How A Healthy Workforce Can Boost Your Company's Profits
More and more organizations worldwide are making the wellbeing of their staff a business priority. The main influencer governing this approach is the increasing recognition that a healthy, engaged workforce is key to a company’s ability to maximize its productivity. This connection between wellness, employee engagement and financial success has resulted in the demand for new strategies offering the best possible employee health and benefits packages.
If implemented properly, health and wellness benefits can reap big rewards. The Willis Towers Watson (WTW) 2015-2016 Staying@Work Survey found strong links between highly effective health and wellbeing programmes, high-performing employees and strong financial results. That’s quite a combination.
This return on investment has a firm logic behind it: A healthy and engaged workforce takes less time off sick and works more efficiently, resulting in a double whammy benefit of increasing top line revenues and decreasing bottom line expenses. Yet, like any investment, delivering a comprehensive wellbeing package that will both attract and retain the best possible candidates requires an initial outlay. So, once your company has made the important decision to invest in its long-term future by providing a targeted healthcare package, what exactly can you expect for your money?
Reduction in long-term healthcare costs
There’s no doubt that healthy employees cost you less. With global healthcare spending consistently above general inflation (due to factors such as an ageing workforce and poor lifestyle habits) prevention makes infinitely more financial sense than cure.
In 2009, Gulf Cooperation Council (GCC) states spent around US$ 34.3 billion on healthcare. By 2025 that figure is predicted to rise to $60 billion. Meanwhile, a survey by researcher YouGov showed that in the UAE, the average company’s cost of health insurance policies rose from AED1 million in 2010 to AED1.6 million by the end of 2015.
Lifestyle factors, such as poor diet, lack of exercise, smoking, drinking and inadequate sleep, can potentially all lead to more serious health issues requiring medical care. Research published by the Journal of Occupational and Environmental Medicine showed that employees with who scored higher for certain risk factors had significantly higher healthcare costs than those at lower risk. This was the case in seven out of ten categories, including people who were depressed, under high levels of stress, had high blood sugar, high or low body weight, high blood pressure, were smokers, or had a sedentary lifestyle.
One of the biggest concerns in the GCC region is the rise of obesity and stress, both of which can negatively affect employee performance. According to a 2013 report by the University of Washington’s Institute for Health Metrics and Evaluation, more than 66% of men and 60% of women in the UAE are already overweight or obese. The economic burden of obesity in the UAE is estimated to run into billions.
Such an epidemic naturally has an adverse effect on business productivity. A 2007 Canadian study found that obese employees are absent on average 13 times more than non-obese employees and incur almost seven times as many medical claims costs.
However, health conditions such as obesity can be helped or even prevented with lifestyle change that can be introduced through workplace wellness initiatives. In 2010, a large-scale analysis of studies published in the US journal Health Affairs found that for every dollar spent on wellness programmes, medical costs fell by about $3.27 and absenteeism costs fell by about $2.73.
Another study, published by The Harvard Business Review, looked at a sample of 185 workers and their spouses who all worked for the same employer. The group were put on a cardiac rehabilitation and exercise training programme lasting for six months, even though they were not heart patients. By the end of the initiative, 57% of those who had been classed as ‘high risk’ for various factors such as body fat and blood pressure had switched to low-risk status. Also medical claims costs reduced by $1,421 per participant, compared with those from the previous year. Meanwhile, a similar group of employees who underwent no training showed no improvements.
Reduce the problem of absenteeism
Employee absenteeism continues to be a key concern throughout all industry sectors. A 2012 Absenteeism in the Middle East workplace poll by Bayt.com revealed that decreased overall productivity was considered to be the most costly effect of employee absence by 26.8% of the 9,085 respondents in the Middle East and North Africa region. This was closely followed by ‘possible loss of business or dissatisfied customers’ at 22.3%.
Indeed, costs relating to absenteeism can mount up. In 2015, the US Centers for Disease Control and Prevention reported that productivity losses linked to absenteeism cost employers $1,685 per employee. There’s also the indirect cost of absence from work such as overtime payments and the calling in and training of cover staff.
It is clear that employers can achieve significant cost savings if they can reduce their absenteeism by improving employee health and wellbeing at work. The fewer sick and injured employees you have making insurance claims, the lower your healthcare costs, including insurance premiums. In 2001, US company Union Pacific Railroad famously reported a 10% decrease in healthcare costs, amounting to $53.6 million, after it introduced a wellness programme.
Decrease instances of presenteeism
Yet, hefty healthcare costs and sick days may not be the biggest culprits when it comes to lost productivity at work. Presenteeism –the term used when employees turn up for work but are unable to focus fully on their jobs– is harder to monitor. But according to Perspectives: Culture of Health and Financial Well-Being from Willis Towers Watson, ‘employees around the world lose almost 11 days of productivity at work each year’.
The causes of presenteeism can vary from sickness and injury through to high stress levels, anxiety or general life pressures. It’s worth noting that the most engaged workers are to be found in the US and Canada and it’s perhaps no coincidence that the WTW 2015/2016 Staying@Work Survey’s global report revealed that companies in the US are most likely to provide wellness, stress management and resilience programmes.
Such programs, which promote exercise, good diet and healthy lifestyle, can help reduce the impact of long-term conditions such as stress, depression, allergies and sleep disorders. Employers who prioritise a workplace culture that promotes good health and a contented working atmosphere can have a huge impact on their employees’ productivity– and ultimately their own profits.
Having team members who are engaged in their role and satisfied with their work situation is strongly linked to better sales performance. To evaluate the effectiveness of health and wellness programmes, the WTW 2015/2016 Staying@Work Survey asked employers to rate their performance in 20 health and productivity-related areas, using a metric called the Overall Health and Productivity Effectiveness (OHPE) score. Not only did the high-OHPE organizations have healthier staff, those with highly effective wellness programmes were twice as likely as low-OHPE organizations to significantly outperform their peers financially– plus, they reported 50% higher revenue per employee.
Not too surprisingly, employees who feel well looked after by their employers are more likely to stick around. In a 2009/2010 report by Towers Watson and the National Business Group, staff at companies with highly effective wellness programmes were a third less likely to leave voluntarily than those at companies with programmes with low effectiveness.
Increased employee morale
By offering health and wellbeing initiatives to your employees, you demonstrate that you value and support your workforce and care for their wider health and wellbeing. By investing in the people who work for you, you will not only attract and retain the best possible candidates, you will also help to boost employee morale and job satisfaction– along with productivity.
Clearly employers who take action on employee health have a lot to gain. As research consistently proves, good health equals good business. Ensuring you have a healthy, happy workforce by investing in a comprehensive workplace wellness plan that’s tailor-made to your employees’ needs will reap huge rewards all round. To be effective, it requires a strategic focus and employer commitment. But once in place, it can deliver substantial benefits that will not only boost productivity and profitability but will make your organisation stand out from its competitors.
Related: Understanding The Millennial Workforce
Simon Stirzaker is the Regional Leader of Health & Benefits at Al-Futtaim Willis, UAE. He came to the Middle East in 1994 where he was instrumental in the shaping and development of the health insurance market in both the UAE and Saudi Arabia. Prior to Al Futtaim Willis, Simon was the Regional Head of Development & Strategy for Middle East at the Royal Bank of Canada. He holds a BA degree in accounting and finance from Birmingham University, UK.