Integrating Employee Wellness Management With Good Corporate Governance Practices

Connecting the dots

Corporate governance has become an issue of global importance and is set to intensify even further as organizations across the world are called to report upon their financial and non-financial performances. The public’s response to corporate governance scandals and numerous collapses of organizations on a worldwide basis has highlighted the need to satisfy a broad spectrum of governance measures, moreover to understand the effects that poor corporate governance has across the entire supply chain.

Corporate governance, risk mitigation, and compliance (GRC) with legal, regulatory and procedural measures need to be thoroughly understood by organizational leaders and boards, and these critical components must be firmly established within the organization’s strategy to give it any form of substance and meaning. Failing to include these components in the organization’s DNA, nullifies their importance in the organization’s operation and is surely a quick route to disaster at all levels; not least a failure on the part of the board of directors and their fiduciary duties.

It is expected that organizations of all sizes apply sound GRC practices and institute high ethical values for the benefit of investors, their stakeholders, their employees and the communities in which they operate. In short, failure to comply with good governance can have devastating consequences for all the organization’s stakeholders. Yet when confronting organizations about their corporate governance practices -- or lack thereof in many instances -- many business leaders cite the need for a more pragmatic means to systematically introduce governance measures that make sense to their business operations (instead of being overburdened and threatened with punitive actions).

Besides the obvious corporate governance areas, most organizations typically concentrate upon, such as the compliance with various legislation, governance recommendations, internal rules and policies; many organizations inadvertently do not consider the more fundamental governance issues attached to their employees or workforce. This crucial area -- the human capital of the organization -- is most often left as an ‘aside matter’ and it does not get the full attention and allocated time it rightfully deserves. After all, if there is no workforce or if the workforce is negatively impacted in one way or another, realistically speaking the organization will be in serious trouble with obvious sustainability implications.

Accordingly, as organizations are increasingly expected to report upon their non-financial components of their business, which includes amongst other their ‘people’ and ‘planet’ matters, there is no doubt that this type of reporting is far less developed (or sophisticated) as compared to the hundreds of years of financial reporting. To this end, organizations may require additional professional outside assistance as they begin to tackle the complexities attached to human (and environmental) reporting. Reporting of this nature is relatively new for most organizations, and getting to know and deal with the so-called ‘soft’ issues of a business is actually not that easy, especially when it comes to the physical health and the emotional wellness of employees. It is in this context that organizations will need to practically show the cumulative and individual health risks of organization and its employees, not least the future sustainability of its workforce and the health care management plans for employees.

So, does the buck end with the HR (Human Resources) department? In real terms, it is quite possible that HR executives will be delegated the task of devising HR strategies to ‘fit into the organization’s master plan’. However, this approach is inevitably flawed, simply because HR cannot -- by its own means -- be held accountable for ensuring the organization’s employee wellness strategy alone. In order for the organization’s employee wellness strategy and program to become successful, HR will require the unwavering support from both the board and the senior leadership of the organization.

For ‘employee wellness’ to be effective within the organization and its employees, it has to be deeply rooted within the organization’s strategy, culture and value system. Failing this vital support, including an attitudinal shift to promote the wellness of employees, any attempts to improve the organization’s employee wellness strategy will be fruitless.

As employee wellness programs are intended to benefit the organization as a whole, it should be completely integrated within the business; and such that the design, implementation, and operations of the wellness program creates sustainable stakeholder value. Indeed, in order to unlock the value of the organization’s wellness program, the program should be evaluated and refined continuously so that employee-health strategies are improved upon for the benefit of both the organization and its workforce.

Expectedly, organizations that employ the global best practices of employee wellness programs generally report greater employer and employee risk reductions than those organizations that do not adhere to them. Moreover, they also report:
 

• Increased levels of employee commitment,
• Improved employee wellness program participation,
• Increased workforce productivity and morale, and
• Reduced absenteeism/presenteeism and health care claims

 
These world-class employee wellness programs are always designed with an end objective in mind. When designing these programs, forward-planning employers purposefully incorporate a wide spectrum of governance and risk management issues within their thinking, which can range from basic information sharing, to more complex interventions that are fully incorporated into the business strategy. As opposed to the typical ad-hoc, independent activity-based programs -- which tend to fade away after a short period of time -- superlative employee wellness programs are mostly outcome-based, where a strong business case and well defined strategy and program is most evident. Within the latter approach, organizations may focus upon, for example, specific employee population groups, health risks and business results that realize greater productivity and profitability. These organizations emphasize a strong clinical health risk approach in areas such as cardio-vascular functioning, body fat percentage, hypertension, cholesterol, blood sugar and lipid level imbalances. These primary concerns are combined to deal with issues such as depression, burnout, back pain, smoking, healthy eating and physical activity.

Organizations who deploy outcome-based employee wellness programs, typically report a return on investment (ROI) -- expressed as a cost/benefit ratio -- which ranges from 1:3 up to 1:7. Employees of these organizations are reportedly more personally committed to their organization with 20 percent higher employee wellness participation rates, and employees are more inclined to support their peers with health promotion activities.

Global employee wellness program evaluations also report a ‘culture of wellness’ as a best practice that increases the organizational outcomes. A culture of wellness manifests in the language, the interpersonal relationships, and the individual expressions (behavior) of employees. The behavioral patterns of a wellness culture speak of inter-dependence, wholeness, good stewardship, positive virtuous, strengths, functionality and ethical behavior.

As more corporate governance practices are called for, and as the area surrounding the human capital and its integrated reporting continues to develop - organizations will be increasingly expected to comply with the recognized international standards, health care regulations and labor-related legislation. It should therefore come as no surprise that much of the change toward employee wellness will not only emanate from the various policy makers. As an additional bottom-up demand on employers, enlightened employees will factor the manner in which their future employer regards (and accommodates) their personal wellness prior to accepting employment with the organization.

By disregarding the intrinsic employee wellness values (including their personal health and safety) which has become a new and fundamental component required for an organization’s annual Integrated Reporting, there is no doubt that there will be a number of consequences, which will have dire impact upon the organization’s future and its sustainability. Going forward, organizations will need to report on their total employee health management system, and the impact of their wellness program and how it mitigates organizational and human capital risks.