New study shows companies with healthy workforces outperform the JSE All Share Index
5 February 2016
Four recent studies, including the latest being published in New York, came to similar conclusions about the impact of employee health on financial performance.
Discovery Limited – A new study being published in New York on 5 February 2016, found companies with healthy workforces appear to have a competitive edge in the stock market.
“At Discovery, we see the health of our workforce as an integral indicator of our overall organisational performance. Studies such as these that confirm the significant impact of workforce health on performance enforce our vision of developing health metrics and categories to include within our corporate reporting as part of sustainability and integrated reporting for consideration by stakeholders and investors,” says Brett Tromp, Chief Financial Officer at Discovery Health.
This latest study will be published online in the February issue of the Journal of Occupational and Environmental Medicine (JOEM). The study compared the stock market performance of ten of the companies in South Africa with the healthiest employees with that of other companies. Nine different investment scenarios were tested and, in all nine scenarios, the companies with the healthiest employees outperformed the Johannesburg Stock Exchange All Share Index.
Tromp says, “These results further strengthen the critical economic impact and direct financial correlation between employee health and financial success of a business. Altering preventable health risk factors, such as inactivity, smoking and unhealthy diets that are associated with many non-communicable diseases, including cancer heart and lung diseases and diabetes, will become critical to prevent the projected high cost of productivity loss these conditions are expected to have on businesses over the next two decades.” He says, “Indicators from Discovery’s Corporate Wellness offering and the Healthy Company Index correlate with these studies and also indicate that employee participation in workplace wellness programmes lowers absenteeism and the direct and indirect health costs for employers.”
The new research follows three studies published in the January issue of JOEM that examined the stock prices of U.S. companies with high-performing employee health and well-being programmes. All three studies found companies with high-performing employee health and well-being programmes outperformed the Standard & Poor’s index by seven percent to 16 percent each year.
“Taken together, these four studies add to the growing mountain of evidence that workforce health is an important factor in the financial health of a corporation,” said Daniel Malan, a lecturer at Stellenbosch University Business School, a consultant to Discovery Limited, and an author of the South African study. “Now that the connection has been made, employers can see that the decision to invest in the health of their employees is a decision associated with a healthy bottom line. Not only do employees benefit, but shareholders benefit as well.”
Authors on all four studies are members of the Vitality Health Metrics Working Group, a group of health experts and corporate leaders that is calling for the voluntary public reporting of aggregated workforce health metrics. The group released a report during the World Economic Forum last month that provides a roadmap for corporations to include workforce health metrics in existing reporting platforms such as 10-K forms and annual reports.
“In 2015, Discovery embarked on including health metrics in our reporting. Although more work still has to be done, we believe reporting on these metrics presents an opportunity to identify concerns and mitigate the effect of poor employee health on overall performance,” says Tromp.
“For corporations to achieve sustained success, they must focus on the day-to-day issues that are critical to progress, such as the health of their most valuable asset – their employees,” said Derek Yach, Chief Health Officer of Vitality and chair of the Health Metrics Working Group.
A limitation of the research is the possibility of reverse causation, meaning financially successful companies can afford to spend money on programmes that improve the health of their workforces. Also, the authors recommend the studies be reproduced with a larger sample size and a longer period under analysis. The research was conducted independently.
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About The Vitality Group
The Vitality Group is a member of Discovery Ltd., a global financial services organisation offering an incentive-based health and well-being programme to employers as part of their benefits programme. With a foundation based on actuarial science and behavioural economic theory, Vitality encourages changes in lifestyle that reduce healthcare costs, both in the short and long term, by rewarding members for addressing their specific health issues. Vitality’s well-being programmes serve companies in a wide range of sizes and industries, improving individuals’ health and wellbeing as well as employers’ bottom lines.
For more information, visit www.thevitalitygroup.com
The Vitality Institute is an evidence-driven, action-oriented research organisation dedicated to building a culture of well-being by promoting health and preventing chronic diseases. The Institute aims to unite leaders in the public and private sectors to transform evidence into action and build a culture of health. The Institute was founded in 2013 by the South African insurer, Discovery Limited, as part of its commitment to health promotion and well-being programmes that advance social good.
About Discovery Limited
Discovery Limited is a South African-founded financial services organisation that operates in the healthcare, life assurance, short-term insurance, savings and investment products and wellness markets. Founded in 1992, Discovery was guided by a clear core purpose – to make people healthier and to enhance and protect their lives. Underpinning this core purpose is the belief that through innovation, Discovery can be a powerful market disruptor.
The company, with headquarters in Johannesburg, South Africa, has expanded its operations globally and currently serves over 4.4 million clients across South Africa, the United Kingdom, the United States, China, Singapore and Australia. Discovery recently announced an intent to partner with Generali, a leading insurer in Europe, and has partnered John Hancock in the US. These new partnerships will bring Discovery’s shared-value business model to protection industries in Europe and the US.
Vitality, Discovery’s wellness programme, is the world’s largest scientific, incentive-based wellness solution for individuals and corporates. The global Vitality membership base now exceeds three million lives in five markets.
Discovery is an authorised financial services provider and trades under the code “DSY” on the Johannesburg Securities Exchange.
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