Improving Workplace Productivity— - Aon - Retirement · Improving Workplace Productivity ......

BENEFITS QUARTERLY, Third Quarter 2011 13

sociated with sick time, personal leave, paid holidays, vacation and short-term disability or salary continua-tion. Periods of paid leave associated with sick time and short-term disability or salary continuation are times when the employee is not at work and not pro-ductive—when they are absent.

The ability to enhance workforce output and mini-mize loss due to absenteeism represents a tremendous advantage in the global economic environment. Many employers are plagued by the rising frequency and duration of leaves related to an employee’s poor health. There is a growing awareness that absent workers create a direct drain on profitability due to reduced productivity and increased expense. Table I illustrates how benefit costs of health and productivity direct cost programs add up as a percent of payroll.

Are there opportunities to mitigate the risk associ-ated with absence? Can employers reasonably set a goal of reducing the frequency and duration of ab-

The business pages of U.S. news-papers are replete with head-lines measuring, forecasting and praising the continued pro-ductivity gains of the American workforce. Improvements in productivity are attributable to multiple factors, such as tech-nology innovations, but the most important metric contin-

ues to be human labor (output per hour). Today more than ever, organizations and their managers are tasked to “do more with less” as businesses globally look to maximize their workforce output and in-crease productivity.

The parallel initiative to increasing productivity is reducing expense. For most organizations, salary is the single largest expense. Most payroll calculations include salary for days worked as well as the cost as-

Improving Workplace Productivity—

It Isn’t Just About Reducing Absenceby kathy harte, kathleen Mahieu, david Mallett,

Julie Norville and Sander VanderWerf

Employers must get more aggressive in their health and productivity strategies. A comprehensive strategy includes data analytics across health and lost-time programs, absence policies that meet today’s needs for both employer and em-ployee, health and wellness programs targeting modifiable health behaviors, and absence program administration that is aligned to operational goals. This article targets key aspects of a comprehensive long-term health and productivity stra-tegic vision. An organization can use these aspects independently to address immediate tactical issues while it develops its broader strategy. The target areas include a view from the perspective of data management, absence program design and management, employee health and wellness, and behavioral health.

Absence Management and presenteeism

14 BENEFITS QUARTERLY, Third Quarter 2011

sure of the direct costs associated with individual health, disability and time-off programs. However, they are unable to measure the indirect cost of a lost workday or the relationship between health and ab-sence.

Interest is growing in collecting and using worker lost-time data more holistically both to set strategic direction within absence programs and to guide the organization’s overall health and productivity strat-egy to:

•Examine the population health risk in context of the corporate agenda

•Utilize meaningful metrics to measure the effects on corporate health, including lost revenue im-pact

•Incorporate effective leave policies and associ-ated administration

•Use metrics to calibrate continuous improve-ment initiatives to meet dynamic business needs.

Metrics become the first and last parts of a four-part initiative: (1) Define the baseline. (2) Identify trends. (3) Initiate change. (4) Measure the impact.

Absence program design and management and employee health and wellness are among the strat-egies most frequently associated with impacting absence.

Employers are also challenged to design and ad-minister leave-of-absence programs that support the employee’s need for time-off and disability cover-ages, along with the employer’s desire for a cost-com-petitive benefit that creates a fully productive work-force. A combination of plan designs and best-in-class administration that align with organizational goals and employee needs is key.

As employers become more aware of the multiple work-life balance issues affecting their employees’ lives, they are increasingly attempting to help employees ad-dress their poor physical and/or mental conditions.

An organization cannot be successful without em-ployees who show up every day ready to give their full attention to their job. It is estimated that 4–10% of an employer’s workforce is not at work on any given day.3 A lost day from work is more than the sal-ary and benefits paid for that day; a comprehensive evaluation recognizes the impact to the organiza-tion’s bottom line and profits. This untapped re-source—employees who are absent who could be at work—can significantly contribute to the organiza-tion’s financial success. Reducing the benefit cost is a small part of this lost resource. The real potential is the increase in hours worked.

For this article, we have chosen to begin the discussion by targeting key aspects of a comprehen-sive long-term health and productivity strategic

sences, or should the goal be to increase the organiza-tion’s productivity?

Both goals recognize the value of a workforce that is present. The latter also places value in a workforce that is both present and fully engaged. Employees’ productivity can be significantly influenced by their general health and well-being, their understanding and utilization of medical leave policies, and the rela-tionship they have with their manager.

While less than 23% of employers participating in Aon Hewitt’s Annual Health Care Survey 2008 had a formal health and productivity strategy in place, 60% intended to develop one in the next five years.1

A comprehensive health and productivity strategy encompasses several key tactical aspects that, when successfully linked, support an employer’s ability to influence workforce productivity. Included in the strategies are data analytics across health and lost-time programs, absence policies that meet today’s needs for both employer and employee, health and wellness programs targeting modifiable health be-haviors, and absence program administration that is aligned to operational goals.

Though metrics continue to seem elusive to many employers, 69% of participants in Aon Hewitt’s Nuts and Bolts of Leaves of Absence 2008 survey identified that they have never calculated total time-off pro-gram costs, and 58% have never calculated time-off usage statistics.2

Comprehensive analytics are needed to evaluate, at a minimum, employee utilization trends and ven-dor performance. Many employers have some mea-

TABLE IHEaltH and productiVity dirEct cost programs as a pErcEnt oF payroll

Medical coverage 10.0%

Overtime 3.4%

Replacement workers 2.0%

Job accommodation 1.0%

Sick leave (not including paid time off) 1.0%

Short-term disability 1.0%

Workers’ compensation 1.0%

Health improvement programs 0.5%

Long-term disability 0.5%

Source: U.S. Department of Labor.


and their families, while at the same time reducing total health-related costs.

Integrating evidence-based, data-driven measure-ment and monitoring mechanisms is key to the suc-cess of these more comprehensive strategies. These evaluation approaches should help to define the goals and objectives for the program silos—but more importantly, also span across the total health and pro-ductivity management spectrum.

Measurement and evaluation will give employers the critical numbers they need to recognize year-over-year trends for effective management of integrated health and absence benefit designs, occupational health and safety programs, health improvement/well-ness initiatives, and medical management programs. Identifying and tracking key metrics longitudinally helps a corporation to align programming with medi-cal and productivity cost drivers and to document ef-fective use of programming dollars.

The Pepsi Bottling Group (PBG) has embraced integrated measurement concepts. PBG wanted to predict how improvements to employees’ health risk profiles could potentially lower health- and produc-tivity-related costs. The company analyzed experi-ence across multiple benefit program areas and data types to determine the relationship between individ-ual health risks and costs.

PBG’s analysis illustrates how health risk factors can influence direct medical costs and costs associ-ated with productivity-related outcomes. PBG found that a large reduction in the prevalence of health risks could yield annual workers’ comp sav-ings of $733,260, with 66% of those savings being realized from a reduction in weight risk and 15% from reduced stress. PBG also calculated annual short-term disability (STD) savings could amount to $344,190 for a large risk reduction, with most sav-ings coming from reductions in weight and high blood glucose (20%). An additional $2.3 million in medical savings was also hypothesized for large risk reduction.8

Research, analytics and measurement/monitoring approaches are much easier to accomplish when employers have access to health and productivity program data. Even in the absence of actual data, modeling can be applied to pinpoint actionable op-portunities for employers. Such tools are extremely useful in helping make the business case for when to invest in more holistic health and productivity man-agement strategies.

However, not only must some level of data and/or models be available and customizable, but there must also be effective analytic interpretation and use of those data resources.

vision. An organization can use these aspects inde-pendently to address immediate tactical issues while developing its broader strategy. The target areas include a view from the perspective of data manage-ment; absence program design and management; employee health and wellness; and employees’ men-tal health.

A VIEW FRoM ThE pERSpECTIVE oF dATA MANAgEMENT

Although many employers are concerned about workforce health, their efforts to address this prob-lem have tended to focus on medical costs without considering how health impacts workforce productiv-ity. Historically, many employers have had little infor-mation about how disability, absenteeism and lost productivity affect their bottom line. After identify-ing major medical and pharmacy cost drivers, many employers have attempted to relieve their cost bur-den by implementing siloed approaches to health and productivity management versus thinking more ho-listically.

Forward-thinking employers implement compre-hensive strategies that cross the organization’s vari-ous programs, policies and populations.

The following statistics demonstrate the need for strategies to reduce health care expenditures, retain valuable employees and optimize employee produc-tivity:

•Employers are spending an estimated $13,000 per employee per year in total direct and indirect health costs.4

•Employers typically lose $3 of health-related productivity for every $1 spent on medical care or pharmacy.5

•Health-related problems reduce the effective-ness of the U.S. workforce by 5-10%.6

•A survey found that an estimated 18 million Americans aged 19 to 64 are not working be-cause of health reasons.7

•Organizations willing to integrate benefit pro-grams can achieve substantial savings, typically 15-35% of prior costs (Integrated Benefits Insti-tute).

•The annual cost of occupational and nonoccupa-tional injuries and illnesses represents 12-14% of total payroll costs.

Employers must understand the relationships that span their various benefit types and programs so that they can get more aggressive in health and productiv-ity strategies. This will lower health risks, reduce the burden of illness, improve wellness and human per-formance, and enhance the quality of life for workers


Four types of data, covering multiple years of expe-rience, must be captured to design the initial baseline measurement set and for ongoing metric monitoring:

1. Traditional eligibility/enrollment, medical/ behavioral health claims and prescription drug claims experience

2. Disparate absenteeism data points (disability, incidental paid and unpaid absence, family medical leave (FML) and workers’ compensa-tion) to complete the picture of all lost-time experience

3. Participation data from health risk assess-ments, biometrics, lifestyle management, disease management and other health im-provement programs

4. When and where available, summary plan design, corporate culture information (e.g., via surveys) and employee satisfaction. Benefit or provider satisfaction is also important infor-mation.

Capturing these data points allows the organiza-tion to build a health and productivity profile for ev-ery employee and/or cohort grouping.

Next, an organization should map out key metrics and views that will provide additional insight. Table II contains a list of sample metrics.

Determining the best method for presenting this information is difficult but critical for engaging stake-

Once data sources (internal and external to the or-ganization) and/or models are identified, it is crucial that the measurement and monitoring process incor-porate a step that helps determine how best to present this complex information in a visually revealing frame-work. The correct framework will deliver instant in-sight into areas where an employer can take action. Data by itself isn’t extremely powerful. Rather, what yields results is the manner in which the key metrics are presented (and supported by evidence of impor-tance) in order to tell the comprehensive health and productivity story.

To that end, it is critical that employers that move forward with any mix of health, wellness and ab-sence management initiatives develop a baseline of current experience—from a more holistic, total health and productivity perspective. This baseline should provide important insight into the organiza-tion’s major cost and utilization drivers across all benefit program areas, and also provide a means to gauge future impact.

By understanding what is really driving the his-toric experience, an organization can implement the right intervention programs and best practice ele-ments to maximize return on investment. Further, longstanding hypotheses or theories of what is truly going on within the organization and specific popula-tions can be either validated or refuted.

TABLE IIsamplE mEtrics and ViEWs/population drills For basElinE and ongoing mEasurEmEnt

Metrics Views/Population Drills

Integrated health and productivity:•Totalcostbytypeofcoverage•Totalcostbydiagnosticcategories•Disabledpopulationdriveswhat%

of total cost and utilization

•Businessunit•Jobtitle/type•Employeestatus•Employeetype•Geographiclocation•Medicalvendor•Age/gendermix•Employeelengthofservice•Continuousenrollmentindicator•Wellnessprogramparticipant

vs. nonparticipant flags•Riskstatusandfactors

Absence experience (sick days, short-term disability, workers’ compensation):•Duration•Incidence•Prevalence•Costperemployee•Costpercase•Diagnosis•Relapseorrepeatrate•Denialrate


FIgURE 1ExamplE oF prEsEnting HigH-lEVEl analytic concEpts and subcomponEnts

bEnEFits paid as % oF total by typE oF coVEragE

HEaltH and productiVity mEtrics

aggrEgatE cost by typE oF coVEragE—EmployEEs only

WC All Short- Long- Wage/ Types Term Term Med/ of Medical Rx Drug Disability Disability Other Coverage

Total Benefits Paid (millions) $352.4 $97.2 $40.6 $12.5 $27.8 $530.5

Benefits Paid as a % of TOTAL 66.4% 18.3% 7.7% 2.3% 5.2% 100%

Benefits Paid per Active EE $6,743 $1,861 $777 $239 $533 $10,156

Most Costly Condition Neoplasms; Endcr, Muskulo, Muskulo, Injury Neo- and Benefits Paid $74,774,642 Nutri, Cnctv Cnctv and plasms; Metabolic, Tissue; Tissue; Poisoning; $77,950,572 Immun; $2,811,011 $87,524 $8,476,598 $15,408,662

Second Most Costly Circulatory Infectious Injury and Injury and Muskulo, Muskulo, Condition and System; and Parasitic Poisoning; Poisoning; Cnctv Cnctv Benefits Paid $44,431,373 Dis; $2,630,490 $64,088 Tissue; Tissue; $14,882,989 $416,141 $52,427,854

Third Most Costly Muskulo, Mental Pregnancy, Neoplasms; Skin and Circulatory Condition and Cnctv Tissue; Disorders; Childbirth, $59,091 Subcu- System; Benefits Paid $44,341,354 $9,460,181 Puerp; taneous $51,286,128 $1,266,470 Tissue; $98,936

Medical

Long-Term Disability

WC Wage/Med/Other

Short-Term Disability

Rx Drug

Total Benefits Paid: $472,473,088

}}

84.8%

15.2%

66.4%

18.3%

7.7%

5.2%2.3%


FIgURE 2ExamplE oF clustEring similar analytic concEpts into FEWEr ViEWs WitH rElatEd tHEmEs oF cost and utilization mEtrics

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000 STD

LTD

WC Lost Time

WC Med Only

2010Q12009Q42009Q32009Q22009Q12008Q4

Number of New Cases Incurred by Quarter and Type of Coverage

0

10

20

30

40

50

60

Short-Term Disability

Expected Duration

Ave

rage

Num

ber

of B

usin

ess

Day

s Lo

st

Average Case Duration—Closed Cases Only

51.1

21.8

Average Disability Durations (Business Days Lost)

0

5

10

15

20

25

30

35

WC Med Only

WC Lost Time

LTDSTD

30.9

3.2

6.2

22.2

Number of Cases per 100 Active EEs

0%

2%

4%

6%

8%

10%

Disability Claim Recurrence Rates

WC Med Only

WC Lost Time

LTDSTD


•Ergonomic or disease management programs targeted to the underlying clinical condition

•Job qualification recertification directed to the appropriate job function

•Identification of characteristics needed to tailor absence management programs.

Assuredly, these measurement and monitoring steps will provide organizations with a framework for capturing actionable information in order to mini-mize preventable costs and promote productivity—from an overall view throughout the business, as well as down to finer population cuts. This approach can help employers:

•Promote personal health management, organiza-tional resiliency and safety

•Prevent and manage risk, such as personal stress and work stress

•Intervene effectively to restore and foster capa-bility and prevent further risk.

In summary, the value of implementing a total health and productivity model is that healthy-at-work, optimally functional employees consume fewer benefits and are more productive. The integration of disability, absence and lost productivity data, to-gether with the more traditional group health and prescription drug data, can augment an employer’s analytic scope and increase cost-saving opportunities.

holders throughout the organization. The ideal method is to:

•Present the high-level analytic concepts first, and then show the subcomponents (see Figure 1).

•Cluster similar analytic concepts into fewer views with related themes of cost and utilization met-rics (see Figure 2).

•Start isolating and comparing metrics for key population slices. Compare work locations and/or business units in order to develop a road map to tactical/tailored interventions. Concentrate on the work groups driving most of the adverse ex-perience and highlight the parts of the organiza-tion demonstrating favorable experience (see Figure 3).

Further drill-down measurement should identify the population of employees driving the majority of lost work time experience. The metrics should uncover the similar traits of the high-user group, for example:

•Age and tenure•Work location and job function•Underlying clinical conditions, risk status, etc.From the resulting profile of the high-user group,

the employer can target appropriate intervention programs, such as:

•Education of appropriate field management re-sponsible for absence discipline

FIgURE 3ExamplE oF isolating and comparing mEtrics For kEy population slicEs

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

Lost Productivity STD Benefits

Site 13Site 15*Site 3Site 7Site 14Site 6Site 4*Site 12Site 1aSite 9Site 10Site 5Site 2Site 1Site 8Site 11

Worksite Location


tis can become pneumonia, which can become chronic obstructive pulmonary disease (COPD). In this linear, progressive condition example, the em-ployee most likely accesses sick time, STD, FMLA/state leaves and perhaps even long-term disability (LTD). If the employee smokes or has asthma, COPD can advance much more quickly and ensure LTD probability along with high-dollar medical and pharmacy costs.

Here are a few surprising statistics from the Coun-cil for Disability Awareness:

•Three in ten workers will become disabled be-fore they retire.

•A typical 35-year-old female office worker has a 24% chance of becoming disabled for three or more months during her career.

•A typical 35-year-old male office worker has a 21% chance of becoming disabled for three or more months during his career.

•Risk factors that increase the probability of dis-ability include excess body weight, anxiety or de-pression, tobacco use and chronic conditions such as diabetes, high blood pressure and back pain.

Employers are reassessing their approach to leave-of-absence programs from a variety of perspec-tives: recruitment/retention, comparative practices, reduction of benefit cost, policy integration, return-to-work opportunities, administrative efficiency and workforce management. The greatest emphasis is on redesign of traditional sick time/incidental absence policies and STD plans. Of particular note is the need to address incidental unscheduled absences, which incur expensive worker replacement costs and are most disruptive to the ability to deliver services and products.

To address unscheduled absences, a common and effective design strategy is to develop a paid-time-off (PTO) program combining traditional sick, personal and vacation plans. A PTO plan helps employees manage the available PTO without having to “pre-tend” to be sick. Per the 17th Annual CCH Unsched-uled Absence Survey of 2007, when sick time is in-cluded in a PTO plan, unscheduled absence can be reduced by 25% (for example, employer of 1,000, a savings of 1,250 days annually).10 PTO plans encour-age employees to call in known absences ahead of time and not the day of, with the exception of actual real-time illness. When an employee calls in an un-scheduled absence the day of the event, the employer must often resort to using costly replacement work-ers to fill the void. The cost of a full-replacement worker is typically 1½ times the wages of the absent worker.11

Collective analysis of these various programs can contribute to a more complete picture of workforce health and productivity.

A VIEW FRoM ThE pERSpECTIVE oF ABSENCE pRogRAM dESIgN ANd MANAgEMENT

Absence isn’t just about a day away from work. Many employee absences are tied directly to a medi-cal event in an employee’s life. Those events trigger available benefits and collectively impact benefit cost and workplace productivity. Medical events can range from a sick day for a “mental health day” to a chronic illness or catastrophic medical event. Results may span from one unscheduled lost day of work to an extended period of time away from work ending in reduced capacity.

Being able to evaluate the condition and guide the employee during the period of absence is an integral aspect of any employer’s health and productivity strategy. That involves both design and administra-tion. While 97% of employers surveyed have formal policies, only 26% believe they are followed. Three-fourths of employers report they do not have a for-mal absence management strategy.9

Employers often provide paid-leave-of-absence programs to deal with expected employee absences and to respond to competitive pressure or regulatory requirements (FMLA). The result is a number of leave programs that may overlap. More often than not, these programs no longer support the needs of the organization or its employees as originally in-tended. Paid-leave-of-absence programs may be typed as sick time, personal, vacation, medical leave, short- and long-term disability plans, maternity and paternity. Often, the options are endless. What deter-mines which paid-leave policies an employer offers may be its ability to fund the benefits (as mentioned, the actual cost is often elusive or not measured), per-ceived employee value, and the competitive benefit package needed to attract and retain employees.

Employers must also comply with mandated paid medical leave coverages such as workers’ compensa-tion, statutory disability (New Jersey, New York, Cal-ifornia, Rhode Island, Hawaii and Puerto Rico) and paid family medical leave (California and New Jer-sey), and unpaid leave regulations such as the Family and Medical Leave Act (FMLA).

Statutory FML regulations—whose complexity in-creases as more and more states enact further legisla-tion—also apply. This makes for a complex mix, with frequent overlaps and instances of concurrency for a single lost-time medical event. For example, bronchi-


It is important that employers understand the drivers of medical lost time. Predictive modeling of the types of medical events an employee population may experience, in terms of incidence and duration, are important factors to consider when designing an STD plan in combination with health plan predictive modeling. For example, a younger female workforce may experience a higher level of pregnancy claims, while an older male population may have more mus-culoskeletal claims. Part of the emphasis for bench-marking the baseline is recognizing manageable events.

An often-missed opportunity in the cycle of a chronic medical event is early and appropriate re-turn to transitional duty work. Many employers un-derstand their obligation to comply with the Ameri-cans with Disabilities Act (2009 revision to the ADA Amendments Act of 1992) but don’t link compliance with an opportunity to increase worker productivity and decrease benefit costs.

A return-to-work (RTW) policy with financial in-centives to return to work and clear language regard-ing the transitional RTW duty program can be a true asset to worker productivity. A successful RTW pro-gram must include clearly defined functional job de-

When an employer can plan ahead for an employ-ee’s absence, often work can be spread amongst a team, and the employer avoids full worker replacement costs. PTO plans reduce the number of unscheduled ab-sences, while increasing the employee’s responsibility to manage his or her PTO in partnership with the em-ployer. The result can be a decrease in unscheduled em-ployee absence, making the employee more affordable and an effective partner to increasing the time at work. This tells us that the number of days needed to cover incidental sickness and bridge into the STD benefit for employees with more severe medical conditions is most likely five or less. (Most STD plans have a five-workday or seven-calendar-day benefit wait period.)

For more serious acute and chronic medical events, benefits such as STD/salary continuation come into play. Serious health care events are com-monly defined under STD plans as lasting five or more consecutive workdays, while FML defines a se-rious health care event as three or more days. Worker replacement costs are now inevitable. One can as-sume that this serious employee medical event has become exponentially more costly including health benefits, wage replacement benefits and worker re-placement.

FIgURE 4aVoidablE trEatmEnt costs and output lossEs, 2023

Note: Treatment expenditures for individuals in nursing homes, prisons or under other institutional care are not included. Treatment expenditures for comorbidities and secondary effects of listed disease are also excluded.

Sources: MEPS, NHIS, Milken Institute.

$0 $100 $200 $300 $400 $500

Indirect Impacts

Direct Costs

Stroke

Pulmonary Conditions

Diabetes

Mental Disorders

Hypertension

Heart Disease

Cancer

$14

$47

$73

$88

$172

$137

$373

$10

$26

$17

$28

$23

$76

$37

Total Direct ($217.6 billion) +Total Indirect ($905.1 billion) =

$1.1 trillion


loss has focused primarily on the prevalence of chronic conditions rather than on modifiable health risks. According to the Centers for Disease Control (CDC), four modifiable health risk behaviors—lack of physical activity, poor nutrition, tobacco use and excessive alcohol consumption—are responsible for much of the illness, suffering and early death related to chronic diseases.14

We know that more than half of all Americans suffer from a chronic illness such as cancer, cardiac conditions, hypertension, stroke-related conditions, diabetes, mental health conditions or respiratory dis-eases. Chronic illness costs the economy over $1 trillion annually, according to an October 2007 Milken Institute study (Figure 4).15 Although treat-ment advances have led to higher quality of life and lower mortality rates, the number of those with chronic conditions continues to rise.16

Yet the study makes a bold prediction: By making reasonable improvements in preventing and manag-ing chronic disease, we can actually avoid 40.2 million chronic condition cases in 2023. The improvements would reduce the future economic costs in the United States by 27% or $1.1 trillion by that same year, with the bulk of savings coming from gains in productivity and reduced treatment spending.

We know that of those with chronic conditions, at least half have multiple conditions. Our population is also aging, and we know our risk for developing dis-eases rises as we age.

In addition to the seven chronic conditions out-lined in the Milken study, research also tells us that other conditions significantly contribute to our health care economic burden and decreased productivity in the workplace. Osteoarthritis increases annual per capita absenteeism costs by $469 for female workers and by $520 for male workers. This is equivalent to approximately three lost workdays. The aggregate annual absenteeism costs are $10.3 billion (women = $5.5 billion; men = $4.8 billion). The aggregate annual absenteeism costs of osteoarthritis are quite substan-tial as measured by the probability of absenteeism, days missed from work and their dollar values, com-pared with other major chronic diseases.17

The cost of obesity among U.S. full-time employ-ees is estimated to be $73.1 billion, according to a study published in October 2010 by a Duke Univer-sity obesity researcher.18 The study findings revealed that collectively, the per capita costs of obesity are as high as $16,900 for obese women with a body mass index (BMI) over 40 (roughly 100 pounds over-weight) and $15,500 for obese men in the same BMI class. Presenteeism makes up the largest share of those costs. The authors found that presenteeism ac-

scriptions that specify physical and cognitive de-mands needed to perform essential job functions.

Predetermined positions and modifiable work schedules can make the reasonable accommodation process more efficient, while saving days away from work. Using a formal, consistent process, the RTW de-cision can be made more quickly. By understanding STD, FMLA and workers’ compensation expected claim durations, along with predetermined availability of transitional duty job positions and work schedules, an employer can accurately determine the length of time needed to accommodate employees for the tran-sitional duty policy.

Designing leave-of-absence programs is only half the battle. The other key component is best-in-class administration. While outsourcing STD has become quite common, employers are also outsourcing FML and other ancillary leave programs. Outsourcing re-moves the burden of day-to-day oversight and track-ing of leave-of-absence programs to a third party, but vendors still require oversight to ensure the program is performing as intended and the vendor is employ-ing a level of management consistent with the organi-zation’s culture. Establishing a relationship with a vendor requires a detailed description of program administrative requirements and assessment that the vendor is able to deliver; a cultural fit as to the ex-pected employee experience; and a commitment to a technology platform that interfaces with HRIS and payroll systems, that delivers real-time access to cur-rent claim status, and Web reporting tools that sup-port data analytics.

In summary, employers are challenged to design and administer absence programs that support the employee’s need for time-off plans and disability coverages, along with the employer’s desire for a cost-competitive benefit that creates a fully produc-tive workforce. A combination of plan designs and best-in-class administration that aligns with organiza-tional goals and employee needs is key.

A VIEW FRoM ThE pERSpECTIVE oF EMpLoYEE hEALTh ANd WELLNESS

Employers increasingly recognize the role of em-ployee health in organizational productivity and en-gagement. There is a growing but still limited body of literature that demonstrates a strong association be-tween employee poor health and employee produc-tivity loss.12

According to Aon Hewitt survey results of 593 employer respondents, employers are increasingly fo-cused on employee productivity as a main organiza-tional concern.13 However, research on productivity


counted for as much as 56% of the total cost of obe-sity for women and 68% for men. Even among those in the normal weight range, the value of lost produc-tivity due to health problems far exceeded the medi-cal costs.19

Our health care reduction focus has been primarily on managing costs associated with chronic conditions and not necessarily on preventing them in the first place. The old adage “an ounce of prevention is worth a pound of cure” is one embraced by many research-ers including Dr. Dee Edington of the Health Manage-ment Research Center at the University of Michigan:

The data demonstrates that the current waiting for sickness strategy is unsustainable in terms of the health status of Americans and in the rapidly escalating health care costs without any im-provement in quality outcomes. The positive news is that the data demonstrate that changes in health status correlate with changes in costs; however, corporate and individual wellness strategies have proven to be of limited effective-ness in improving overall health status, improv-ing productivity, and lowering healthcare costs.20

Based on Edington’s work, we have seen a re-newed emphasis on wellness programs that are in-tended to keep the healthy and those at risk from becoming sick(er). Such programs include smoking cessation, weight management, physical activity, stress management and nutrition. It is clear that pro-viding easy-to-use vehicles for employees and their families to stay healthy will impact their future health outcomes, including cost, and their ability to be pro-ductive in the workplace.

The ongoing challenge becomes engagement and ultimately behavior change. If an organization em-ploys all the tools available to it as noted (senior leadership support, marketing and incentives), it will likely see improvement in overall health, health care costs and productivity. One study in the American Journal of Health Promotion suggests that positive worker health can lead to improved quality of goods and services, greater creativity and innovation, en-hanced resilience and increased intellectual capac-ity.21 That is the ultimate in gaining an organizational edge that leads to success.

A VIEW FRoM ThE pERSpECTIVE oF EMpLoYEES’ MENTAL hEALTh

Absence and productivity levels are influenced by many factors, all of which have been heightened due to the current global, economic and workplace envi-ronments. There is greater instability both economi-cally and environmentally around the world, contin-

ThE AUThoRS

kathy harte is a senior clinical health care con-sultant in Aon Hewitt’s health and productivity solutions practice. She has more than 30 years of clinical, professional and consulting experience working with employers, carriers and third-party administrators in the areas of health and produc-tivity. Harte earned a bachelor of science degree in behavioral sciences and a master’s degree in business administration from Mercy College.kathleen Mahieu is a senior health management consultant and leads Aon Hewitt’s behavioral health solutions consulting. She focuses on developing ap-proaches for increasing mental health awareness, de-signing integrated health programs and measuring effectiveness based on cost, clinical outcomes, and operational and administrative performance. Mahieu earned a bachelor of science degree and a master’s degree in business administration from Sacred Heart University. She also holds a master’s degree in educa-tion from Fairfield University.david Mallett is a senior consultant and leads the data forensics and innovation national team for Aon Hewitt. He is a recognized thought leader in creating and implementing both standard and cus-tom data and measurement solutions that assure a high value and return on investment. Mallett earned a bachelor of science degree in business administra-tion from the University of Connecticut and mas-ter’s degrees in business administration and health care administration from Quinnipiac University.Julie Norville is a senior vice president and na-tional absence management practice leader for Aon Hewitt. She is a recognized speaker and au-thor on health and productivity, integrated ab-sence management and return-to-work programs, and has vast experience in working with employ-ers to diagnose lost-time costs and analyze plan designs. Norville earned a master’s degree in clin-ical case management/vocational rehabilitation counseling from the University of Alabama.Sander VanderWerf is a senior consultant and manager of the Aon Hewitt absence management practice. She has more than 25 years of professional experience working with employers, carriers and third-party administrators in the areas of care man-agement, disability and workers’ compensation ben-efit administration, and design and implementation of integrated benefit programs. VanderWerf earned a bachelor of arts degree and a master’s degree in health science from the University of Florida.


the organization to broadly expose the components that will have the greatest impact on absence and productivity.

Prevention Through Enhanced Manager/Supervisor Training

Although EAPs are often thought of as a vehicle for proactively addressing workplace issues and im-proving organizational performance, few employers actually take advantage of the resources to support these areas and do not actively guide employees to these services. In addition to providing problem as-sessment and short-term counseling services, a core competency of EAPs is their expertise in supporting managers and supervisors with addressing workplace issues.

When an individual becomes overwhelmed with personal and/or work issues, the impact of that stress and strain in the workplace is usually first felt by his or her co-workers and manager. An employee who is struggling financially may be at risk for losing his home, may be experiencing relationship difficulties with his spouse and children, and may be relieving his stress by consuming too much alcohol in the evening. This is an employee who is quite likely to be preoc-cupied with all of these worries while at work, exem-plifying a situation of presenteeism. This individual is at work, but is not really working to his full capacity.

It is often the employee’s manager or supervisor who observes the weakening of work performance or strained interpersonal relationships among co-workers. However, the manager may not feel com-fortable addressing these issues with the employee until increased absence and tardiness and dimin-ished work product become too disruptive to the workplace. Training that focuses on the skills man-agers need to identify, address, refer and support employees during difficult situations can play a major role in impacting absence and performance.

Maximizing EAP Services Within an Absence Management Program

Encouraging the use of EAP services while an em-ployee is on disability can play an important role in reducing disability days away from work and achiev-ing earlier return to work. A study by The Hartford in 2007 showed that when employees on disability use the EAP, they return to work an average of 14.5 days sooner than those who do not use the EAP and are twice as likely to return to work than those who do not use the EAP.28 Within your own program, do you know which work locations have high, or low, EAP utilization? How does this coincide with ab-sence and disability levels? Do you know how many

ued financial strain within families, and strong emphasis on increased output and productivity among the workforce. All of these factors lead to more pressure for employees to be at work, work longer hours and deliver higher performance levels.

As a result, employees are experiencing higher stress levels and less downtime to rejuvenate. A 2010 survey by ComPsych showed that 68% of workers re-port having high levels of stress with extreme fatigue and/or feeling out of control—an increase from 65% in 2009.22 The survey further notes that employee stress levels are driven primarily by workload, people issues, job insecurity, and juggling work and personal life. Such high-stress levels lead to poorer overall health, more frequent unscheduled absences and greater potential for longer term absence.

Research over the past 20 years has shown that employee assistance programs (EAPs) play an im-portant role in impacting productivity and absence. In 2007, a study by The Hartford showed that EAP utilization can significantly reduce unscheduled ab-sence.23 Research by the U.S. Department of Health and Human Services found that employers with EAPs average 21% lower absenteeism rates and 14% higher productivity rates than those without EAPs.24

As noted earlier, investment in wellness programs influences both medical costs and absenteeism. And wellness programs that focus on preventing illness and maintaining health can go a long way to creating an environment of high performance, lowering health care costs and reducing absence. Incorporating an EAP into an organization’s overall health and well-ness program is only one approach to mitigating is-sues that influence stress levels. However, few em-ployers consider EAPs to be a component of their wellness program (Figure 5).25

According to the 2008 Employer’s Guide to Em-ployee Assistance Programs, EAPs “deliver a variety of health and productivity services to improve orga-nizational performance.”26 Studies have shown that individuals receiving assistance from the EAP report lower absence rates and higher rates of productivity. A 2001 study by Mark Attridge showed that when EAP services were provided, work loss was avoided in 60% of cases, and 72% of the people associated with these cases showed, on average, a 43% gain in work productivity.27 Because of their ability to impact employee performance, EAPs are an essential com-ponent of an effective productivity enhancement strategy.

However, merely offering an EAP does not mean an organization will benefit from all of the results EAPs can deliver. It takes a concerted effort within


managers understand how EAPs can support overall health, using the services available, and maintaining visibility of the program are all important to achiev-ing high program utilization.

SUMMARY

Tackling workforce productivity is not a “once and done” activity. Developing a strategy that aligns pro-ductivity enhancing programs (or absence reduction programs) with the organization’s mission and cul-ture is the first step. Defining the priorities may cor-respond to a range of issues, such as regulatory com-pliance, employee behavior change, measurement of current state, relating high-cost medical conditions to absence rates or others.

The approach an employer takes may have multi-ple entry points. All options are geared to recognizing

employees on disability have used or are using EAP services? How do you know that employees partici-pating in the disability program are being screened appropriately? Is your disability partner screening participants not only to identify comorbid depression or cooccurring substance abuse but also to assess any psychosocial issues that could be impeding the em-ployee’s ability to return to work and referring them to the EAP?

Understanding how your population is using the EAP is the first step to maximizing the value of this program. However, merely offering an EAP does not ensure that managers, employees and vendor part-ners will make use of it. To maximize the value of EAP, it is important to establish a comprehensive on-going communication strategy that is coordinated with an overall health and wellness communication and promotion initiatives. Helping employees and

FIgURE 5pErcEnt oF EmployErs rEporting HoW tHEir Eap is positionEd WitHin tHEir organization

Source: Aon Hewitt’s 2008 Survey, The Road Ahead: Driving Productivity by Investing In Health 2008.

Positioned as the

gateway to all behavioral health services

Our organization

does not offer an EAP

A highly visible health and wellness

resource

A resource for managers/supervisors

Positioned as a

wellness resource

Communicated as part of

our employee benefit package

4%5%

8%8%10%

63%

0%

10%

20%

30%

40%

50%

60%

70%

80%


10. CCH (2006) CCH Unscheduled Absence Survey. See www.cch.com/absenteeism2006/.

11. S. Nicholson, M. V. Pauly, D. Polsky, C. Sharda, H. Szrek and M. L. Berger. “Measuring the effects of work loss on produc-tivity with team production.” 2006. Health Economics 15:111-123.

12. R. C. Kessler, P. E. Greenberg, K. D. Mickelson, L. M. Meneades and P. S. Wang. The effects of chronic conditions on work loss and work cutback. Journal of Occupational and Environ-mental Medicine. 2001: 43;218-225.

13. Aon Hewitt (2010) The Road Ahead—Emerging Health Trends 2010. A summary is available at www.hewittassociates.com/Intl/NA/en-US/KnowledgeCenter/SurveyResults/ArticleDetail .aspx?cid=8341.

14. Center for Disease Control, National Center for Chronic Disease Prevention and Health Promotion; Four Common Causes of Chronic Disease; see www.cdc.gov/chronicdisease/overview. Page last updated July 7, 2010.

15. A. Bedrossien and R. DeVol. 2007. “An Unhealthy Amer-ica: The economic burden of chronic disease,” The Milken Insti-tute. October 2007: i. The full report is available at www.chron-icdiseaseimpact.

16. Ibid. 17. H. Kotlarz H, C. L. Gunnarsson, H. Fang, J. A. Rizzo. “Os-

teoarthritis and absenteeism costs: evidence from US National Survey Data.” March 1, 2010, Journal of Occupational and Envi-ronmental Medicine, 2010 March; 52(3):263-268.

18. E.A. Finkelstein, M. DiBonaventura, S. M. Burgess and B. C. Hale. 2010. “The Costs of Obesity in the Workplace,”Journal o f Occupat iona l and Envi ronmenta l Medic ine, 2010 Oct;52(10):971-976.

19. Ibid. 20. D. Edington. 2009. Zero Health Trends: Health as a Serious

Economic Strategy, Health Management Research Center, Univer-sity of Michigan. p. 35.

21. J. E. Riedel, W. Lynch, C. Baase, P. Hymel, K. W. Peterson. 2001. “The effect of disease prevention and health promotion on workplace productivity: a literature review,” American Journal of Health Promotion. 15:167-191.

22. 2010 StressPulse Survey, ComPsych Corporation, Novem-ber 22, 2010.

23. The Hartford Life (2007) “Healthier, More Productive Employees: A Report on the Real Potential of Employee Assis-tance Programs,” July 2007, The Hartford Life.

24. T. C. Blum and P. M. Roman. Cost-effectiveness and Preventive Implications of Employee Assistance Programs. U.S. Department of Health and Human Services, Substance Abuse and Mental Health Services Administration (SAMHSA), 1995, p. 28.

25. Aon Hewitt (2008) The Road Ahead: Driving Productivity by Investing In Health 2008.

26. National Business Group on Health (2008) An Employer’s Guide to Employee Assistance Programs. The full report is avail-able at www.businessgrouphealth.org/pdfs/FINAL%20NBGH%20Guide%20to%20EAPs%204%2030%2008.pdf.

27. M. Attridge, “Personal and Work Outcomes of Employee Assistance Services.” Paper presented at American Psychological Association Annual Conference, 2001; San Francisco, California.

28. Healthier, More Productive Employees: A Report on the Real Potential of Employee Assistance Programs (EAPs), The Hartford, 2007.

a few but essential goals: reducing absence, improving employee health and measuring of current state and improvements. The ultimate outcome should be to im-prove workforce effectiveness and productivity.

The ability to measure change is an aspect that spans all of the options presented; establishing the baseline and measuring the results over time is key.

What is most important at the formative stage is defining the strategy and the problems to be solved, then connecting the short-term tactical solutions with a longer term strategic vision. Essential is the re-quirement to monitor the overall performance in the context of the strategic plan. This is the point at which human resource personnel move from their historical position at the table as reactive cost centers to participate as generators of revenue. If more em-ployees are at work today and fully engaged, then the organization’s bottom line will also be healthier. The health and productivity of the employee workforce has a direct relationship to the health and well-being of the organization. b

Endnotes

1. Hewitt Associates, LLC (2008), Two Roads Diverged: Hewitt’s Annual Health Care Survey 2008. Survey findings avail-able at www.hewittassociates.com/_MetaBasicCMAssetCache_/Assets/Articles/2008/Hewitt_Two_Roads_Diverged_2008_HC_Survey_Findings_041708.pdf).

2. Aon Hewitt (2008) The Nuts and Bolts of Leaves of Ab-sence 2008.

3. U.S. Department of Labor, Bureau of Labor Statistics (2005) Current Population Survey; Circadian Information, Shift Work Practices, 2005.

4. S. M. Schwartz and J. Riedel. Outline for Better Measures of Productivity. Journal of Occupational and Environmental Medi-cine—American College of Occupational and Environmental Medicine. 2010; V52: 865-871.

5. R. Loeppke, M. Taitel, D. Richling et al. Health and pro-ductivity as a business strategy. Journal of Occupational and Envi-ronmental Medicine, 2007; 49: 712-721.

6. M. L. Berger, R. Howell, S. Nicholson and C. Sharda. “In-vesting in healthy human capital.” Journal of Occupational and Environmental Medicine, 2003; 45: 1213-1225.

7. K. Davis, S. R. Collins, M. M. Doty, A. Ho and A. L. Holmgren. Health and Productivity Among U.S. Workers. Publica-tion 856. New York, NY: The Commonwealth Fund; 2005.

8. R. M. Henke, G. S. Carls, M. E. Short, X. Pei, S. Wang, S. Moley, M. Sullivan M and R. Z. Goetzel . “The Relationship Be-tween Health Risks and Health and Productivity Costs Among Employees at Pepsi Bottling Group.” Journal of Occupational and Environmental Medicine, 2007; 52: 519-527.

9. Aon Hewitt, The Road Ahead: Driving Productivity While Investing in Health 2008.

International Society of Certified Employee Benefit Specialists

Reprinted from the Third Quarter 2011 issue of BENEFITS QUARTERLY, published by the International Society of Certified Employee Benefit Specialists. With the exception of official Society announcements, the opinions given in articles are those of the authors. The International Society of Certified Employee Benefit Specialists disclaims responsibility for views expressed and statements made in articles published. No further transmission or electronic distribution of this material is permitted without permission. Subscription information can be found at iscebs.org.

©2011 International Society of Certified Employee Benefit Specialists

Date post:	12-Apr-2018
Category:	Documents
Upload:	trannhi
View:	223 times
Download:	1 times

Improving Workplace Productivity— - Aon - Retirement · Improving Workplace Productivity ......

Documents