Blogpost

Companies need a mindset shift on employee health

Jeffrey Pfeffer

Professor of Organizational Behavior, Stanford University

Mental and physical health is front and center as a result of the pandemic. COVID-19 has exposed the many problems of inequity and access that plague US health care. Although many employers offer what they consider to be generous health coverage — and many have expanded their mental health offerings in response to the psychosocial strains of the pandemic — substantial challenges remain.

The important task of creating a healthier workforce needs to start with a fundamental shift in how companies think about employee health. As we emerge from a year that’s upended the way many of us think about and approach work, it’s time to focus not just on the health of our business but also the health of our employees — one cannot exist without the other.

Approach employee health like customer satisfaction

Currently, there is a tendency to think of employee health as just an HR and benefits issue, evidenced in the little time and attention employee health gets from CEOs, which often then gets delegated to benefits people and sometimes outsourced to benefits administrators and consultants. Given the economic and strategic importance of employee health, this lack of priority seems like a profound mistake.

Much like when customer loyalty and satisfaction became recognized as key drivers of company performance and became a priority of senior management, employee health needs to be regularly on senior leadership and board of directors’ agendas.

When companies became serious about improving customer service and loyalty, they set goals for these outcomes, measured them, and were willing to invest money  — in a cost-effective way — to improve the customer experience. This is a great outline for how to approach employee behavioral and physical health.

The true cost of employer-paid health insurance

There is currently an overwhelming discussion of and emphasis on health insurance costs. Although costs are important, they cannot be the sole criterion by which employers assess their healthcare performance and perhaps not even the most important indicator. A healthy workforce misses fewer workdays, turns over less frequently, and is more productive.

As Jeff Immelt, the former CEO of General Electric, told me, the company was spending $3 billion a year on health benefits, and until the recession of 2008, he was giving that spend almost no attention, consistent with my observation that employee health has typically not been a top management priority. When Immelt decided that $3 billion was too large to not prioritize and engaged more actively with employee health and its costs, GE began to take health much more seriously and improved employee health while cutting expenses.

How to build a culture of health

Building a culture of health is no different from what is required to build a culture of innovation or customer service and loyalty.

First, measure behavioral and physical health. Then you have to hold health-relevant vendors, such as benefits administrators, healthcare providers and organizational leaders, accountable for ensuring improvement on these measures over time. As the quality movement and management experience illustrate, what is measured gets attention and improves, and what isn’t measured tends to get ignored and worse.

Second, appoint a Chief Health Officer, someone responsible for overseeing, coordinating and improving employee health. When companies get serious about diversity, equity and inclusion, they appoint an individual to oversee these initiatives. To build a culture of health, take those same steps. It will occur more readily if there’s someone appointed with the explicit job of ensuring that physical and mental health becomes a priority in the organization’s culture.

And third, building a culture of health requires understanding the dimensions of work such as work hours, job autonomy and the other things that affect employee health. The more employers understand what affects health, the better able they can create health-promoting work arrangements.

The business imperative of employee wellbeing

Employers spend a fortune on employee health — large employers estimate they spent about $15,000 on benefits of each of their employees in 2020. But only when it’s made a business priority, and implemented effectively, will companies see the benefits of their investment across multiple dimensions.

In a world where companies are increasingly focused on sustainability and are called to report their sustainability performance, human sustainability — represented by employee health and wellbeing — is an integral part of building a sustainable company.

Pragmatically, employee health is important because of its economic impact on company performance and its societal-level economic consequences. The connections between work and health have been explored for decades. In a 2020 study I conducted with colleagues from the Gallup organization, self-reported health was positively correlated with job satisfaction and employee engagement and negatively related to the number of missed workdays, stress and burnout.

As a matter of moral values, we should not have workplaces creating so much stress and depression that people are literally putting their health at risk to earn a living. Employers need to change their mindsets about employee health, making it a strategic priority and undertaking decisions that create workplaces that foster total worker health.

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