Why CFO’s need to play a role in employee health and wellbeing

Healthy Business CEO, Steve McCullagh and Lockton’s National Manager of Employee Care, Morag Fitzsimons recently spoke to CFO Magazine about the important role that CFO’s and other business leaders need to play in the health and wellbeing of their employees. Read the full article below and discover how our partnership with Lockton Australia can help protect your people, and your bottom line.‍

Why CFO’s need to play a role in employee health and wellbeing

Bad absence management leads to employee burnout and can also generate significant costs for an organisation both of which could otherwise be mitigated through an effective employee health and wellbeing program. By Nina Hendy.

Whilst it might seem difficult to prove that an employee is experiencing burnout, at the end of the day it’s an employers’ duty of care to not only recognise the symptoms but to take action to prevent and manage burnout.

Workplace absenteeism is a massive cost on Australian businesses in lost productivity.

In fact, absenteeism cost Australian businesses an eye-watering $24.2 billion in lost productivity last year in a particularly concerning statistic for CFOs.

The figures, highlighted in a Frost & Sullivan report released at the end of last year, found that people are taking more sick days on average, with 26 per cent of study participants admitting they took more time off sick in 2022 than any other time before the pandemic began at the start of 2020.

The study also found that employers are struggling with a whopping 70 per cent increase in absenteeism compared to the previous year, which negatively affects productivity and teamwork. This is impacting businesses in lost productivity, but also in less measurable ways such as reduced customer service and satisfaction, reduced staff collaboration and teamwork and lost revenue.

The true cost of absenteeism amid a significant talent shortage is highlighting the importance of standing out in the cluttered jobs market to ensure your business is an employer of choice.

But this takes much more than sticking a ping pong table in the corner of the office or stocking the lunchroom with healthy snacks these days.

Strategies to become an employer of choice can be extensive, beginning with looking at your talent management strategy, according to employment and recruitment agency Hays.

Focusing on the importance of employee wellbeing is also increasingly critical, with a study from Deakin University finding that traditional leadership approaches generally ignore the fact that employee wellbeing is multidimensional.

Released last year, the paper highlighted the need for an urgent rethink on the way employers operate given that many traditional leadership approaches ignore the fact that employee wellbeing is multidimensional.  

Report author, Dr Steve Swanson, of Deakin’s Business School found that leaders that prioritise their employees and have a genuine concern for them have the best leadership style that benefitted all key facets of employee wellbeing.

“Research into leadership and employee satisfaction has, until now, failed to recognise that people aren’t one-dimensional. They have wellbeing needs across different areas that managers must cater to,” Dr Swanson says.

An opportunity to step up

Healthy Business CEO Steve McCullagh agrees, adding that there’s a big opportunity for CFOs when it comes to health and wellbeing.

Healthy Business works with organisations to highlight the areas they are currently incurring significant costs, which could be mitigated through an effective health and wellbeing solution.

It does this by rolling out wellbeing programs designed to reduce the rates of absenteeism that drive behaviour change, increasing employee health, productivity, engagement and morale. A growing number of businesses are realising that investing in employee wellbeing is fast becoming a must have budget inclusion in businesses, particularly post-Covid.  

From where he’s standing, he recognises that there’s still a disconnect between what employers see as their responsibility when it comes to employee wellbeing, and what they don’t believe they need to be concerned about, he says.

“Once CFOs understand that absenteeism might be costing them, say $12 million a year, and we explain the financial benefit of reducing that by just 5 per cent, the value ecomes clearer,” he says.

“It’s a lightbulb moment when CFOs realised the financial value that wellbeing programs can bring to their business,” he says.

The key, he says, is for CFOs to ensure that the spend is a savings enabler, not a cost with no strategic focus or ability to monitor affect. “CFOs should have an expectation with providers to be able to articulate their ROI, and recognise that it’s easier to save money than it is to generate it,” McCullagh says.

“Healthy Business isn’t an out-of-the-box health and wellbeing solution. We come in and illuminate actual costs that an organisation is incurring due to absence and provide a tailored solution to assist with reducing these costs specific tothat organisation,” he explains.

Some CFOs are ahead of the curve here, while others are way behind when it comes to their understanding of the importance of implementing employee wellbeing measures that will work for them, he says. “The majority of CFOs understand that people risk is probably something to pay attention to, but some are a little lost on what to do and how to manage this,” McCullagh says.

There’s a growing expectation on the employer that wellbeing is managed from the top, with increasing regulations mandating that businesses implement changes, he says. 

“Physical safety is well understood in the workplace these days, but mental health in the workplace might be equally important, but it hasn’t been mandated and regulated in the same way that physical safety has. This is changing now” he says. 

It’s a complex problem and workplaces need to start doing something about health and wellbeing for their employees. The tight labour market also dictates that change is needed to be an employer of choice.

The learning for all companies is to ensure they are allocating resources appropriately, that consider the unique needs of their industry and workplace, to ensure they will be effective, he says.  

Locked and loaded

Healthy Business partners with Lockton Australia to provide a Total Cost of Absence Review(TCAR). TCAR examines company data to help calculate the true cost of absence, bridging the value gap.

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Lockton national manager of employee care Morag Fitzsimons says health and wellbeing is much more than workers’ compensation, turnover or sick leave. “The complexities of staff health and wellbeing and the reasons for absenteeism is something that CFOs need to understand to be able to address the hidden risks of leave without pay,” she says.

Lockton, the world’s largest privately-owned insurance brokerage and risk advisor, launched Lockton People Solutions to support clients in areas such as employee experiences and engagement.

Extensive analysis of company data by Lockton can identify absence costs and issues, and then Healthy Business can work with stakeholders to develop solutions that aim to improve the bottom line, she says.

“Businesses can reach their full potential when their people reach theirs, which is why employers need solutions that help balance attracting and retaining talent with managing costs and promoting employee wellbeing,” she told CFO Magazine.  

“Employers tell us they need help engaging their workforce, recruiting and retaining talent and driving efficiency for their business.”

“The way people work is being challenged, and employers are under increasing pressure to attract and retain their talent. Companies need to look at how to create positive employee experiences and drive engagement while also looking for greater efficiencies. 

Having specialists target problem areas of the business to improve its value proposition is priceless, she says.

Understanding return on investment has traditionally been a generic concept, but there is a lot of research that shows that every dollar invested in improving workforce participation enables CFOs to quantify the return.

“Many organisations are currently struggling for market share, are suffering from production issues or supply chain problems, which gives them a strong financial argument to spend on wellbeing programs of this kind,” she says.

While there’s no magic formula for working out how much a business should be spendingon health and wellbeing improvements, it is possible to look at how much these programs could save.

“Whether the financial downfall inside a business extends to the workforce, retention issues or something else, by conducting a Total Cost of Absence Review (TCAR) within your organisation you can soon start to map out the best way to introduce improvements that will benefit the balance sheet,” she says.

Click here to learn more about how Healthy Business and Lockton can assist your organisation to protect its bottom line by protecting its employees, plus get a quick estimate on much absenteeism might be currently costing your organisation.

Why CFO's need to play a role in employee health and wellbeing by Nina Hendy - CFO Magazine published xx/05/23