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Tuesday, January 7, 2014

Why Companies Are Losing $21.8 Billion Today

By Jim Clifton, Chairman and CEO of Gallup, and Ben Leedle, CEO of Healthways

Ten cities in America stand out when it comes to high well-being -- with Boulder, Colo.; Barnstable Town, Mass.; and San Luis Obispo-Paso Robles, Calif.; as examples of cities in the top 10. Residents in these places -- compared with the rest of the country -- are better connected to their community, have better financial stability and physical health, and have a higher sense of purpose.

These high well-being cities tend to exhibit many shared characteristics, including lower chronic disease rates, lower incidence of obesity, more frequent exercise, less smoking, and a more positive outlook on their community. These commonalities demonstrate a consistent, mutual foundation upon which the top well-being cities attain and maintain their status as standard bearers of well-being in America.

Now, imagine how different the nation would be if the well-being of the average American worker was just as good as that of the people in the top 10 cities -- an attainable and measurable goal that can be achieved with the appropriate focus by business owners and their leadership.

If every one of America’s biggest companies -- those with 10,000 employees or more -- got serious about the well-being of their employees and matched the well-being of our nation’s top 10 cities in just two areas (obesity and smoking), we would collectively net $21.8 billion in reduced healthcare costs and improved productivity. 

That figure gets even bigger by accounting for other health conditions and all the aspects of well-being that affect an employee’s life -- like strong social relationships, engagement at work, and a sense of financial security.

And every uptick in well-being would pay off for those companies in not just cost savings and improved worker productivity, but also in increased loyalty, safety, and a better customer experience. Those companies could invest their capital in growth, not healthcare costs. Their employees would put their energy into their jobs, not their illnesses, sources of stress, and struggles.

Then there are the millions of other employees working in the millions of smaller businesses throughout the country -- many of whom could benefit from improved well-being, meaning the total savings for all U.S. businesses would likely be hundreds of billions of dollars every year. This would put a sizable dent in our annual $2.7 trillion in healthcare spending.

So, what can business leaders do to capture this value? First, understand that the key elements impacting an employee’s day-to-day life go well beyond physical health and include factors like financial stress, social relationships, work environment, and community involvement. The most effective strategies drive awareness around all facets of well-being; help employees develop specific goals to improve their individual well-being; provide them access to resources; and foster ongoing engagement, motivation, and encouragement. Companies that have engaged their employees this way have seen not only lower healthcare costs and improved productivity, but also lower rates of absenteeism and turnover.

Here’s the thing: Chief executives and business leaders should not wait for the government to solve our healthcare spending problem. These leaders have to step up, because no one else is better equipped. Business leadership is all about solving problems, setting strategies, demanding accountability, and building on success. To attack this problem, business leaders must understand why the residents in the top 10 cities have higher well-being, and then take action to help their employees improve their well-being.

Leaders can, in fact, solve this problem one employee, one department, and one company at a time. They just have to choose to tackle it and then put the right systems in place.

Sure, there’s an altruistic component to helping your employees improve their well-being -- it will be good for them, and it will be good for our country. Importantly, however, improving well-being will also make your company perform better -- and ultimately, it will be good for business.

2 comments:

Josia Nakash said...
January 8, 2014 at 9:27 AM  

Dear Jim,

Greetings from Israel.

I'm so happy to see someone finally has a blueprint for a better society! I saw what you said at the Meridian Global Leadership summit and have some parts of the puzzle that you are looking for. The big global shift is that soon millions of people will be out of work (I see you were already talking about the bleak outlook in July). As painful as it sounds this can be a pleasant process if we prepare society properly for the next stage. We need to organize our lives in a completely different way and in the end we will all be better off and happier. Humanity is going through a historic transition at the moment and the more we are aware of this process and what it involves exactly the less we will suffer.

As great as your ideas are, you are still missing a big chunk of the puzzle. Let's say all the major corporations implemented your ideas tomorrow morning and there was a higher level of well-being in those companies. In a perfect scenario this elevated mood impacts circles around them and really generates a positive shift in society. Sounds great, right? Wrong because you have still not dealt with the root of the problem. When you get to the root of the problem you will understand the connection between the freezing weather on both sides of the Atlantic and the escalating levels of suicide, depression and substance abuse worldwide. Nature will not allow us to continue down this self-destructive path.

I would like to sign off on a happy note. Someone in your position can generate a genuine shift throughout society. All it will take is one great leader to stand up and explain to everyone what is really happening in our world.

Wishing you all the best for 2014 -

Josia Nakash

Anonymous said...
January 19, 2014 at 4:16 PM  

The food supply chain and its stakeholders seems to me is not yet adressed properly ????

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