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Annie Hayes

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Working out: The benefits shape-up

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health benefitsDespite the downturn, more employers are offering health and wellbeing benefits than ever before. But does a brief flirtation with a never-ending supply of Golden Delicious and some Nicorette patch slapping benefit the boss? Annie Hayes reports.


Wellbeing benefits on offer

Subsidised gym membership no longer pre-empts an ‘oh wow’ response. It’s about as expected as salary itself, and health and wellbeing benefits have long since surpassed a free ticket to the workout studio with a good range of alternative options on the menu.

The Chartered Institute of Personnel and Development’s (CIPD) absence management survey 2008 report shows that the most commonly provided employee wellbeing benefits (in addition to gym membership) include access to counselling services, stop smoking support, employee assistance programmes, healthy eating options in staff restaurants and access to physiotherapy.

Employers are more likely to offer benefits such as private medical insurance, critical illness insurance and long-term disability/permanent health insurance to senior-level employees than to all employees across the organisation.

Matt Millard, divisional director at Oval Healthcare, says in addition to this, dental health is climbing up the agenda: “Dental health has been shown to be a good indicator of health in general and dental plans are an increasingly popular choice.”

Large corporates are also getting ever more inventive. Professor Michael O’Donnell, chief medical officer at Unum, the largest long-term disability insurer in the UK, says that at Transport for London (TfL) they are focusing on making their wellbeing strategies relevant: “At TfL, they are running health fairs and staff are invited to attend on their days off. They offer a series of experts that give advice on a range of issues, such as diet.” BT and Royal Mail are other household names that offer similar programmes to good effect.

Unsurprisingly, it’s the larger corporates and public sector bodies (52%) that have the financial armoury to get creative when it comes to health and wellbeing benefits. According to the CIPD’s survey, just 26% of manufacturing and production organisations are likely to have plans in place, the lowest of all sectors. But does it matter and is there any real benefit?

What’s the advantage?

Millard says the benefits are numerous: “Studies have shown that employees value health benefits very highly when looking for a job, so they can be a useful tool in recruiting and retaining high quality staff, and making them feel cared for and valued.”

Millard’s belief in the product is so strong that he goes as far as to say that, in his view, offering healthcare benefits can give a company the edge when it comes to recruiting new staff. In fact, he says, in some industries they are so widely offered that not having some kind of healthcare offering will put companies at a competitive disadvantage.

“Having health and wellbeing benefits can help companies manage staff absence, leading to increased productivity and profits.”

Matt Millard, Oval Healthcare

Managing absence is another positive, says Millard: “Having health and wellbeing benefits can also help companies manage staff absence, leading to increased productivity and profits. Private medical insurance programmes mean that non-urgent medical procedures can be scheduled into the companies’ less busy periods, therefore minimising disruption. Offering employee assistance programmes such as counselling services can help to avoid stress in general, making employees happier in the process. It can also help protect businesses against expensive lawsuits brought by employees for stress or stress-related illness.”

When it comes to absence, it’s certainly a route that is worth trying. According to the Health and Safety Executive, around 13.8 million working days were lost in 2006/07 due to work-related stress, depression and anxiety whilst high level estimates suggest that stress and back pain are expensive conditions, costing the British economy £3.7 billion and £5 billion per year respectively. According to the CBI, sickness absence can cost roughly £495 per employee per year.

O’Donnell points to Royal Mail and illustrates again the value that health and wellbeing benefits can have in conjunction with other initiatives. The postal outfit was much publicised for its gifts for attendance scheme, in which an absence cull was managed by tempting employees back to work with treats, days out and holiday wins.

“There was much more to it than that, however,” says O’Donnell. “They sought to help employees out with musculoskeletal disorders for example.”

As Millard says, many of the benefits are the softer side of employment, making staff happy, conveying a sense that they are cared for and paying more than lip-service to employee wellbeing and health.

Smoking, drink and drugs rehabilitation is another key area. Research shows that smokers cost employers 64 minutes a day in lost productivity. Corporate heavyweights including Virgin, Nationwide, Xerox and Tesco have all run discounted Allen Carr Easyway programmes for their smoking workers.

Part of the success of these programmes is helping workers within a structured environment. O’Donnell believes that alcoholics are much more likely to recover if they’re in work and seeking support than unemployed and at home, for example. With less smokers and alcoholics on the staff books, employers should, in theory, at least enjoy the benefits of reduced absence and improved productivity.

Benefits aside, costs do come into play and whilst providing a never-ending supply of organic fruit might be fairly cheap and cheerful, the larger initiatives can prove costly.

Calculating the ROI

According to Building the Case for Wellness, published by PricewaterhouseCoopers in February this year, there is as yet no clear business case that demonstrates wellness programmes have a direct financial return or effects on tangible business benefits.

To add a further dash of grey to the returns the CIPD find that just 15% of organisations evaluate the impact of their wellbeing spend, with public services being the most likely (22%) and manufacturing and production the least likely (11%).

“There is as yet no clear business case that demonstrates wellness programmes have a direct financial return or effects on tangible business benefits.”

PricewaterhouseCoopers

The lack of tangible return makes health and wellbeing benefits hard to sell as it can be difficult to demonstrate the return in pounds and pennies, yet despite this almost 40% of respondent organisations in the CIPD survey are intending to increase their spend on employee wellbeing benefits in 2009, whilst nearly a third of employers have an employee wellbeing strategy in place. Improved figures may be brought about by the fact that some insurance providers have begun to bolt on wellbeing features to more traditional protection benefits.

What we do know is that the health and wellbeing benefit spend is a fairly small proportion of the total wage bill. The CIPD says the average value of employee wellbeing benefits estimated by respondent organisations as a percentage of their total pay bill is 3.3%, ranging from 3.7% in the private sector to 0.7% in non-profit organisations.

We also know that most of the financial benefits take the form of cost savings rather than increased income or revenue flows.

At ground level, Millard suggests that companies that are interested in measuring their ROI on health and wellbeing benefits could do worse than simply monitoring their absence records before and after the implementation of health schemes.

O’Donnell adds that part of the problem in arriving at an accurate ROI is that the surveys used for much evidence are relatively short term: “What we want to find out is whether those benefits are sustained in the long term.”

This is a question that only time can answer. Yet employers are getting more interested in the health and wellbeing of their staff and are somewhat incredibly, less concerned in seeing the real returns in pound signs. It’s a debate that has a lot of mileage yet and one that is just turning the corner from healthcare benefits that used to focus on what to do when things go wrong, to initiatives that demonstrate that action can be taken to prevent employees from getting there in the first place.

One Response

  1. Can organisations afford NOT to have a wellbeing & stress manage
    Hi Annie

    Thanks for this very interesting report. As a specialist in Stress Management, I agree that it can be hard to measure direct ROI for these programmes. It’s not necessarily that one isn’t able to see an ROI, it is that in my experience, many organistions are not set up to measure the ROI on Wellbeing programmes and also, are often only “dipping their toes” into wellbeing programmes.

    Part of the cause for this can be that employers can be very nervous about even raising the subject of wellbeing and stress management because they believe their employees will “jump on a bandwagon” and they’ll find themselves being taken advantage of. However, my experience indicates quite the reverse and, whilst one may always find one or two people who might “take the mickey”, the majority are actually afraid to raise the issue of their wellbeing as they’re afraid an admission to being unduly stressed, for example, may affect their career.

    I agree that a good start would be to monitor absenteeism, but also perhaps to monitor the quality of employees being attracted, any change in staff retention and so on.

    One of the issues with Wellness programmes is that, if it’s going to work well, it has to be a “two-way street” and, whilst seminars, counselling etc work, the employees themselves have to be willing to share the responsibility with employers for their own wellbeing and put their learning into practice. Working in partnership like this is more likely to produce positive results because a communication is established – and poor communication is one of the areas which is a major cause of stress in the workplace.

    At the end of the day, there are studies which have shown that people who feel they are treated well, are more productive which is bound to have an effect on the bottom line. There are also many other studies (mostly from the US), which show a positive effect individual aspects of wellbeing in the workplace producing positive results.

    One only has to think about the effect on the bottom line of legal action from an employee due to ill-health, which can result in 6-figure sum payouts in compensation, costs of the legal action, costs of diverting staff to handle the case and resulting poor publicity, to see that a wellbeing and stress management programme can have a very beneficial effect.

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