Can a Company Afford to be Unwell?
The costs of ill health, both in premiums and in lost productivity are staggering, up to $2,800 per employee per year, for those that have issues. And many, many employees do have issues. Even a small employer, let's say 20 - 35 people, chances are that 50 percent or more of their staff is afflicted by some sort of chronic disease, illness or challenge.
Interestingly, depression is one of the most severe diseases in terms of costing employers' sick time and lost productivity. If a company is lucky enough to escape the depressed employee, they still need to look at their general workforce and do these calculations:
- Approximately 28.9% of people over 18 have high blood pressure. Of those, 50% don't know if treatment is successfully controlling it. 70% of diabetics have high blood pressure.
- As of 2007, over 35% of adult men are considered obese. Obesity is a precursor for several illnesses such as high blood pressure, diabetes and heart disease. ("Obese" is defined as being more than 20% over ones ideal body weight).
- Approximately 9% of men and women suffer from some form of coronary disease.
- Approximately 8 in 1,000 people suffer from diabetes.
Unless an employer has one very unfortunate person in their office who has all the obesity, high blood pressure, coronary disease and diabetes there is to go around, chances are they have multiple employees afflicted with disease or other conditions. If you add non-life-threatening illnesses, such as allergies, arthritis and asthma, those statistics start to look pretty grim:
- 20% of people have allergies. 10% of the population has hay fever.
- 6.4% of people have asthma.
- 13.6% of people have arthritis.
- 28% of people have GERD.
- 0.04% of people have some form of cancer.
So, what do you think the chances are that all of a business's employees are healthy and don't need a wellness program? Can you count up the likely number of employees suffering from some form of disease or illness and multiply that by $2,000? This is their real minimum cost of unwell employees. Can an employer afford for their workforce to be unwell?
If an employer could capture that lost productivity how much more work could their employees do? How much less frequently would they need to add staff? How much less would they pay for health insurance premiums? Next, compare the minimum cost of unwell employees to the average cost per employee of implementing a wellness program.
The average cost for an effective wellness program is $100 to $150 per employee per year. The return on that investment is anywhere from $300 to $750. Can employers afford to continue without an effective wellness program?
The Magnified Risk with Key Employees
So far, the numbers we've talked about are averaged amongst all employees. The next thing to consider is something not studied separately, so you will have to use your own anecdotal evidence and musings to determine how important it is to you and what the probable costs are. This issue is that of unwell key employees. Those key people may be business partners, senior managers, intrapreneurs, super-salespeople or super-productive staff members.
Any of the people upon which a business turns, whether they be cheerleaders, innovators, leaders or highly proficient technical people - you know who they are - are worth their weight in gold and probably worth more than they are being paid. If the average employee costs a company $2,000 to $2,800 when they're down and out, what does it cost you for any of these superstars to be operating at less than full power?
Not only is the company dealing with sub-par performance and expectations possibly not being met for a period of time, they are also incurring opportunity cost because of the stellar performance that's lacking in the moment. If a company has a superstar who can barely hold his head up due to illness, depression, anxiety, etc., he will no doubt miss the signs of opportunities coming across his desk that he would normally seize on.
Can an employer even begin to put a price tag on this opportunity cost? What about those high-impact employees that carry a lot of weight primarily due to the sheer amount of work they can perform? If a normal employee being less productive costs a company $2,000 a year - how much does a super-performer being under the weather cost? What about those corporate cheerleaders?
If a company has more than 20 employees, they no doubt have someone who keeps everyone motivated and going forward. They bring sunshine into the office and lift everyone's mood. They love the company and help juice up the loyalty among the rest of the staff. What happens when he's down, dragging or absent? That company is losing more than just his productivity; they're losing the buoyancy of the remainder of their staff.
What if you owned a company and you had a business partner, the yin to your yang? If he's distracted by medical issues or less than optimally productive do things get a bit lopsided? Are you less effective? Is your company less productive? Additionally, key employees, especially business partners, may be insured by a key man life insurance policy. This policy will provide the business with money to keep running while searching for a replacement and to pay the salary of that replacement.
If you want to insure a valued employee, the better health they're in, the less expensive that policy! So you can see that there are certain key individuals in a business whose health is probably more important than you ever thought. Anyone on whom a business owner relies to be more than a cog in the wheel is someone they would want to see committed to achieving the highest possible level of health.
Can an employer force these people to participate in a wellness program, if their health is so important to their company? Legally, probably not, but an employer can apply a great deal of encouragement, enticement, persuasion and motivation, and as is usually the case, once they start to see the benefits in feeling better, looking better, losing weight and breathing easier they will want to continue on their own.
Also, they will be even more loyal to their employer for caring.So what's the bottom line? Here are the cold, hard statistics for an unwell workforce:
- Presenteeism accounts for 61% of an employee's total lost productivity and medical costs.
- Employees working at diminished capacity cost employers over $250 billion a year. They cost employers $2,000 to $2,800 per employee per year.
- Absenteeism costs an average of $789 per employee per year (as of 2002 - It will have gone up!)
- The average cost of health insurance premiums are $8,000 for employees-only and $12,500 for employees with dependents. Wellness programs can net a 10% to 20% discount in these costs from the healthcare insurer.
- The average cost of absenteeism and presenteeism in a workforce is 10% of the compensation.
- The average cost of direct medical expenses is 7% of the compensation.
- Business owners can gain assistance in calculating their own costs; they may find the Blueprint for Health helpful. It is free and available online and it is a service of the Health as Human Capital Foundation (www.hhcfoundation.org/hhcf).
- Implementing an effective wellness program can reduce these costs tremendously. 10% to 20% can be saved in health insurance premiums. Workers compensation premiums can be reduced. Direct medical costs, if a company has a self-insured plan, will plummet. Absenteeism and presenteeism will be reduced dramatically.
- Successful implementers of wellness programs indicate a return on investment ranging from $3.00 for every dollar spent to well over $5.00.
Next month I'll discuss the main elements in a traditional corporate wellness program. They include:
- Identification of Risk Factors
- Recommendations to Reduce Risk Factors
- Goals and Incentives
- Participation
- Multimedia Support
- Management Commitment
"Training veteran Greg Justice didn't just get in on the leading edge of an emerging industry 20-some years ago, he helped create it. Opening the first personal training studio in Kansas City, Justice has, over the years, laid the groundwork for countless others to follow. Being a trailblazer, however, takes a willingness to plow into the thicket of uncertainty.
It means forging ahead with nothing but faith. As one of the true leaders of the personal training industry, Justice now has the benefit of hindsight and the insight of experience, both of which he eagerly offers up to the hundreds of trainers he has mentored."- Shelby MurphyPersonal Fitness Professional magazine, Journey to Success, May 2009
Greg Justice, MA opened AYC Health & Fitness, Kansas City's Original Personal Training Center, in May 1986. He has personally trained more than 40,000 one-on-one sessions. Today, AYC specializes in corporate wellness and personal training. Greg holds a master's degree in HPER (exercise science) (1986) from Morehead State University, Morehead, KY and a bachelor's degree in Health & Physical Education (1983) from Morehead State University, Morehead, KY.
Greg is also an AFAA certified personal trainer (CPT). He has worked with athletes and non-athletes of all ages and physical abilities and served as a conditioning coach at the collegiate level. He also worked with the Kansas City Chiefs, during the offseason, in the early 1980's.He has been actively involved in the fitness industry for more than a quarter of a century as a club manager, owner, personal fitness trainer, and corporate wellness supervisor where he worked with more than 60 corporations.
Greg writes articles for many international publications and websites including Exercise & Health, IDEA Fitness Journal, American Fitness Magazine, Protraineronline.com, Fitcommerce.com, Personal Trainer University, and has a monthly column called "Treadmill Talks" in Personal Fitness Professional (PFP) magazine.
He has authored a book titled "Lies & Myths about Corporate Wellness" and has been a contributing author for two other books. He currently serves at the President of the Association of Professional Personal Trainers (APPT). Greg was an adjunct professor of exercise science at Avila University and currently serves on the faculty of Personal Trainer University.
He mentors and instructs trainers interested in Corporate Wellness through his Corporate Boot Camp System class. He developed this course because of the need of CEOs and HR Professionals for achieving a means of positive, effective, and lasting change toward more healthy and productive employees.
His system is tested and proven and combines the three major areas that business needs to address if they are to see a return on their employee benefits investment.
