If you want your employees to flourish rather than merely exist, a wellbeing programme may provide the solution. But first you must convince the cynics, writes Dr Bridget Juniper.
Consider this scenario: you want to develop a more effective employee wellbeing programme. You know there is a huge gap between those employees who are deemed to be healthy because there is an absence of disease and those deemed to be healthy because they are in a state of physical, mental and social wellbeing. You have the basics in place so the prevalence of disease is managed and controlled.
You now want to take things up a few notches so that your employees are flourishing rather than merely existing. So far, so good. The only issues are lack of support from management and tight budgets. To overcome this, you must build a logical business case to convince the cynics that what you want to do offers value over existing arrangements and competing ideas.
This is a common situation. Given the high costs of poor performance to an organisation, there is a lack of strategic thought invested in the health and wellness of a workforce. No responsible employer will invest in a large-scale overhaul of its IT programme without a thorough investigation of the rationale to underpin such a decision. Why, then, does the same organisation fail to conduct a similar set of checks on the health and wellness of its workforce?
The research shows that if people feel well in their work, they will be more productive. However, this seemingly obvious fact seems to escape most programme providers and hard-nosed budget holders.
So, how do you persuade an organisation to adopt a more strategic approach to employee wellbeing that is not confined only to describing a group of workers that have no medical illnesses? This step-by-step guide should help you.
1. Identify the need that requires a solution
First, articulate the nature of your concern(s) and how this translates into a business need. While management support is clearly lacking, you must try to ensure your decision makers acknowledge that there is a problem and agree at least to consider the business case for addressing it.
2. Take stock of the current situation
Before providing ideas on which future direction to take, it is critical to establish where you are now. A thorough audit of existing arrangements will serve you well in the long run because it provides a reference framework for the recommendations in your business case.
By attributing costs to different aspects, you will construct an informed view based on the figures. Like it or not, numbers are the currency of decision makers the world over and are wholly necessary if your business case is to cut any sway.”
Decide what is in scope for your particular type of organisation and the problem(s) you have identified (see table 1). Is it just OH activity? Are there wider elements to be considered? Employee engagement? Employee benefits, perhaps? What organisational outcomes are available that link to your area of interest? Absence data? OH referrals? Claims analysis? Staff survey findings? Client satisfaction metrics? How do you compare with the competition? What are the stated aims and claims of current programme activity?
Be comprehensive and gather up as many of these details as you can. It is likely that this will be the first time this kind of examination has been conducted.
3. Calculate current costs
Based on what information has been gathered in step two, you now need to attach costs. This can be complicated, but will pay off. By attributing costs to different aspects, you will construct an informed view based on the figures. Like it or not, numbers are the currency of decision makers the world over and are wholly necessary if your business case is to cut any sway.
Each organisation will obviously vary in the detail, but there are two main elements to consider when collating related costs. The first concerns the different activities an organisation funds in order to meet its aims in relation to your business case. The second considers the financial consequences that an organisation bears when it fails on these aims.
Table 1 sets out some suggested headings for funded activities against which costs need to be set. I have suggested using remedial and preventive health classifications, but you will have your own categories that fit the profile of your organisation.
Next are the costs related to particular outcomes. This can be a bit of a hornet’s nest but, again, an essential step when building your business case. For the purposes of this exercise, I have focused only on three elements – absence, presenteeism and attrition – but it is likely you will want to change or supplement these.
The cost of absence is an obvious area of investigation for most health and wellbeing business cases.
The Chartered Institute of Personnel and Development (CIPD) estimates that absence costs an organisation about £600 for each employee each year. However, in dealings to calculate absence costs undertaken by myself, the figures are at least 50% higher. This is for two main reasons. First, indirect as well as direct costs must be factored in. Second, a percentage for unreported absence should be added to the mix on the basis that I have yet to encounter a company that believes its absence records present a full and accurate account of attendance levels. Depending on the organisation, I generally add 0.5%-1% to reported absence rates.
There are no definitive rules on what should be considered when costing absence but table 2 provides some suggestions.
You will be best positioned to calculate your indirect costs. As a guide, I use a conservative figure of 10% of direct costs. Researchers, including Huczynski and Fitzpatrick (1989), argue that 100% is nearer the mark, while the Institute of Employment Studies (2001) proposes that the number is somewhere between the two. Either way, indirect costs are a critical consideration that, inexplicably, most practitioners fail to grasp.
An increasing number of companies are reporting concerns about this, although there is much confusion over its meaning and prevalence. Here, we define presenteeism as “distraction from work”.
The conventional definition refers to lost productivity that occurs when employees attend work when they are ill and perform sub-optimally as a result. This can also be termed “sickness presence” or “lost health-related work productivity”.
Some commentators expand the term to encompass healthy employees who are just non-productive. No employee is 100% productive all of the time, but examples of this type of behaviour might include surfing the web, idle chit-chat with colleagues or making lots of personal phone calls.
You will need to decide what you mean by presenteeism and then provide a cost for it. As a guide, the Sainsbury Centre for Mental Health estimated that, in the UK in 2006, presenteeism, based on psychological health problems alone, accounted for 1.5 times as much working time lost as absenteeism, with the incidence of coming to work when unfit being more common among higher-paid staff. Others, including Johns (2010), estimate the multiplier to be anywhere between one and seven times the costs of absenteeism.
The cost of attrition is the third area of financial burden that should be considered. How many of your staff quit your organisation voluntarily because of impaired health and wellbeing? The numbers associated with this vary, but are generally 150% of annual salary costs for managers and six months’ salary costs for hourly paid workers. Generally, I attribute 50% of attrition to health and wellbeing issues.
Having assembled all of these numbers, you can start to tot them up. You will be able to calculate what the organisation is funding to prevent and manage ill health and you will be able to put a figure on what financial penalties are being paid out as a consequence of ill health. You will be surprised at the big numbers that start to emerge.
4. Cost-benefit analysis
Now that you have a better handle on the numbers, you are in a position to scrutinise spend and take an informed view of cost versus benefit. What benefits are the company reaping from its various expense lines? What is the level of staff take-up of different initiatives? Who is taking them up? If you have the data, how do short-term absences (incidence, frequency and cause) compare with long-term absences? Do the various provisions in place demonstrate direct gains to the organisation and its performance?
In almost all cases I encounter, organisations inject more funding into activities that are in place in case people get sick compared with those activities that seek to prevent people falling sick in the first place. What is the situation in your organisation? Is the split between “cure” and “prevention” activities justified? Do the data on outcomes demonstrate benefit?
The return on helping healthy people stay healthy far exceeds the return on getting people better once they are sick.”
As Dr Dee Edington, health and wellness pioneer at the University of Michigan, rightly points out, the return on helping healthy people stay healthy far exceeds the return on getting people better once they are sick. Do your costs reflect this balance? If not, why not?
5. Plug the gaps
By now, you should be generating some clarity around current practices and how they are delivering against programme aims and provider promises. Is there enough evidence to validate this spend? If not, how can you plug the gaps in knowledge in order to shore up the justification or challenge some presumptions and guesswork?
Perhaps you require better data collection or you need to carry out more analyses to link provision with organisational outcomes. The majority of enterprises state that the primary aim of their health and wellbeing programme is to enhance performance, but only a handful are able to link their actions directly to organisational markers. Be mindful of this and make your recommendations count.
6. Return on investment and recommendations
The gaps you identify in step five will form part of your recommendations. Building on this and earlier steps, you can set out specific proposals.
Now that you have a clear picture on cost versus benefit, you will be able to demonstrate return on investment for specific initiatives. For example, you will be able to show that an x% drop in short-term absence through an investment of £y will yield a return on investment of £z.
7. Required resource
Perhaps these ideas will require additional budget. However, there is a chance that you will be able to recommend reallocating spend from other budget line activity that can be resourced differently or even dropped if the payback has been minimal.
For example, a private medical insurance scheme is often a headline cost (about£500 per person). You may be able to re-negotiate the premium with the insurer or switch to a tax-efficient healthcare trust. Likewise, if you are hosting wellness events that are attended only by those who are fit, could these be replaced with something that has wider appeal?
8. Compiling your case
Now that you have carried out your due diligence, you can build your case. It should contain some or all of the following sections, depending on its focus:
- context – scope and background;
- existing position – costs and activity;
- value proposition – desired business outcomes;
- focus – the problem(s) to overcome and proposed solution(s);
- deliverables – outcomes, deliverables and benefits;
- workload – approach and phased stages of delivery;
- required resources – team and budget schedule;
- review – evaluation; and
These steps offer a methodical approach to breaking down current activity and quantifying the numbers around provision and impact.
OH professionals who follow this kind of discipline will have more influence over the kind of health and wellness programme they are involved with.
They will be able to justify their recommendations and place the health and wellbeing of their workforce on a more commercial platform. This will benefit them professionally, their senior managers and, importantly, the employees themselves, who will profit from a well-thought-out, balanced programme.
Dr Bridget Juniper is head of Work and Wellbeing Ltd, which specialises in the measurement of employee wellbeing. A chartered organisational psychologist, Juniper has conducted award-winning research on employee wellbeing at Cranfield University. She publishes regularly in scholarly journals and frequently presents to academic and corporate audiences.
Private medical insurance
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National insurance contributions