ALA Boston Newsletter - Spring 2008

How valuable is your employees’ health?

Investing in your organization’s human capital

Ask a roomful of partners and executive directors how much they spend annually for health care and chances are pretty good they will accurately report their aggregate costs as well as the per employee, per year outlay. The same is true of workers compensation, disability and most other major company expenses. But ask another question, “What is a healthy employee worth?” and you are likely to be answered with blank stares or puzzled faces.

I recently had the opportunity to speak to a number of corporate groups and posed that very question. One individual guessed $10,000, but mostly the room was quiet. It was pretty clear that leaders are just not accustomed to thinking about the value of good health, as opposed to the cost of poor health. It’s an interesting phenomenon. If you don’t stop to consider what the value is of a healthy and productive workforce it’s almost certain you are not actively working to cultivate such an organization. What a shame.

Investing in solutions
A focus on medical costs alone marginalizes health as an HR issue—rather than a business issue—and leads to a mindset of “reducing costs” instead of “investing in solutions”. The term “human capital” is more reflective of overall value. We have certainly heard talk about human capital over the past several years. What are you doing to maximize the human capital in your firm?

If we are to truly manage escalating health care costs, our solutions will need to go beyond cost shifting measures and high deductible plan designs. If you want to develop a high performing work group, the strategy and answers include a lot more than benefit plan design. We need to engage the hearts and minds of our workforce and enlist them as part of the solution. This necessitates viewing employees with a new perspective, one that values the intellectual property they represent and is committed to maximizing the potential that is largely untapped in today’s workforce.

Making health a core business issue requires core business outcomes. Your operational managers must wholeheartedly embrace this new mindset for it to succeed in your firm. Try engaging them with questions that reflect work performance indicators: What if all workers had two fewer days absent? What if you could get 4% more effort from workers? What if we could reduce our workers compensation costs by 50%? What if we could reduce the number of new workers we need to hire and train because the employees we have are focused, on task and on the job?

The answers to these questions will begin to help you formulate an answer to the question, “What is a healthy employee worth?” Many organizations find it helpful to build a visual framework that helps all stakeholders involved to see their respective position and function.

Most employers do not have an integrated data warehouse that combines person-level data from Group Health, STD, LTD and Work Comp. Thus, the designated manager within that employer has only a limited view of the total costs of illness, absence and injuries affecting their population. Consequently, they may inadvertently make decisions that reduce a visible cost in one program while increasing another cost that is less visible to the company’s detriment. An increased focus on absence management may encourage employees to be at work, however, overlooks the more important issue of productivity at work.

What are the costs associated with absence? The Integrated Benefits Institute calculates the lost productivity costs of absence to be seven times the cost of wage replacement alone. Impairment at work or “presenteeism” is a much larger source of workplace productivity loss than absenteeism. Further complicating the picture, recurring or ongoing absence is relatively easy to identify, but losses due to presenteeism may accumulate for years without being discovered or addressed.

Boosting your staff’s health and productivity
All that being said, there are a number of initiatives that any size firm can begin to implement that will help improve the health and productivity of the workforce. Smaller firms can focus on self-care strategies not only for areas of unnecessary utilization in the health plan, but for common causes of presenteeism like allergies. Law firms with traditional wellness programs and a reasonable budget can work to incorporate measures of presenteeism and productivity into their health risk assessment process. This can be accomplished by selecting a health risk appraisal tool that incorporates a set of questions to measure presenteeism, or by customizing your appraisal instrument to add these questions. As information is collected, targeted interventions can address specific employee groups or individuals through one-on-one coaching. Specialized culture surveys can also be conducted to assess issues in the population. Many large employers are already well down this path and have begun to publish the findings of their early studies on productivity in their workgroups. Companies providing leadership and innovation in this area include Federal Express, Dow Chemical, International Truck and Engine, and J P Morgan Chase. Others can benefit from their experience and pattern programs accordingly in their own organizations.

Evidence-based medicine seeks to set us on that path. If you can eliminate waste and improve productivity within your firm’s operations, you can do the same with employee health. Start the process today by learning the value of a healthy employee to your firm and investing in solutions accordingly.

Cheryl Mealey CHES
Regional Wellness Consultant

Thomas Porell
Vice President
Hilb, Rogal & Hobbs