Facebook Announces That the Average BMI of Its Employees Is 30; Stock Drops by 8%

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The above headline is fictional, but we could start to see such announcements in the future.

A coalition of employers and insurers, dubbed the Health Metrics Working Group, has been meeting for more than a year to figure out how to collect, interpret and report the health of their workforce. Such a report could give a variety of stakeholders – investors, managers, employees, and consumers, insight into a company’s commitment to employee health. While poor health can certainly drive up a company’s medical costs, a growing body of research suggests it can also affect employee productivity and performance.

The working group aims to develop a standard measure of employee health, one which could be verified by outside auditors, similar to what is done financial accounting reports.

A parallel could be drawn with corporate social responsibility and sustainability reports which have grown in popularity over the years. From Wikipedia:

A sustainability report is an organizational report that gives information about economic, environmental, social and governance performance… Many companies now produce an annual sustainability report and there are a wide array of ratings and standards around. There are a variety of reasons that companies choose to produce these reports, but at their core they are intended to be “vessels of transparency and accountability”. Often they also intended to improve internal processes, engage stakeholders and persuade investors.

While there is quite a bit of diversity in how these reports are currently prepared, there have been initiatives to standardize what is measured, how it is measured, and how it is reported.

This appears to be what is taking place with the Health Metrics Working Group.

Derek Yach, the chair of the working group, want this to be a serious management tool that goes alongside financial management tools. He believes that the level of obesity in the workforce, stress and depression is material to the business performance of a company. Any health information would be presented in the aggregate, to conform with health-privacy laws.

To give you a sense of what sort of metrics the group is suggesting, and how the overall score would be aggregated, here is a sample scorecard from the Group’s report:

samplescorecardhealth

As noted earlier, firms that rate high on employee health may reap financial benefits, too. A trio of studies on the link between stock performance and corporate wellness, published in this month’s Journal of Occupational and Environmental Medicine, found that companies with high-performing health programs for employees outperformed the Standard & Poor’s index by as much as 16% a year.

I’m a fan of such a metric. Intuitively it makes sense to me that a healthier workforce is a more productive workforce. In addition, I think a healthier workforce is an indication that management cares about such a metric, and not just a focus on the bottom line profits.

In many ways it is an extension of the Balanced Scorecard, a management tool that has been used successfully by firms for close to 30 years as a way to get an organization to focus on both financial and non-financial measures of performance.

And who knows, someday in the not so distant future, Apple may issue a press release stating that its entire global workforce is 100% smoke free, and the stock market will react as if the company just announced that sales increased 10% more than expected.

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Jim Borden

Accounting Prof. at Villanova; happily married for 30+ years; father of 3 outstanding young men; vegan; interests: fitness, creativity, education, blogging, social media.

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