Back in business

The provision of occupational health services in the UK is
at an all time low. But with employees being the backbone of any
organisation,  Caroline Horn puts
forward five good reasons to get OH…

Recent research has shown that only 30 per cent of the UK’s workforce have
access to an occupational health service. The survey, conducted by the
Institute of Occupational Medicine for the Health & Safety Executive, also
revealed the steady decline in the provision of occupational health – 10 years
ago, around half the country’s workforce was covered.

Finance and transport industries are among the worst providers (35 per
cent). A spokesperson for the TUC commenting on the research, stated:
"Worryingly, in some sectors, the main reason given for having no
occupational health support was that there were no relevant hazards.

"This included more than 20 per cent of finance sector employers,
although their staff suffer from stress and RSI; more than 15 per cent of
transport companies, where staff suffer from musculo-skeletal disorders; and
more than 10 per cent of retail companies, whose staff are also prone to
musculo-skeletal disorders."

Owen Tudor, health and safety specialist for the TUC, says: "The
situation is getting worse for two reasons. Companies are downsizing and
outsourcing, and healthcare is one of the central functions they can easily get
rid of. And external occupational health services are more vulnerable to future
cost-cutting exercises.

"The second reason is that in the UK, we tend to cut costs to improve
profitability, instead of thinking: ‘let’s increase production by ensuring that
our staff are at work, and well’."

Chief executive of the Businesshealth Group Ed Radkiewicz, says: "A
company will typically spend around 15 per cent of the value of its IT system
on maintenance to avoid breakdown. But the workforce represents the largest
cost in a company – and often, it will spend very little on its health

Part of the problem, says Janice Kaye, managing director of OH service
provider MMS, is that companies are notoriously poor at absentee analysis.

"If companies don’t know what their problems are," she asks,
"then how can you convince management to put their money up front to solve
the problem?"

Radkiewicz adds that many businesses don’t see health and well being as a
possible advantage, because "they are not sure what the issue is and
they’re not confident they can do anything about it".

But even where companies do make a provision for occupational health, the
TUC concludes: "Very few of the workplaces surveyed actually assessed the
costs and benefits of their OH provision. In the workplaces that did, the costs
were evaluated more often than the benefits, which is pretty pointless."

To get companies back on track, the boards need to be convinced that OH is
just as much a strategic business issue as any other HR initiative. We look at
five areas where OH intervention and comprehensive support – which protects and
promotes the health of employees – can help productivity and add value to the
bottom line of any business.

1 Business benefits

There are a number of issues companies should consider when looking at the
costs and benefits of OH systems. In addition to the direct costs, these
include productivity and risk assessments, as well as employee value and
corporate responsibility.

According to the CBI, British industry loses around £13bn annually through
absence caused by health issues. While this includes the direct costs of absence,
companies also need to factor in increased insurance premiums – up by 6 per
cent last year across the UK – and, where necessary, ill health retirement

In terms of staff turnover, employers need to consider the additional costs
of recruitment, training and the associated drop in productivity.

In fact, healthcare provider Businesshealth Group estimates that around 40
per cent of a company’s total staff costs are related to health.

Radkiewicz says: "Businesses need to understand what the problem is,
how important it is, and how to deal with it."

One of Businesshealth’s customers, Direct Line, had problems related to
staff turnover and absenteeism that affected payroll costs, training, customer
service and morale.

Direct Line estimated that staff turnover was costing £27m each year, and
absenteeism £6.5m. It therefore introduced a pressure management programme
developed by Businesshealth, to tackle stress-related issues among 600 of its
employees in Bristol.

As a result, employee turnover dropped by 5 per cent, representing a saving
of £150,000 in direct payroll costs alone.

The Engineering Employers Federation says that tackling stress can have a
range of positive effects on a company’s output, as it impacts on individual
performance in a number of ways, including work quality, resistance to change,
and relationships with colleagues and customers.

Even if companies remain sceptical that OH measures can contribute
positively to the bottom line, failing to tackle issues such as stress can be a
false economy.

The TUC’s Tudor explains why: "For employers who do provide OH
services, the legal imperative is very strong. While the first reason they
generally give for introducing OH measures is ‘because it is a good idea’, the
second is to minimise the possibility of litigation."

2 Absence Management

While there are many different reasons for staff absence, poor health is the
most worrying. It is estimated that we lose around 700 million working days a
year to aches, pains and strains.

Of those, around 3.7 million days are lost through back problems. Workplace
stress costs a further £3.75bn each year, says the HSE, and the loss of 6.5
million working days.

Musculo-skeletal disorder (MSD) affects around 1.2 million people, costs
around £10bn each year and necessitates up to 12 million GP consultations,
costing the NHS nearly £500m. It now accounts for 60 per cent of all
health-related absenteeism – but effective occupational health systems can help
to reduce its impact.

Four years ago, British Polythene Industries (BPI) was experiencing
spiralling injury and absenteeism rates across its 3,000-strong UK workforce.
Each case of MSD absence at the firm resulted in an average of 26 working days

BPI group health and safety manager Andy Collinson wanted to find an
effective way of rehabilitating injured employees, believing a proactive
approach would reduce levels of absenteeism.

The company approached MMS National – a UK-wide network of 3,000 osteopaths,
chiropractors and physiotherapists who provide preventative training and
immediate treatment for MSD injuries.

Within a year, MSD absence at BPI was down 75 per cent.

"In financial terms, the benefits outweigh the costs by 12:1,"
says Collinson.

But stress is also a major and growing contributory factor to absence, with
the CBI estimating that mental health problems account for around 53 per cent
of sickness absences.

Gary Booton, health and safety manager for the Engineering Employers’
Federation, says: "Managing stress is integral to a business and impacts
on the day-to-day costs of managing absence and developing good systems.

"The external driver, is the risk of litigation," he adds.

Rolls-Royce is one of the companies actively involved in stress management
and has used the Federation’s document, Managing Stress at Work
(, to help reduce employee absence levels.

Booton says: "Rolls-Royce trained 75 per cent of their managers in
stress management using our formulas. In the first year, there was a 25 per
cent drop in absences caused by depression."

3 Attraction and retention

Most companies will state that attraction and retention, in addition to
absence management, are the key drivers in offering private health insurance.
According to Mercer Human Resource Consulting, private health insurance is
invariably among the top three most valued benefits in staff surveys.

In Watson Wyatt’s 2002 Employee Reward and Benefits Report, the most popular
benefit among employees is private medical insurance – which came above company
cars and holidays.

Indeed, private health insurance is likely to grow in popularity as an
increasingly stretched NHS makes private healthcare even more attractive.

For individuals, private healthcare doesn’t come cheap. Research undertaken
by HealthSure showed that while 68 per cent of people feel they should be
taking more responsibility for their health, around 30 per cent delay essential
treatment because of costs.

Janice Kaye, managing director of MMS, adds: "Our own research
indicates that quick access to healthcare is important to employees,
particularly those working in heavy industries."

Private healthcare can therefore be a very useful benefits tool for
employers. But before a company implements a health package aimed at improving
attraction and retention of employees, it needs to do its homework.

Mercer points out that criteria such as membership eligibility for people
such as part-time workers and family members, and issues such as what exactly
will be covered – treating pre-existing medical conditions, rehabilitation
services and so forth – all need to be addressed, and compared to what the
competition currently has on offer.

When electrical retailer Dixons was researching healthcare provision for its
employees, it wanted all staff to have the option of healthcare as part of its
attraction and retention package.

While full-scale private medical insurance for all employees would have been
prohibitively expensive, Dixons opted for a Health for Cash plan from
HealthSure, where employees pay a weekly premium in return for access to
private healthcare providers.

Raman Sankaran, marketing communications manager for HealthSure, says:
"This is something that people can use regularly even when they are not
ill – it can help with dental care and optician costs. It is just as much about
prevention as it is about cure."

4 Work-life balance

Enhancing work-life effectiveness will generally involve some or all of the
following: flexible working, innovative ways of working, individual career
development, and individual support.

Occupational health measures can impact on all of these, says Christine
Owen, European partner at Mercer Human Resource Consulting.

While generally regarded as a positive option for individual staff, flexible
working can increase stress for line managers if a department experiences
frequent short absences, or if incompatible people are job sharing.

"OH systems can support managers and can also act as a catalyst for
improving other factors, such as management systems and interpersonal
skills," says Owen.

Mercer is currently working with a police force that has around 1,700 staff,
where a high level of sickness absence and a lack of ‘best practice’ work-life
balance policies, have affected the work-life balance of staff.

To address all of these issues, Mercer’s programme focused on developing an
integrated healthcare system to manage musculo-skeletal and psychological stress
conditions, to reduce pressure at operational level. The results of the
programme are currently being assessed.

Non-standard work patterns, such as those adopted by call centres, should be
assessed to check the impact they are having on an individual’s life outside
work, such as the effects caused by shift working, because absenteeism is not
always health related.

When Direct Line investigated the reasons for absence at its call centres,
consultant Business health found the group costing the most was the youngest.
Many were taking on full-time employment for the first time, and still learning
how to create a work-life balance.

In career development, occupational health measures can help to ensure
people are suited to their role – long working hours or excessive travel, for
example, will have a negative impact.

Employee assistance programmes could include an element of health, such as
counselling, or the provision of information on health screening, for instance.

Bechtel UK, an engineering firm, introduced health-screening facilities
after a pilot programme, conducted by Businesshealth, revealed that staff had
some serious health risks – especially cardiovascular and musculo-skeletal

A personal health manager and walk-in clinics were made available to those
employees at risk, and a culture change is now underway – an unhealthy
lifestyle is no longer seen as a badge of honour.

5 Corporate responsibility

Corporations are under increasing pressure to take responsibility for their
employees’ health. The Government has set demanding health and safety targets
for the British economy in the Revitalising Health and Safety (RHS) and
Securing Health Together (SH2) strategy statements, published in 2001.

Targets include a 30 per cent reduction in the number of working days lost
from work-related injury and ill-health, reducing the number of people
suffering from work-related ill-health by 20 per cent, and reducing the rate of
fatal and major injury accidents by 10 per cent, all by the year 2010. The
Government wants businesses to be at the half way mark by 2004.

The costs – both legal and financial – of failing to meet health and safety
obligations, are likely to rise. In recent cases highlighted by the HSE, an
injury to a worker using an unguarded drill cost a small engineering company
£45,000. The managing director was also prosecuted, and two employees were made
redundant to keep the company afloat.

In the construction industry, meanwhile, accidents can account for 3 to 6
per cent of total project costs.

But as Meredith Tweedie, occupational health services consultancy manager
with AIG, points out: "An industry like construction is high risk, and
will obviously need support from health and safety. But what if you’re trying
to squeeze a six-foot worker into a cramped office? Health and safety must go
right across the board."

There is also a growing moral imperative on corporates to become more
involved in their employees’ health, something that is reflected in the
increasing interest in OH measures from outside bodies.

According to the HSC, reporting on health and safety by the FTSE 100
companies increased from 47 per cent in 1995, to 60 per cent in 2001.

Research carried out by Claros Consulting on behalf of HSC/HSE, highlighted
that accurate information about a company’s health and safety performance is
becoming more important to investors.

And as Colin Grange, clinical director of Ceridian Centrefile, points out:
"OH measures signal the culture of an organisation. Companies are making
many more demands on employees – a good OH system will indicate that the
company is willing to give something back."

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