Why isn't wellbeing a boardroom issue?
Katie Jacobs, October 30, 2014
Research conducted by HR magazine reveals worrying trends in businesses’ attitude to wellbeing. Why isn’t it being taken seriously as a boardroom issue?
Imagine your company spends millions a year on a complex piece of machinery. This piece of machinery is responsible for practically everything you do. Without it, you can’t create new products, deliver services or keep back-office functions ticking. Would you wait for this piece of machinery to break down unexpectedly? Or would you invest a substantial amount in keeping everything in working order, nipping any potential problems in the bud before they impact too much on the day-to-day business? It’s a no-brainer.
But when that machinery is people, which in today’s knowledge-driven economy is highly likely, the message doesn’t seem to have been received. Employee health and wellbeing still isn’t being taken seriously in many companies, seen too often as ‘fluffy’ or an optional extra.
HR magazine wanted to know what our readers were thinking about health and wellbeing, and whether it was being thought about strategically at the highest levels of business. So, in conjunction with Indaba Health and Wellness, who provided our prize, we surveyed over 400 of you, from CEOs of small businesses to HR directors of multinationals and public sector bodies. The results were not overly surprising, but no less concerning.
Not a strategic imperative
They paint a picture of a business landscape where health and wellbeing is tackled as a series of piecemeal initiatives and policies rather than as part of a business strategy. Almost half (47%) of respondents said they ran health and wellbeing initiatives, but only 17% said they had a comprehensive strategy in place linking the health and wellbeing of the workforce to the success of the business. A quarter had nothing in place, although were keen to start focusing on employee health. Most worryingly, 11% had nothing in place and no plans to introduce a strategy.
When asked how important health and wellbeing was to the business, 19% said it was ‘vital and at the core of the business’ and 51% classed it as ‘important’. However, 27% said it was only ‘nice to have, not a business imperative’. And 4% said it wasn’t important at all.
Louise Aston, director of the Business in the Community (BITC) Workwell campaign around health and wellbeing, isn’t surprised by the findings. “This agenda is very much in its infancy,” she says. “In the last five or six years there has been good progress, but there is still a long way to go.”
Ivan Robertson, visiting professor of organisational psychology at Leeds University Business School and co-founder of business psychologists Robertson Cooper (with fellow professor and wellbeing evangelist Cary Cooper) agrees. “Few people do this in a really joined up, strategic way, but some are much worse than others,” he says. “In general, across UK Plc, there is some awareness, and people are beginning to take it more seriously, but it’s not strategic enough.”
A clear business case
Why is this the status quo? After all, there is no shortage of business cases for investing in health and wellbeing. First: the cost of absenteeism. According to the CBI’s 2013 absence survey, the average total cost for each absent employee in 2012 was £975, while the median cost of absence per employee totalled £622. That directly costs the UK economy about £14 billion a year, according to the CBI research.
Then there’s the flip-side of absenteeism: presenteeism, attending work while unfit, draining productivity. The Centre for Mental Health calculates that presenteeism based on psychological health problems alone costs the UK economy £15.1 billion a year. A 2010 report on presenteeism in the workplace estimated the multiplier to be anywhere between one and seven times the costs of absence, a figure that is only likely to have increased as people worry about losing their jobs if they show any physical or physiological weakness.
External demographics such as the UK’s ageing workforce means the situation is only likely to get worse. The number of older people in work has been rising rapidly and there are already more than ten million people in the UK aged over 65, a figure set to double in the next 30 years. Younger workers won’t be eligible for a state pension until they hit 70 and beyond. And, as our piece on p36 explores, long-term conditions are becoming more and more common for British employees. According to our research, many businesses have not yet woken up to this: 20% of respondents said they were ‘not concerned at all’ about the potential impact of an ageing workforce, while 36% classed their concerns as ‘neutral’.
“There is a compelling business case out there, but in many cases there seems to be a gap between the evidence and companies adopting policies,” says Aston. “This agenda is very intangible and there’s no one-size-fits-all solution. It’s not linear and it’s hard work, which is why companies are struggling.”
“It’s not that there’s not enough evidence,” adds Robertson. “But even if you put that evidence in front of people, some people don’t go for it.” That’s a situation that will be all too familiar to many HRDs, with 29% of our survey participants citing lack of buy-in from senior leaders as a major barrier in implementing a successful health and wellbeing strategy. Robertson adds the major problem is that “the benefits [of investing in wellbeing] are tomorrow”, something many leaders, focused on short-term returns, don’t like to hear.
Turning cost to your advantage
Almost half of respondents (48%) cited costs as the biggest barrier to implementing a successful strategy. But at the Children and Family Court Advisory and Support Service (Cafcass), HR director Jabbar Sardar and his senior HR business partner Daryl Maitland were able to build a solid business case for health and wellbeing investment based on cost. “We analysed where we were spending our money and 80% of our spend was going on 20% of staff who were on long-term sick leave,” explains Maitland. “What we were spending was very fragmented. We wanted to redistribute it across the entire workforce.”
“We wanted to use 100% of spend for 100% of people,” continues Sardar. “My question to the board was: ‘We spend this much on 500 people. Would you like that to be spent on everyone and engage everyone’? They said: ‘Of course’. That was our rationale. We set it up from a cost perspective. Now, we spend 1.2% of our budget on health and wellbeing. What organisation wouldn’t want to use that to engage 100% of the workforce?”
As part of Cafcass’s strategy, staff were consulted on what services they would appreciate. With an ageing workforce, areas like complimentary health scored particularly highly. Cafcass measures everything, from what people are using to the impact on individual and regional sickness levels. These metrics are linked to personal employee dashboards, which also measure things like performance. Sickness costs have reduced from £3.3 million to £1.8 million in two years, and social workers now take an average of six sick days a year, down from 16.2. This is despite them handling heavier caseloads.
“You don’t need to spend a lot or do a lot of random things,” says Sardar. “You need to be very clear and have a coherent vision; we knew we had an ageing workforce. This is about staff taking personal responsibility for their wellbeing – looking at a range of options and deciding what’s right for them. HR gets to be more of a strategic player as staff are taking accountability for their own sickness. I wanted my team to be dealing with engagement, culture and talent, not occupational health and sickness.”
A joined-up approach
Maitland identifies that before overhauling Cafcass’s strategy, health spend was highly fragmented. Both Aston and Robertson call this out as an issue for the wellness agenda, preventing it from being taken more seriously. “There’s a lack of overall strategic management and ownership around this,” says Aston. “It tends to be quite siloed; you’ve got HR, occupational health, talent management… Overall strategic ownership for the agenda is really lacking.”
Aston believes fundamental ownership should come from the CEO, not be siloed in HR. “In terms of elevating it to a strategic boardroom issue, a lot of this is about silo-busting; getting all the pieces around the table and talking about it together,” she adds.
“Part of [the problem] is the way organisations are structured,” explains Robertson. “Typically you have HR, health and safety, and occupational health taking an interest in this area. HR is occupied with other areas, like talent management. Occupational health is really occupational ill-health, trying to catch it when things go wrong. None of it is joined-up because the people at the top haven’t go the message yet. There needs to be recognition that health and wellbeing is mainstream. Take all the fragmented areas of the business and join them up at a higher level, pulling together those three areas.”
When Andrew Dodman, HR director at the University of Sheffield, wanted to launch a new wellbeing strategy, aimed at putting health at the heart of the employee offering and tailored to individual members of staff, fragmentation was initially “a huge challenge”, he recalls. “I was adamant everything had to be integrated and a one-stop shop, under one brand,” he adds. “Staff don’t want to jump from one department or team to another. Fragmentation could be a reason why provision is weak [across UK Plc], if there’s not one person leading.” Unlike Aston, Dodman believes leadership should come from the HRD, as they are responsible for the employee offer.
Claire Bolsover, HR manager at property investment company British Land, says it’s critical to bring everything into “one single source: HR”. Her organisation offers a wide range of wellbeing related perks, from having a company doctor for annual health MOTs to private health insurance. “In large organisations, I think [wellbeing] can get lost,” she adds. “If there isn’t that central space, people can think it’s someone else’s responsibility.”
Weaving together the different strands of health and wellbeing should also help businesses overcome another key problem: measuring ROI. According to our research, 37% of organisations cite difficulty providing meaningful metrics and proving ROI as one of the biggest barriers to implementing a strategy. And when asked ‘Have you worked out how to measure ROI when it comes to health and wellbeing initiatives?’, only 4% answered positively. A worrying 61% said ‘no’ and 35% said they are ‘working on it’.
Robertson says that in some ways, measuring ROI is relatively easy. “You can take the temperature of the workforce at any time, measure it against turnover, who goes off sick, who is performing well and the impact on the organisation. All [that data] should be there and readily available if you just join it up,” he says.
Christina Ptasinski, vice president of global human resources at logistics firm Crane Worldwide Logistics, which classes health and wellbeing as “critically important”, admits that bringing together different elements is a challenge, made more difficult by the fact the organisation has staff across 103 locations in 25 countries. “In the US it’s easy [to measure impact] because we literally pay for their healthcare,” she says. “In other locations, all those metrics we can grab, we do. We look at accidents, lost time, our turnover, our engagement survey, which includes questions around wellness, the reasons people leave in exit interviews – was it because of benefits or lack of work-life balance? Is that a problem in Australia but not Aberdeen? It’s multifaceted and some of it is not as easy to measure as other areas, but every data point I can grab, I do.”
However, while proving ROI is undoubtedly important, there is a school of thought that investing in wellbeing is just the right thing to do. “Wellbeing and engagement are the fundamentals of responsible business,” says Aston. When Dodman wanted to launch his strategy, he decided the best approach was to go with his gut and just do it (luckily, his executive team felt the same).
“We wanted to demonstrate value, but if we waited for a smoking gun, we’d be waiting forever,” he explains. “We believed [investing in wellbeing] was sensible and would work. Lots of my HR peers are looking for evidence and while they are searching, nothing is happening. It’s a bit of a leap of faith, but if you have to demonstrate value first, you’ll be waiting forever.”
For those organisations that still remain unconvinced, the next evolution in investor reporting may soon force them to change their minds. Investors are becoming increasingly interested in human capital metrics. Writing in the BITC report FTSE 100 Public Reporting of Wellbeing and Engagement, Amanda Young, head of responsible investment at Standard Life Investments and a member of the PRI (Principles for Responsible Investment) says: “This group of investors believes that the way in which companies manage their human capital may have a direct bearing on their ability to grow and deliver shareholder returns. Companies with happy and healthy workforces should ensure productivity, minimise the risk of employee action, motivate their staff, improve margins, protect their intellectual property, innovate and protect their reputations.”
“What is measured is managed,” she adds, over the phone. “If a company is measuring something, there’s a sense there is some sort of management thinking. All companies will stand up and say: ‘Our employees are our greatest asset’. But there’s silence after that.”
At British Land, key KPIs include wellbeing-related results from Best Companies accreditation and ones from the Dow Jones Sustainability Index, which covers people measures, and much is reported publicly. Bolsover says there are “over 20” publicly reported people measures, including wellbeing-related ones like absenteeism, flexible working, parental leave take-up and staff satisfaction. “It’s important to our shareholders and investors,” she explains. “It helps us record and see how we’re doing, and it helps with recruitment and retention.”
BITC is campaigning for more public reporting around wellbeing, via its FTSE 100 Benchmark. “There’s increasing demand from the investment community,” says Aston. “This is where environmental reporting was a decade ago, and it’s not going to go away.”
Comparisons to other business areas throw the wellbeing debate into sharp relief. Now talking about their strategy for environmental sustainability is second nature to big corporations, and Robertson makes a further analogy to diversity. “Go back far enough and it was something people joked about,” he says. “Now, even in the hardest nosed sectors, people talk about it seriously and are working hard to change things.”
While our survey shows there is still some way to go, wellbeing is likely to keep rising up the business agenda. After all, environmental sustainability is here to stay; why shouldn’t the sustainability of the workforce be top of mind as well? Aston puts it simply: “The focus should be on being proactive and preventative. It’s about supporting people to fulfil their potential and flourish. Then the rest will take care of itself.”