Arguably the biggest challenge facing the UK economy is the stagnation in productivity that has persisted since the 2008 financial crisis. Figures released last October by the Office for National Statistics (ONS) showed that in 2016 UK output per worker was 8.5 per cent behind Germany, 11.5 per cent behind France and a whopping 26.5 per cent behind the US.
Attendees at the Corporate Adviser Tackling the UK’s Productivity Deficit: the Case for Group Risk round table in Bath last month were in broad agreement that the group risk industry could play a key role in tackling the problem. Its range of added- value tools for combating presenteeism can directly improve employee productivity, said delegates, provided the industry did enough to improve understanding of what it is that it does.
Canada Life Group Insurance marketing director Paul Avis said: “If we were to achieve US productivity levels each UK household would gain £22,000 of extra income, so the prize of a more productive workforce is high. But we start from a very disappointing base level of productivity compared with other nations at a time when there are some very clear challenges, with one in five workers in poverty, council tax bills rising by up to 6 per cent and interest rates maybe about to rise.”
While the group risk industry might argue there are good reasons why government might want to consider fiscal incentives to make employers engage with products such as income protection and return to work services, there was universal agreement from attendees that in reality the industry should not expect any help from policymakers. This represented a marked departure in tone from previous round tables, where some had expressed hopes of achieving fiscal incentives to improve group income protection take up.
i2 Healthcare director Simon Derby said: “One thing we have to do is to disabuse ourselves of is that we are going to get any help from the government because we are never going to. The government doesn’t have a clue about what we do and, although we get all the glad-handing from the minister of the day, they then move onto a new portfolio at some point. We have to do it ourselves.”
But that doesn’t mean there is not an opportunity helping employers with this chronic productivity gap.
Avis said: “Imagine how much work you are going to get done if you are worrying about your house or car being repossessed. NHS social care pressures mean there are 3 million workers who double up as carers, so there is also going to be a productivity issue if you are having to combine both jobs. Additionally, the reducing welfare state is increasing family pressures to house people, with 307,000 homeless people and 5,000 rough sleepers.”
Avis also highlighted a range of other issues that could exacerbate productivity loss among UK employs, ranging from Brexit, cyber security and the General Data Protection Regulation (GDPR) to auto- enrolment, gender pay reporting equalisation demands, the apprenticeship levy and spiralling PMI costs. This ‘perfect storm’ meant it was “all really kicking off for employers out there” and could result in HR departments being heavily distracted.
To complete the picture he pointed to a range of recent government papers and industry reports. For example, the Stevenson/Farmer Thriving at Work review found that poor mental health was costing employers between £17bn and £26bn a year through presenteeism – and producing a total annual mental health bill for the economy of £74bn to £99bn.
A common thread running through such reports was a lack of support for group income protection. The Department for Work and Pensions’ (DWP) Green Paper, The Stevenson/Farmer review and the Good Work plan had been “unilaterally inconclusive in terms of tangible actions for employers”.
“As an industry we are therefore now completely alone in terms of developing group income protection, health and wellbeing, productivity and employee engagement and in addressing presenteeism,” Avis continued. “So there is the opportunity for the corporate adviser. Can they help remedy what’s keeping the finance director and HR director up at night and come up with solutions to address recruitment and retention and health and wellbeing by using early intervention and clinical certainty?
“Whilst I believe that what we do as insurance companies can add value to that debate, the question is how can we make it happen? On the face of it productivity and presenteeism have nothing to do with insurance and the work we do but we need to delve below that.”
Delegates pointed out the fact that senior employer decision makers were hard to get hold of and that the industry still lacked adequate data to talk with any authority about the cost benefits of tackling presenteeism and the other productivity issues that group risk products address.
Aspira Corporate Solutions corporate benefits executive Daniel Lamb said: “Getting a meeting with a finance director and HR director both together in the same room can be quite challenging and, even if you get to the stage when you illustrate that things don’t cost as much as they thought and that there are creative ways of helping, you will probably only get three minutes.
“Every HR department I work with is so busy and stretched. They would like to do the right thing but when you try and arrange a meeting they say ‘how about in three months’ time?’ They just have so many things going on at the moment, and I don’t think they have enough resources. It’s our full-time job but it’s only a tiny bit of theirs.”
LifeWorks consultant David Shearman said: “When we ask employers what makes their organisation work they always say it’s their people, but I think the majority of UK businesses still see their workforces as a cost centre rather than a profit centre. HR directors still have their hands strung by finance directors and they only get limited budgets, which they must spend wisely. “I can go to a finance director and HR director and talk about sickness rates, turnover and retention rates, and they are hard numbers that can’t be argued with. But if I talk about presenteeism they’ll laugh me out of the room because no value can be attributed to it.”
Nevertheless, presenteeism apart, the suggestion by LifeWorks consultant Luke Prankard that heads of HR should be approached with an invitation to make them “chief productivity officer” received strong support as a potential way in.
He said: “If you go and talk about something ‘they’d like to have’ and not say why it’s going to do something for the organisation such as increase productivity or stop some form of cost then we are always going to be having the same conversation and getting the same response back. And I think as an industry that we need to get better at proving that return on investment.
“We can’t go in with presenteeism but we can talk about absence rates and the impact of mental health, and we can talk about financial wellbeing and about how that is distracting people and what it means to an organisation. It’s so important we change that conversation and say to HR ‘look if you spend £1m we can show you that it saves £3m, and that’s when your CEO is going to listen to you’.”
Furthermore, as Avis argued, most intermediaries simply can’t afford not to take such a consultancy approach because if they continue just to be brokers they risk finding that a consultant takes their customers off them.
Canada Life Group Insurance HR business partner Emma Fletcher was able to provide a valuable perspective “from the coalface” as she sees exactly which factors impact on the productivity of the insurer’s own managers on a day-to-day basis.
In addition to presenteeism caused by sick employees coming to work when they shouldn’t, she singled out technology – as employees were always on their smart phones, dealing with emails and being frustrated by incidents such as printer jams – and debt, an area where she said there had been a big increase.
Prankard agreed that “technology can be a distraction if it is really badly designed as it can completely disengage the workforce,” while Shearman reported that in the last year alone LifeWorks had seen an 8 per cent increase in the calls received into its call centre about finance and debt. He also volunteered that a company involved with credit improvement had informed him that 40 per cent of UK adults had less than £100 in savings.
The UK’s productivity challenge is not going away any time soon. Added value services through group risk products can go some way to helping employers tackle the problem.
