BOTTOM LINE AND WELLNESS: Are healthy companies experiencing better financial results?
Written by Nancy Pokorny
Published in Crain’s Cleveland Business Human Resources Guide, July 31, 2016
One of the most common questions Findley Davies hears regarding corporate wellness programs is, "Are they worth the effort and cost?" Three recent studies answer that question with a resounding yes — but perhaps in ways that have not been measured traditionally.
In late 2015, the Health Enhancement Research Organization, a national nonprofit dedicated to identifying and sharing best practices in the field of workplace health and well-being, released research that focused on stock performance as a measure of wellness effectiveness. From 2009 to 2014, HERO studied the stock performance of 45 publicly traded companies that had earned top scores on the HERO Health and Well-Being Best Practices Scorecard.
These companies ranged in size from 762 employees to nearly 300,000 employees. Researchers found that collectively, as a simulated portfolio of companies, this group outperformed the S&P 500 in appreciation (235% vs. 159%) and comparable dividend yield (1.97% vs. 1.95%).
A second study, published in the Journal of Occupational and Environmental Medicine and sponsored by Underwriter's Laboratories Integrated Health and Safety Institute, showed similar results. The authors looked at the stock market performance of companies that had applied for or received the American College of Occupational and Environmental Medicine's Corporate Health Achievement Award, which annually recognizes the healthiest and safest companies in North America. The authors tracked the stock market performance of 17 CHAA applicants or recipients with proven health and/or safety programs between 2001 to 2014 using a hypothetical initial investment of $10,000. The hypothetical investment returns for CHAA companies during this period ranged from 333% to 204% vs. an S&P return of 105% during the same period.
A third study, conducted by The Health Project, analyzed the stock performance data of 26 publicly traded companies that won the C. Everett Koop National Health Award between 1999 and 2014. The Koop Awards recognize companies whose wellness programs have led to documented health behavior change and risk reduction plus cost savings. Investing in Koop Award winners produced substantially higher returns — 235% higher than the S&P 500 index.
Stopping short of proving cause and effect, these studies suggest a correlation between health and well-being best practices and strong financial performance.
Workplace wellness programs may have started as a way to reduce employee health care costs, but employers are realizing that a healthy, vibrant workforce is also a high performing one. It is difficult to operate at peak performance when you don't feel well — that's a given. But what often gets overlooked is that energy and vitality can subtly and silently wain just as we are hitting our peak years of work experience. It's a safe bet to assume that all employers want their top talent performing at peak levels well into their careers. So how can they best enable that to happen?
Successful health and well-being initiatives don't begin with a program, they begin with a vision. Corporate leadership (not HR alone) must set and drive that vision as part of an overall business strategy. A corporate vision might include a statement such as "we are committed to taking care of ourselves so that we can take care of our clients (or customers, patients or products), and even more importantly, our families and our communities."
In order to be successful, leaders throughout the organization have to lead by example and stay the course to demonstrate that the wellness initiative is not a "flavor of the month program" but a long-term commitment that is part of the overall corporate strategy.
Once you first determine where you are in your quest to be a healthy company, the next step is to determine where you want to go. It is important to define — on your terms — what it means to be a healthy company. What are you aiming for?
Define the change you hope to see in your workforce. This visioning stage is often overlooked in the rush to choose a wellness vendor who can implement programs, interact with employees, and conduct health screenings.
Once you understand your vision, the work begins to implement that vision. This most often involves the development of a multi-year plan that continually builds on progress year over year. This is the optimal time to select a wellness vendor that best meets your needs in helping you achieve your vision long term.
The final step is to identify the metrics that measure your progress in achieving your vision. Each subsequent year, as metrics are reviewed, adjustments to the implementation strategy, and sometimes even the vision itself, can be made.
Surprisingly, Findley Davies has found that it's the visioning and long-term strategy that employers struggle with most. Once you know where you want to go, the rest falls into place.