellness central to business strategy opens an important new avenue to increasing organisational effectiveness. Companies that recognise this are more likely to boost workforce productivity, drive business performance, and realise core strategic goals.
Brett Tromp CA(SA) is CFO of Discovery Health
This article was originally published in ASA.