Employee health, drug and disability costs have increased significantly or are expected to rise, according to a survey of Canadian financial leaders.
Yet only 15 per cent of the 95 respondents said their company has considered a funding strategy to address the impact of these future costs. Drivers such as an aging workforce, the cost related to drug and disability plans, as well as legislative changes are key issues, according to the study conducted by the Canadian Financial Executives Research Foundation, the non-profit research institute of Financial Executives International Canada (FEI Canada).
“Financial executives need to be aware of these emerging demographic and health trends that will have a substantial impact on the bottom line of Canadian businesses,” said Michael Conway, chief executive and national president of FEI Canada. “To address the perfect storm of factors, CFOs will have a significant role to play in maintaining employee health, while holding the line on costs and ultimately improving productivity.”
More than one-third (38 per cent) of the financial executives surveyed said they were accountable for the HR function at their organization and 85 per cent had some type of involvement with HR. All emphasized their role in working with HR to predict and control costs, found the study Banking on Productivity: Managing Employee Health Costs, based on the survey and an executive research forum with participants in Montreal, Toronto and Calgary.
“Companies also need to be aware of the impact of mental health issues on their bottom line. One third of disability claims are mental health-related,” said Paula Allen, vice-president of research and integrative solutions at Morneau Shepell, which sponsored the study. “And mental health disability claims are approximately one-third more expensive than physical health claims.”
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