Human Resources: More Employers to offer Workers Financial Incentives for Healthy Behavior

WASHINGTON, November 7, 2007 – With continuing pressure to control health
care costs, more companies plan to offer financial incentives to reward
workers who adopt healthy lifestyles, according to a new survey by Watson
Wyatt, a leading global consulting firm, and the National Business Group on
Health, a non-profit association of 285 large employers. Those employers
best controlling costs and increasing productivity are integrating a broad
array of health management programs.

Nearly half (46 percent) of employers surveyed currently offer financial
incentives to encourage workers to monitor and improve their health or plan
to offer incentives next year. By 2009, that number is expected to surpass
70 percent, according to the 2007/2008 Staying[at]Work survey. A total of 355
large employers participated in the survey.

The survey also found that companies with effective health and productivity
programs demonstrate superior performance. They achieve 20 percent more
revenue per employee, have 16.1 percent higher market value and deliver 57
percent higher shareholder returns (from 2004 to 2006). Additionally,
companies with highly effective health and productivity programs have cost
increases that are five times lower for sick leave; four and one-half times
lower for long-term disability; four times lower for short-term disability;
and three and one-half times lower for general health coverage.

“With few options left, companies are putting significant emphasis on
improving the health and productivity of their workforce” said Shelly
Wolff, national practice leader for health and productivity at Watson
Wyatt. “Global competition and pressure for greater efficiency are causing
employers to seek new ways to help manage benefit costs and increase worker
output. Increasingly, companies are looking at the health of their workers
as the new growth engine to stave off health care inflation and keep
employees on the job and productive.”

The survey found that more companies are planning to connect employee
health to company goals. Almost one-third of employers (29 percent)
currently link health and productivity programs to their broader
initiatives, or plan to in 2008. Another 26 percent plan to do so in 2009.
Employers are also implementing various programs to engage employees in
managing their own health.

Companies Aim to Encourage Healthy Behaviors

Offer Now or in 2008
Plan to Implement in 2009

Provide tools that encourage safety and wellness
85%
7%

Promote emotional health
82%
7%

Educate employees on safety at work
63%
9%

Involve senior management in promoting health and productivity
52%
16%

Offer economic incentives
46%
26%

Educate medical providers on work environment and health initiatives
33%
7%

Connect wellness programs to broader initiatives
29%
26%

Integrate health programs with paid leave
26%
12%

Yet, while both companies and their workers say that a healthy workforce is
a priority, accountability remains low. Although 79 percent of companies
think employees should be held accountable for improving and maintaining
their own health, only 4 percent actually are taking action on this issue.
Similarly, 68 percent believe that managers should be responsible for
workforce productivity, yet only 13 percent are holding managers
accountable.

“The survey results confirm that successful employers are more likely to
provide tools to support health improvement, promote emotional health,
educate employees on safety at work, use positive economic incentives, and
involve senior management in promoting health and productivity. It's a very
inspiring message," said Helen Darling, president of the National Business
Group on Health.

Other findings from the survey include:

Employers spend a median 21.2 percent of payroll on direct and indirect
costs of programs for wellness, sick leave and disability, slightly less
than the 22 percent they spent in 2005.
Preventable factors lead the list of health-related items affecting
business performance, followed by adverse physical conditions, such as back
pain. The leading health issues are lifestyle risks (42 percent), physical
conditions (34 percent), chronic conditions (31 percent), unscheduled
absences (30 percent) and mental health conditions (23 percent).
The two most commonly cited barriers to effectively managing health and
productivity are lack of data (45 percent) and organizational structure (41
percent).
More information on the 2007/2008 Staying[at]Work report can be found at
www.watsonwyatt.com

About Watson Wyatt Worldwide

Watson Wyatt (NYSE: WW) is the trusted business partner to the world’s
leading organizations on people and financial issues. The firm’s global
services include: managing the cost and effectiveness of employee benefit
programs; developing attraction, retention and reward strategies; advising
pension plan sponsors and other institutions on optimal investment
strategies; providing strategic and financial advice to insurance and
financial services companies; and delivering related technology,
outsourcing and data services. Watson Wyatt has 7,000 associates in 31
countries and is located on the Web at www.watsonwyatt.com

About The National Business Group on Health

The National Business Group on Health is the nation’s only non-profit,
membership organization of large employers devoted exclusively to finding
innovative and forward-thinking solutions to their most important health
care and related benefits issues. The Business Group identifies and shares
best practices in health benefits, disability, health and productivity,
related paid time off and work/life balance issues. Business Group members
provide health coverage for more than 50 million U.S. workers, retirees and
their families. For more information about the Business Group, visit
www.businessgrouphealth.org