Focus on staff health can boost financial performance by 10%

Companies that take active steps to manage and promote health and wellbeing at work can improve their financial performance by as much as 10%, research has found.

An analysis of FTSE 100 companies by Business In The Community found that those that reported quantitatively on employee health issues outperformed their peers when it came to shareholder return by on average 10 percentage points during 2009.

The study, which has made one of the first clear links between health and wellbeing and improved financial performance, was carried out in conjunction with pollster Ipsos Mori.

It found that 37 firms that 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 firms had an average return of 51%.

BITC has identified four key areas that promote employee health:

• Better physical and psychological health, to create an environment that promotes healthy behaviours
• Better work, to create a happy and engaging work environment
• Better relationships, to promote communications and social connections
• Better specialist support, to provide interventions to manage health and wellbeing.

Louise Aston, national director for BITC’s Business Action on Health, said: “This is hugely encouraging as we campaign to promote the business benefits of better health at work and to make public reporting on workplace health issues commonplace in UK boardrooms.

“However, there is evidence to suggest that companies could benefit even further by recognising wellness as a strategic business issue that is linked directly to engagement and organisational productivity,” she added.

In a separate analysis, workplace engagement body The Great Places to Work Institute has argued that firms ranked in its annual “best workplaces” poll also on average reported sickness absence rates that were 30% lower than rivals who did not manage their staff so effectively.

With sickness absence estimated by the Chartered Institute of Personnel and Development to cost nearly £700 a year per employee, this meant a firm with 100 employees could be looking at savings of £21,000 a year in this one area alone, the institute calculated.