The Business Roundtable recently issued a much-publicized Statement on the Purpose of a Corporation that expanded the corporate duty of care to include employees. And Harvard Law School Forum on Corporate Governance confirmed that employee wellbeing has become a serious investor concern.
While boards set strategic objectives, hold CEOs accountable and are stewards of a company’s assets, many focus on short-term goals, such as boosting share value and quarterly dividends, and see human capital in terms of cost containment rather than a fundamental investment in business success.
This is a mistake, for three fundamental reasons.
First, human capital is a top-level strategic priority. And because labor shortages are projected to last for years, boards must see employee retention and performance as worthy of board oversight and CEO accountability.
Next, as employees increasingly seek employers that support their whole-person wellbeing, boards must ensure that wellness programs are designed to attract and retain scarce human capital and maximize employee productivity, engagement, and overall workplace health and wellbeing.
And finally, as customers and investors demand more accountability for how employers treat employees, boards must view employer wellbeing as core to corporate reputation and stakeholder engagement.
This explains why human capital must become a top priority, and why boards must ensure their companies invest in evidence-based wellbeing initiatives that support employee wellbeing by following a 3-step approach.
Step One: Understand The Fundamentals of Workplace Wellbeing
Whole-person wellbeing takes into account both body and mind. Research by Gallup and others shows that whole-person wellbeing involves the interplay of several wellbeing aspects that work together and ultimately determine a person’s total health and wellbeing.
This is why effective wellness programs go beyond health assessments, diet, exercise and smoking cessation programs and also include programs that address mental health and financial security, both of which contribute to higher wellbeing, a positive outlook, and feeling engaged at work.
By going beyond approaches that disproportionately focus on lowering blood pressure and losing weight (which research shows are largely ineffective at boosting employee health or delivering business returns), whole-person approaches can help employers see real returns, including lower absenteeism, fewer healthcare claims, and higher workplace engagement and performance.
So while boards do not need to become experts in workplace wellbeing, they need to become conversant in core concepts and best practices. A board education process should be facilitated by a wellbeing expert who can compile and present evidence-based best practices and case studies on whole-person wellbeing in a day-long retreat attended by board members, CEOs and CHROs.
Step Two: Plan For Employee Outcomes & Business Returns
Strategic planning can improve organizational performance. It involves setting goals and articulating how those goals will be achieved with actions and resources and should be an integral part of wellness programs.
Yet, according to a new study by the Returns On Wellbeing Institute, in partnership with the Wellness Council of America (WELCOA), boards seldom take part in strategic planning and oversight of wellness programs or hold CEOs accountable for achieving targeted goals.
Boards must no longer see employee wellness as a non-strategic personnel activity and must insist that companies include their input on employee wellness efforts.
Boards must ensure wellness programs are based on best practices. They must review employee wellbeing assessments to first understand current baselines of workers’ physical, mental and financial wellbeing and to plan targeted and measurable employee outcomes and business returns.
For example, an employee assessment might reveal that many workers are living paycheck to paycheck, borrowing from their retirement plans, or skipping doctor’s visits due to financial stress. This, in turn, might be contributing to turnover, absenteeism and poor customer service.
In this case, companies armed with employee assessment data might create strategic wellbeing plans designed to improve employees’ financial wellbeing via programs that ensure workers receive living wages, emergency loan programs, or lower health insurance deductibles.
Once companies understand how financially stressed workers hurt their bottom lines, they can study how better financial wellbeing leads to lower year-over-year absenteeism and better customer service when employees have less financial stress and bring their best selves to work.
Step Three: Accountability, Oversight and Measurement
Boards should oversee, review, modify and approve strategic wellbeing plans at least once a year. Boards must also hold CEOs accountable for achieving targeted employee wellbeing outcomes and business returns, and consider wellbeing goals when setting CEO incentive pay.
And according to our research, it’s not just about programs, which alone seldom succeed. Boards must understand that wellbeing initiatives, which constitute the entire strategic wellbeing effort, must include intentional workplace cultures, leadership from CEOs and managers, and inspirational corporate purposes that go beyond profits and inspire employees.
To ensure that wellbeing remains a top priority, boards need standing employee wellbeing committees that address wellbeing at every board meeting. Governance committees should also include “human capital” and “employee wellbeing” as one of the necessary skillsets when recruiting new board members.
While taking oversight responsibility for employee wellbeing is new territory for many boards, it should not be a hard sell for many for directors to make a difference and renew their enthusiasm for their roles as board members and the company’s purpose and mission.
Because CEOs have limited tenures, boards must ensure employee wellbeing endures and is perpetuated. And as more board members try to bring more corporate responsibility to boards, employee wellbeing offers an engaging agenda item for improving lives and business results, and leaving a legacy.