A decisive link between promoting employee wellbeing and boosting shareholder return has been made in a new research project to be revealed today.
An analysis of FTSE 100 employers by Business in the Community (BITC) found that companies which took active steps to improve health and wellbeing at work enhanced financial performance by 10% on average in 2009.
The study, carried out in conjunction with Ipsos Mori, found that 37 firms which reported against two or more BITC measures on wellbeing – such as creating a happy and engaging work environment – demonstrated a total shareholder return of 61%. The remaining FTSE 100 had an average return of 51%.
Louise Aston, national director of BITC's Business Action on Health campaign, said companies that were successful in forging a link between the bottom line and employee wellbeing had used people data to understand root causes of happiness at work, such as sickness absence rates, staff turnover, and internal engagement surveys.
"The challenge for companies is not misunderstanding what the employee health and wellbeing agenda is about; it's not about lettuce leaves and gym membership," she told Personnel Today.
The BITC, in collaboration with business leaders and HR chiefs, has identified four key areas that will help to promote employee health and wellbeing:
- Better physical and psychological health – create an environment that promotes healthy behaviours.
- Better work – create a happy and engaging work environment.
- Better relationships – promote communications and social connections.
- Better specialist support – provide interventions to manage health and wellbeing.
"The research suggests that, for these FTSE 100 companies that strategically manage their employees' health and wellbeing, there is a link to enhanced financial performance."
However, just four of the 100 firms analysed publicly reported the financial impact of addressing health issues in 2009, up from one firm the year before.
Aston said HR still had a job to do to progress the wellbeing agenda and ensure line managers grasped their role in being intuitive to staff needs.
Julie McDowell, head of sustainable investment and a member of the Business Action on Health leadership team at Standard Life, added: "Companies that focus on employee health, wellbeing and engagement are likely to derive positive results from a more committed and productive workforce.
"While there is clearly room for improvement, the research provides encouraging signs that FTSE 100 companies are recognising the strong interest expressed by investors and others in how these issues are managed."
Ben Wilmott, senior public policy adviser at the Chartered Institute of Personnel and Development, hailed the BITC research as "extremely useful", but said there was more work to be done.
"The challenge for firms is to report people management data and use it smartly," he said.