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Good health is good business


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In this white paper Patrick Woodman, Head of External Affairs at the Chartered Management Institute, discusses the importance of health in the workplace, not only for employees, but also for the bottom line.

The economy is of course an important factor when it comes to health and wellbeing at work. Managers are working longer hours and many organisations can’t justify giving pay rises when budgets are tight. This all impacts morale, stress levels and sickness absence.

However, Patrick highlights the true business advantages to be gained if employers invest in employee health. By implementing a well thought out health and wellbeing strategy, businesses can benefit from lower staff turnover, reduced sickness absence, and improved productivity and morale.

Patrick details some initiatives that employers can easily adopt, including examining leadership styles, to show how health and wellbeing can truly be good for business.

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Good health is good business

  1. 1. Good health is good business Executive summary In this white paper Patrick Woodman, Head of External Affairs at the Chartered Management Institute, discusses the importance of health in the workplace, not only for employees, but also for the bottom line. The economy is of course an important factor when it comes to health and wellbeing at work. Managers are working longer hours and many organisations can’t justify giving pay rises when budgets are tight. This all impacts morale, stress levels and sickness absence. However, Patrick highlights the true business advantages to be gained if employers invest in employee health. By implementing a well thought out health and wellbeing strategy, businesses can benefit from lower staff turnover, reduced sickness absence, and improved productivity and morale. Patrick details some initiatives that employers can easily adopt, including examining leadership styles, to show how health and wellbeing can truly be good for business. Contents • Introduction, Howard Hughes, Simplyhealth • Good health is good business, Patrick Woodman (CMI) • Simplyhealth view • Profile of Patrick Woodman • About the Chartered Management Institute • About Simplyhealth •
  2. 2. Good health is good business Introduction by Howard Hughes, Head of Employer Marketing We started our white paper series to examine issues that have an effect on health and wellbeing in the workplace. So far we have discussed absence management, the importance of culture and many other topics that affect businesses day in day out. The Chartered Management Institute (CMI) knows all about the issues that are prevalent in today’s modern workplaces. We joined it to publish research into what affects the quality of our working lives. Of course the style of management and leadership has a big impact, but so does health and wellbeing. Patrick Woodman from the CMI uses his expertise in this white paper to really get to the bottom of how health is good for business. You can download all of our previous white papers on our website at We’ll be releasing more white papers in due course which will include: • Combining Employee Benefits Packages – Making efficiencies • Self funded health plans and tax efficient wellbeing We hope that you find this white paper useful and that it gives you more to reflect on when developing your own health and wellbeing strategy or advising a client. Howard Hughes Head of Employer 2
  3. 3. Good health is good business Good health is good business Patrick Woodman, Chartered Management Institute The UK is enduring a prolonged economic crisis. Its effects are far reaching and do not all show up in national statistics for gross domestic product, nor even in individual companies’ annual accounts. They are felt in very real ways by people working for organisations in every part of the economy, for whom organisational change, restructuring and cost cutting has become the norm rather than the exception. The result, as revealed by the latest research on the subject, is that the events of recent years have had significant effects upon the health and wellbeing of many employees. This is cause for concern in its own right. Many employers would seek to“Sickness absence costs minimise such an impact on the grounds of corporate responsibility, dutyare estimated to be as of care or morality. There is a large cost to society as a whole: the cost ofmuch as £100bn” sickness absence and worklessness from ill health is estimated to be as much as a colossal £100bn1. From a management perspective, there’s also a hard nosed reason to be concerned, which is that such trends risk harming performance at an organisational level, creating a negative circle. Reduced health and wellbeing and lower levels of employee engagement can take their toll on organisational performance. Managing health therefore offers benefits to employees and employers alike – not only to one or the other. Yet, the latest research data gives cause for concern. Only 39 per cent of managers think that their senior management is committed to employee health, down 16 percentage points since 2007. The last five years have seen a rise in presenteeism, with a significant increase in the proportion of those who feel that their organisation has a culture of people not taking time off work even when they were ill (from 32 per cent in 2007 to 43 per cent in 2012). The average manager works 1.5 hours a day over contract – or 46 days in a year. Ninety two per cent had experienced organisational change over the previous year, and many more said they worked in declining organisations than in previous years2. With organisational performance and individual wellbeing both under strain, it“Health and wellbeing is high time that managers and employers take seriously the idea that goodinitiatives should not be health is good business. Of course, managers will be concerned at taking upseen as a cost, but an an agenda which seems only to offer increased costs at a time when costinvestment in people” cutting is the order of the day3, but initiatives to promote better health and wellbeing need not be seen as a cost. Rather, they can be an investment in the organisation’s people; an investment with the potential to generate substantial returns. Recognising the importance of employee health is not a luxury for the good times, to be jettisoned when the going gets tough, it can come into its own in tough times, helping employees when they need it most and supporting higher performance 3
  4. 4. Good health is good business CMI’s latest research shows that there are organisations which are creating the right conditions for employees to work hard and create success, at the same time as enjoying a good quality of working life. Specific programmes relating to health and wellbeing can offer solutions to help employees deal with particular problems and to minimise ill effects on the workplace, but the best companies understand that support for employee wellbeing hinges fundamentally on growing the right organisational culture. Key to this is improving management and leadership styles. The latest“Authoritarian and reactive instalment in CMI’s ground breaking research series on The Quality of Workingmanagement styles are Life, published with Simplyhealth4, shows that authoritarian, bureaucratic andassociated with lower reactive management styles are more common than five years ago, shortlylevels of employee trust” before the start of the economic crisis. This may be an understandable reaction to the economic headwinds buffeting organisations. However, from an employee engagement and wellbeing perspective it is wholly counter productive, as these management styles are associated with lower levels of trust and worse wellbeing outcomes. Far better results are associated with management styles that are genuinely accessible, empowering and innovative5. Implementing health initiatives As with any change programme, a range of factors are likely to be critical to the successful implementation of a health or wellbeing programme. One simple framework developed by PWC is based on a typical cyclical management model with three stages; plan, execute and manage. Key steps within these stages include assessing need, carrying out a gap analysis to pinpoint which interventions might make improvements, identifying risks and deciding priorities, and identifying and selection service options, which may frequently be delivered by outside providers. The execution stage demands that employees are engaged in what is being provided, an area which it is important not to overlook as many programmes, even when based on real identified needs, come unstuck as a result of employee indifference or hostility. Clear leadership commitment, communication and changes to the organisation’s culture can be particularly important enablers. The cycle concludes with measurement of the impact6, to which one might add review and action to identify and implement necessary 4
  5. 5. Good health is good business CMI’s own research with Simplyhealth strongly indicates that the implementation of specific health initiatives cannot be considered in isolation. As important, if not more so, is the effect of the management styles adopted in carrying out the organisation’s business from day to day. There are strong links between the dominant management styles within organisations and measures of health and wellbeing, and indeed to organisational growth and decline. Accessible, empowering and innovative styles are associated with both happier staff and better organisational performance7. Any organisation looking to improve health and wellbeing will find itself pushing water uphill if underlying problems of poor management remain unchanged. Measuring the benefits It’s a management truism, but one which nonetheless applies to health and wellbeing; what is measured is managed, and what is not measured, isn’t managed. It is important therefore to set the parameters for implementation of any new organisational health measures at the outset: data will provide the basis for measuring and identifying how far progress is being made. The rewards for improving health and wellbeing are likely to include measurable effects, both upon employees and the employer, as indicated through organisational level data. Yet, other potential gains are no less real. Changes at an individual employee level, such as greater job satisfaction, with higher levels of engagement and more willingness to ‘go the extra mile’ are likely to quickly show up in measures of employee retention, reputation as an employer of choice, productivity and customer satisfaction. Table 1 overleaf highlights the range of costs which may be incurred in“Implementation of health implementing health or wellbeing programmes and the range of benefits,or wellbeing programmes including intermediate benefits and direct financial benefits. They may includecould see reductions in indirect cost savings such as reductions in sickness absence, or more directsickness absence and ones such as recruitment costs, overtime payments or temporary recruitment.recruitment costs” Income benefits may be identifiable in measures directly in terms of increased productivity, but may be visible in increased revenues per 5
  6. 6. Good health is good business Table 1: Costs and benefits associated with wellness programmes9 Intermediate benefits Related bottom line Programme costs (non-financial) benefits (financial) ▼ Sickness absence ▼ Overtime payments ▼ Temporary recruitment ▼ Permanent staff payroll Start-up costs ▲ Employee satisfaction ▼ Recruitment costs • Management time ▼ Staff turnover • External consultants • Capital equipment ▼ Accidents and injuries ▼ Legal costs/claims • Promotion, marketing ▼ Insurance premiums • Training etc ▼ Healthcare costs Operating costs ▲ Productivity ▲ Revenues • Management time ▼ Overtime payments • Staff salaries ▼ Permanent staff • Bought-in goods/ payroll services • Training etc ▲ Company profile ▼ Recruitment costs ▲ Employee health and ▼ Healthcare costs welfare ▲ Resource utilisation ▼ Management time Financial assessment: relate costs to financial benefits Managing musculoskeletal disorders and stress The benefits for employers and individuals alike may be particularly substantial if progress can be made in tackling the two biggest causes of lost working days; stress, depression or anxiety, and musculoskeletal disorders (MSDs), which are responsible for some 10.4 and 7.5 million lost working days 6
  7. 7. Good health is good business The most common causes of workplace stress have been identified as work pressure, lack of managerial support and work related violence and bullying11. Management action (or inaction) is deeply connected to such factors, so there is a real need for management action to reduce the incidence of workplace stress. Particularly in the current economic climate, it’s clear that many organisations are under severe pressure – often existential in scale. It’s all too easy for that stress to transfer from the organisational to the personal. CMI’s own research shows an increase in self reporting of symptoms of stress among managers between 2007-2012, reported by 42 per cent in 2012, up from 35 per cent. While it may be impossible to eliminate such pressure entirely, management styles which are more accessible and supportive should help reduce the threat. No organisation will function at its best when employees are over stressed and suffering ill health. MSDs – injuries, damage or disorder affecting the limbs or the back – may or may not be caused by injury in the workplace, but can have huge effects on people’s lives, and can even lead to employees taking early retirement12. Employers should consider how they can make simple adjustments to working conditions to accommodate those with long term MSDs. Managers may need to be trained to help them deal with staff with MSDs and make those affected feel able to discuss their conditions. Organisational support for flexible working, ergonomic assessments and adjustments, and attendance policies which permit time off for medical appointments may also be needed. Indeed, training was found to be an important factor in the success of a wide range of health policies in the 2012 Quality of Working Life research13. What health initiatives are most valued? As well as tackling some of the biggest causes of ill health at work, employers“Managers are working looking to use improvements in health and wellbeing as a device to improvelonger hours than five employee engagement and performance should consider the value placedyears ago” on different benefits by employees. CMI’s Quality of Working Life research, in partnership with Simplyhealth, reviews the popularity of a range of benefits. Perhaps reflecting the finding that managers are working longer hours than five years ago, the most popular benefits related to time, such as flexible working, options for additional holiday time or policies offering leaves of absence for personal issues. Other popular options included private medical insurance, healthy eating facilities, gym and sports facilities, health coaching, progressive return to work options, and health cash 7
  8. 8. Good health is good business While cost reduction is a major driver of change of many organisations, it is particularly important to understand the benefits of such investments. Measuring their impact will be important to developing persuasive business cases, but if possible, it is also important to identify and gather broader measures of employee engagement and wellbeing. Such measures have the potential to add colour to the ‘monochrome’ financial measures and provide insights into the longer term trends affecting employee wellbeing. Improving line management Whatever the individual health initiatives that an employer might choose to offer to their employees, one thing remains clear. Organisations looking to generate real return on investment in employee health cannot neglect the core questions of how management culture and behaviour affect health. Key challenges for managers include: Listening - directors in particular need to understand that the organisation can look and feel very different outside the senior executive team. Many colleagues will have real and valid factors which mean they don’t feel the same way about the organisation, which need to be recognised. Creating high trust environments - greater trust of line managers is associated with better health outcomes. Reassessing management styles and becoming more empowering and accessible is not necessarily a ‘quick win’, and may not be easy in the way of cost-cutting or restructuring, but the benefits of building high trust environments will be worth the effort. Motivating staff - by providing more autonomy within employees’ roles, agreeing clear objectives, and warmly recognising success. Managing change - the 2012 CMI/Simplyhealth research showed that 92% of managers had experienced organisational change over the previous year. Substantial numbers said it had decreased morale, motivation, loyalty to the organisation, and wellbeing – so improving change management is a priority. Building a true understanding of the implications of change and its effect on employees is vital. Communicate clearly and involve staff in change processes. Develop managers to manage change - managers at all levels need to be effectively trained in the planning and implementation of change, particularly in terms of how it affects 8
  9. 9. Good health is good business Simplyhealth view So it’s official, good health does equal good business, the facts are there. This is something that we at Simplyhealth have always understood; it is our business after all. However, employees, managers and businesses are going through tough times and that impacts health in the workplace. Our economy is in poor shape, which impacts business decisions, which can in turn affect morale at work. It’s also why managers are working, on average, nine weeks extra per year. That’s a significant statistic, but can we really say it’s a surprise? The CMI/Simplyhealth Quality of Working Life Research shows just how important it is to have the right culture in your organisation to boost productivity. How managers ‘manage’ their staff also has an impact. When times are tough, chinks in the corporate culture will soon be felt. Of course employees are truly aware of the hard times and understand that opportunities are, in some cases, slim, but that doesn’t mean that they should just be left to get on with it. There are other options and we know that a little goes a long way. Extra hours can be rewarded by flexible working arrangements, especially when it’s not possible to provide employees with pay increases. Other research we have carried out (with the CIPD) shows that health and“Health and wellbeing wellbeing spend is actually on the increase, and this is good news. Companiesspending is on the are looking for other options, which is why we’re seeing a continual upwardincrease” trend in the sales of health cash plans and self funded health plans. SMEs tell us that the low cost and tangible nature of cash plans mean they’re a no brainer for businesses. Self funded health plans are popular with large corporate clients because they give them the ability to be flexible in terms of benefit design and make tax savings. Measuring the return on investment for health benefits isn’t always easy to do, but when you look closely at the table put together by PwC, you can clearly see that the wider business benefits. If you ever need to put together a business case it demonstrates the long term impact, which can only be good for bottom line, and good for business. Don’t forget a summary of the CMI/Simplyhealth Quality of Working Life Research, and other white papers, can be found at 9
  10. 10. Good health is good business Patrick Woodman profile Head of External Affairs, Chartered Management Institute Patrick is responsible for CMI’s thought leadership research, providing topical insights into the latest management practice and developing practical recommendations to help managers tackle the challenges they face. He led for CMI on The Quality of Working Life report published with Simplyhealth in July 2012, examining the impact of the recession on health and wellbeing. In all, Patrick has been the author or co-author of over a dozen CMI reports and regularly discusses CMI’s research findings and policy recommendations with the media. Patrick also oversees CMI’s PR, membership communications – including Professional Manager magazine – and policy work, engaging with government departments and Parliamentarians on management and leadership skills issues and on workplace matters such as employee engagement, health and wellbeing, and equality and diversity. About the Chartered Management Institute The CMI is the only chartered professional body in the UK dedicated to promoting the highest standards in management and leadership excellence. It has more than 90,000 members. It’s the only chartered body in the UK that awards management and leadership qualifications, and the only body that awards Chartered Manager, the hallmark of any professional manager. If you’re a manager that means when you join the CMI you’re making a statement about your standards and determination to continue to develop your management skills. If you’re an employer that means your organisation will be able to draw on its experience of helping to get the best out of managers. You can find out more about the CMI at 10
  11. 11. Good health is good business About Simplyhealth Simplyhealth are experts in providing access to quality healthcare, and because we only focus on healthcare, you can rely on us for specialist knowledge. Our health plans include health cash plans, dental plans, private medical insurance and self funded health plans. 20,000 businesses choose us as their healthcare provider, including major brands such as John Lewis Partnership, Tesco, Royal Mail, British Airways and Yorkshire Building Society. We’re committed to providing exceptional personal customer service. When our private medical insurance customers have a complex claim, we ensure that a caring case manager stays with them throughout, arranging their appointments and taking care of everything for them. When customers make a cash plan claim we usually get the money back into their back account in just a few days. We follow mutual values and care about our communities. Each year we donate around £1 million to health related charities and good causes. You can find out more about our health plans at 11
  12. 12. Good health is good business References 1 Working for a healthier tomorrow, 2008 (Dame Carol Black’s review of the health of Britain’s working age population) 2 Worrall L and Cooper C, The Quality of Working Life, 2012, CMI/Simplyhealth 3 Ibid. Cost-cutting was a driver of organisational change in 85 per cent of cases 4567 Ibid 8 Building the case for wellness, 2008, PricewaterhouseCoopers for the Health Work Wellbeing Executive 9 Ibid 10 Health and Safety Executive, ‘Working Days Lost’, based on Labour Force Survey data for 2011-12 Stress and Psychological Disorders, 2012, Health and Safety Executive 11 Zheltoukhova K, O’Dea L, Bevan S, Taking the strain: The impact of 12 musculoskeletal disorders on work and home life, 2012, Work Foundation, UK%20survey%20FINAL.pdf 13 Worrall and Cooper 2012 Private health insurance Health cash plans Dental plans Self funded plans1301103 Simplyhealth is a trading name of Simplyhealth Access, registered and incorporated in England and Wales, No.183035. Registered office: Hambleden House, Waterloo Court, Andover, Hampshire, SP10 1LQ. Authorised and regulated by the Financial Services Authority. Your calls may be recorded and monitored for training and quality assurance purposes.