Encouraging Healthy Employee Lifestyles Makes Good Business Sense

November 7, 2007 (PLANSPONSOR.com) - A new survey found that companies with effective health and productivity programs achieved 20% more revenue per employee, had 16.1% higher market value, and delivered 57% higher shareholder returns from 2004 to 2006.

According to a news release from Watson Wyatt and the National Business Group on Health, a survey by the two groups found that 46% of employers currently have a financial incentive program for healthy lifestyles. The study predicts 70% of employers will rely on financial incentives to encourage people to adopt healthy lifestyles by 2009.

The survey showed companies with effective health and productivity programs have cost increases that are:

  • five times lower for sick leave;
  • four and one-half times lower for long-term disability;
  • four times lower for short-term disability; and
  • three and one-half times lower for general health coverage.

“With few options left, companies are putting significant emphasis on improving the health and productivity of their workforce” said Shelly Wolff, national practice leader for health and productivity at Watson Wyatt, in the news release. “Global competition and pressure for greater efficiency are causing employers to seek new ways to help manage benefit costs and increase worker output. Increasingly, companies are looking at the health of their workers as the new growth engine to stave off health care inflation and keep employees on the job and productive.”

Almost one-third of employers (29%) currently link health and productivity programs to their broader initiatives or plan to in 2008. Another 26% plan to do so the year after that.

Although 79% of companies think employees should be held accountable for improving and maintaining their own health, only 4% actually hold employees accountable. Similarly, 68% believe that managers should be responsible for workforce productivity, yet only 13% are holding managers accountable.

Other survey findings, according to the release, include:

  • Employers spend a median 21.2% of payroll on direct and indirect costs of programs for wellness, sick leave, and disability – slightly less than the 22% they spent in 2005.
  • Preventable factors lead the list of health-related items affecting business performance, followed by adverse physical conditions, such as back pain. The leading health issues are lifestyle risks (42%), physical conditions (34%), chronic conditions (31%), unscheduled absences (30%), and mental health conditions (23%).

A total of 355 large employers participated in the survey.

More information is at www.watsonwyatt.com .