The Business Value of a Healthy Workforce

Organizations have long looked to health and productivity programs as a core component of their organizational health strategy. To them, it’s a way to keep workers healthier and stem the tide of higher health care costs. 

While the adoption of health care reform and its fast-approaching excise tax is leading organizations to develop new strategies, it’s safe to say that companies are not likely to take their foot off the health and productivity pedal anytime soon.

According to a January 2014 “Staying@Work” report by human resources research and consulting firm Towers Watson & Co., where this article’s authors work, more than two-thirds of the nearly 200 U.S. employers it surveyed said they plan to increase their support of health and wellness programs during the next two years, while an additional 17 percent plan to significantly increase support.

The top priorities for these programs include developing a workplace culture where employees are responsible for their health and understand its importance, improving employee engagement in health and productivity programs, and educating employees to be more informed health care consumers, according to the survey (Figure 1).

Additionally, survey respondents ranked a workplace culture of health as a greater priority than improving employee engagement or developing consumerist behaviors. Far and away the biggest obstacle to changing employee behavior, according to the survey, is a lack of employee engagement (low participation or interest in programs), chosen by 77 percent of U.S. employers. Nearly 30 percent in the survey said lack of evidence of appreciable financial return was the next biggest obstacle.

When it comes to engagement, employers continue to implement tactics to encourage improved employee action relating to their health and productivity (Figure 2). U.S. employers also continue to increase the number of health and productivity program offerings, the survey showed. The majority of organizations surveyed now offer wellness screening, work-site health and well-being services, lifestyle change and health and decision support.

While financial incentives continue to be widely used for at least some program elements, during the next three years U.S. employers plan to institute tougher requirements for employees to earn incentives, according to the survey (Figure 3). Employers also plan to shift their incentive strategy away from primarily rewarding desired behaviors or improved health status to a focus on building a healthy workplace culture — a major shift in strategy.

Employers are also expecting a positive return on their health and productivity investment. According to the report’s analysis of “high-effectiveness” organizations, there is a strong link between highly effective health and productivity strategies and strong human capital and financial results.

High-effectiveness organizations’ employees have obesity rates that are 25 percent lower than low-effectiveness companies, the study showed, and the rate of diabetes or high-glucose risks is roughly half (12 percent vs. 23 percent). In 2012, unplanned absences for high-effectiveness organizations were lower (3.3 vs. four days per year), according to the survey, and respondents expect them to be as low or lower in 2013 (three vs. 4.3 days per year).

High-effectiveness companies are 40 percent more likely to report financial performance above their peers during the past year than low-effectiveness companies (63 percent vs. 45 percent). In fact, the survey showed high-effectiveness companies are nearly 80 percent more likely to report their financial performance as significantly higher than their peers.

What is more, there is a differential in U.S. annual health care costs of more than $1,600 per employee, according to the study, giving a company with 20,000 employees a $32 million cost advantage over low-performing organizations.

Getting to those levels is a challenge, however. According to the report, the companies that achieve those results take a holistic view of health and productivity. In doing so, the survey showed they tend to focus on several areas:

• Gaining the commitment of senior leadership, securing resources and funding and committing to a comprehensive strategy.
• Developing a comprehensive strategy that reflects the organization’s specific challenges and goals that is based on identified population health issues and absence data and integrates every aspect of health and productivity — including the organization’s approach to health benefits, its tactics for ensuring employees’ engagement in their own health and well-being, and the management of vendor relationships.
• Implementing employee engagement strategies that promote a supportive environment, offer financial incentives for program participation and provide tools to help employees understand their best health care options.
• Engaging managers as role models for a healthy lifestyle and training them to provide the face-to-face communication employees need.
• Communicating frequently using a combination of high-touch and high-tech tactics.
• Taking steps to reduce employee stress by understanding the sources and addressing them through a cohesive, thoughtful strategy.
• Providing easy access to high-quality health care — both mental and physical — so employees can address health issues early and receive evidence-based, appropriate care, thereby avoiding or reducing absence.
• Understanding health and productivity outcomes by establishing metrics, knowing the baseline statistics for population health and absence, measuring progress against goals and adjusting programs for best results.

Whether employers stay with a self-managed or move to an exchange-based health program, the most recent Towers Watson report suggests health and productivity figures to be a part of the equation. Over the long term, the business value of a healthy workforce appears too powerful to ignore.