Effective leaders employ these four strategies to support employee wellbeing.
Employee Experience|ESG and Sustainability|Health and Benefits|Inclusion-and-Diversity|Ukupne nagrade |Wealth Management
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As intangible assets continue to rise in their proportion of corporate valuations, boards and senior management teams have increased their focus on and oversight of human capital management – in particular employee wellbeing – and its link to performance.
Effective boards and senior management teams create and preserve long-term value by acting as stewards of their enterprises, providing appropriate levels of wellbeing governance and oversight, knowing that healthy, engaged and financially secure employees perform more effectively and efficiently, make better decisions and drive superior results.
In today’s environment, effective leaders increasingly care about employees’ physical and mental health issues. They pay attention if employees lack access to healthcare (physical and mental), are not earning a living wage or are not saving enough for retirement. They are concerned with low levels of engagement or job satisfaction, opportunities for advancement, physical safety, respect and dignity, and fair pay.
These leaders take the following actions relative to wellbeing, corporate governance and performance:
01
Understand the connection between employee wellbeing and performance
WTW research demonstrates the impact of employee wellbeing on retention of key talent, employee productivity and financial performance. For example, employees are more than twice as likely to report an intention to remain with their employer for the next two years in high wellbeing cultures versus low wellbeing cultures. Eight times as many employees are fully engaged in high wellbeing cultures compared to low wellbeing cultures. Effective boards and senior leaders measure and review wellbeing and performance data for their organizations.
02
Articulate materiality of human capital and wellbeing
Effective boards and senior leaders report materiality of human capital and wellbeing in multiple dimensions of financial and operational impact, including areas such as supply chain impact (e.g., days required to fill orders), productivity cost (e.g., lost work/gap time), replacement cost (e.g., recruiting costs), reputation impact (e.g., brand and goodwill), ESG impact (e.g., governance adherence) and value creation/erosion (e.g., earnings per employee).
03
Practice 'CARE governance'
My WTW colleague Don Delves notes that it’s understood that effective boards and senior management teams devote time in the intense and time-pressured boardroom environment to ensure essential wellbeing topics are being covered and discussed.
These elements include four components, easily recalled using the mnemonic, CARE: compensation and benefits, advancement, retirement and experience.
Compensation and benefits include base pay, annual incentives, long-term incentives and employee healthcare benefits.
Advancement includes succession planning, management development, skill availability, preparing workforces for the future, retention and turnover.
Retirement includes all wealth-creating defined benefit and defined contribution plans, as well as any other qualified and nonqualified plans such as employee stock purchase plans or excess benefit plans.
Experience includes actual conditions of the employee population such as work environment, work location, remote/hybrid arrangements, work content, relationships with colleagues, managerial effectiveness, inclusion, belonging and dignity.
04
Measure four dimensions of employee wellbeing
Effective boards and senior management teams measure wellbeing across four key dimensions:
Physical wellbeing: Employees thrive physically, understanding and managing their health. They take appropriate preventive measures to maintain or improve their health and effectively deal with chronic conditions. Metrics include percentage of employees covered by healthcare, absenteeism, presenteeism, wellbeing program participation, total cost of ill-being, chronic-care management, productivity, and employee health and safety.
Emotional wellbeing: Employees are emotionally balanced, self-aware and they develop positive mental health skills, including resilience, stress management and the ability to cope with emotional triggers. Metrics include percentage of employees covered by behavioral healthcare, employee assistance program usage, behavioral health service access, use of paid time off, psychological health standards, stress barometers, resilience training and emotional health indices.
Financial wellbeing: Employees have financial resilience and manage personal budgetary commitments, meet financial goals, protect against risks and save for contingencies and future needs (such as caregiving, college, home ownership or retirement). Metrics include retirement readiness by age, ability to manage planned and unplanned financial events, financial literacy indices, retirement plan contribution levels, percentage of employees living below the poverty level and percentage of employees with second (or third) jobs.
Social wellbeing: Employees are connected to work, family, community and their individual purpose. They understand how to support and collaborate with others as well as how to accept and foster diversity and dignity. Metrics include International Safety Organization psychological safety standards, inclusion and diversity metrics, percentage of employees working remotely, employee engagement, leadership trust and workplace dignity.
By prioritizing and taking a multidimensional approach to employee wellbeing, effective leaders build more resilient and sustainable businesses that are positioned for future uncertainties.
A version of this article originally appeared on Forbes on November 29, 2023.
