Disability, absences cost firms an average $10 million: Survey

Mental health still the top cause of disability
By Shannon Klie
|Canadian HR Reporter|Last Updated: 03/18/2008

Mental health is still the biggest disability concern for Canadian organizations, according to a recent report.

The 2007

Staying@Work Survey

, conducted by HR consulting firm Watson Wyatt, found 72 per cent of the 78 organizations surveyed ranked mental health conditions among the leading causes of long-term disability and 82 per cent ranked them among the leading causes of short-term disability.

This is a trend Watson Wyatt has been tracking for the past eight years, said Joseph Ricciuti, director of client solutions for Watson Wyatt in Toronto.

“Back in 2003, mental health issues started to rear its head as being the number-one concern among compensation and benefits managers and HR folks,” he said. “In 2005, the survey really supported that same view. It was the number-one issue among benefits and compensation managers that was keeping them up at night.”

However, in 2005, 81 per cent of organizations reported mental health as being a leading cause of long-term disability compared with only 72 per cent in 2007 and the average cost of LTD claims dropped from 1.4 per cent of payroll to 1.05 per cent in the same period.

This suggests STD case management of these claims is becoming more effective and employers are offering better return-to-work programs for employees suffering from mental health conditions, according to the report.

“But are they getting people back effectively?” asked Ricciuti.

One indicator that people might be returning to work too soon is the high cost of casual absences (at 1.2 per cent of payroll), said Ricciuti.

Casual absences, which Watson Wyatt included for the first time in the 2007 survey, may also be an indicator of undiagnosed or unmanaged mental health conditions and poor work-life balance programs, according to the report.

“Companies have got to get a better understanding of the cost implication and the productivity implication that this area of mental health is having on them. The paradigm has to now move away from this one focus that they had on LTD to the areas of casual absences, short-term disability and productivity,” said Ricciuti.

LTD, STD, workers’ compensation and casual absences are costing the average employer about $10.4 million in direct costs, said Ricciuti. When the indirect costs of replacement workers, return-to-work programs and lost productivity are calculated, disability and absences cost employers upwards of $30 million, he said.

“The economics have to speak for themselves,” he said.

Another concern is the potential cost of presenteeism. While 85 per cent of respondents believe employees stay home when they’re sick, Watson Wyatt’s 2007

Work Canada Study

revealed only 44 per cent of employees cut back on their work when they’re not well and 25 per cent of employees reported they don’t have the physical or mental energy to do their job most of the time.

“Monitoring and managing the impact of chronic conditions is an important part of any strategy to address presenteeism,” states the report. “Organizations should work to establish a culture of health that encourages employees to take care of their health by offering the means to detect chronic diseases, supporting them and encouraging healthy lifestyle habits.”

Mental health screening programs and early intervention can be very effective in mitigating mental health issues, said Donna MacCandlish, director of business development for Toronto-based Mood Disorders Association of Ontario, the creators of the online screening tool “Check-Up from the Neck Up.”

Screening programs can also help employers track what’s going on with employees, said MacCandlish.

“It allows employers to keep their fingers on the pulse of what’s going on in terms of overall mental health of their employee base,” which in turn enables employers to be proactive in creating programs to address certain mental health issues, she said.

The association is looking to partner with employee assistance programs, benefits consultants and insurance companies in order to have employers use Check-Up from the Neck Up as a screening tool, said MacCandlish.

The goal is to give employers access to aggregate data about their workforce so they can identify areas of concern, but specifics about individual employees' screenings would be kept confidential from employers, said MacCandlish.

What makes the online tool different from other screening programs is that it tests for an individual’s propensity towards a mental health illness, not just his current condition, she said.

Mental health screening programs are also very effective at improving employee satisfaction and productivity, according to the Watson Wyatt report. However, only 16 per cent of respondents have such a program in place.

“Health risk assessments are very, very important and not a lot are doing it so we need to address that,” said Ricciuti.

One of the reasons so few organizations use screening programs is they don’t understand the value of the programs, he said.

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