Why provide health-related benefits?

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There are many good reasons why employers should invest in this area of benefits.

Healthy employees are more likely to be motivated, engaged, productive and innovative. Conversely, ill and absent employees are less likely to display these qualities, and are a major cost to the business.

The Office for National Statistics estimates that 137.3 million days are lost due to sickness and injury each year in the UK. Research has found that employees take an average 6.1 days’ sick leave per year. In financial terms, direct costs of sickness absence include sick pay and paying for replacement staff, while indirect costs stem from a loss of productivity, delivery and customer service, and consequentially representational damage for the employer.

Less tangibly, sickness absence can also put additional stress on the remaining employees.

Studies have found that active absence management programmes and early intervention can have a major impact on reducing the costs of absenteeism, and can be effective in reducing the time away from work. Health benefits can focus on early intervention, as well as providing access to diagnosis, treatment, recovery and rehabilitation services when required.

More widely, health benefits can play an important part in education on health, and the reduction of factors or conditions that can be detrimental to employee health.

Traditionally, health benefits beyond sick pay focused on provision for senior management and professional staff. But many employers now see the advantages of offering them to the wider workforce. This is particularly true in areas with skill shortages, and those that require high levels of investment in employee training and knowledge acquisition, where the employer wants to ensure maximum attendance from the individual. Using flexible benefits gives employers the opportunity to increase the range of employees who receive health benefits. It also provides employees with the opportunity to prioritise benefits that are important to them.

A comprehensive approach to health demonstrates the organisation’s commitment to its people, potentially enabling it to recruit and retain key talent. Any organisation that fails to provide support on health and associated areas risks reputational damage particularly in relation to health conditions associated with the working environment, such as stress. Retail health products can be expensive, so employers that offer a benefit at corporate rates can increase the perceived value of the benefit and the overall value of the employment relationship.

Many organisations believe not only that the health of their employees is important, but that the health of their close families is too. They therefore offer health benefits to employees’ families as part of their provision.

Building a health strategy

The range of health benefits available to employers is extensive. The health benefits that are appropriate for any one employer will depend on its individual circumstances.

Having a health benefits strategy will help an organisation to identify the most appropriate health-related benefits for its circumstances. In developing a strategy, the organisation should:

identify the objectives and desired outcomes from the strategy implementation – which might include a desire to maintain a healthy workforce, provide a competitive benefits package, or reduce sickness absence;

understand the current position within the organisation with regard to sickness absence rates and causes, and the costs of sickness absence, in order to understand where and how health benefits could have an impact;

understand the market position in terms of recruitment and retention and competitor benefits offerings;

calculate the current costs of health benefits to the organisation;

have a dashboard of data, for example levels of engagement, productivity and employee turnover, information from stress audits and usage of employee assistance programmes;

review the national/industry/sector information on sickness and absence costs to provide comparisons; and

undertake a preliminary review of health benefits available and what would assist the organisation in achieving its desired outcomes.

The employer should use the information collected to build a business case from both a financial and a well-being perspective for a health benefits package.

Health benefits will usually form part of a broad well-being programme and maximum impact can be achieved if this well-being strategy is woven into the culture of the business. A successful implementation will require strong support from the top management team and from managers throughout the organisation.

An important part of a health strategy will be obtaining employee buy-in. For example, those who will benefit most from a health education programme may be the most reluctant to participate. Given the high cost of some group risk benefits, employers need to ensure that employees are using the services available to them. A communication strategy will be an important part of any health strategy implementation.

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