Why workplace wellness makes financial sense

Written by
Greg Levine

13 Oct 2015

13 Oct 2015 • by Greg Levine

There are so many factors that contribute to a a person being ‘unhealthy’ – lack of sleep, money worries, the list is endless. With these issues circulating through the workplace this could potentially impact upon productivity. Greg Levine explains why it could be financially beneficial to your organisation to keep your employees upbeat. 

An investment that will pay off

Investment in employee health is not always top of the agenda for HR divisions in the UK, despite emerging evidence to suggest the positive effect that these programmes can have on both health and productivity outcomes. While the reasons for this vary, two primary drivers relate to the strength and ubiquity of the NHS as the provider and funder of healthcare for the nation, and the fact that healthy lifestyle changes take time to manifest in better health outcomes.

The implications of these issues from an HR strategy perspective are profound; first, UK employers are not exposed to the direct medical costs of employee illness and therefore have little incentive to control these costs. This effect is most powerfully demonstrated by comparing the levels of investment in employee health across U.S. and UK-based companies. Second, there exists a perception that any employee health improvement that is achieved will benefit the next employer, a fear that has intensified in view of globalisation and increasing levels of competition and employee turnover. 

How do we bridge this divide? It is important to understand that while the issues that UK employers are grappling with are real and relevant, they tell only part of the story. By focusing purely on short-term healthcare costs and long-term health outcomes, employers are missing productivity effects that are impacting on their bottom lines significantly. This is where the opportunity lies.

Britains healthiest company

Encouragingly, our proprietary research shows that many of the drivers of lost productivity can be modified quite significantly in the short-term. Using data from nearly 25,000 employees and 82 UK-based companies that participated in ‘Britain’s Healthiest Company’, an initiative of Vitality in partnership with Mercer, Rand Europe and the University of Cambridge, we have measured the effect of different lifestyle and clinical risk factors on both absence and presenteeism. What is clear from the analysis is that companies need to think more broadly about managing productivity, extending to areas such as the sleep patterns and financial circumstances of its employees, as well as managing the inter-dependency of risks. It is a complex challenge, but models such as these provide a new approach, as well as a basis to change the conversation internally to allow companies to invest in employee wellbeing more comprehensively.

The question is where to start. You can’t manage what you don’t measure, so employers need a baseline measure across a diverse range of factors. They also need a benchmark to understand the potential for improvement. This is where Britain’s Healthiest Company plays a critical role. The survey comprehensively evaluates the health of both companies and employees, focusing on issues such as the effect of existing wellbeing policies and interventions in improving employee health; the company culture and leadership; employee engagement and productivity; the clinical and lifestyle risks to which employees are exposed; mental wellbeing issues; and employee motivation to change. Since the initiative was launched 3 years ago, nearly 180 unique companies, and over 60,000 unique employees, have participated, yielding a significant dataset that correlates employer measures to employee lifestyle, health and productivity measures. 

What have we found? The research revealed that employees’ poor lifestyles are impacting on their health, while companies are exposed to very significant costs of lost productivity, some of which are directly related to the lifestyle choices that employees make. 

From a healthcare perspective, when we calculated the Vitality Age* of the 25,000 respondents to the 2014 Britain’s Healthiest Company survey, it was found to be almost four years older than actual age. In effect, the workforce is four years older than it should be. In the case of productivity, UK companies lost nearly 8% of their annual wage bills to absence and presenteeism, a staggering £58bn cost to the economy each year. As expected, there are variations both in the profile of employees who are exposed to risk, as well as differences by industry, firm size and location. The clear message though is that the productivity problem is pervasive, all companies, regardless of industry and size, suffer from lost productivity, with varying degrees of opportunity to modify employee behaviour to address these losses. 

Integrate happiness into your office culture

Making employee health a focal point of company culture and offering an engaging incentive system can lead to successful changes in terms of health and productivity. There are many interesting initiatives which have been used to support cultural change, ranging from removing sweets and sugary drinks in vending machines to offering free gym and yoga classes. Some UK companies are now offering ‘stress reduction groups’ and ‘cycle to work’ initiatives as well as smoking intervention.     If companies are able to incentivise worker health then the UK will undoubtedly begin to see changes in employee engagement and productivity levels, all of which will benefit HR and management teams operating in all industries. 

On the strength of our data, it is hard to dispute that a well-structured and comprehensive workplace wellness programme is good for everyone - employer, employee and society as a whole. By engaging in the programme, employees become healthier, which reduces the burden on the NHS. In addition, employers enjoy the financial benefits of a healthier, more productive and more engaged workforce. 

As such, we believe that employee health and wellbeing should be placed firmly on the boardroom agenda across the UK. But we know that change is hard - to bring about the needed paradigm shift, companies should take the bold step to externally report on both their wellness initiatives as well as the concomitant effect of those programmes on employee health. It is time that companies give the same attention and visibility to employee health issues as they do to their corporate social responsibility activities.