Companies Ponder a Rating of Workers’ Health

January 26, 2016 Wall Street Journal

Companies might add something new to their annual reports: a rating of their workers’ health.

A group of employers, including International Business Machines Corp., PepsiCo Inc. and Johnson & Johnson, are weighing how to publicly report–and measure–the health of their workforce. Such ratings would give shareholders, corporate directors, managers and consumers insight into a company’s commitment to improving employee health, and whether such efforts are getting results. Chronic illness, tobacco use and obesity can drive up a company’s medical costs, but a growing body of research suggests they can also affect productivity and performance.

Derek Yach, the chair of the working group and the chief health officer of the Vitality Group, a unit of South African insurer Discovery Ltd., says rating workforce health gives investors and consumers another way to assess a given company’s productivity, management and commitment to employees’ well being. Vitality offers health and wellness programs to employers and could stand to gain if more companies adopt health-reporting metrics.

The working group aims to develop a standard measure of employee health, one which could be verified by outside auditors, similar to financial accounting standards, says Dr. Yach. Another model is corporate environmental impact reports, which have grown increasingly common, he adds.

Dr. Yach released a report and sample scorecards of corporate health metrics at the World Economic Forum in Davos, Switzerland. Some of the sample questions include, “Is there a person responsible for employee health and well-being in your company?” and, “Does your company maintain a smoke-free workplace?”

“We want this to be a serious management tool that goes alongside financial management tools,” says Dr. Yach. “The level of obesity in the workforce, stress and depression I consider material to the business performance of a company.”

Any health information would be presented in the aggregate, to conform with health-privacy laws.

Few companies systematically and publicly report their health metrics. “All the working group members support the concept of reporting on employee health metrics, but if and how that gets implemented will vary quite widely,” says Shahnaz Radjy, lead project manager on the initiative and senior communications specialist at the Vitality Institute.

Dr. Kyu Rhee, chief health officer for IBM, says the company has long been committed to a “data-driven, evidence- based approach to employee wellness.”

Allegacy Federal Credit Union, a nonprofit Winston-Salem, N.C., credit union and member of the working group, issued its first employee health scorecard to its roughly 125,000 credit union members last spring. The report card measured factors such as whether its leadership was committed to the wellness and job satisfaction of its 350 staffers. The self-reported data wasn’t audited by a third party, says Garrick Throckmorton, an Allegacy human-resources executive. Allegacy rated itself a 49 on a 55-point scale–suggesting that the company’s wellness efforts were working.

That number “has allowed us to demonstrate to our stakeholders and to our board of directors that we are serious about employee health,” says Mr. Throckmorton.

Firms that rate high on employee health may reap financial benefits, too. A trio of studies on the link between stock performance and corporate wellness, published in this month’s Journal of Occupational and Environmental Medicine, found that companies with high-performing health programs for employees outperformed the Standard & Poor’s index by as much as 16% a year.

Assigning a single number to score the health of thousands of workers is a tricky proposition, involving countless variables. Still, some employers want to boil down staff health into one number, says Paul Mendelowitz, medical director, health informatics at Active Health, a New York health analytics firm and an independent subsidiary of Aetna Inc.

Active Health is developing an algorithm that can assign a score to an employee population’s health, which it expects to begin testing with employer clients in a few months, says Dr. Mendelowitz.

Derek Yach, the chair of the working group and the chief health officer of the Vitality Group, a unit of South African insurer Discovery Ltd., says rating workforce health gives investors and consumers another way to assess a given company’s productivity, management and commitment to employees’ well being. Vitality offers health and wellness programs to employers and could stand to gain if more companies adopt health-reporting metrics. The working group aims to develop a standard measure of employee health, one which could be verified by outside auditors, similar to financial accounting standards, says Dr. Yach. Another model is corporate environmental impact reports, which have grown increasingly common, he adds. Dr. Yach released a report and sample scorecards of corporate health metrics at the World Economic Forum in Davos, Switzerland. Some of the sample questions include, "Is there a person responsible for employee health and well-being in your company?" and, "Does your company maintain a smoke-free workplace?" "We want this to be a serious management tool that goes alongside financial management tools," says Dr. Yach. "The level of obesity in the workforce, stress and depression I consider material to the business performance of a company." Any health information would be presented in the aggregate, to conform with health-privacy laws. Few companies systematically and publicly report their health metrics. "All the working group members support the concept of reporting on employee health metrics, but if and how that gets implemented will vary quite widely," says Shahnaz Radjy, lead project manager on the initiative and senior communications specialist at the Vitality Institute. Dr. Kyu Rhee, chief health officer for IBM, says the company has long been committed to a "data-driven, evidence- based approach to employee wellness." Allegacy Federal Credit Union, a nonprofit Winston-Salem, N.C., credit union and member of the working group, issued its first employee health scorecard to its roughly 125,000 credit union members last spring. The report card measured factors such as whether its leadership was committed to the wellness and job satisfaction of its 350 staffers. The self-reported data wasn’t audited by a third party, says Garrick Throckmorton, an Allegacy human-resources executive. Allegacy rated itself a 49 on a 55-point scale — suggesting that the company’s wellness efforts were working. That number "has allowed us to demonstrate to our stakeholders and to our board of directors that we are serious about employee health," says Mr. Throckmorton. Firms that rate high on employee health may reap financial benefits, too. A trio of studies on the link between stock performance and corporate wellness, published in this month’s Journal of Occupational and Environmental Medicine, found that companies with high-performing health programs for employees outperformed the Standard & Poor’s index by as much as 16% a year. Assigning a single number to score the health of thousands of workers is a tricky proposition, involving countless variables. Still, some employers want to boil down staff health into one number, says Paul Mendelowitz, medical director, health informatics at Active Health, a New York health analytics firm and an independent subsidiary of Aetna Inc. Active Health is developing an algorithm that can assign a score to an employee population’s health, which it expects to begin testing with employer clients in a few months, says Dr. Mendelowitz.

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