Commercial Property Guide asked Professor Andrew Clarke from Victoria University to expand on the concept of  Wellness and Wellbeing becoming a mainstream management performance measure. Here is his discussion of the subject that touches all of us:

In early 2017, Medibank and international firm, Deloitte, produced an index allowing firms to measure the wellness and wellbeing of their staff. They argued these concepts should become mainstream for management, and form part of CEO accountability to the board. In particular, that responsibility for wellness be a Key Performance Indicator (KPI) against which leadership performance is judged.

The emerging workplace “wellness” project

In recent years there have been numerous studies on wellness in the workplace from several perspectives including health, rehabilitation, and management. As an emerging area, there is no “formal and universally accepted definition of a workplace program.”

Measuring “soft” targets

The proposal involves measuring so-called “soft” targets, long regarded as intangible and subjective, including culture, diversity and inclusivity. The emerging fourth area is wellness, supported by national peak bodies dealing with community health and business issues, major employer groups, and international professional firms. The Business Council of Australia chair, Jennifer Westacott noted: “We need to take these things very seriously because as a bottom line result in unplanned absenteeism, they cost businesses money. They’re not just feel-good things. These are real economic things.”

This push, though, for a mandated approach has serious consequences for boards and CEOs. 

The choice appears to be between:

  • the continuation of the bottom-up, broadly-informed organisational approach which is underway, and is a version of corporate social responsibility;or
  • moving to a top-down, mandated, legalistic approach.

Identifying wellness indicia 

The index Wellbeing@Work measures the concept of “wellness” across four “pillars”:

  • mind – mental health and resilience, including self-esteem
  • body – physical health, including sleep, nutrition and exercise
  • purpose – how effectively an individual can bring their “whole self” to work, and find meaning in what they do
  • place – how workplaces “walk the talk” on policies, eg, flexibility, diversity, inclusion, bullying and harassment.

Defining “wellbeing”

While the literature has no “consensus definition” of wellbeing, a key is that wellbeing is more than merely the absence of negative circumstances, such as illness. It also includes positive features such as the quality of a job or happiness. An alternative definition is “the subjective state of being healthy, happy, contented, comfortable and satisfied with one’s life”.

The issue is complex for several reasons.

First, terms such as “wellness”, “wellbeing” and “workplace health” are used often interchangeably, and they may overlap, and intersect.

Second, the terms are themselves complex and omnibus in nature – they carry sub-meanings.

Third, the terms will mean different things to different fields of academic endeavour and practical purpose including law, management, heath, sociology and psychology.

Fourth, the terms vary across cultural, legal, and economic contexts, and between nations.

A new measurement ethos

The wellness concept, as a management tool, will further blur the former bright line between “hard”, tangible and easily monetisable measures, as opposed to “soft” targets.

Staff wellness internationally

The issue of staff wellness has been studied by the World Health Organization, the Organization for Economic Cooperation and Development (OECD), the European Union, and multinational companies.

Research from the United States, France and Canada has raised the unintended consequences of wellness programs, the issues of staff privacy, and noted that employees may lose, not gain, power.

A key issue is whether the program is obligatory, or voluntary. With obligatory models, particular staff with medical conditions (smokers, the obese, sensitive medical issues) may be perceived as targeted.  

The literature points out that implementation is not a panacea for a happy workplace, or correlative to higher profits or sustainability.

Unless carefully constructed, a wellness program may lead to distrust, industrial unrest, and a gulf between  employees and management.

In seeking to hold the CEO account for this KPI, the board may unleash complex and unpredictable forces.

Changing  established workplace arrangements

Employment law and contract

Employees spend enough time at work, and the relationship with their employer is bound by long-established legal principles and protections. The employer group would generally share this view.  

Tort law and occupational health and safety

The proposal may change the duty of care owed by an employer to an individual employee because it expands the “safe workplace” concept.

An employer already owes a series of well-established duties based on care, supervision and control.  

Class actions by employees of their own firm – a new paradigm?

The proposal raises a potential new class action bought by employees acting collectively against the company for breach of a generalizable duty of care by the firm through its board, and by senior management via the CEO.

The board’s duty to the company as a whole

Directors owe a fiduciary duty to the company as a separate legal entity, primarily the shareholders. The critical issue is whether the board can uphold this duty, as well as comply with the wellness KPI aimed specifically at employees.

A new form of corporate governance?

It will raise the wider debate in corporate governance – that of the shareholder model of the firm versus the stakeholder model. Does this new index therefore set up the shareholders in opposition to the employees?

A new form of compliance?

The ASX Guidelines already require publicly listed firms “to consider their risk management systems in regard to material effects of ethics, human capital and reputation.” At this point, “disclosure of social performance is not required by law.” The model Work Health and Safety Act proposed by Safe Work Australia provides impetus for boards at s27 “to manage corporate risks-including work, health and safety risks”.

Unintended consequences

The scale of Australian employee absenteeism was more than $7 billion a year in 2010. Any measures which may improve this figure, therefore, needs to be examined.

The proposed wellness index, however, gives rise to a range of unintended legal and related consequences, providing further challenges to the already complex regulatory environment for boards.

As such, the choice – between the proposed narrow, mandated approach, or further refinement of the broader, best-practice wellness project already underway – appears clear.