Canadian Employers Jumping on Health Incentives Bandwagon

November 21, 2011 ( - As Canadian organizations search for ways to improve workforce productivity, they are trying new approaches to combat rising health costs and increased employee absence, stress and disability.

High-effectiveness companies are using tactics like financial rewards to encourage and support their staff in making better lifestyle health decisions. While incentive pay to encourage participation in health and productivity programs is a common practice in the U.S., a new survey by Towers Watson shows the number of organizations implementing this strategy in Canada is on the rise.  

According to Towers Watson’s 2011/2012 Staying@Work survey, a quarter (26%) of Canadian employers are planning to offer some type of financial reward in 2012 to individuals who participate in their health management programs – up from just 13% who currently do so.  

Mental health conditions continue to be the most common reason for disability claims in Canada. Survey respondents identified the top three drivers of their short-term disability claims: 83% cited mental health conditions, followed by muskuloskeletal/back issues at 76% and accidents at 37%. Similarly, mental health conditions are cited by 85% of respondents as a top driver of their long-term disability claims, followed by muskuloskeletal/back issues at 76% and cancer at 63%.  

Most organizations report that employee stress is a major and growing business issue, and many are planning to adapt their organizational health strategies for the next two years to include a focus on mental health (61%) as well as physical health. Canadian respondents cited excessive workloads, lack of work/life balance, unclear or conflicting job expectations and inadequate staffing as the top sources of workplace stress.   

The survey results indicate that the prevalence of each of these stressors has risen significantly over the last two years. For example, today nearly nine in 10 (89%) Canadian employers say excessive workload is a problem – a 25% jump from 2009 (64%). Though organizations are striving to limit the impact of workforce stress on business performance, the majority report underwhelming results; less than 10% of companies say their actions have produced significant success.

Better Workforce Health = Better Business Outcomes  

In 2011, health and productivity costs as a percentage of payroll totaled just over 17% in Canada, up from 12.6% in 2009. Organizations with effective health and productivity practices are achieving better business outcomes, according to Towers Watson’s 2011/2012 Staying@Work survey. The benefits include a lower average turnover rate (8% instead of 10.4%), fewer unplanned absences – and for publically traded companies, an 18% market premium compared to organizations with low health and productivity effectiveness.  

High-effectiveness companies invest more in health and productivity than organizations with less-effective programs, and experience better results. They also focus not just on physical health prevention, but build programs that address both health programs and workplace conditions.  

According to the survey, employers with effective health and productivity programs are doing much more to link senior leaders to program performance, engage employees in the management of their health with incentives, measure program outcomes, target preventable causes of employee absence and personalize communications for specific employee populations.  

The survey was completed by 335 human resources and/or health benefit managers in Canada (87) and the United States (248) with at least 1,000 employees. The responding organizations employ 7.8 million workers and operate in all major industry sectors.