Healthier companies outperform the market by as much as 50 percent, recent studies indicate. If health is an important measure of a country’s developmental status and needs, the same goes for a business. In this regard, companies are becoming more attuned to the need to both measure and report on their staff’s health and well-being. We spoke to two top CFOs and two corporate wellness experts to find out what companies can do to invest in the well-being of their staff – and what ROI they can expect.
By Toni Muir
Right: Marcia Eugenio, Phela Wellness
“The wealth of business depends on the health of workers,” Dr Maria Neira wrote in the report ‘Healthy workplaces: a model for action’, issues by the World Health Organisation (WHO), where she is a director. Recent studies agree with her, indicating that healthier companies outperform the market by as much as 50 percent.
Both US and South Africa-based studies have demonstrated that best-in-class workplace health programmes are linked to improved stock performance, according to insurer Discovery. Slowly but surely that penny is dropping, says Derek Yach, chief health officer of Vitality Global, in a recent publication: “Business increasingly recognises this reality yet – with important exceptions – has been slow to embrace the potential for mutual benefit to profitability and to society that could be achieved by companies more explicitly and actively addressing health.”
This does not only include providing an optimal environment for promoting and maintaining physical health but also mental, motivational and social health, says Marcia Eugenio, CEO of South African company Phela Wellness. “Organisational health is thus enabled by a culture that promotes personal and collective ownership of health and, as such, that is why it is important that employee health becomes a strategic focus,” she says.
Speaking to the correlation between employee health and organisational fitness and financial performance, Marcia says the former directly relates to the latter.
“The cost of sick leave and absenteeism on productivity is particularly significant in the South African environment. At a subtler level, other dimensions of wellness have further impact. Employee morale and engagement are now considered to be further measures of employee health. The phenomenon of ‘presenteeism’ – being present in the office but not productively engaged – has a negative impact on performance and productivity.”
Brett Tromp (left), award-winning CFO at Discovery Health, is one of the pioneers and biggest advocates of reporting on health metrics. He says looking after employees’ health is simply the right thing to do. “There seems to be a big correlation between companies with a healthier workforce, or at least who invest in the health and well-being of their workforce, and greater returns on the stock market,” he says. “From an employee point of view we are seeing – especially with the millennial generation – that people want more from a company than just a salary.”
For investors and people who understand business, the term they are looking for is sustainability, says Brett. “We strongly believe the health of a workforce, which is a company’s biggest asset or expense, is an important factor in financial performance. Mental well-being and health all lead into employee engagement and loyalty. It’s another angle for the investors to look at, on top of standard measures. A company with a robust and healthy workforce, and with low absenteeism, is a more attractive investment.”
Marcia agrees that there is an increasing legislative requirement for companies to look after the well-being of their employees. Measuring employee health creates a functional awareness of this vital business dynamic as a strategic issue, she says.
“Measurement is able to demonstrate, firstly, the health status of the employee body, but, secondly, with more recent sophisticated tools, to track trends in employee health and target the required preventative measures.”
Jo Pohl (right), CFO of Telesure Group, agrees that undertaking wellness assessments to determine employees’ health helps to determine emerging trends. “For example, does the person have the right job fit and do they see longevity and opportunity there for themselves? It also sheds light on their emotional load, because there’s a person at home and a person at work and you don’t know what they bring in with them each day,” she says. Such assessments also help measure the impact of absenteeism on productivity and turnover, Jo adds. “By being able to measure it we are quite excited as an exco because we know what we can do to address it. Our workforce is our greatest asset. You can only deliver value if you are able to place your capital wisely.”
As more companies begin to consider health reporting, and as the metrics become more clearly identified, so different organisations have begun putting frameworks into place to assist companies in compiling the data. Last year a working group convened by Dr Penny Abbott, then Head of Research and Product Development at the SA Board for People Practices (SABPP), developed a concept for measuring human capital. It was aligned with both integrated reporting principles and King III and dubbed ‘The Human Capital Measurement Framework’. “Based on the framework, organisations will be able to use a standard template to report human capital metrics,” Penny explains.
“Current reporting on human capital is inconsistent and provides more anecdotal than real human capital value measurements. The framework will provide a holistic picture on the state of human capital in organisations.”
In addition to the human capital risks driving business value, the metrics framework is also intended to highlight other human capital risk that could be of concern to boards. “If an organisation underperforms on some of the metrics, it could pose a risk to the business. The framework therefore serves as an early warning tracking system for things like reputational risk caused by a lack of employment equity,” Penny says. Although still in draft phase, the SABPP anticipates finalising the framework by the end of this year, after which it will be piloted within organisations.
Marcia believes the biggest mindset shift required by companies is in transforming the view of the employee from being a replaceable cog in a productive machine to being recognised as a living component in a healthy system. “The health of the employee body represents the health of the company and has direct implications on performance. Consequently, company identity must now transcend the limit of brand, capital and market share to embrace its employee body,” she says.
Left: Dr Penny Abbott
As a CFO known for her practical insight and accessible leadership style, Jo thinks the staff’s well-being is a case of ‘walk the talk’ and that the example must be set by those at the top:
“A debate we’ve had as exco is how we are seen to be living this in terms of our own wellness. We try to ensure that health and wellness is at the centre of what we do, but the exec has to live that. Also, what we as the company are doing to endorse healthier options, such as subsidising healthy eating at the canteen, or endorsing company sports teams."
We talk through our turnover regularly. Financial wellness, physical wellness – everything we do talks to the holistic person. The real way to change a mindset is to understand the consequence of not doing it, as opposed to the cost of doing it."
Jo does emphasise that all of this takes conscious effort from the executives and a lot of collaboration. “Over time it becomes a habit or more about the corporate culture or DNA but it doesn’t happen overnight.” Brett agrees with the notion, saying it is easy to convince people of something that makes so much sense. But reality is stubborn, the Discovery CFO acknowledges. “It is a bit like with life – if you don’t have to do it, people generally won’t. But we believe it’s the right thing to do, regardless of whether it’s law or not. We want companies in South Africa to treat their employees well in all aspects, and the well-being aspect is a big part of that.”