· 7 min read · Features

Reporting on staff health - Bottom line on health

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Even among companies that realise the importance of employee wellbeing very few include details of their health policies' ROI in their annual reports. Steve Hemsley looks at reasons for this omission.

January 24 is officially the date when UK workers feel most miserable. Psychologist Cliff Arnall has found the mix of post-Christmas blues, bad weather, bills and guilt over new year's resolutions combine to make workers the most glum during these 24 hours than at any other time of the year.

Ironically, the 24th also happens to be the day Business in the Community (BITC) will publish research into how well employees feel at work. It finds those in the south of England feel better at work in the winter months than, say, their colleagues based in Scotland where the weather can be more bleak.

The report is the next phase of a BITC Business Action on Health campaign to encourage FTSE 100 companies to take the wellbeing of their employees more seriously by understanding its effect on a business's bottom line. Its aim is to have 75% of top companies and 20% of BITC's 850 members reporting on health and wellbeing in the boardroom by 2011. It is an ambitious target. In 2007 just seven of the FTSE 100 businesses reported wellbeing at a quantitative level, which means they had enough insight to measure its impact financially. This year the figure has risen to 23, with Abbey, Bupa, Unilever and Tate and Lyle among those reporting.

"Many company leaders say wellbeing is important and admit it is a no-brainer, but it has always been a bolt-on function," says BITC's campaign director, Louise Aston. "We want more companies making a robust business case and demonstrating a real ROI from having a proper health strategy."

On a more positive note, 81% (up from 68% in 2007) of FTSE 100 firms have said publicly they are committed to improving their staff's health and wellbeing. But it seems getting them to actually write this into their company reports is a step too far. So why is this?

Aston admits one of the difficulties for HR teams is getting reliable data to demonstrate ROI to their financial directors. She says HR professionals should make use of Pricewaterhouse Coopers'(PwC) Business Health Check Tool which can be downloaded for free from the Health Work Wellbeing website. This tool is designed to help companies and public-sector organisations assess the costs of ill-health and evaluate the positive impact of wellbeing programmes on these costs.

PwC's evidence suggests wellness programmes help reduce staff turnover and improve productivity and that programme costs quickly translate into financial benefits. A survey by CBI/Axa in 2007 claimed the cost to employers from staff absence is about £13 billion a year or £659 for every employee. Absence rates are higher in larger organisations and consistently higher in the public sector rather than the private sector. Even employees themselves appreciate they would perform better, be absent less frequently and be less likely to look for a new job at a competitor if their bosses took more care of them. For example, 88% of workers think employers should provide health and wellbeing incentives (source: www.reed.co.uk); 68% of employees are worried about the cost of healthcare (Westfield Health); and more than half of Britons want employers to take more responsibility for their health needs (Bupa).

Boots reports on staff health

BITC's Business Action on Health leadership team is chaired by Alex Gourlay, managing director of Boots. Since the chain's takeover by private-equity group Kohlberg Kravis Roberts in 2007, Boots has been one of the few that has reported on the business benefits of having healthy staff. "It seems other private-equity firms now regard this area as a way for businesses to gain competitive advantage," says Aston.

Aston believes the UK economy is getting to the point where the health of employees is an important risk factor being considered by potential investors. "People are an asset, especially in a knowledge economy," she says. "Mental health issues are on the rise so looking after people's emotional resilience as well as their physical health is increasingly important because it will affect how a company performs."

The impact on workers' mental health can be underestimated. According to the Royal College of Psychiatrists, at any one time, one sixth of the workforce experience symptoms associated with mental ill health, such as sleep problems, fatigue or irritability that will have an impact on how they perform.

The Bupa survey suggests workers want more health benefits such as private medical insurance (PMI), health assessments and free gym membership. Bupa has even hinted that in future how it handles medical insurance claims made through corporate schemes could take into account how employers manage their staff's health and wellbeing.

"The majority of companies simply comply with the law when it comes to wellbeing in the workplace and do what they have to when managing physical health," claims Bupa's health and wellness consultant Jill Pollock. "Staff must take responsibility for their own health but this is a two-way street. A person's lifestyle behaviour does impact on how they work and how their company performs financially. It is important employers educate staff about health and offer incentives within the workplace."

Bupa is also lobbying Government to try and remove current disincentives that stop some firms from offering health benefits to more employees. Providing gym membership to staff is taxable unless the employer owns the gym. Ellie Gamble, senior tax manager at accountants Grant Thornton, agrees Government must do more to encourage companies to improve their staff's health: "There is still a long way to go for the tax system to encourage employers to look after the health of the adult population," she says. "Changes should be made because it saves the NHS money if a company pays for staff to have health screening."

Kent-based Water for Work has begun to offer companies Instant Employee Health Checks as part of its Wellbeing Programme. The company visits clients' offices and each check takes less than five minutes. Individuals receive their results with recommendations on how to improve their health. Their bosses are given an aggregated, anonymous report that provides them with an overall company health check.

There is plenty of other assistance available to companies that want to improve wellness. Aon Consulting has launched an occupational health audit service to help employers manage costs and demonstrate a return on investment. Aon will study a firm's processes, how staff are health screened before they are employed, analyse a company's absence policy and carry out assessments on individuals' workstations.

The smallest changes can make a lot of difference. The Food Standards Agency is working with caterers and employers to improve what is served up in employer's canteens. HR consultancy Towers Perrin has worked with BITC to launch a Healthy Eating Toolkit to promote best practice in this area. There is a 12-step model to follow.

Justin Crossland, head of health and risk consulting at Towers Perrin, says it is not only large companies that prioritise employee health. "Following a wellbeing strategy can give any company a competitive advantage because it is linked to employee engagement and retention," he says.

Of course everyone, including the boss, can have an off day when they will underperform. Maybe the Government should show its support for health and wellbeing in the workplace by making 24 January an official 'duvet day'.

QUANTITATIVE RESULTS?

What is it?

Pharmaceutical company GlaxoSmithKline says its Team Resilience Programme has reduced work-related mental illness by 60% and decreased absence relating to mental conditions by 20%, saving £2.4 million since 2002. The company publicly reports on the financial health of its wellbeing programmes and says positive action has seen a 10%-15% cut in fatigue and frustration levels in the workplace and a 15% increase in self-esteem and job satisfaction. Its new target is to reduce musculoskeletal illness and injury, which is one of the main reasons for staff absence.

Verdict: Paul Miller, an independent health economist, says other factors need to be considered to measure the financial impact on the business. "The analysis must take into account factors such as whether the absent person is part- or full-time and if their work is time critical and can be easily covered or not," says Miller. "I use the example of an airline. It is serious if the pilot is ill but not so serious to the business if a member of the cabin crew is absent."

WHAT IS IT?

The National Grid has become one of the first FTSE100 companies to use the Business Health Check Tool from PricewaterhouseCoopers to audit the financial impact of its wellness strategy. The PwC software is being used to analyse the cost of ill-health to the National Grid's business and evaluate the impact of the strategies it already has in place. The National Grid is a big supporter of health initiatives that involve staff and their families. During the summer some 14,000 people joined a pedometer challenge to walk 10,000 steps a day. The company has also installed wellness kiosks so employees can track their blood pressure, body mass index, pulse and fat content.

Verdict? Miller says the approach is one other companies would be wise to follow to generate improvements to their bottom line. "Wellness kiosks do have a positive effect on morale and loyalty, which boosts retention levels," says Miller. "If staff engagement levels rise, productivity levels tend to follow."

CASE STUDY: NOMINET

Gill Crowther wants her staff to love coming to work. The director of HR at domain names registry Nominet is toasting the success of the company's first Wellbeing Week held in October for its 120 staff. "You have to think how you can make your vision a reality and we decided staff needed to feel they belonged and that the company cares about them," says Crowther.

Everyone at Nominet receives private medical insurance and dental care but Crowther wanted employees to realise the company supports them when they are well and not just when they fall ill. The Wellnesss Week had to appeal to the workforce who, although made up of all ages, comprises mainly people in their late 20s and early 30s. The initiative was overseen by an HR project team and included a step-a-thon challenge, dietary advice, mole checks, a mobile screening service, reflexology and health-themed staff competitions.

"This is not about achieving a short-term return on investment but about getting staff engaged and improving morale," says Crowther. "This will improve the company's performance over the longer-term." This is an ongoing programme and the activities will be repeated every few months. Work will also be done to improve the working environment and to communicate to managers the link between a healthy workforce and good financial results.

Nominet undertook a survey a year ago that revealed 28.5% of its staff said they felt 'engaged' at work. When the study was repeated after the Wellbeing Week this figure had risen to 31.5%. "In most organisations an engagement level of around 20% is accepted, so we are very pleased," says Crowther.

Research by the British Heart Foundation has found a ROI from programmes such as a Wellbeing Week of £6.20 for every £1 spent as companies see an increase in productivity and a reduction in staff absence.