Quick question: Would the leadership in your organization say employee well-being is an expense or an investment? We often hear “I’m not sure,” “both” or “it depends on what day of the month you ask me.” We decided to get to the root of the problem and learn why healthy engaged employees matter more to some organizations than others and why they should care.

The Beacon sat down and talked with one of the true pioneers of employee well being, Cal Martin, who is a former top executive and owner of The Gallup Corporation that created the well-known well being index. Cal has counseled hundreds of top executives at Fortune 500 companies like AT&T, Disney and Union Pacific on customer satisfaction, employee engagement and well being. Cal is also a long time friend and member of the Splashlight advisory board.

“Well being really had its origin several decades ago with Dr. Peter Drucker and others when companies started to realize the strong correlation between having satisfied employees and satisfied customers,” said Martin. “They wanted a way to quantify and measure whether employees were helping or hurting the business. We found that employee satisfaction had a huge impact on the customer satisfaction and their stock price. What we developed were some of the most predictive tools ever to determine the employee’s level of being engaged. That is, whether they were actively supporting the company and its mission to satisfy the customer. We found that generally the top 26% of the employees were engaged. Then there were 55% who were in the middle – sometimes they were engaged and sometimes they were mentally disconnected. And then there were 19% who were actively undermining the company on a daily basis. That group was costing the company in significant ways.”

Well being then evolved as a way to try to better understand and measure in an index why someone was more engaged and how the five key areas of their lives interact and impact this important predictor. The five areas are career, social, financial, physical and community. “What we have learned is that an employee’s well being has a profound impact on the company’s cost in customer satisfaction, worker safety and company health expenses,” commented Martin.

Splashlight is a big fan of the author Al Lewis, who is a well known critic of wellness programs for not using valid measurements of success. In his book Cracking Health Costs: How to Cut Your Company’s Health Costs and Provide Employees Better Care, Al Lewis sites several examples of the Well Being Index as a valid measurement tool. As Cal says, “if you can’t measure it, you can’t manage it.” We agree.

In the book, there is a study of medical and pharmacy claims for one population (health plan members and employees) in the 12 month period following a baseline well being assessment, a clear relationship emerged between low well being and higher hospitalization and emergency room utilization compared to those with higher well being. Specifically, for each one point positive difference in well-being employees were 2.2 percent less likely to have an admission, 1.7 percent less likely to have an ER visit, and had a 1 percent lower likelihood of incurring any healthcare cost. For those who incur healthcare costs, each one-point positive difference in well-being was associated with a 1 percent lower cost.

“So my experience is, it is absolutely worth proactively investing in employee well being rather than trying to manage the expenses reactively,” said Martin. “It’s a win-win scenario. Healthier employees means a healthier bottom line.”

In the next issue of The Beacon, Martin will share more insight and lessons learned through his real world experience.