There are many global imperatives for investment in health management. Topping the list are increasing health costs, an aging workforce with associated increasing health risks, the war for talent in emerging markets, and employee engagement and productivity in all geographies. Managing health risk is important from both cost management and human capital management perspectives. The transformational message to all those concerned with corporate health care is to move from focusing on reactive methods of disease identification and claim reviews to promoting ways for employees to live and work with energy and vitality.

Getting ahead of the competition with a healthy and productive workforce

In today’s competitive business world, all companies are under pressure to create a high-performance culture – but what makes or breaks a high-performance culture?

The two key ingredients are health and engagement. Employees who are distracted by ill health do not have the energy to unleash the discretionary effort that results from being truly engaged in their work. Engagement is needed for the development of creative solutions to help companies thrive in difficult economic environments and, in the process, contribute to sustained growth in the economies in which they operate. Engagement is also needed to make work meaningful in the eyes of employees and enhance their self-esteem and feelings of self-worth.

The equilibrium of a fulfilled personal life and a fulfilled work life creates a happy employee. We all know that there are times when either or both of these are not perfect, but the science behind productivity, engagement and well-being tells us in no uncertain terms that the status quo is not fate. We are the masters of our destiny – at least to some extent. And the environment in the workplace has a huge bearing on employee motivation and productivity. Good management includes motivating employees to give their all. Good managers have the confidence to address employee issues, including health and performance issues, when they first emerge, because these managers know that good referral pathways are in place to allow them to tackle problems early and to be the “caring face” of the organization. Good managers also have learned when to refer employees on to the appropriate service instead of assuming a counseling role, which would be intrusive and unprofessional.

If there is one lesson the recent economic crisis has taught us, it is the importance of a healthy, productive workforce that can help companies get and stay ahead of the competition. No one reaches his or her potential without looking after one’s own health, and no organization reaches its potential without a healthy workforce. Simply put, we can either allow matters to get worse, treating sickness and losing valuable productivity, or renew our focus on keeping people healthy and productive ⁽¹⁾. 

Staying healthy is as important as treating illness

Investing in well-being makes business sense. While sickness incurs high treatment costs, maintaining wellness is usually much more cost effective. An investment strategy of maintaining good health avoids the otherwise “natural” progression of a significant proportion of the employee population -- from the low health risk to the medium- and high-risk groups and, ultimately, to the proportion of ill employees who incur high treatment costs and experience reduced productivity through absenteeism and presenteeism.

Plenty of evidence shows that employee engagement correlates directly with higher customer satisfaction, higher productivity and higher profitability. Also, the drivers of engagement have been studied carefully over the past years. These include opportunities to learn new skills, motivational leadership, fair pay, consistency, input into decision making, collaboration with colleagues, and senior management acting to ensure the organization’s long-term success by taking an interest in employee well-being.

The last two drivers are currently moving to the forefront of researchers’ inquiries. A long-term view is necessary because the credit crunch has shown that “short term-ism” in business can have catastrophic consequences. Employee well-being is important because it is becoming increasingly clearer that business sustainability and engagement depend on healthy individuals.

The recognition that investments in health and well-being are critical to business success should change our thinking and planning around risk management. While we all recognize that financial, environmental and infrastructure risks are high on the agenda, we are slowly appreciating that operational risk is not just about processes and systems but, first and foremost, about people. And people will achieve high levels of productivity only when they are healthy. 

Create healthy habits to support behavioral change

Health risk assessments are a good tool to raise awareness about risk factors, but awareness alone is not enough to change behavior and achieve desired health outcomes. Similarly, targeted single-issue campaigns have shown disappointing outcomes in the past because old habits die hard in many work environments. To succeed with behavioral change, people need an environment that reinforces their self-motivation. Healthy food choices, a smoking ban, flexible working hours and opportunities to exercise are examples of environmental changes that have shown much greater success in improving health than singling out individuals for change. Innovative organizations have found ways of creating the group dynamics conducive to engaging all employees in the quest for a healthier lifestyle.

It is important to have support and participation from top leadership to create maximum levels of program engagement. Employees who experience a caring workplace created by a supportive management team are more likely to carry over healthy behavioral patterns into their personal time.

Success breeds success! Small, achievable steps are crucial because they can be sustained over time.

It is much easier to create healthy habits or rituals than it is to appeal to people’s personal sense of discipline. If Thursday is a designated gym day, then the decision to exercise has already been made and extra willpower will not be required!

We are seeing an increase in chronic diseases, such as diabetes and cardiovascular disease. As a consequence, the health care costs in the Europe, Middle East and Africa (EMEA) region keep rising − as they do globally − reaching levels almost double the general rate of inflation. While European businesses have been traditionally protected from the full weight of medical inflation, this is no longer entirely true because the sovereign debt crisis is accelerating the shift from state funding to private funding of health care. Public funding shortages are further compounded by low birth rates across EMEA.

Some of the most common health problems, such as back pain, elevated cholesterol and high blood pressure, are relatively inexpensive to treat, but if we do nothing these problems will progress to the next level and be much more costly – economically and personally. An assessment of the full cost of health and disease is vital for creating a sound business case when prioritizing an organization’s health and well-being program. The transformational message to all concerned with corporate health care is to move from focusing only on disease to promoting ways to live and work with energy and vitality. Supporting employee health and wellness means that employees have the strengths to develop their potential and look after their health in the workplace and outside work, which in turn increases their resilience in times of organizational change and challenges. Having appropriate control over their workflow further enhances work satisfaction and contributes to commitment and engagement, resulting in higher productivity.

Mental health is a major factor in presenteeism

Major factors in presenteeism – a term describing when employees are present at work but are not as productive as they are when at their best and not distracted by ill health – are stress and common mental health concerns. For instance, in 2011, Mercer released data from 375,000 claims in the UK showing that mental health has overtaken musculoskeletal complaints as the main cause of incapacity claims. The trend is also reflected in data from Mercer’s Pan European Health & Benefits Survey, which found that among the 502 companies surveyed across Europe, mental health issues were cited as the largest cause of long-term absence among their staff, slightly above musculoskeletal causes.

The understanding and awareness of mental health conditions and their impact on an employee’s productivity have leapt forward in recent years. However, employers must endeavor to remain ahead of the curve; medical and insurance costs associated with mental health are heading upward. Hence, forward-looking organizations have shifted their emphasis from managing premiums only to managing claims and their underlying causes, and mental health has come to the forefront of their attention.

While the cause and effect can appear relatively obvious, the situation is complicated by companies’ general inability to gather information on the causes and details of employee absences. While many companies state that mental health is the prime cause of long-term absences, 25% of UK respondents to Mercer’s Pan European Health & Benefits Survey said their companies had no access to good-quality data on the causes, duration or cost of their employees’ absences. Of those that did have some form of measurement, the majority focused on duration of absence (73%), cause of absence (43%) and cost of absence (19%).

We know that mental health and associated absences are problems, and cuts in state provision are likely to exacerbate the situation. Yet a large proportion of companies do not know why their employees are absent. This isn’t good business practice, and this lack of knowledge costs organizations money. Poor mental health and high absence rates lead to high staff turnover.

Care pathways should be established

One solution for the lack of data and spiraling mental health care costs is to create a triage system using a mental health professional as a gatekeeper. This model allows a company to respond in a more focused manner to employees’ mental health issues. It can be used to gather good data on mental health in the organization and, from there, allocate resources to the right areas.

Management in the UK has a legal duty to care for staff health and safety, and individual managers have a responsibility for each employee’s personal well-being at work. It is important for managers to know both the company policy and about their staff's health situations, in order to recognize problems early and intervene swiftly and appropriately. Companies should also be aware that the care and advice that employees may have sought from their local general practitioner (GP) may soon be unavailable or at risk due to funding decisions that commissioning GPs may make in the future. It is in a company’s financial interest to get its staff back to work as soon as possible, so HR directors should consider what their organization needs to provide in lieu of the state provisions to reduce mental illness and absences.

Being proactive on mental health issues, such as depression and anxiety disorders, pays dividends, as these disorders are the biggest cause of presenteeism or a lack of productivity. Results of studies from around the globe provide evidence that industry incurs more costs from presenteeism than from absenteeism ⁽²⁾.  In the UK, for example, the Sainsbury Centre for Mental Health calculated that the British industry loses £8.4 billion and £15.1 billion annually to absenteeism and presenteeism, respectively, due to mental health issues alone ⁽³⁾.

Organizations are under pressure to become more efficient and get ahead of the competition. They face challenges of skill shortages in certain industry sectors, productivity impairment due to chronic diseases and reduced employee engagement. In addition, there is the financial burden caused by absent employees, who could be rehabilitated, and high staff turnover.

Stay on top of the health service continuum

Only an integrated and coordinated program can create the desired outcome of a culture of good health and a significant return on investment. Poorly targeted projects that lack a strategic plan may lead to a shift of the problem from one area to another. For instance, absenteeism projects in isolation often create more presenteeism, as employees are reluctant to acknowledge the need for treatment – particularly when the disease has a perceived social stigma, such as is often the case with mental health disorders. This may lead to late diagnosis and treatment. To avoid just “squeezing the balloon,” we recommend an integrated strategy that includes the creation of care pathways that empower managers to tackle absenteeism and presenteeism in a caring and meaningful way.

Mercer’s Health Management Consulting team uses a service continuum that is aligned to the employee journey in an organization – from the recruitment phase, support when employees are not at work or absent from work, and through the phase when they are leaving the organization. This phased model allows Mercer consultants to design and implement services that are integrated and generate intelligent health and ROI data. An annual review evaluates the impact of the existing services and provides the opportunity to align the health and wellness strategy with human capital strategy.

In practice, when designing a health care strategy with clients, consultants discuss how much productivity is currently lost, how to collect data on absenteeism and presenteeism, how to analyze insurance claims, and how to perform a review of referral pathways. Employee health is a global issue, and health management can create a competitive advantage through productivity improvements and risk management.

Ultimately, a high-performance culture depends on healthy and engaged employees!

Notes:

1. Edington DW. Zero Trends: Health as a Serious Economic Strategy, Health Management Research Center, 2009.
2. Hemp P. “Presenteeism: At work – But out of it,” Harvard Business Review, October 2004.
3. The Sainsbury Centre for Mental Health. Mental Health at Work: Developing the Business Case, December 2007.