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The group met for more than a year to discuss and debate best practices for reporting workforce health metrics. The products of their meetings, a report and two health metrics scorecards, were released in Davos, Switzerland, where business and political leaders from around the world gathered at the annual meeting of the World Economic Forum.
“A healthy workforce is a more productive and profitable workforce, so the health of a company’s employees is extremely relevant to investors, shareholders and boards of directors,” said Dr Derek Yach, chief health officer of Vitality and the chair of the Health Metrics Working Group.
“Sadly, many companies have a better sense of the wear on their machinery than the health of their employees. It is time to give workforce health the high-profile visibility it needs.”
Evidence is mounting that workforce health is critical to the financial health of a corporation. This month’s Journal of Occupational and Environmental Medicine contains three studies that examine the stock prices of companies with high-performing employee wellness programs. All three studies found companies with high-performing employee wellness programs outperformed the Standard and Poor’s index by 7 percent to 16 percent per year.
“We need to raise the bar through enhanced transparency, encouraging companies to manage, measure, and report on health metrics; and boards of directors, investors, and shareholders also need to start asking the right questions with respect to health,” said Erika Karp, founder and CEO of Cornerstone Capital.
Karp was not a member of the working group but is familiar with the report.
“Health metrics reporting will enhance good governance as well as prospects for companies to operate profitably and sustainably over the long term,” she said.
Yach added that “by engaging in health metrics reporting, companies benefit through improved understanding of their business models, better decision making, increased investor confidence, improved reputation, and greater stakeholder support.”
Vitality and the International Integrated Reporting Council (IIRC) will look to work together and with major reporting bodies to obtain consensus about how to incorporate health metrics into corporate reporting.
In the meantime, investors, stockholders and boards of directors are asked to encourage companies to report workforce health metrics in their annual reports, integrated reports and 10-K reports.
The report and the score cards can be found online at: www.thevitalityinstitute.org/healthreporting.
By Derek Yach and Shahnaz Radjy*
New research has just been published demonstrating that companies with best in class workplace health programs tend to outperform their peers in terms of stock performance. The key take-away is that investing in evidence-based employee health programs is a proxy for other highly effective business practices and great governance.
Three studies published by Ray Fabius, Ron Goetzel, Ron Loeppke, and other colleagues in the latest edition of the Journal of Occupational and Environmental Medicine (JOEM) found that companies investing in employee health out-performed their peers by an average of 7% to 16% per year.
Specifically, the studies used similar methodologies to look at companies who were
- Awarded the C. Everett Koop Award
- Winners of the American College of Occupational and Environmental Medicine (ACOEM) Corporate Health Achievement Award (CHAA)
- High scorers on the HERO self-assessment
These companies’ performance were compared to the Standard and Poor (S&P) 500 over 14 years in the first two cases, and six years in the case of HERO results. In the case of Koop Award recipients, the difference over the 14 years was as much as a stock appreciation of 333% versus the S&P stock appreciation of 105%.
This builds on a first study by Fabius et al. in 2013, and paves the way for a forthcoming study of South African companies which implies these findings are of global relevance.
While these findings do not address causation, they do provide a correlation between health and financial performance, suggesting that investing in employee health and well-being is part of good business. Even the more conservative interpretations will conclude that investing in health is not a bad idea.
As mentioned in the JOEM editorial by Michael O’Donnell, at a time when healthcare costs are often part of the top 10 – and definitely part of the top 100 – issues CEOs care about, but investing in employee health may not be, these findings can hopefully shift the conversation and help corporate leaders value investing in prevention.
Additionally, an important call to action is for companies to start reporting on health, a topic discussed at the World Economic Forum Annual Meeting in Davos , and the focus of a report and we will soon be launching on the business case as well as proposing concrete metrics that could be used to put corporate reporting on health promotion and chronic disease prevention on the map.
- This blog first appeared on the Vitality Institute website
- Dr Derek Yach is chief health officer of the Vitality Group in the US
- Shahnaz Radjy is the Vitality Institute senior communications specialist
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