A Big Picture of Human Capital Beyond Health Solutions:

Transcription

1 SM A Big Picture of Human Capital Beyond Health Solutions: Realigning policy and strategy to optimize human capital performance HCMS, Inc. Big Picture Human Capital Solutions Data Elements of Human Capital Compensation Workforce Transition Performance and Output Attendance Big Picture Information Safety and Risk Management Prevention and Wellbeing Medical Service and Insurance Management and Training HCMS, Inc. 2 1

2 3 companies, 3 medical cost stories Three companies: same worker profile. Administrative Workers. Same gender, age, tenure, salary, region, # Illnesses, co-morbidity rating. $6,000 $5,000 Most Wellness Predicted Medical Costs Healthiest $4,981 $4,000 $3,000 $2,000 $3,536 $2,705 $1,000 $0 Company #1 Company #2 Company #3 HCMS, Inc. 3 3 companies, 3 disability stories Three companies: Administrative Workers. Modeled as same age, same gender, same tenure, same salary, same region of the country. Probabilty of Having an STD Claim probability Liberal PTO Liberal PTO Company #1 Company #2 Company #3 HCMS, Inc. 4 2

3 3 Groups of Top Workers, 3 Rates of Turnover 100% 75% Percent of Top Performers Still Employed After Four Years All in the top 5% 90% 50% 40% 25% 0% 0% Group 1 Group 2 Group 3 Trevor, Charlie O.; Gerhart, Barry; Boudreau, John W. HCMS, Inc. Journal of Applied Psychology Feb Vol 82(1) Imagine that a company is a river. Optimal Performance HCMS, Inc. 6 3

4 A company is a river. Optimal Performance HCMS, Inc. 7 When things go wrong.. Inefficiency, High Costs and Low Performance HCMS, Inc. 8 4

5 When things go wrong.. Inefficiency, High Costs and Low Performance Why? HCMS, Inc. 9 Why do some have better outcomes? Usual Approach: It s the employees fault. They aren t healthy They have bad attitudes They don t have good skills We need to change employee behavior! management pick one: case, care, disease, absence, stress HCMS, Inc. 10 5

6 Incomplete Picture Human Capital Quantifying Problems Data Elements of Human Capital Focus: Workers cost too much, They don t paddle well. Let s improve health. Employees Medical Service and Insurance HCMS, Inc. 11 Is there evidence to support health as a primary explanation? Health status does correlate significantly with increased cost, more absences and lost productivity. But HOW much: Age, gender, health self- rating, salary, marital status: R-square =.11 (11% explained) (89% of variance NOT explained by these factors) HCMS, Inc. 12 6

7 Predicted Medical Costs by Company Three companies: Administrative Workers. Modeled as same age, same gender, same tenure, same salary, same # diagnoses, same co-morbidity, same region of the country Predicted Medical Costs $6,000 $5,000 Not health $4,981 $4,000 $3,000 $3,536 $2,705 $2,000 $1,000 $0 #1 #2 #3 HCMS, Inc. 13 What interferes with productivity? Family issues Personal health problems 15% 18% 25% Sometimes Frequently All the time Personal issues 18% Not enough training 19% Low morale in co-workers 26% Low motivation Poor communication 31% 28% 47% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 2007 Health as Human Capital Survey HCMS, Inc. 14 7

8 Point #1 Healthcare costs are not a separate problem They are to a great extent a symptom of a larger phenomenon HCMS, Inc. 15 Incomplete Picture Human Capital Quantifying Problems Attendance Employees Medical Service and Insurance HCMS, Inc. 16 8

9 Predicted STD Rate by Company Three companies: Administrative Workers. Modeled as same age, same gender, same tenure, same salary, same region of the country Probabilty of Having an STD Claim Illness absence in Sweden is seven times higher Not health than ours probability #1 #2 #3 HCMS, Inc. 17 Incomplete Picture Human Capital Quantifying Problems Workforce Transition Focus: How big is the total health problem? Attendance Employees Safety and Risk Management Medical Service and Insurance HCMS, Inc. 18 9

10 Incomplete Picture Human Capital Quantifying Problems + = Healthcare costs Absence Injury Turnover Trouble Attendance Workforce Transition Employees Safety and Risk Management The problem? Worker Behavior! Medical Service and Insurance They, spend too much, don t take care of themselves, take unplanned work day HCMS, Inc. 19 Point # 2 Benefits utilization of any type is connected with all other types And to a great extent, it s predictable (and changeable) HCMS, Inc

11 Big Picture Human Capital Solutions Compensation Workforce Transition Performance and Output Attendance BIG PICTURE INFORMATION Person-centric Integrated Longitudinal Safety and Risk Management Prevention and Wellbeing Medical Service and Insurance Management and Training HCMS, Inc. 21 Currents aligned with optimal human capital performance HCMS, Inc

12 Currents are incentives Aligned with optimal human capital performance High Job Performance Low Benefits Use High Engagement in Health Protection Job Mobility Financially Self-Sufficient Capacity Growth HCMS, Inc. 23 Currents misaligned with optimal human capital performance HCMS, Inc

13 Currents are incentives Misaligned with optimal human capital performance Low Performance High Benefits Use Low Engagement in Health Protection Job Lock Financially Limited Capacity Stagnation HCMS, Inc. 25 Currents are created through incentives Four types 1 Shared Rewards Something to Gain Shared Responsibilities Asset Growth Ownership of Decisions Something to Lose Something to Protect Freedom to Choose HCMS, Inc

14 Shared Rewards Something to gain Eligible for a Bonus (Y/N) Either Score: 0 to 5 Know exactly how bonus will be determined? Or At least partly based on individual performance Possible bonus or profit sharing >10% of total salary Cash back for unused sick leave/pto Practice: Strongly Agree: At my company, the people who succeed are those who earn it through their achievements or HCMS, Inc. 27 Currents are incentives One Shared Rewards HCMS, Inc

15 Data on shared rewards Profit sharing Three studies: productivity increased by 3% 5% 9% Variable pay 44% increase in output HCMS, Inc. 29 Percent of Top Performers Still Employed After Four Years Trevor, Charlie O.; Gerhart, Barry; Boudreau, John W. Journal of Applied Psychology Feb Vol 82(1) % 80% 90% 70% 60% 50% 40% 30% 40% 20% 10% 0% 0% Lowest salary increase Moderate salary increase Highest salary increase Group 1 Group 2 Group 3 HCMS, Inc

16 What Makes Health More Important? Clear guidelines about bonuses Percent Rating Health as Important to Work Success 80% 75% 70% 65% 60% 55% 60% 66% 71% 75% 50% I don t know I know very little I know generally I know exactly Controlling for age, gender, salary, company size HCMS, Inc. 31 Shared Responsibilities Something to lose PTO bank instead of sick leave Less than 100% pay during STD Most have OOP Max of $3000 or higher Most have deductible > $1500 Score: 0 to 5 Agree: I protect my health because it is essential to having a successful career. HCMS, Inc

17 Currents are incentives Two Shared Responsibilities HCMS, Inc. 33 Big Picture Human Capital Solutions -- Shared Asset Growth rewards and and Decision responsibilities Ownership Compensation Workforce Transition Performance and Output Attendance BIG PICTURE INFORMATION Person-centric Integrated Longitudinal Safety and Risk Management Prevention and Wellbeing Medical Service and Insurance Management and Training HCMS, Inc

18 Asset Growth Something to protect 401K available with >=3% match H.S.A. with annual deposit of $2000 or higher Tuition reimbursement for education Score: 0 to 5 Prevention covered at 100%, wellness available Rating: How would you rate your company's emphasis on skill training? (Excellent or very good) HCMS, Inc. 35 Currents are incentives Three Asset Growth HCMS, Inc

19 Ownership of Decisions Freedom to choose Offer CDHP Access to support for financial decisions Score: 0 to 5 Access to decision-support for health decisions Agree: (job control) I am encouraged to make independent decisions about how to get my work done. Agree My company asks for input about what benefits are important to workers HCMS, Inc. 37 Currents are incentives Four Ownership of Decisions HCMS, Inc

20 Incentives create currents Total Shared Rewards Shared Responsibilities Asset Growth Ownership of Decisions HCMS, Inc. 39 Currents are incentives Aligned with optimal human capital performance High Job Performance Low Benefits Use High Engagement in Health Protection Job Mobility Financially Self-Sufficient Capacity Growth HCMS, Inc

21 Levels of Human Capital Management Strategy Overall Current type Combined Incentives reach Everyone, all the time Incentive ripples Specific Policy or design Everyone, occasionally Life preserver Person-focused assistance Specific people, At specific times HCMS, Inc. 41 When currents are misaligned. Optimal Performance Interventions move with The natural current HCMS, Inc

22 When currents align with optimal human capital performance Optimal Performance Interventions move with The natural current HCMS, Inc. 43 Levels of Human Capital Management Strategy Overall Current type Combined Incentives reach Everyone, all the time Incentive ripples Specific Policy or design Everyone, occasionally Life preserver Hooks Person-focused assistance Problem-focused hooks Specific people, At specific times Specific issues in specific people, at specific times HCMS, Inc

23 When currents align with optimal human capital performance Inefficiency, High Costs and Low Performance HCMS, Inc. 45 When currents are misaligned. Inefficiency, High Costs and Low Performance Recovery slower and more difficult HCMS, Inc

24 Currents are incentives Total Shared Rewards Shared Responsibilities Asset Growth Ownership of Decisions HCMS, Inc. 47 Incomplete Picture Human Capital Quantifying Problems Workforce Transition Focus: How big is the total health problem? Attendance Employees Safety and Risk Management Medical Service and Insurance HCMS, Inc

25 Big Picture Human Capital Solutions Compensation Workforce Transition Performance and Output Attendance BIG PICTURE INFORMATION Person-centric Integrated Longitudinal Safety and Risk Management Prevention and Wellbeing Medical Service and Insurance Management and Training HCMS, Inc. 49 Currents aligned with optimal human capital performance HCMS, Inc