Kiran Mathur Mohammed

kmmpub@gmail.com

Employers are leaving millions of dollars on the table by not optimising their employee benefits to drive productivity, as well as satisfaction.

For most CEOs and CFOs, employee benefits are largely seen as an expense line item, to be minimised at most, or to get better PR at best.

Too often, executives think of employee benefits in a short-term transactional way. That goes a bit like this: “If I offer more generous employee benefits, I’ll be able to keep and hire better staff.” This is missing a significant opportunity, one that technology has only recently started to reveal.

According to the US Bureau of Labour Statistics, employee benefits comprise between 25 to 35 per cent of compensation, which in turn comprises between 15 to 30 per cent of revenue for most companies. This means that companies are spending between 3.75 to 10 per cent of their revenue on a line item whose real value is largely being ignored.

The bulk of these benefits is in life and health insurance, and pensions. What if companies could gamify benefits to unlock employee value, in a way that made them healthier?

Better workplace data is enabling companies to tailor employee benefits more directly to their teams in a way that boosts productivity for the firm, as well as making employees healthier and happier.

Let’s start with health insurance. On the face of it this is uncomplicated. Companies pay premiums, and the insurers pay if their employees get sick. But new possibilities start being unlocked once we start to acknowledge the incentives that lie behind insurance coverage. Right now, insurers and by extension employers have a direct incentive for their employees to live healthier lifestyles – whether that means eating healthier, hitting the gym, keeping up with their check-ups or taking their medication.

[caption id="attachment_901156" align="alignnone" width="1011"] In this March 21, 2018 file photo the Republic Bank team cheers on one of their members during the Carifin Games, Queen's Park Savannah, Port of Spain. -[/caption]

If employees are physically healthier, and importantly can be measured as such – in a way that fits an actuarial model – employers and insurers immediately gain by paying lower claims and premium costs. According to the US Integrated Benefits Institute, sick days cost companies US$575 billion in 2019 – just about 2.7 per cent of GDP from lost productivity alone – not including healthcare costs. Extrapolating that number to TT, and we are losing US$600 million in lost productivity.

This opportunity goes beyond sick days; there is a wide economic literature on the impact of health and wellness on worker productivity.

So what can companies do? First, they should act to quantify the costs. A back of the envelope number is straightforward – multiply daily total revenue per employee by the number of sick days your employees take a year, and you have the total cost of sick days. There are more