It’s enough to make any employer feel nauseous. The total cost of ill health to the British economy is more than £100bn, according to Dame Carol Black, author of the 2008 report on the health of the UK workforce.
What’s more, uncertain economic times have health consequences for employees, so that figure could have increased in light of what has happened to the country’s finances since that report was drafted.
“In this economy, every organisation looks for better performance,” says Oliver Gray, managing director of wellbeing scheme provider EnergiseYou. “Workers push harder and work long hours. This can lead to poor health, stress and even burnout. This in turn means absence, higher private medical insurance costs, staff turnover and poor performance.”
Buoyed by glowing feedback from employers that have adopted wellbeing strategies, corporate clients are taking health more seriously. Right now, 46 per cent of multinational companies have a wellness strategy, according to a November 2009 survey of 1,100 organisations. The poll, by employee benefits consultancy Buck Consultants, found that 97 per cent of employers with a wellbeing strategy wanted to boost productivity and cut ’presenteeism’, where the individual is at work but not productive.
The link between wellness and productivity has only just dawned on employers. Until recently, many organisations were pretty happy just to stick a free eye test notice on the canteen notice board and leave it at that. David Prosser, strategic development manager at AXA ICAS, says: “When I entered the industry 10 years ago, most HR professionals were sceptical about the business case for workforce wellbeing. But they are increasingly accepting the benefits.”
He added that health strategies are a powerful tool: to cut employees chances of getting ill through supporting and training; and treating maladies early, pulling sick employees out from under the duvet and back to their desks.
The workplace healthcare sector is subtly morphing into its new, 21st-century shape. In the past, employers focused on curing sickness with schemes such as private medial insurance, healthcare cashback and employee assistance programmes.
“In this economy, every organisation looks for better performance. Workers push harder and work long hours”
Nowadays the industry is positive about prevention as well as cure. Employees can take online risk assessments to warn them of potential dangers and give tips on how to maintain a balanced lifestyle.Another trend is workplace champion training, where employees learn healthy living skills and share the know-how with colleagues. High tech communication is all the rage, and providers spread messages via text message, social-networking sites and even 3D virtual social worlds such as Second Life.
Arguably the most significant development is the new breed of absence management software. “One of the key ways of improving productivity is to track and manage sickness absence,” says Mercer principle Sarah Brown. “There are a number of tools on the market which can accurately calculate the impact and cost of absence.These are most effective when linked to early intervention and fast track access to care for psychological and musculoskeletal-related absences.”
Of course, since we slid into recession, raiding the coffers for a new benefits scheme is the last thing on many clients’ minds. For many employers, health and wellbeing schemes are a nice-to-have that they simply can’t afford. “Employers are thinking long and hard about discretionary spend,” says Kevin Jones, a new business director at employee benefits consultancy Jelf Group. “You can show employers how wellbeing helps, but they are cautious about upping their current spend. Finance directors are aggressively managing costs and parking nice-to-have benefits.”
The obvious implication is that return-on-investment marketing is better than the feel-good and fluffy. “I see a change in our clients away from wellbeing strategies, because of current economic conditions,” says Stephen Hackett, head of employee benefits for consultancy Bluefin. “However, there is a growing demand for risk management strategies that help to contain or reduce claims spend. We anticipate more focus on absence, return to work strategies and managing claims authorisation.”
Health and wellbeing is a strong savings generator. A study by PricewaterhouseCoopers estimates that a well-crafted wellbeing strategy should yield a return on investment of between 250 per cent and 450 per cent (Building the Business Case for Wellness, 2008). The savings could be even greater, says Oliver Gray, managing director of provider EnergiseYou. “An employee wellbeing scheme should deliver between four to six times savings to the bottom line. This is dependant on how extensive it is. One-off events don’t deliver as much as tailored, ongoing schemes, with different activities each month.”
While some multinationals can freely splash the cash on health schemes, smaller organisations find it a stretch. David Prosser of AXA ICAS, says “Larger-sized employers with HR resources are more receptive to investing in health and wellbeing. But it’s still a challenge to convince smaller-sized employers that it is worthwhile.”
Intermediaries would do well to point smaller businesses in the direction of a new government scheme, which offers firms grants to boost workplace wellbeing. The Health Work, Wellbeing Challenge Fund provides grants of up to £50,000 for small and medium sized firms to launch health schemes.
So what makes a wellbeing strategy a success? In a world where health providers are as plentiful as multivitamin tablets, there is plenty of choice. “The key is to understand the client’s workforce health issues and promote relevant initiatives,” says Colin Bullen, head of health & risk benefits at Hewitt Associates. “Employees need to know what’s in it for them. Schemes should be fun, with an element of reward for health improvement.”
More challenging is equipping managers to handle workplace health. This is because it is line managers, not HR managers, who deal with employees everyday. Mark Carman, marketing and communications director at flexible benefits provider Motivano, says: “As the people who directly affect workers’ attitudes towards wellbeing, line managers should be trained to understand the health strategy. They need to know the advantages and reasons for changes, so they can communicate them to their teams.”
Employees can change, but the message needs hammering home. Dave Middleton, client relationship director at Portus Consulting, says: “There should be key events at key times of the year. This means health screening with online booking systems for employees, and workshops focused on other business objectives, such as reducing stress at busy times.”
One thing experts are particularly keen on is measuring results. Keeping the workforces healthy and productive should mean lower absence rates and health insurance costs, but there’s no substitute for hard figures. Aaron Ross, chief executive of absence management provider FirstCare, says: “You need to provide data to convince HR and finance professionals to accept the importance of a wellbeing strategy. The numbers should illustrate that employees use the services, productivity has increased&and potential risks have been mitigated.”
“Also remember that different health benefits are often managed by different departments. To ensure the benefits’ value is realised, this information needs to be shared and analysed.”
“When implanting a strategy, senior managers need to step outside their comfort zone and face the realities of what it’s like to work for their company. That can be the hardest part”
As for commission, intermediaries can expect between 5 and 15 per cent. Stephen Hackett, head of employee benefits at consultancy Bluefin, says: “If commission is used for corporate health schemes, it will attract an average of 5 per cent. Age-rated schemes can pay anything up to 15 per cent if an advisor has a large block of business with one provider.”
And what of the future? Kevin Jones of Jelf Group thinks proclamations about a surge in demand for health schemes are premature. “I don’t see any immediate change for health and wellbeing strategies,” he says.”If companies have any discretionary spend, they think hard about how to use it. In an ideal world, they would implement a good wellbeing strategy, but the pressure on budgets means they are naturally extremely cautious.”
Once the UK pulls itself out of the downturn, it could be a golden age for workplace wellbeing. Sarah Brown of Mercer says: “In the long term, workplace health initiatives will become more relevant for organisations, as part of their overall human resources strategy. We expect IT systems to become more sophisticated and more reliable ROI metrics.”
Yet giving staff tools to make positive changes to their lives is very different from guaranteeing lasting health and happiness. AXA ICAS’s David Prosser says: “Without addressing the way an organisation treats its people, token measures such as subsidised gym membership or lettuce in the staff canteen are most unlikely to be a recipe for success.”
In Focus
Michelle Mahdon
Michelle Mahdon, programme leader at think tank the Work Foundation
“Employers cannot afford to ignore employee wellbeing at the moment,” says Michelle Mahdon, programme leader at think tank The Work Foundation. “Job insecurity, financial burdens and change can be extremely stressful. To ensure that the workforce remains well enough for the company to survive and thrive, employers must remember the short and long term health of employees.”
For Mahdon, the benefits of a wellbeing strategy go further than fewer workers calling in sick. She cites pastie-maker Ginsters as a case study. “It’s important to take a broader perspective when it comes to return on investment. Ginsters found that their investment in a health strategy cut their recruitment-marketing spend dramatically. This was because word spread about the scheme, and people wanted to work for Ginsters.”
Mahdon says Health schemes should be employee-led. “Some of the most innovative ideas come from companies that get workers involved. These organisations get front-line employees to indentify what will help them feel well.”
“When implanting a strategy, senior managers need to step outside their comfort zone and face the realities of what it’s like to work for their company.That can be the hardest part.”
The key, says Mahdon, is picking the right scheme to tackle sickness’s root causes. This might not always be improving diet or exercise, for example. She says: “Employee benefits consultants and corporate IFAs are right to believe that the workplace is a good opportunity to work with a captive audience and help people change their behaviour.”
“But this is only half the story. Employers need to look at how the workplace itself is affecting people’s wellbeing. The evidence shows that job quality, which includes everything from management to flexibility, makes a difference.”
So how open are employers to health-boosting perks? ”More HR directors and Finance Directors are getting it, but there is some way to go before wellbeing is accepted as a core element of a successful workplace,” she says.
Top tips for a successful wellbeing strategy
A measure of success
Ensure all health and wellbeing strategies have results clients can measure. The more hard data, the more convincing the business case.
Explore budget benefits
Health and wellbeing strategies don’t have to have a six-figure price tag. Duvet days, local gym discounts and workstation audits can be had for very little. Get employees involved in designing perks. Workers can be extremely innovative with no budget.&
Consider organisational audits
These assess the affect of job design, HR policy and working conditions. An audit is pricey at £10-30k, but if it reduces employee turnover by just a few heads, it could pay for itself.
Choose wisely
Pick a provider that offers a full range of health and wellbeing options, so it can tailor a strategy to clients’ needs.
Look for robust IT systems
Know the workforce. Ensure you and your client understand its workforce’s unique characteristics, and tailor the health strategy accordingly.
Number crunch
Take advantage of absence data to understand why workers are poorly. If, for example, there is a high proportion of musculoskeletal-related absence, pick schemes that target this.
Promote awareness
Once the scheme is up and running, pencil in events for employees throughout the year. Health screenings, canteen healthy eating days and stress workshops will remind staff what’s on offer.
Play fair
Wellbeing isn’t just about physical environment. It’s about quality of jobs, management, fairness, flexibility and support.
Pass it on
The new scheme needs to be communicated&effectively at every level of the organisation. Train line managers to pass on the message.
Haggle for a discount
Ensure that your client haggles down their private medical insurance and EAP costs in the light of a fitter workforce.