Scott MacStravic, PhD
While improving employee health has been shown to improve employee, and thereby employers’ performance in a wide range of industries and countries, it is certainly not the only, and not necessarily the best way to do so. A recent study offers some insights into where health improvement stands in terms of its relative effects on how well employees perform.
While there has been a substantial accumulation of research on the effects of employee “unhealth” on productivity and performance dimensions, particularly on the quality and quantity of performance while at work (“presenteeism”), there has not been much in the way of comparative research. When compared to others that were gauged in terms of employees’ self-rated ability to perform at their best, “personal health problems” rated only sixth of seven factors in terms of its frequency of impairment effect.
When 1826 workers in a wide range of jobs from a wide range of industries reported on their performance impairment factors, “low motivation” was the most frequently identified factor, with 31% of workers reporting this factor “sometimes”, 12% “frequently” and 4% “all the time”. Next in frequency was “low morale among co-workers” with 26%, 10% and 5% reporting these same frequencies. “Personal health problems” was reported as only 18%, 5% and 2% in these frequency levels, totaling 25% compared to low motivation’s 48% total.
The other factors reported were:
[W. Lynch & H. Gardner “Employee Health Problems Are Not the Greatest Threat to Worker Productivity” Health as Human Capital Foundation May 20, 2007 (hhcf.blogspot.com)]
This is not to say that employee health is only the sixth most valuable factor for HCOs or other employers to address. For one thing, the survey asked only about the frequency of each factor, not how much each factor impaired performance when present. It could be that health has a more powerful impairment effect than its frequency would suggest.
For another, the real issue is not the extent to which a given factor affects employee performance alone that determines which deserves the most attention by HCOs. It is the extent to which available and implementable interventions will cost-effectively reduce the effects of each factor and deliver positive ROI for those organizations that employ them. Each HCO will have to identify the best solution for itself, vs. rely on the report’s findings.
On the other hand, the same survey revealed what seems clearly the major modifiable factor in promoting employee performance – the extent to which workers perceive that their organization’s success will be shared via meaningful rewards. It also indicated that the more benefits employees get, the less motivated they tend to be. Motivation scores were highest when employees received no benefits, and lowest when they received four or more. [W. Lynch, et al. “Brief 1: Human Capital Motivation and Productivity” Health as Human Capital Foundation May 2007 (www.hhcfoundation.org/hhcf/pdf/Brief1.pdf)]
Employees who most fully identify with their organization, who share the feeling that “my success is your success”, who believe that their investment in hard work and dedication is worthwhile, that meaningful rewards will result, will tend to be the most productive and valuable. When they feel that good performance is rewarded, and that progressively greater performance and value will yield progressively greater rewards, employees will tend to improve their performance continuously.
The fact that one employer achieved a 44% in productive output at the cost of only a 10% increase in compensation, in the first year of implementing a pay-for-performance system is a strong indication that financial rewards can make a big difference. [E. Lazar “Performance Pay and Productivity” American Economic Review 190:5 Dec 2000 1346-1361] On the other hand, the fact that another employer achieved a 35% improvement in productivity in the first year of an empowerment system where all employees could choose the time and place, as well as the amount of their efforts, with no added cost to the employer, is a strong indication that other rewards can work as well. [M. Conlin “Smashing the Clock” Business Week Dec 11, 2006 (www.businessweek.com)]
HCOs might well conduct surveys of their own workforces to determine the extent to which the general findings reported here reflect the attitudes and performance of their own employees. Whether or not employee health turns out to be a major or relatively minor factor, it is certainly a useful one to address. But by learning which factors can be modified most cost-effectively in terms of ROI, HCOs may discover a “solution” or at least an effective way to address many, if not most, of their operational problems.
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