Beyond Health Insurance to Human Capital: Do You Get the Most Out of Your Employees?
by Matt Hardy, Sales Executive, Payne Financial Group Inc.
The costs associated with an unhealthy and unhappy employee population are far greater than just rising health insurance premiums. The "hard costs" of health insurance premiums take center stage in the minds of most employers and management because insurance premiums are easy to see and understand. Premiums are, for the most part, clear and concrete: a definable service and a black-and-white dollar figure.
Productivity loss is an equally significant cost that also directly hits any company's bottom line. But it is much less quantifiable. It is not easy to see and label. But for management that makes the effort to look for it, identify its causes and implement targeted strategies to impact it, productivity loss is something that employers can change to the improvement of their bottom lines. Productivity loss is the "soft cost" behind health insurance benefit packages.
A healthier, more engaged employee population not only costs less in health insurance-related costs but also improves the business by consistently showing up ready to most-efficiently produce top-notch work.
In fact, a recent Rutgers University report concluded that employee health problems cost U.S. employers approximately $226 billion each year. Significantly, of that $226 billion, $158 billion - 70 percent - in costs were directly related to lost productivity. That's a huge economic impact from employees being "at work, but not really." Rutgers determined that the other 30 percent in costs were tied to employee absences due to illness.
The Rutgers study is backed up by a major employee study conducted by the AdvancePCS Center for Work and Health in Hunt Valley, Maryland. This study concluded that 71 percent of lost productivity time was directly related to deficient performance while on the job. Comparatively, 23 percent of productivity costs were due to actual absences from work and 6 percent were connected to employees dealing with family health obligations. Interestingly, this study found that productivity losses for smokers were twice that of nonsmokers.
While a company's health insurance premiums may fluctuate year to year, there is only so much control a company has over them. And many companies, working with their trusted insurance advisors, have by now done what they can to control these hard costs.
Here at Payne Financial Group, we want to help employers take control of the soft costs of lost productivity. There is a lot anemployer can do to control these costs and benefit company bottom lines by creating a healthier, more engaged employee population. In addition to helping companies with the hard costs of health insurance, our goal is to help companies get the most out of their employee population (the soft costs) to increase overall productivity and profit.
The first step is to face the issue of productivity loss and define the terms.
Productivity loss occurs due to absenteeism - when an employee is not at work - and due to presenteeism - when an employee is "there but not really there." The reasons behind either of these can be rooted in physical health issues, in mental/emotional health issues or in poor morale/lack of engagement.
Simple tools can be used to start collecting some real information at the company, such as our absentee template that tracks work absences and the reasons why employees say they are absent.
The second step is to identify the severity of the problem and start identifying its causes.
At PFG, we have developed an intense and powerful Discovery process that involves the range of expertise and viewpoints of company management. The Discovery process is detailed to help identify productivity loss and the drivers behind it, both absenteeism and presenteeism. Topics discussed during Discovery include HR compliance, employee absences, employee morale and engagement, training procedures and more.
The third step, if the results of step two warrant, is to dig deeper.
For example if our Discovery process finds that health issues account for the bulk of the problem, we'd suggest a further look for specific causes: Are employees coming to work with the flu and getting others sick? Are smoking, allergies or obesity employee issues that would be positively impacted by a concerted wellness program and/or health screenings? Can on-the-job injuries be minimized by creating or amping up a culture of safety at work?
Morale is harder to identify but often worth the effort. A companywide employee morale or engagement survey can help identify morale issues that are behind productivity loss due to both absenteeism and presenteeism. In addition to identifying problems, analysis of this employee survey can provide insight into what changes management can make to turn unhappy, unmotivated employees into engaged, more productive employees. And, survey results can show management what the company is already doing "right" - programs, attitudes, communications, etc., that should be continued to support good employee morale. Are employees happy or unhappy at work? Is company culture an issue? If happy, are they just happy to work or are they truly engaged employees? While many consulting firms offer this type of survey, a company can create and conduct its own - we have a template of suggested questions to get you started.
Are employees sufficiently trained to do their best job?
Is there evidence that a deeper HR Compliance audit would be useful to look at the company's current health insurance package as it stands today and how upcoming Health Care Reform (HCR) changes will impact the benefits program? (Adhering to federal and state regulations regarding COBRA, HIPAA, HIPAA Privacy, Section 125, I-9 Forms and FMLA can be complicated - and failure to complycan be extremely expensive.)
The next step is then to design, propose and implement specific, targeted Strategic Interventions that are customized to answer the problems identified at that company.
Often a targeted wellness program with clear employee communication makes a dramatic, positive impact.
Sometimes our analysis finds specific communication deficiencies are the drivers behind low employee morale. In that case, recommended new company-specific communications tools might include job descriptions, employee handbook improvements, communicating employee terminations and more. Sometimes the communication problem is that employees don't understand the full value of their benefit package and have never seen a clearly communicated Benefits Statement (also known as "the hidden paycheck").
Or, perhaps the answer for the company involves specific new job training and professional development opportunities.
Sometimes, the Discovery process will identify compliance issues with Health Care Reform(HCR) acts that are costing the company money and impacting employees. Specific steps can be implanted to ensure HCR compliance going forward regarding COBRA,HIPAA, FMLA and other governmental regulations.
The overall goal is an ongoing program that reduces a company's total cost of risk - from insurance premiums to employee engagement - thereby increasing its profitability.
Once a company implements its strategic interventions - or, Total Risk Management Plan - to answer the soft-cost issue of employee engagement and productivity, that's not the end of it. As companies and employees all change and grow, so must any program we help implement be monitored and adjusted as needed. At PFG, we have a yearly Stewardship Report that ensures this ongoing "paying attention" by both company management and its insurance advisor.
Whatever the issues costing your company money in lost productivity, these issues cannot be remedied - and the losses turned to gains - until they are faced, identified, given real and targeted solutions, and then monitored and adjusted each year. But it can be done, to the benefit of both the company and the employee.
Matt Hardy is a sales executive with Payne Financial Group with expertise in health insurance and employee benefits plans for businesses of all sizes. Based in the Billings office, Matt can be reached at mhardy@pfg-insurance.com or telephone 406-238-1904.
Terms to know and use
Absenteeism: Employees who are physically not at work. Absences typically are for health-related reasons or for personal time off/vacation.
Presenteeism: Employees who are physically at work but either mentally "not really there" or are not working at 100 percent of their capability. The "here but not really here" can be due to health- (their own or that of a family member), mental/emotional- or morale-related issues.
Truly engaged employees stay with their employer because they enjoy their work and support the company; they have passion, pride and energy for their work and their company.
Disengaged employees, while they might enjoy their work, go to work for the paycheck, the favorable working conditions and/or the job security.
A real example: Recently, using Payne Financial Group's (PFG) Discovery process, a mid-sized, multi-location Montana service company identified poor employee communication and poor employee health as the primary drivers behind its high levels of absenteeism and presenteeism. Working together with the employer, we were able to quantify lost productivity due to lack of employee engagement. By implementing a strategic wellness program and employee communication techniques we were able to positively change the company culture and thereby decrease both absenteeism and presenteeism - and measurably increase employee productivity.
