For any business, people are your primary asset. Look after your employees and they’ll look after the business. But many managers still don’t realise the true cost of sick days.
Here are some alarming facts every manager should know about workplace health:
• The cost of illness to New Zealand employers each year is likely to be more than $1500 per employee or more than $2 billion across the whole workforce (TNS Conversa, Nov 2008).
• Employers are probably spending the equivalent of about nine percent of their annual pay-bill on absence, say several studies in the United Kingdom.
• An average $100 is lost for every employee absent for day. For the whole New Zealand economy, the savings from workplace health insurance in terms of loss of output avoided are $117 million year, says the NZ Institute of Economic Research.
It sounds like common sense for every company to invest in workplace wellness programme, but given the budget cuts many businesses are still facing, it can be tough convincing financial controller that this is priority business investment.
Senior managers will need to see strong business case to support proposed programme, offering the facts and figures they need to make an informed choice on whether project should go ahead.
Every business is unique, but here are some suggestions to help set up business case.
The executive summary
This is quick, easily-understood summary of the opportunity. It should include short description of the proposed health and wellness initiative and summary of the resources needed to make it happen. You should be clear about how the proposal fits with the company’s key business strategies.
You need to define the core problem or business challenge and how this problem impacts the business. It might be high levels of sickness absence, low staff morale or high staff turnover. You should include factual evidence beyond your business. Southern Cross’ healthy business website www.healthybusiness.co.nz provides absence and employee turnover calculators as well as business case tool which will help provide research and facts based on the information and areas you provide.
Outline any initiatives that have already been put in place and the results – for example, annual staff influenza vaccinations. Include staff or management feedback to help support your business case.
You should try to include examples of best practice that support your case. There are growing number of organisations in New Zealand that are investing in comprehensive wellness programmes. Among them are BNZ, Telecom and New Zealand Customs. Visit healthybusiness.co.nz to read more about these initiatives.
Describe the health and wellness initiative you want to put in place, and include comments from people who have the information and skills to strengthen your business case.
Investment and expected return
Show how much the health and wellness initiative will cost to put in place and maintain. Using the best practice examples as guide, you should clearly detail the savings that could be achieved.
Consider the financial impacts of reduced turnover, reduced sickness absence and increased productivity and remember that optimistic or unrealistic budgets and implementation schedules can destroy the credibility of business case.
Some areas you may want to include in your business case:
Absence: Include facts about sick days, such as the ones above. What are the financial impacts?
Attraction and retention: Ensure your business maximises the value of money spent on recruitment, training, and development by keeping firm lid on staff turnover, and making your business attractive to the best candidates.
• The cost of hiring and training new employee can vary from 30 percent to 200 percent of annual compensation, says the American Management Association.
• The cost of providing fully subsidised health plan for your company can be as little as one percent of your annual payroll (Source: Southern Cross, for 41-year-old earning $45,000 on the Wellbeing One plan).
• Employee benefits are one of the main reasons why employees stay with an organisation, says the Randstad 2009 Employment Trends Report.
• The 2008 Hudson Job Seeker Study into the key motivators of today’s job seeker showed they rate top employers as those who show they care about their people.
Culture and productivity: Health and wellness programmes can help you to keep healthier, more productive, loyal workforce. There is measurable link between person’s health and lifestyle and how productive they are at work. The World Economic Forum estimates the benefits from improving the general wellness of workforce indicates likely annual return of three-to-one or more, says the World Economic Forum.
Return on investment: healthy, engaged and productive workforce is critical to maximising business performance and driving sustainable growth. Health and safety activities have direct economic benefits. They help curb absence and enhance productivity and efficiency.
World Economic Forum studies show that companies with the most effective health and productivity programmes experience 11 percent higher revenue per employee and 28 percent higher shareholder returns.
Looking at the high cost of poor health to employers and success of health and wellness interventions, the economic case for investing in wellness programmes is given.
It isn’t case of can you afford to. Can you afford not to?
The right medicine
At pharmaceutical company GlaxoSmithKline in the United Kingdom health enhancement and support initiatives are part of company-wide personal and team resiliency programme to help employees remain physically energised, mentally focused, emotionally connected and spiritually aligned to their mission.
Programmes in individual and team resilience resulted in 60 percent global reduction in work-related mental ill health and 29 percent reduction in working days lost.
Staff surveys revealed an increase in staff satisfaction of 21 percent.
Half the employees reported themselves as ‘committed’ or ‘highly committed’ and 75 percent ‘never’ or ‘only occasionally’ considered leaving. These attitudinal changes were accompanied by performance and productivity increases of seven percent to 13 percent.
Source: Business in the Community, Wealth from Health, October 2007.
When quitting feels good
Sarah lived in denial for nine years. keen runner with an active interest in sports, exercise, and healthy eating, there was just one question that bothered her. If she was only ‘social’ smoker why couldn’t she give it up?
When Sarah’s workplace announced they would be running subsidised stop-smoking programme, Sarah saw this as her opportunity to seek help to quit and get rid of habit that was at odds with her otherwise healthy philosophy of life. She joined 12 colleagues in the smoking cessation programme. Going through the programme with people she knew helped create supportive environment.
Now training for the Auckland Harbour Crossing swim, Sarah also has her sights set on competing in triathlons next summer. For Sarah, an employer-subsidised programme not only helped her give up smoking, but opened up whole lot of new sporting opportunities and challenges.
• Peter Tynan is chief executive Health Insurance, Southern Cross Medical Care Society.