In the mid-1970s, Jim Goodnight had a dream: Start a technology company that treated workers as its most valuable asset. The 33-year-old computer programmer envisioned generous health benefits and a beautiful campus equipped with racquetball and volleyball courts to encourage exercise. Health-conscious cafeterias would serve wonderful, low-cost meals. An onsite clinic would offer medical and psychological services free of charge.
He imagined an array of life-enhancing perks, everything from a flexible workweek and onsite daycare to continuing-education classes on a wide range of topics.
Given the realities of today’s marketplace and the bottom-line imperatives that drive corporate America, it would be easy to write off Goodnight as a hopeless idealist and assume that any company lavishing such care on its employees would have gone out of business long ago. Yet not only did Goodnight eventually bring every single one of his dreamed-about amenities to the company he launched in 1976, he has grown it into the largest privately held software company in the world.
Today that company, SAS (Statistical Analysis Systems), which specializes in creating business analytics software, has annual revenue of $2.3 billion and has made its founder the richest man in North Carolina, where the company is based.
The employee turnover rate at SAS is under 4 percent, which is 80 percent lower than the industry standard, saving the company up to $70 million a year in hiring and training costs. Employees have unlimited sick days, but on average they take only two a year.
Even the company’s onsite healthcare program — its most costly perk — saves money by increasing productivity. Doctors’ appointments are free (there isn’t even a billing department), which makes workers more likely to seek out help for a problem before it gets worse, and thus more expensive to treat. Since the clinic is located on campus, employees don’t waste time driving to office visits. All told, for every dollar SAS spends running the onsite clinic, it actually saves $2.24, netting the company an annual savings of $6.6 billion.
“It’s becoming really clear from an empirical standpoint that when you take care of people, it works,” says Jeff Klein, CEO of Working for Good, a conscious-marketing and business-development company, author of Working for Good: Making a Difference While Making a Living and this month’s cover subject. (See “Working for Good,” for an interview with Klein.) “Whatever you do to serve and support the people who work with and for you, that tells them you care. When people feel cared about, they come alive. And that makes workers more engaged and more productive, and it becomes a virtuous — and prosperous — cycle.”
Reinventing Corporate Wellness
While not every company has the inclination to go as far as SAS, it’s clear that the days of simply tacking up a smoking-cessation poster and calling it a wellness program are quickly coming to an end. In a world of ballooning healthcare costs and exhausted employees, more businesses are adopting comprehensive workplace wellness programs that pay closer attention not just to the physical health of their workforces, but also to their employees’ overall sense of well-being.
There’s good reason for this:
According to Paul Rosch, MD, president of the American Institute of Stress, a nonprofit research and information organization, job stress is estimated to cost U.S. industry more than $300 billion a year in absenteeism, turnover, diminished productivity, and medical, legal and insurance costs. And, according to the American Psychological Association, 52 percent of Americans report that they have considered workplace stress a significant factor when looking for a new job, declining a promotion or leaving a job altogether.
In 2010, the Harvard Business Review defined workplace wellness as “an organized, employer-sponsored program that is designed to support employees (and, sometimes, their families) as they adopt and sustain behaviors that reduce health risks, improve quality of life, enhance personal effectiveness and benefit the organization’s bottom line.” These types of programs take many forms, but they all recognize and incorporate the same core principles.
The central paradigm is that sustainable behavior change is essential for improved health and fewer related healthcare costs. After all, it’s great to give up smoking for a day, but it pays off in terms of health and the bottom line only if the person gives up smoking for good.
The best programs recognize that behavior change is challenging and requires support. People need ongoing care and attention, as well as “lots of different entry points,” to make healthy changes.
The best programs recognize that behavior change is challenging and requires support, says Ann Mirabito, PhD, coauthor of the recent Harvard Business Review paper. People need ongoing care and attention, as well as “lots of different entry points,” to make healthy changes.
“Wellness has many facets: physical, mental, emotional, spiritual, financial,” says Mirabito. “Some people may have financial wellness issues, but not physical issues. Or they may be ready to tackle stress, but not quite ready to tackle healthy eating, for example.” Successful programs meet people where they’re at and then help them go where they need to go.
“One of the keys to creating physical health and wellness is to improve the happiness of the employee first,” says Shawn Achor, CEO of the corporate strategy firm Good Think Inc., and author of The Happiness Advantage: The Seven Principles of Positive Psychology That Fuel Success and Performance at Work. “Research shows that if you can get your employees into a positive mindset first, they’re more likely to stick with a healthy-eating plan or exercise program.” This focus on emotional well-being also improves productivity.
The success of these programs is almost always evaluated in terms of measurable bottom-line improvements. A study published in the February 2010 issue of Health Affairs found that for every dollar invested in a comprehensive workplace wellness program, companies saved $3.27 in medical costs and $2.73 in costs related to absenteeism.
When Goodnight founded SAS, a robust program for supporting employee health, happiness and well-being was considered a luxury. Today it is increasingly considered a strategic imperative.
Showing Up for Work
Like SAS, the outdoor apparel manufacturer Patagonia has onsite daycare and offers a host of fitness and lifestyle classes, but the company is perhaps best known — and best loved by its employees — for its freeform work environment. Workers set their own flexible, results-oriented schedules. Management trusts them to decide when they feel burned out and need to rest and when they feel energized and ready to work, a strategy that erases “presenteeism” from the picture.
Presenteeism is the opposite of absenteeism: It is the act of attending work while sick or being at work beyond the time needed (or possible) for effective performance. Researchers at Cornell University Institute for Health and Productivity Studies estimate that some 60 percent of the total cost of worker illness is the result of this phenomenon.
Most people don’t abuse the privilege of increased autonomy. In fact, it makes you work harder because you’re trusted to get your job done.
Most people don’t abuse the privilege of increased autonomy, says Jess Clayton, a public relations spokesperson at Patagonia who spent the first five of her eight years at the company in the human resources department. “In fact, it makes you work harder because you’re trusted to get your job done. You want to do a better job. And when you’re burned out and need to go for a big run or go surfing, you do it, and then you come back the next day even more energized.”
Showing up to work ill or exhausted happens with workers at every level, but it can be especially prominent among lower-wage workers. Because they’re more apt to be paid by the hour, and are less likely to accrue paid sick time, they often show up when they’re sick or just plain exhausted. Their productivity plummets. And while they are at work, they negatively affect the health and productivity of other workers, too.
Simply adding paid sick time for lower-wage workers can make a huge difference, says Susan Lambert, associate professor in the School of Social Service Administration at the University of Chicago. Not only does it help assuage presenteeism, it also helps build company loyalty — something that can be rare on the lower end of the pay spectrum.
“When workers aren’t included in benefits and other supports, they don’t feel as much commitment to or engagement in the organization. Including them sends a message that they’re a valued part of the workforce,” Lambert says.
Another factor to consider is that many lower-wage workers are frontline service workers. In essence, they are the face of the company. “If companies care about that point of contact, they will want to provide those workers with support so they can stay healthy and feel good about their job.”
Whole Foods Market is already known as a great place to work, and it treats its frontline people particularly well. All employees, including the grocery store chain’s in-store workers, accrue paid time off, can take leaves of absence, and participate in profit-sharing and stock-option plans. Employees are full-time at or above 30 hours per week, and that qualifies them for healthcare benefits, the cost for which may amount to as little as $10 per paycheck. The company even has a Team Member Emergency Program: If an employee experiences an unforeseeable crisis, the company offers financial assistance and coworkers can donate paid-time-off hours to their embattled peer.
Whole Foods Market also offers employees an opportunity to participate in a unique, company-sponsored Total Health Immersion program. Selected participants travel, all expenses paid, to various off-site locations for three, five or 10 days of an intensive healthy-eating education and healthy-lifestyle experience, including a yoga practice.
For comprehensive wellness programs to succeed, of course, companies must adopt strategies to get a majority of their workers engaged in creating the desired outcome. It all comes down to behavior change, and there are basically two options for motivating it: the carrot or the stick.
Mirabito and her Harvard Business Review coauthors argue that the only truly effective option is the carrot. “Employees lose trust when they feel they’re being forced to act against their wishes.” Absolute mandates or punishment “just send the behavior underground,” she says, rather than inspiring sustainable behavior change.
At Lincoln Industries, a manufacturing company in Lincoln, Neb., employees are offered the “carrot” of lower health-insurance premiums if they adopt healthier behaviors. The company has been offering lower premiums to non-tobacco-users since 2005, for example. That, coupled with company-wide cessation efforts, led to an 11 percent decline in smoking within just a few years. This targeted success is part of the reason Lincoln Industries enjoys a 50 percent savings in insurance costs per employee compared with the regional average.
But it’s not always about the money. A study at the University of Maryland found that personalized feedback and coaching is another effective way to motivate behavior change.
Personalized feedback (about lab results from a health screening, for example) allows the person giving the feedback — such as a doctor, nurse, nutritionist, wellness coach or personal trainer — to tailor his or her message and offer individually customized, caring advice based on that person’s current circumstances and needs.
Virtually everyone is interested in getting a real-time health-status snapshot and face time with someone who can help make sense of it.
“Some people respond to emotional appeals, others to rational arguments in favor of behavior change,” says Mirabito. And virtually everyone is interested in getting a real-time health-status snapshot and face time with someone who can help make sense of it.
MyHealthCheck, a subsidiary of Life Time Fitness, works with corporate clients to offer their employees in-depth health assessments, including lab work, body analysis and a health-risk appraisal. The results can be used to set insurance costs (so employees with healthy numbers enjoy lower premiums), as well as to motivate and educate employees, ideally inspiring them to begin making changes they might otherwise have put off.
“Traditionally, participants have gotten very general, cookie-cutter information about what to do to improve health,” says Holt Vaughan, director of myHealthCheck. By connecting employees with a registered dietitian who not only analyzes their individual test results, but also helps them develop personalized goals and action plans, says Vaughan, companies stand to reap both goodwill and behavioral benefits.
Hypertherm, a metal systems manufacturer in Hanover, N.H., has used a combination of ongoing financial incentives and feedback in their successful wellness program. The company provides cash incentives of $10 per pay period, or $260 annually, to employees who participate in biometric health screenings, which are general health screenings that involve blood pressure, cholesterol, glucose testing, and weight and BMI. In the last three years, participation rates have climbed from 11 percent in 2009 to 79 percent in 2011.
In partnership with the Dartmouth-Hitchcock Medical Center, Hypertherm also offers on-site clinic services and health coaching. For Wendy Kibling, a documentation specialist at Hypertherm, access to health coaching made a big difference in her struggle to lose excess weight. “I just seemed to be stuck,” she says. So she sought out the counsel of her company’s on-site health coach, who encouraged her to adjust her approach. Kibling went on to surpass her original weight-loss goal.
Jim Goodnight’s crazy dream of a kinder, gentler, more life-sustaining workplace has, in many ways, provided a model for the future. “Smart companies now cultivate these kinds of working environments because every time employees experience a small burst of happiness, they get primed for creativity and innovation,” says Good Think Inc.’s Shawn Achor.
That’s a big part of what CEOs from major companies discover when they fly to Raleigh to meet with Goodnight and learn his secrets firsthand. “They want to know how he recruited all those smart people and why they are the second most productive company in the world,” says Tim Sanders, author of Saving the World at Work. Goodnight gives credit where credit is due: “If you do the right thing for your people,” he says, “they’ll overpay you.”
Success Story: SAS
- Location: Cary, North Carolina
- Industry: Software
- Healthy-and-Happy benefits: Unlimited sick days, onsite daycare, onsite health center with free services to employees and their families, state-of-the-art gym.
- How the company profits: The dedication employees have toward the company is clear: Turnover is less than 4 percent, which is 80 percent lower than the industry average.
Success Story: Patagonia
- Location: Ventura, California
- Industry: Manufacturer of outdoor apparel
- Healthy-And-Happy benefits: Subsidized healthy food in the cafeterias, paid leave for parents of ill children, onsite daycare, up to 60 days a year paid leave to help a nonprofit environmental group, free yoga and aerobics classes.
- How the company profits: Patagonia enjoys a turnover rate of less than 5 percent; other businesses in the same industry have a 20 percent turnover rate.
Success Story: Hypertherm
- Location: Hanover, New Hampshire
- Industry: Designs and manufactures metal-cutting products, systems and consumables
- Healthy-and-Happy Benefits: Stock appreciation rights, paid time off to volunteer, onsite clinic for employees (who are called associates), subsidized lunches in the cafeteria for associates and their families, wellness fairs, free onsite fitness classes and a $100 annual reimbursement for membership at a fitness facility.
- How the Company Profits: The company’s employee turnover rate is between 4 and 5 percent — significantly lower than the industry average. It has also been successful in limiting total medical-plan costs, holding increases to just 8 percent annually over the past three years, well below the national average of 10 percent.
How to Start a Health Program Where You Work
The Wellness Council of America (WELCOA) offers these six steps to companies that would like to encourage employee wellness but don’t know where to begin.
- Get the support of your top executives: Show them how it will make a real difference to the company in terms of lower health-insurance costs, less absenteeism or more productivity. Then, start with a program just for them before you expand to the whole company. “If the CEO isn’t healthy himself, he won’t want to start a program he won’t be successful at,” says David Hunnicutt, PhD, president of WELCOA.
- Put someone in charge: Wellness efforts that rely on volunteer leaders get lost in the shuffle of deadlines and busy seasons. Name a point person to organize the program, market it to employees, work with outside service providers and oversee progress. And make this a recognized part of their job descriptions.
- Find out what employees want and need: Analyzing your insurance claims data or sponsoring a companywide physical that screens for common diseases and health risks will help you zero in on which problems your employees need to tackle, such as smoking, high blood pressure, stress or obesity. A simple survey can help you figure out the kind of programs they’ll respond to.
- Choose appropriate programs: While coming up with programming that meets company goals and employee needs, also make sure it fits your work environment. For example, if employees are tied to their desks (think stock traders or telephone customer-service providers), make sure organized events will fit within break times.
- Create a supportive environment: “The CEO has to get behind the program and use it,” Hunnicutt says. “If he’s using the gym in the afternoon, that says it’s OK for others to do it. And that creates a culture that’s supportive.” Hunnicutt points to a company he knows that opened a beautiful fitness center but kept it closed from 8 to 5 so employees wouldn’t use it during work. “All it did was create resentment,” he says.
- Evaluate how you’re doing: Whether you count the people who show up to a workshop or hand out surveys at the end of a class series, keep in touch with employees to make sure the program remains aligned with their needs over time. And be sure to bean count, too, to remind those at the top that their investment is paying off.
This article originally appeared as “The Profits of a Healthy Workplace” in the October 2012 issue of Experience Life.