The health and productivity advantage

Organizations with high-performing health and productivity programs experience superior employee health, engagement and financial outcomes, a Towers Watson survey shows

By Wendy Poirier and Joseph Ricciuti

*This is an expanded version of a summary that originally appeared in the May 2010 issue of CAmagazine.

Having employees at work and actively engaged is fast becoming the primary global workforce issue in today’s competitive business landscape. Proactive and progressive CEOs, CFOs and HR executives understand the business reality of functioning in a competitive marketplace and the organizational risk associated with rising health care and disability costs, lost productivity and high employee turnover. To mitigate these risks, many are now beginning to examine the link between their business performance and employee well-being.

To get a better understanding of the links between employee well-being, productivity and business success, Towers Watson recently analyzed workforce and financial data from 352 organizations with at least 1,000 employees in Canada and the United States. Using a diagnostic scorecard to assess health program effectiveness, workforce effectiveness and financial performance, the 2009/2010 Staying@Work Survey revealed that organizations with high-performing health and productivity programs experience superior employee health, engagement and financial outcomes. These leading organizations understand the link between programs that support and encourage greater workforce health and the policies and practices that promote workforce effectiveness.

While the optimal balance between these two factors is unique to each organization and reflects the distinctive attributes of its industry, business plan, HR strategy and workforce composition, these leading organizations do share a number of important factors. Among them is their investment in a framework that provides a comprehensive set of programs to address the complex issues facing their workforces. In fact, leading organizations were 50% more likely to enhance or add to their workplace programs, or plan to do so this year, compared to other organizations.

Leading organizations also understand that the key to an effective health and productivity framework extends beyond the physical and mental health of its employees - it extends to the organizational environment, culture and interpersonal relationships that connect employees to the mission and goals of the organization. Successful organizations create a compelling employment deal through reward structure, leadership and communication to cultivate an engaged and effective workforce - and they reap the rewards of their investment through lower costs, improved productivity and, ultimately, superior financial performance.

The leading organizations in the survey reported shareholder returns 55% higher than their industry peers, earned a higher market premium and reported the highest average revenue per employee. They also reported 1.8 fewer days lost to unplanned absence and 1 less day lost due to disabilities. Having employees fully productive while at work despite physical, mental or stress-related challenges is a struggle for many companies. However, organizations with a well-developed health and productivity framework report the lowest levels of lost productivity attributed to presenteeism. Additionally, despite continued medical cost inflation, they experienced health care cost trends that are 1.2 percentage points lower than those of other organizations.

While there is further progress to be made both in terms of enhancing program design and effectiveness, and expanding the number of employees who are highly engaged in health and productivity programs, the results are impressive, especially when examined against the backdrop of a challenging global economy.

In the next few years it will be key for companies to cultivate a workforce that is healthy, productive and engaged in order to succeed in an increasingly global and competitive business environment. Developing an effective health and productivity framework is a foundation for success. This research shows that companies with successful programs are linked to improved business outcomes, including reductions in lost time, improved employee effectiveness, lower medical trends and, ultimately, superior financial returns.

While there is no one set of programs that is right for all, organizations with successful programs adhere to a number of best practices:

Make health and productivity programs a part of the broader organizational culture by connecting them to corporate goals, promoting a healthy work environment and benchmarking programs externally.
Take action against stress by working to reduce the stigma associated with mental health issues and seek ways to help the workforce manage excessive workloads and balance work/life issues.
Integrate data across programs, regularly measure program performance and achieve higher levels of engagement in their programs.
Regularly analyze data to identify opportunities, design programs and make H&P policy decisions.
Simplify H&P programs, integrate delivery and consolidate program vendors to improve utilization.
Offer a variety of incentives to promote the company’s health and productivity strategy.
Engage the support of senior leaders as visible champions and ensure adequate budgetary support.
As part of the company’s culture, help employees to understand business decisions and to take responsibility.
Involve employees in organizational decisions and communicate those decisions to employees effectively.
Work to ensure that employees know their compensation and benefits are competitive for their industry and skills.

Ultimately, by applying an integrated approach that includes financial and human capital metrics to evaluate which programs generate the greatest returns, high-performing organizations are achieving a health and productivity advantage – higher shareholder returns, higher workforce productivity, lower rates of work loss and lower health care costs.

For more information about Towers Watson, its Staying@Work Survey or the Health and Productivity Scorecard, please contact InfoCanada@TowersWatson.com.