How Organizations Can Turn Workforce Risks Into Value
There is nothing more important to the health of a business than the health and resilience of its workforce. Organizations need to understand the overall well-being of their employees and act quickly to address any physical, emotional, social and financial risks as these risks can pose threats to the business if left unmanaged. Implementing employee benefit plans that are designed to mitigate against these risks can be a critical component of the organizations risk management strategies.
Unmanaged workforce risks can result in business disruption. The global pandemic has brought many workforce trends to light that may not have been as high of a priority to businesses before. The value of looking after the well-being and health of employees is now of greater importance than ever, and businesses that realize this importance will benefit from positive business outcomes. Research by Mercer shows that 10.6 days of lost productive time per employee per year can be recouped by improving the health of the workforce.
Caring is a competitive advantage
Another trend of the COVID-19 pandemic is the importance of business and brand reputation, and how easily this can become damaged if an organization is perceived to be neglecting employee well-being. One of the ways that employers can manage this is to view well-being holistically and from an employee perspective rather than just a business item that needs checking off the list. When a company provides meaningful benefits that are in line with employee needs and expectations, it shows to its employees, and any potential employees, that it cares about their health and well-being. Furthermore, risks such as decreased employee productivity and performance, and risks of safety violations and errors can be mitigated. By implementing well-managed well-being and health plans, proactive businesses can gain a competitive advantage and can place themselves in a position of attracting top talent. According to the World Health Organization (WHO), depression and anxiety disorders cost the global economy about US$1 trillion each year in lost productivity[1], therefore organizations that show they care are the ones that will stand out.
Turning health risks into positive business outcomes
Poorly designed employee benefit plans that don’t consider shortages due to sickness can expose organizations to workforce risks and endanger business continuity. Employees who feel overworked and stressed, and don’t receive the support they require from the company, can easily become demotivated and unproductive. This can lead to absenteeism and presenteeism, which is a real concern for businesses as disengagement costs approximately $7 trillion in lost productivity globally[2].
Julio Garcia Villalon, Mercer Marsh Benefits Leader for Middle East and Africa, recommends that, “Organizations need to take a holistic approach to their employee health and well-being benefits. Employee benefits is no longer an important agenda item just for Human Resources managers, but for Finance and Risk managers as well. Identifying potential problems and risks in a workforce well-being strategy is essential not just for mitigating against workforce risks but business risks as well.” As high as 61% of employees rate health as a bigger concern than wealth or career[3], therefore organizations should also be looking to match this perspective in their business strategies. Julio Garcia Villalon continues that, “Employers who are proactive and implement strong well-being and health strategies early on, and that focus on plan design that manages workforce risks but also provides benefits that are valued by their employees, will have a head start on mitigating against potential health issues that may occur in their workforce.”
Four pillars of a strong well-being strategy
Strong well-being strategies mitigate health risks, optimise health, and enable a well-being-centric culture and brand, which all contributes to positive business outcomes. Well-being strategies should identify which benefits are most important to employees. Mercer Marsh Benefits Health on Demand 2020 Survey showed that majority of employees want to work for an organization that protects their employees’ health and financial well-being. The research also showed that 95% of company decision-makers expected to invest more in health and well-being in the coming five years. Mercer Global Talent Trends 2020-2021 Survey showed that 47% of employers plan to add mental health benefits to their program and 36% want to include more digital health services. This indicates that many employers are considering how to retain and attract talent and how to be seen as an employer-of-choice.
There are four pillars of a strong and effective well-being strategy; these are physical well-being, emotional well-being, financial well-being, and social well-being. Organisations that strategically address each of these pillars end up with a strategy that leads to improved health, productivity, engagement, retention, and trust.
Read our paper, Turning Health Risk into Value: Well-being for more information.
[1] World Health Organization. “Mental Health in the Workplace,” available at https://www.who.int/teams/mental-health-and-substance-use/mental-healthin-the-workplace
[2] Gallup. State of the Global Workplace, 2017, available at https://www.gallup.com/workplace/238079/state-global-workplace-2017.aspx
[3] Mercer. Global Talent Trends Study: Empowerment in a Disrupted World, 2017, available at https://www.uk.mercer.com/our-thinking/global-talent-hr-trends.html