Employee well-being enables core business objectives. Abundant data by Gallup, Deloitte and the Centers for Disease Control show that high employee well-being boosts engagement, lowers turnover and absenteeism, improves customer service and product quality, and leads to higher profits, lower healthcare costs and even higher shareholder value.
Yet, despite the evidence, many CEOs see employee well-being as a second tier priority, or merely a nice thing to do. At the Returns On Wellbeing Institute, we’ve asked many CEOs, “Do you give employee well-being your personal, focused support?” to which many respond, “I leave that to HR. I just don’t have the time.”
CEO involvement to crucial to maximizing returns from employee well-being. If companies hope to see ROI from well-being, CEOs must treat it as a central organizing principle. HR must start the process with a three-part strategy.
First, educate and persuade CEOs that employee well-being is worth their time and investment.
Second, present quick wins where well-being can meet immediate goals and challenges and deliver ROI.
And, finally, use these wins as a launchpad for increasing CEO support for comprehensive well-being programs that deliver longer term, substantial ROI.
This article provides a roadmap to help HR to make the case for employee well-being and ultimately, convince C-suites to make it a top priority.
Step One: Educate and Persuade
The CHRO must talk to the CEO, present the case and get initial buy-in for whole-person employee well-being by showing how well-being can help meet short and long-term objectives the CEO cares about.
First, define well-being in simple terms. Explain that well-being, as a description of the human condition, goes beyond wellness programs that see “good health” as the absence of illness, and instead takes a whole person approach that includes three aspects of employee well-being: physical, mental/emotional and financial.
Explain that, unlike wellness programs that focus on losing weight, quitting smoking and lowering blood pressure, well-being goes further by focusing on both physical health and other drivers of employee well-being such as job satisfaction, financial stability, and mental health issues like stress and depression.
Explain the professional consensus that physical fitness wellness programs do not make employees healthier or deliver ROI. Gather data that shows why wellness hasn’t worked, and that whole person, culturally-supported well-being does work.
If your company already has a fitness-based wellness program, explain why it needs to be re-engineered around a whole person model. To do this, HR will need to conduct an initial employee well-being assessment to understand the extent their workforce suffers from poor health, depression or financial stress.
Step Two: Present Quick Wins
Present research on how well-being can deliver ROI. I suggest areas like lowering turnover (where studies show that low well-being influences turnover, and how high well-being helps retention) and boosting engagement (where research by Gallup shows how high well-being enhances employee engagement).
Calculate how much turnover is costing your company. Show how many employees left voluntarily in the past year, then calculate their average salaries and the costs of replacing those departed employees by using the following formula:
Cost of Turnover = (Cost of Hiring + Cost of Onboarding and Training + Severance + Loss in Productivity) x Number of Employees Lost.
Your calculations may be eye-opening. For example, when using a conservative 30% figure as the cost to replace departed workers, a 5,000 employee company with a $50,000 average salary could save $750,000 per year for each percentage point it lowers turnover (e.g., reducing turnover from 15% to 14%).
Explain how engagement determines how well employees perform on the job and that companies with highly engaged employees are 21% more profitable.
Show that the majority of the U.S. workforce (51%) is not engaged, according to Gallup's State of the American Workplace report. Moreover, 13% of a typical workforce is actively disengaged, which Gallup defines as “unhappy and unproductive at work and liable to spread negativity to coworkers” and calculate what that could mean for your company.
Gallup’s shows that actively disengaged employees can cost employers $3,400 for every $10,000 of salary, or 34%. For a 5000 employee company with a $50,000 average salary, and using national averages (5,000 x .13), there are 650 actively disengaged employees costing $17,000 per employee a year, or a total of $11 million per year cost of active disengagement for its entire workforce!
Calculate and show the CEO the potential savings from lowering the number of actively disengaged employees in your workplace by 1% in the coming year. For a 5000 employee company with an average salary of $50,000, each percentage point decrease could yield $850,000 in annual savings.
Step Three: Earning CEO Support
Now that you’ve connected well-being to bottom line issues, brainstorm with the CEO to consider how well-being could help lower these numbers over the next year. Show how taking the first steps of enacting a well-being initiate are not only worth the time and investment, but worthy of CEO and board support.
Discuss the costs of implementing a first phase well-being program. This will vary, but a rough average is about $500 per employee. Include up-front costs to conduct a workplace assessment, develop a strategic plan and a modest budget for setting up the program, vendor fees, and modest employee incentives to stimulate enrollment.
Present the timeline in two parts: (Phase 1) short term: where it should take about six months to conduct an appraisal and adopt a strategic plan, and another six months to start realizing any near-term wins; and (Phase 2) longer term: two to three years as more substantial ROIs are realized.
To maximize quick wins within twelve months, Phase I should coincide with programs that start immediately and are designed to achieve short-term ROI by turnover and boosting employee engagement.
Patagonia, for example, implements a program to target dissatisfied employees so that managers can intervene and convince them to stay with the company. It utilizes frequent employee surveys that measure both employee engagement and employee retention, and it’s effectively lowered turnover.
HR can quickly boost well-being with programs that reduce stress and increase financial well-being. According to a new study published in the American Journal of Health Promotion, these sorts of short-term interventions can improve employee well-being and productivity, and help reduce overall costs, within six months.
While short-term savings may be initially helpful in getting CEOs’ attention, HR must not forget that employee well-being is a long-term strategy. It needs to become central to the company mission, management decisions, and operating processes with the goal of cultivating a supportive workplace culture that permanently reduces turnover, increases engagement and results in better customer service.
CHROs should give a senior HR manager primary responsibility for managing the initiative, and recruit a senior communications person to include well-being in virtually every employee communication, develop CEO speeches and talking points and take care of all necessary event logistics that involve the CEO.
CHROs must show that the well-being initiative will not burden CEOs or senior management and that HR will manage most of the activities around the initiative and serve as a bridge to CEOs and boards.
Stress that employee well-being should take no more than 5% of a CEO’s time, or as little as 3 hours a week. CEOs will primarily contribute around employee communications and appearances and those executive assistants will be recruited to ensure that CEOs arrive where and when needed with messages in hand.
As a former CEO, I can tell you that workplace well-being is contagious, especially when employees express enthusiasm and appreciation for the company’s efforts.
Well-being initiatives stimulate engaging hallway and elevator conversations. And employees will approach CEOs to talk about their experiences, successes, and failures, and even encourage the CEO. This can be both fun and rewarding.
In the end, this is not about seducing CEOs, but making it easy and fun, and inextricably tied to advancing bottom line organizational goals. HR needs to be bold and strategic, but once you win over CEOs and earn their hands-on leadership, the bottom line results will speak for themselves.
