Employees seen as 'intellectual capital' as new paradigm unfolds
Organizations seek new ways to maximize their return on investment
What a difference a few years can make. While employers have clearly not abandoned their "lean and mean" approach to staffing, many have ceased to view employees - and their salaries - solely as a necessary evil of doing business. As labor shortages grow, an increasing number of employers have come to view employees as intellectual assets, which, when maximized, will contribute to growing profits.
"Employer groups are looking for ways they can improve their risks; they are introducing wellness programs they believe will have an impact and affect their bottom line," adds Nancy Richardson, vice president of business development with Healthtrac, a Menlo Park, CA-based wellness firm. "And they are taking the lead; they're not waiting for their health plans to come to them with a program."
This paradigm shift has important implications for both human resource and health promotion professionals. It challenges HR managers to find new and better ways to train and motivate employees so the employer can maximize the "return on employee investment." And it shines a bright light on wellness and its role in helping employees be at the top of their game.
"What I'm seeing is a fairly dramatic shift as organizations are looking at an employee as either an investment or an asset," says Susan J. Leeds, managing director of The Ayers Group, a New York-based consulting firm. "We see companies applying dollars against management development, coaching, and training in order to retain employees. With the job market the way it is, retention is a major issue.
"There are all these wonderful investments being made - to get someone in, to train them . . . how do you get a return? By enabling employees to be in charge of their own `tool kits.' What you want is an employee with an ongoing inventory of knowledge and skills, who knows that what he has to offer is in sync with the organization's business plan."
Immunex Corp., a Seattle-based biotech firm, recently instituted what it calls a Performance Pay Plan, which incorporates merit and incentive pay and stock options. "The biggest challenge for us is to make clear to our employees what we expect from them," says Tim Dickenson, manager of training and organizational effectiveness. "Most of the emphasis is actually on performance planning, rather than on pay."
Health is a critical component
The human resource professionals con-tacted by Employee Health & Fitness agree that employee health cannot be separatedfrom optimal performance.
"When I talk about what it takes to be a stellar performer, that includes being in charge of your career in a healthy and vital way," says Leeds. "Healthy employees dedicate themselves to measurable results. Developing broad skills - the quest for knowledge itself - is healthy. And I sleep a whole lot better at night when I know what I'm doing works for my organization."
Having employees who are healthy and fit is a key component of any performance-related program, she adds. "I'm at my most productive when I'm at the top of my game."
"Good employee health is critical," adds Dickenson. Although environmental health and safety is a separate department from the training department, they are indispensable to each other and work closely, he says. "Then, there's the benefits department; unless we have benefits in place that make employees feel satisfied and productive, it's harder to keep them."
Ergonomics is a major issue
One area of employee health that is particularly important to Dickenson is ergonomics. "On the research bench, if you don't have the proper ergonomics in place, it can really destroy productivity," he notes.
"That really came onto our radar screen during the last couple of years," says Jeff Palmer, manager of environmental health and safety at Immunex. "Employees really do need to remain healthy to be productive. If someone is in pain or suffering, they're not productive, so we need workplaces that accommodate their work."
As an example of this willingness to accommodate its employees, Immunex purchased a "standing desk" recently for an employee who was recovering from an auto accident and who was unable to sit for long periods of time.
There is more than one way, experts agree, to skin the return-on-employee investment cat. "Employers want to leverage their investment, hopefully, into ideal performers," says Leeds. "They are developing individual training or group coaching programs to help employees shore up areas where there are shortcomings, such as time management skills, communication skills, and so forth. If you offer employees these programs, what they return to you is a win-win situation - a happier and healthier employee. The organization retains top-quality talent, continues to receive a return on its investment, and the individual employee gets continuous learning."
Training programs offered by Ayers cover a wide range of "areas of competence," including:
· assertiveness;
· change management;
· coaching staff to top performance;
· communicating through performance appraisals;
· communications skills;
· competency gap analysis;
· delegation skills;
· delivering successful presentations;
· time management;
· executive effectiveness;
· inclusion;
· interpersonal skills;
· interviewer training;
· meeting management;
· Myers-Briggs indicator training;
· problem-solving;
· resolving conflict;
· team building.
At Immunex, the new program is very goal-oriented. "Let's take a staff scientist," Dickenson offers. "First, we have him go to a performance planning workshop to learn the concepts of defined results and measurement. Then we have him write a first draft of his performance plan. This is followed by discussions between the manager and the employee; they reach an agreement and sign off on it."
Linking pay with performance
The employee's pay is linked to how well he achieves the goals laid out in the plan. The employee no longer assumes specified pay for a specified job title; he is paid based on what meets and what exceeds expectations. "This involves specifics that are not only numerical but quality-related," Dickenson explains. "For example, we may measure whether some internal customer, say the employee's manager, is satisfied with his creativity."
Richardson has just completed a four-year program with a large employer that has significantly improved its return on individual employees. "We implemented a program that identifies and channels high-risk employees to targeted wellness programs," she reports. "In independent claims evaluation, they showed a 6.7-1 return on investment. Channeling employees into targeted programs that are risk-specific - either by mail or through the phone - can actually improve the risk of people with chronic disease." HealthTrac offered the following programs to high-risk employees: arthritis, back pain, blood pressure, diabetes, lung disease, stroke, heart problems, smoking cessation, and weight loss. The employer looked at absenteeism and health claims costs, Richardson says.
These numbers, notes Richardson, were calculated for those employees covered by the company's indemnity plan. "We were not able to get individual data for the HMO population, but by extrapolating the overall data, we conservatively estimated a 9-1 return on investment," says Richardson. "The employer was very happy." (For ways to build a healthy work force, see above.)
In studies like Richardson's, measuring your return on investment is fairly straightforward - simply a matter of numbers. But in terms of evaluating performance, can human resource professionals be that scientific?
Not really, admits Leeds, but you can measure progress. "As organizations do cost-accounting on an employee, they need to evaluate what they have invested to recruit them; to bring them up to speed technically; and to continually be working with them so they fit within the culture of their organization and department. All of this is time and money; it's a huge investment."
When she was on the corporate side, Leeds ran human resource and training departments and kept tabs on employee progress to ascertain whether that investment was paying off. "I would work through an appraisal process, sit down together with the employee, and have a conversation in which we would set goals, identify skills, agree on a level of skills, and identify the gaps that may exist that could prevent those goals from being achieved. We would put a development plan in place designed to help the individual close that gap, and then we would come back together at designated points in time to see if we were, in fact, closing the gap. I encourage all employers to do that."
[Editor's Note: For more information, contact: Susan Leeds, The Ayers Group Inc., 370 Lexington Avenue, New York, NY 10017. Telephone: (212) 889-7788. Fax: (212) 889-6465. Web site: http://www. ayers.com.]
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