Health: The New Driver of Business Value
Brett Tromp, Chief Financial Officer, Discovery Health | Jun 30, 2016
chief executive officer, chief financial officer, chief operating officer, Discovery, Health, king report on corporate governance, National Academy of Medicine, S&P 500 index, shared value, South Africa, united nations global compact, well-being
Revenues, profits, and cash flows: These are common concerns for chief financial officers (CFO) conducting business across sectors and geographies. Historically, workforce health has not featured among the top concerns for CFOs and other C-Suite executives, including the chief executive officer (CEO) or chief operating officer (COO). For many companies, this is changing.
Workforce health is a critical driver for business dominance. CFOs are observing a positive correlation between workforce health and financial outputs. In the United States, recent research concluded that companies investing in corporate health programs outperformed the S&P 500 index. Over a six-year period, stock values for a portfolio of companies with high corporate health scores appreciated by 235% compared with 159% by the S&P 500 Index. Similar results were found among South African companies, where companies that created cultures of health yielded greater value for investors.
Discovery’s Healthy Company Index, the largest survey of workplace health in South Africa, has established comparable empirical conclusions. South African employees have a Vitality Age – a risk-adjusted age based on one’s health and lifestyle – that is 6.4 years older than their actual ages. Fifty percent of employees have five or more risk factors outside of the healthy range, 43% were of an unhealthy weight, and 53% did not have routine preventive health checks. Absenteeism costs the South African economy $1.1 billion each year and the average South African employee takes eight days of sick leave.
Realizing the relationships between workforce health and financial performance, Discovery is working to mobilize the South African finance community to incorporate health into corporate reporting platforms. South Africa has been a leader in reporting on non-financial measures through the King Report on Corporate Governance (King III). In the United States, the United Nations Global Compact has released plans to work with Discovery to integrate health into its 10 principles for responsible business.
It is clear that global businesses are acknowledging the tangible correlation between health behaviors and financial performance. Creating and sustaining shared values in health will be essential for future business success – in the workplace, marketplace, and community.