One-quarter of firms planning to offer incentive pay for health programs: Towers Watson

Mental health issues top reason for disability claims
|hrreporter.com|Last Updated: 11/28/2011

As Canadian organizations search for ways to improve workforce productivity, they are trying new approaches to combat the double-whammy of rising health costs and increased employee absence, stress and disability.

High-effectiveness companies are using tactics like financial rewards to encourage and support their staff in making better lifestyle health decisions, according to Towers Watson. While incentive pay to encourage participation in health and productivity programs is a common practice in the United States, the number of organizations implementing this strategy in Canada is on the rise.

One-quarter (26 per cent) of the 335 Canadian employers surveyed said they are planning to offer some type of financial reward in 2012 to individuals who participate in their health management programs — up from just 13 per cent who currently do so, found the Staying@Work survey.

“We are seeing employers increasingly realize the importance that health and productivity programs can play in their efforts to control health care costs and maintain a productive workforce,” said Wendy Poirier, health and group benefits leader at Towers Watson. “While the outcomes of any one tactic can’t be guaranteed, high effectiveness companies with thoughtful multi-faceted programs are reaping clear returns on their investments in workforce health.”

Despite growing awareness and action, mental health conditions continue to be the most common reason for disability claims in Canada, according to 83 per cent of survey respondents. Muskuloskeletal/back issues came in second at 76 per cent followed by accidents at 37 per cent.

Similarly, mental health conditions are cited by 85 per cent of respondents as a top driver of their long-term disability claims, followed by muskuloskeletal/back issues at 76 per cent and Cancer at 63 per cent.

Most organizations report that employee stress is a major and growing business issue, and many are planning to adapt their organizational health strategies for the next two years to include a focus on mental health (61 per cent) as well as physical health, found the survey. Canadian respondents cited excessive workloads, lack of work-life balance, unclear or conflicting job expectations and inadequate staffing as the top sources of workplace stress.

The survey results indicate that the prevalence of each of these stressors has risen significantly over the last two years. For example, today nearly nine in 10 (89 per cent) of Canadian employers say excessive workload is a problem, up from 64 per cent in 2009.

“Over the past few years we’ve seen employers asking employees to work longer hours and to do more with less, leaving less time for healthy activities like going to the gym, or eating properly. At the same time, people are worrying about job security and their personal well-being,” said Keri Alletson, a senior consultant at Towers Watson. “Together, these factors can add up and take a serious toll on both physical and mental health, as well as increase absence from work and presenteeism.”

Business consequences include higher health-care costs, reduced work performance and lost productivity, she said.

In 2011, health and productivity costs as a percentage of payroll totalled 17 per cent in Canada, up from 12.6 per cent in 2009. Organizations with effective health and productivity practices are achieving significantly better business outcomes, said Towers Watson. The benefits include a lower average turnover rate (eight per cent instead of 10.4 per cent), fewer unplanned absences — and for publicly traded companies, an 18 per cent market premium compared to organizations with low health and productivity effectiveness, found the survey.

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