Topics:   Leadership,Strategy

Topics:   Leadership,Strategy

May 1, 2019

Culture: The Foundation of Employee Wellbeing

May 1, 2019

In the Midwest, there is a large employer widely cited for its cutting-edge employee wellness initiative. Its roster of programs, including an on-site gym, healthy eating programs, and stress-reduction courses, receives gushing media coverage and attracts attention from celebrities.  

From the outside, the company has been lauded for doing everything right. But on the inside, employees live a different reality.

A large percentage of its workforce earns below the state’s median wage, which leads to financial stress that makes things like eating well and working out nonstarters—even on site, when these resources are provided. Moreover, the company is dramatically understaffed, which is leading to unpredictable schedules and high employee stress.

Because employees feel like they’re not valued or respected, the culture is characterized by cynicism and low morale. Managers are viewed as unsympathetic, caring only about company objectives at the expense of employees. Many employees see the on-site gym as a joke, and turnover is high.

Cultural Resistance Hurts Strategic Initiatives

Employee wellbeing across America is at an all-time low. According to authorities like Gallup and CDC, low employee wellbeing is leading to poor physical and mental health that’s eroding profits through lower employee engagement, higher turnover, poor customer service, and higher healthcare costs.

As the opening example illustrates, no wellness program, no matter how carefully designed, will thrive in a resistant culture. Even companies which in good faith believe their wellness programs are delivering strong returns on investment (ROI) are often blind to how their employees actually view, let alone embrace, their wellbeing initiative. Low and unenthusiastic participation is the result—and oftentimes due to forces that the company itself creates, negating the value of the program before it has a chance to thrive.

Moreover, CEOs and boards are missing in action on understanding employee wellbeing from the mailroom to the boardroom. And when leadership does not treat employee wellbeing as a genuine priority and true core value, it produces workplace cultures that are indifferent or hostile to wellbeing efforts.

Accordingly, if companies ever hope to see any positive ROI from improving employee health, workplace wellbeing must become a board-level priority. The following three-step approach will guide boards in overseeing efforts to boost employee health and wellbeing by building supportive workplace cultures.

1. Set employee wellbeing as a top strategic priority.

Directors have an essential oversight and accountability role in ensuring that in a strategic wellbeing initiative, cultural resistance is addressed and a strategic foundation is laid, preparing management to change the culture to one of support. It starts by making employee wellbeing the dominant core value.

The evidence and common sense tell us that happy and healthy employees outperform unhappy employees by wide margins. Gallup has shown that high whole-person employee wellbeing and engagement help companies experience substantially better business and operational outcomes. And Deloitte states that “…providing a robust suite of well-being programs …is becoming a corporate responsibility and a strategy to drive employee productivity, engagement, and retention.”

Boards must see employee wellbeing as a crucial enabler for the company’s tactics to advance operational priorities. Consider voluntary turnover, which Deloitte tells us can cost an employer 1.5 to 2 times salary to replace a lost employee. Research shows that high employee wellbeing and engagement can reduce turnover by at least 25 percent.

Gallup’s 2013 State of the American Workplace shows that employees thriving in wellbeing have 41 percent lower health-related costs compared with employees who are struggling and 62 percent lower costs compared with those who are suffering.

Studies in the Journal of Environmental Medicine show that companies that boost employee wellbeing see substantially higher share value than peer organizations on the S&P 500.  

2. Align cultures with wellbeing.

Noted Massachusetts Institute of Technology professor and culture expert Edgar Schein describes culture as “the hidden force that drives most of [employee]  behavior….” Culture is embodied by leadership styles, procedures, and perceptions of what’s valued, rewarded, and punished.  

While the rules that govern most workplace cultures are unstated, they implicitly but firmly guide employee behavior and usually eclipse unaligned top down initiatives and programs.  

A highly regarded study by professors Kim S. Cameron and Robert E. Quinn of the University of Michigan found that up to three quarters of all strategic initiatives fail because they do not take into account cultural resistance. Or, as said by Rosie Ward and Jon Robison in their book, How to Build a Thriving Culture at Work, “No strategic organizational change will succeed if it is not aligned with culture.”  

Accordingly, boards must ensure that companies include culture change as an essential part of any strategic wellbeing initiative by following these three steps:

Assess the current culture. Determine whether it supports or hinders optimal employee wellbeing. Consider things like 24/7/365 availability, tacit discouragement of taking vacations, uncaring managers, and pay below living wages. The board can understand these current culture touch points through the results of surveys, focus groups, and in-depth discussions at all levels of the organization.

Boards should insist that surveys be conducted by third-party experts. This maximizes the likelihood of bluntly honest responses providing the insights needed for changing the culture to achieve greater employee wellbeing, meet key performance metrics, and demonstrate social responsibility.

Provide guidelines and expectations for management to build the desired culture. Next, the board should outline what it expects of management as the team designs the desired culture. The board should expect that employee wellbeing is placed at the center, making it an infused core value that drives all considerations. This requires looking at procedures, policies, leadership traits, and even how managers and leaders are evaluated. The board may also consider amending CEO and other c-suite performance metrics to ensure the team has levers in place to motivate the desired behavior changes in its leaders.

Move to the new culture. Directors must provide appropriate oversight and ensure this process is project-managed with milestones, results, and accountabilities. Once established, these new cultures of wellbeing must be nourished and maintained, and boards must remain vigilant to ensure that wellbeing is a permanent standing agenda item. It may also be helpful for the board itself to model the new culture, and to ensure that the management team is also doing the same.

3. Measure the success of cultural changes.

Contrary to common practice, success should not be predicated solely on lowering healthcare costs, something that’s impossible to precisely measure and is not itself strategic.  

Instead, boards should focus on lowering employee turnover, boosting employee engagement, and improving customer service, which are strategic and are directly and measurably impacted by employee wellbeing. Not only are these ROIs central to operational success; their potential returns absolutely dwarf any possible reductions in healthcare costs.  

Finally, employee wellbeing can no longer be considered an unreviewable detail of management prerogative. Rather, assessment and oversight of employee wellbeing is a top director priority in the exercise of their fiduciary duty to safeguard and protect their organization’s most critical asset: its workforce and intellectual capital.

Jim Purcell is founder of the Returns on Wellbeing Institute. He previously served as CEO of Blue Cross & Blue Shield of Rhode Island, and will speak at the 2019 NACD Global Board Leaders’ Summit.