Health & Productivity Management

Health and productivity management is defined by the Institute for Health and Productivity, (IHPM) as the integrated management of data and services related to all aspects of employee health that affect work performance. This includes measuring the impact of target interventions on both health and productivity (Sullivan, 2005). Health and productivity management innovation is grounded in scientific measurement and quantification of business outcomes (Goetzel, 2001).

The process of health productivity management aims to collate essential health and productivity data from across the silos of the organisation, which then forms the basis of the action strategy. However, for many organisations this poses a big dilemma as such data are often hard to collect and collate. The poor communication and politics between these silos, as seen in large monolithic, bureaucratic and hierarchical organisations are major barriers working against the success of health and productivity management.

There is a debate in the health and productivity management field about value, cost and quality of health of the workforce. Traditionally, real value and quality were equated with how much it cost you (Sullivan, 2005). This provides an insight on real value, the fact that it has little to do with expenditure, but more to do about total functionality and quality. This is the debate within the field of health productivity management, the majority of corporate decision makers view health only as a cost, instead of appreciating the added value which health can provide to human assets.

This concept has been adopted and developed at Dow Chemical Company (Goetzel et al, 2005). 2. 2. 2. Paradigm Shift There is a strong belief in the field of health and productivity management that if its strategy is to be successful, management need to shift the value proposition from the cost of human capital to the value of human capital in sustaining growth and profitability (Loeppke, et al 2003). Health productivity management provides the ability to develop and monitor key performance indicators that are synergistic with an organisation’s balance scorecard.

However, herein lies the gap in knowledge, what tools/model(s) can be developed to actually assist corporate decision makers integrate this employee health strategy into a successful organisational strategy (Goetzel et al, 2005). One such productivity strategy is adopting organisational value focused activities as compared to a traditional cost management approach (Lynch et al,2004). These activities are those that consider not only cost to deliver, but also the overall value of the activity including it’s effectiveness at reducing absenteeism and improving productivity.

These activities include onsite health clinics which reduce the time away from work when seeking treatment (Stave, Muchmore, and Gardner, 2003); onsite wellness and health promotion programs focused on reducing health risks and keeping employees healthy (Aldana and Pronk, 2001; Steven and Aldana, 2001; Boles, Pelletier, and Lynch, 2004); disease management programs focusing on specific disease outcomes (Weingarten, Henning and Badamgarav, 2002); and on-site flu shot programs to reduce sickness related absences due to influenza (Akazawa, Sindelar, and Paltiel, 2003).

2. 2. 3. A Pragmatic Approach to Health & Productivity Management Goetzel et al (2005) highlight a pragmatic approach to health and productivity management which involves three essential functions. Firstly, it assembles and analyses reliable actionable data, which is collected across the different silos (functional departments) of the organisation. This includes for example, absenteeism rates from Personnel, on the job accident incidence reports from Loss Prevention Department, incidence and prevalence rates of low back pain from Occupational Health (Figure 3).

Secondly, it assesses the greatest risks to the organisation in terms of people, programs and costs taking into account how much poor health is costing the organisation in relation to performance deficits. This is done by zeroing in on the most costly high risk group (Edington, 2001). Lastly, this in turn links the profit potential to the capability and performance of employees by designing and implementing targeted solutions. When data is collated, it provides a focus for resource allocation priorities for employee groups that require intervention. In such a way, economical return can be projected and realised (Sullivan, 2005).

The underlying problem to successful adaption of the HPM model is that in many organisations there is a lack of integration and cohesion of HPM components because they are usually addressed by different silos (functional departments) throughout the organisation. Many of these departments are unaware of functions and responsibilities and do not recognise relevant data collected and collated by other departments throughout the organisation. Functions across the different departments of the organisation need to form strategic alignments so as to strengthen the economic case of HPM.

Clearly the operational and tactical levels need to be arrayed with HPM approach and strategy (Goetzel et al, 2005). A metaphor demonstrated in Figure 3, shows health productivity management comprised of pieces of a puzzle floating around the organisation. These pieces include environmental, health and safety programs, health promotion programs, demand and disease management, employee assistance programs (EAP), compensation programs, disability data, absenteeism data, workers compensation, and group health (Goetzel et al, 2005). The Reductionist and Systematic Metaphors in Health & Productivity Management

Figure 3: Illustrates the fragmented reductionist approach of the HPM strategy without any relationship or cohesion as contrasted with this common approach to a systematic integrated strategy of all components working together. (Goetzel et al, 2005) 2. 2. 4. Importance of Benchmarking In order to further strengthen the link between health and productivity, key performance measures, benchmarks and best practices have been established. Research, conducted by Goetzel et al (2001), found that until recently, few normative data existed for most HPM areas.

To meet this need of normative data, a consortium of benchmarking studies were conducted. This involved the collection of data, from forty three employers on almost a million workers from a group of seventeen Fortune 500 companies in 1998. It was discovered that the median costs for HPM for these organizations were $9992 per employee, which were then distributed, between group health (47 percent), turnover (37 percent), unscheduled absence (eight percent), non – occupational disability (five percent) and workers compensation programs (three percent).

Achieving best practice levels of performance (operationally defined as the twenty fifth percentile for program expenditures in each HPM area) would realise a savings of $2,562. 00 per employee (a twenty six percent reduction). These results indicate substantial opportunities for improvement through effective development, communication and management of HPM programs. This research has set a framework for future study that will more clearly connect employee health, organisational performance, and work output (i. e. , productivity).

The conclusions that can be drawn from this research are the following: 1. Health productivity management is a viable strategy and innovation that organisations need to consider, so as to effectively maximise their human capital. 2. This research clearly supports …

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