In mid-2020, well into the COVID-19 pandemic, the Institute for Corporate Productivity (i4cp) partnered with Dr. Jeffrey Pfeffer on research to identify vital organizational stakeholders, their responsibilities, decision-making criteria, and other key aspects of the healthcare ecosystem.
Pfeffer, a longtime i4cp Thought Leader Consortium member and the Thomas D. Dee II Professor of Organizational Behavior at Stanford University’s Graduate School of Business, has taught at Stanford since 1979 and is regarded as one of the nation’s most influential business and management visionaries. In addition, he is the author or co-author of numerous widely published articles, and his 15 books include 2018’s Dying for a Paycheck, a landmark examination of employee health, stress, and the toxic work environments and management practices that are leading contributors to those problems.
The goal of the 2020 i4cp/Pfeffer healthcare research?
We sought to uncover insights to help employers achieve stronger outcomes with their healthcare programs and ultimately, to contribute to the higher levels of employee well-being that enable both individuals and businesses to perform optimally.
Because U.S. employers now pay for or provide half of the nation’s healthcare services, optimizing the efficiency, effectiveness, and affordability of that care is a critical imperative—one made even more apparent by the pandemic. But Pfeffer says employers are still missing the mark when it comes to the well-being of their workforces.
Recently, Pfeffer sat down with i4cp’s well-being research lead, Carol Morrison, to discuss the collaborative study and the ongoing commitment he shares with i4cp to identify and support high-performance strategies to improve workforce well-being.
The pandemic has “made everything worse” and exposed the “inadequacies of our systems”
Morrison: In Dying for a Paycheck, you called attention to the staggering effects of workplace stress on well-being—that of individuals and the organizations that employ them. In your view, how has the added challenge of the COVID-19 health crisis affected work-related stress?
Pfeffer: COVID certainly has made everything worse. Surveys I’ve seen this year—and there have been many by i4cp and others—are consistent in showing that stress is much worse.
According to the American Psychological Association, politics and the election became a high-profile source of stress. Other research by a company that links mental health providers with organizations’ employees also found that stress has increased this year. Those are just a couple of examples.
Not only is the stress more pronounced, but the pandemic has really exposed the inadequacies in many of our systems. For instance, COVID made it really evident that we have not done very well as a country with respect to providing enough work/family support. Women, including talented college-educated women, are leaving the workforce in enormous numbers. That will disrupt careers, of course, but it also will eventually create talent shortages.
I have a friend who heads a company, and she said to me, ‘I am a CEO, but I also run a daycare center. I run a school, too.’ Because she has a preschooler and a first or second grader at home, she now has three jobs. And the number of women leaving employers suggests she isn’t the only one experiencing such overload. So the health crisis has shown the inadequacies of our work/family support structures.
I think that the pandemic has also illustrated the inadequacy of the healthcare system in this country. Because we have an employer-based health system, if you no longer have an employer, you no longer have health insurance.
So COVID-19 has exposed all the weaknesses: It has made stress worse, and it has revealed where we are not very adequate in dealing with situations that confront and seriously challenge people in their lives.
For an employer who realizes those challenges are happening, is there a starting place you would suggest? Can they do something right now to make a positive difference for their workforces?
Sure. A friend of mine runs a company that connects people with mental health providers, mental health apps, whatever they need. I think it behooves employers to explore the ecosystems around work/family support and around mental health. Maybe even insurance benefits administration, too. In other words, try to do things to find better, more progressive, more helpful providers.
I think it would also benefit employers to actually do something which, for the most part, they do not do. And that is: Evaluate the providers of those health and supportive services and hold them accountable. Ironically, this is a very important moment for HR. It is a time in which, I think, companies and their senior leaders understand that business as usual is not going to cut it. So, along with measurement and accountability of benefits providers, I think there is an opportunity for HR to do innovative things—if HR wants to.
“HR practitioners have thought that less is more”
To your point, i4cp research confirms that companies are placing greater emphasis on employee mental health because of the pandemic (and expect that to increase in coming months). Have you seen organizations taking actions to support better mental health that have particularly impressed you or struck you as being especially innovative?
I think companies are reevaluating what they are doing, but it is late. It is a true fact that 61% of the counties in the United States have not one psychiatrist. So basically we have a system in which access is seriously limited. And don't even get me started on health benefits administrators. My general comment to them is that they had better hope there is not reincarnation!
But HR people are responsible for this. HR practitioners have thought that less is more. But less is not more. The idea that you would constrict people's ability to see mental health professionals belies the fact that mental health is a predictor of physical illness.
We have done a study that shows the use of an antidepressant prescription—taking antidepressants—is a marker of depression. You can look longitudinally (which we did, using United Health prescription data) and see how the risk goes up so that the person taking those drugs will subsequently be taking drugs for cancer, diabetes, and/or heart disease. In almost all cases it goes up by about 50%. So mental health predicts physical health.
There are empirical realities underscoring the mind/body connection. If you spend some time looking at the medical literature, there are two mechanisms for this. One is obvious—if you have mental health problems you are probably not going to engage in health-enhancing behaviors. You are probably going to drink more, smoke more, do more drugs, and exercise less.
Secondly, medical researchers have also demonstrated connections between such things as stress and depression, and actual inflammatory responses in the endocrine system.
So HR functions ought to hold their mental health providers and their health insurance providers more accountable and stop rewarding them for providing less care. The reason why health care in the United States is so expensive is because of price and administrative overhead, not because of overutilization.
Is that part of organizations’ inability or unwillingness to measure the factors that could tell them whether their well-being programs are really effective? In our research, i4cp certainly found that too few companies (less than half) assess either the effectiveness of their well-being programs or the actual levels of well-being of their employees.
That is exactly correct. People do what's easy, and it is easy to put barriers into utilization—utilization of physical health care, mental health care, alternative medicine, physical therapy, whatever. It doesn't make sense, but they do it.
“The self-imposed barriers in organizations are unbelievable”
You've recently written (in the Journal of Occupational and Environmental Medicine) that companies also put limitations on themselves, consciously or not. What do you think it will take to move organizations to measure well-being effectively?
I really have no idea. The decisions that get made on a daily basis are incomprehensible to me. For the article that you mentioned, it was unbelievable to me that we could go out and interview some of the most resource-rich, leading-edge companies that are trying to build cultures of health. Only to hear them say they know that high-deductible health plans really discourage the kind of health-promoting use of medical services that they want to encourage. Yet companies are choosing those health plans. They can't complain about having a high-deductible health plan when that was their own choice.
Sometimes organizations we interviewed would also complain that benefits administrators were not innovative. Yet, again, the companies were the ones choosing which benefits administrators to use. The self-imposed barriers in organizations are unbelievable.
Your article also noted that many companies aren’t exactly authentic when it comes to their motivations about offering well-being benefits and pursuing cultures of well-being. Specifically, you said that many firms do those things because they anticipate bottom-line business benefits, and not because they believe that supporting greater employee well-being is the right thing to do.
And the interesting thing is that they don’t even get the payoff. Because they don’t do what they need to do—measure, eliminate barriers to utilization, demand innovative benefits administration, etc.
Do you think that the ruling from the SEC on disclosure of human capital metrics is a step in the right direction, or that mandated reporting eventually will help give businesses a positive push toward more disciplined measurement?
I think that the move toward ESG (Environmental, Social, and Corporate Governance) measures puts organizations’ focus more on people and not so much solely on the physical environmental measures. That will help because measurement is the first step. It is not the only step, because we measure many things we don't put much priority on. So without measurement we will never get better, but measurement by itself probably is not going to be sufficient.
Will the attention focused on physical and mental health by the pandemic also serve as a driver for change?
I think so. But it depends upon how long that focus lasts post-pandemic—whether this is going to be a temporary thing or whether it is going to change practices. It is hard to say, but I think that the health crisis has really highlighted the work/family and physical and mental health areas in which there are huge deficiencies.
It will take time to overcome those deficiencies. We are not going to create a tremendous number of mental health practitioners overnight, nor will we create overnight the resources necessary to provide people the support they need in order to have a job and have their health.
Historically we have not been very good at doing things that require time and patience. Sustained attention to things tends not to be a strong suit for many people, but maybe this will be different. I hope so.
In other words, the question is, will businesses be able to sustain progress that has been made because of their response to well-being during the pandemic? Will they be able to sustain that long enough to make a difference? Some will point out that the younger generation thinks differently, particularly with respect to mental health issues. They really want mental health support and will choose jobs on that basis. So that puts pressure on businesses. We will see.
“We need a much more holistic view, not only of well-being, but of how people live their lives”
In your opinion, how important is it that organizations pursue the holistic, or whole person, approach to workforce well-being that i4cp research has featured? (i4cp uses a six-element model that includes physical, mental, financial, career, social, and community well-being.)
I think it is very important. The friend I mentioned who is a CEO—and a daycare and school provider as well—said to me that one of the things COVID has demonstrated is that every day is Bring Your Child to Work Day. While a child may not be physically at work, their well-being, what they are doing, and how well they are faring is in your head as a parent.
So basically the idea that somehow you are going to come to work and your family issues, the well-being of your children, and what's going on with your spouse or significant other is going to be left behind is just insane. We need a much more holistic view, not only of well-being, but of how people live their lives. If someone is ill, or struggling financially, or a child isn't doing well, you do not leave that at the door.
This is not new. This is what SAS Institute (a U.S.-based multinational analytics software developer) figured out close to 30 years ago. The company had hired, trained, and retained many successful software engineers; its leaders understood that enabling those engineers to be productive meant that SAS needed to provide support that would help those employees reduce or appropriately handle family-related concerns.
So the company provided very generous benefits of all kinds and resources to help employees address the problems they and their families faced. When challenges arose, as they inevitably did, employees had the ability to handle them and disruption to their work was minimized.
When organizations take that kind of action, it means that people can deal with situations so that they don't have to quit. SAS figured this out decades ago, and it is just astonishing to me that more companies don't see the benefit of doing this.
Yet, companies don’t. The huge statistics that we see now about the pandemic driving women out of the workforce confirms that. And especially when companies talk now about their commitments to diversity and inclusion, they need to create a work environment that permits people to survive.
In July of 2020, i4cp partnered with you on a Benefits Administration survey. In that, you asked HR and business professionals how engaged their current CEOs and CFOs were in decisions about health benefits—such things as copays and deductibles, company versus employee contribution levels, plan design, administration, choice of benefits consultants, etc.
Only 28% of respondents said their CEOs were extremely or very engaged. Meanwhile, 49% reported limited or no CEO engagement.
For CFOs, the percentages were higher: 41% of survey participants said their CFOs were very or extremely engaged; a third said their CFOs showed limited or no engagement.
Given the high costs to organizations for employee healthcare, what is your reaction to those findings and why it is important for those C-level executives to be more engaged in benefits-related decisions?
I think they need to be involved in the right way. As Dying for a Paycheck pointed out—and this is not a big surprise—the health of your workforce affects things like presenteeism, absenteeism, missed workdays, turnover, and productivity. So if you really want a productive workforce you need a healthy workforce—one that is both mentally and physically healthy.
On the one hand, that is common sense. On the other hand, there is a ton of data which has accumulated over decades that demonstrates that. Therefore, you ought to be concerned about building a culture of health in the workplace. Toward that end, companies are spending a fortune on healthcare costs because most of the large firms (and many of the mid-sized ones) are basically self-insured.
So they are spending a fortune on health benefits, but they are oftentimes administering those programs in ways that just upset people and create barriers to accessing the benefits companies are supposedly providing. Essentially that means organizations are shooting themselves in the foot. So to both produce a culture of health and enable people to take advantage of benefits that are very important to them, executives should be much more involved in this.
Business leaders “have a responsibility”
You’ve reported that some business leaders offer excuses for opting out—they aren’t willing to invest in well-being benefits for employees because workers won’t stay with the organization, or they feel that what employees do on their own time, specifically as it relates to their health and well-being, is not the business of an employer. What do you say to those executives?
I would quote somebody like Bob Chapman, chairman and CEO of Barry-Wehmiller [a St. Louis-based manufacturing firm], who has co-authored the book Everybody Matters: The Extraordinary Power of Caring for Your People Like Family. He said that when people show up at your workplace, they have entrusted their well-being, both physical and psychological, to you, and you have a responsibility.
If you think about it, companies slowly—and by the way, with a lot of legal pressure which, I think, is what it's going to take for well-being, too—moved away from saying they didn’t care about the physical environment years ago. And now they believe that they are stewards of that environment. In fact, many of them are issuing environmental reports and talking about what they are doing in terms of recycling and utilization of resources. They came to understand that they have a responsibility to steward the physical world, which they do.
Companies also have a responsibility to be good stewards of the human beings who have entrusted their lives to them. One of my friends calls attention to that by asking: ‘Why do we care more about polar bears then we do about human beings?’ So companies are going to be good stewards of the physical environment, but they need to be good stewards of the human environment as well
The Benefits Administration survey on which we collaborated also asked respondents to rate the importance of eight criteria in organizational decisions about which company (or companies) would administer their firms’ health benefits (benefits administrators were illustrated by examples including Anthem and Blue Cross Blue Shield).
Of the top five items respondents rated extremely important, two center on cost, the other three on access/employee experience (ease of locating providers, ease of administrator’s website use, market share in employer locations).
What insights do these findings suggest to you about organizations’ priorities in health benefits decision-making?
I think the reason why the employee experience and access factors ranked highly Is because one of the things that HR people try to do is avoid noise. To the extent that employees cannot get access to the doctors they want, they make noise; and HR doesn’t like all that noise. So it doesn't surprise me that those features ranked highly.
I would also say that I think that cost gets too much attention. And if I were going to give advice, I would advise benefits decision-makers to worry much more about some of the stuff that didn’t rate highly.
For example, I am on the Stanford committee for faculty and staff human resources. That is the committee that oversees our health insurance. The benefits administrators come in, and for the most part, they do not report on population health. Companies are paying a ton of money for this. I would hold those administrators responsible, not just for causing employees aggravation in getting access to things but, at least to some extent, for the health of the population.
At the end of the day, my role on the committee is about health and insurance. So I would like to hear about health. We are offering physical and mental health benefits in order to produce a healthier population that misses fewer workdays, that is less stressed, and that is more likely to remain with the employer because they believe the employer cares about their well-being. That is what we ought to be assessing ourselves on.
Companies don’t measure their experiences with benefits administrators
The survey asked participants what they were held accountable for related specifically to their job responsibilities associated with health benefits. Their top responses:
- Your employees’ opinions about your health benefits
- Absolute level of spending on health benefits
- Mental/emotional well-being of your organization’s workforce
Do those factors suggest to you that companies are holding benefits professionals accountable for what they should be?
I don’t believe it. How can I be held accountable for the well-being of the people in my organization when i4cp research has found that most organizations don’t measure that? Of the three things noted in these findings the one thing that is measured is cost. I don't think that the other two are typically measured.
My informal sense from talking to benefits consultants is that most of their clients do not measure their experience with the benefits administrator. So if you do not measure the experience with your benefits administrator, and if you do not measure the physical and mental well-being of employees, then two of the three things for which benefits administrators are supposedly being held accountable, they are not accountable for. Because no one has actually gotten any data that would permit those individuals to be held accountable.
Should they be held accountable for these things? Absolutely. And it is not that hard. Most companies do employee surveys. It would not be difficult to put on the employee survey questions that would assess the employees’ mental and physical well-being and their experience with their benefits administrators.
When it comes to well-being and benefits, what would you have business leaders thinking about or doing differently?
Here’s the analogy I make: If you had a piece of expensive capital equipment, and you had employees who were systematically not maintaining that equipment or were doing things that would harm it, you would probably get rid of those employees. You would not let people destroy machinery you have spent a fortune installing.
I would argue that some of the most expensive assets that companies have are the human beings they have spent money to hire, train, and develop. Organizations ought to worry as much about the maintenance of their human capital as they do their physical capital.
. . . .
Visit his website for more on Dr. Jeffrey Pfeffer’s work in employee well-being.
Access i4cp studies and resources on workforce well-being here.
Carol Morrison is a Senior Research Analyst at i4cp