Why CEO involvement in employee benefits can boost company health in UAE

Employee benefits are often regarded as the domains of HR and procurement – and not something the CEO needs to get involved in. But this approach could prove a costly mistake.

Offering the right benefits package is crucial when it comes to attracting and retaining top talent, which in turn impacts on productivity, customer satisfaction, workforce morale, and costs. This is especially so in regions such as the UAE, where there’s a skills or knowledge shortage and recruitment is a challenge.

In a 2016 survey of employee benefits, 62 per cent of UAE employers cited employee benefits packages – with perks ranging from health and wellness programmes to free lunches – as key to attracting top talent, while 84 per cent saw them as vital to retention. Benefits then are an integral part of employment strategy, which means they should be an integral part of a CEO’s strategy too – not solely the remit of HR and procurement.

A healthy workforce = lower costs

Benefits that keep the workforce healthy are also money savers for companies. This nugget of wisdom was recognised as far back as 1979 by James Burke, innovative CEO of Johnson & Johnson’s (J&J), who introduced the Live for Life programme. Its aim? To make its employees the healthiest in the world.

This goal was at least partially achieved in 2015 when J&J was named ‘Britain’s healthiest company’, following the largest-ever national wellness survey. The findings were validated by a research team from the University of Cambridge.

The most recent figures published in the journal Health Affairs show that in the six years up to 2008, the number of J&J employees with high blood pressure, high cholesterol or who were physically inactive fell significantly. Healthier staff meant a yearly average saving per employee of $565 in 2009. So far the Live for Life programme has saved the company $250m in healthcare costs.

Back in the late 1970s, Burke was no doubt seen to be taking a big risk. But he recognised that as CEO he was perfectly placed to weigh up the competing aims of HR and procurement. With this in mind, it’s important for other CEOs to follow this lead and make themselves an integral part of any benefit decision-making process.

How involved should the CEO be?

Wellness programmes, which focus on physical and mental wellbeing to lower the cost of health insurance premiums, are just one of a wealth of benefit packages companies offer.

Other ‘perks’ may include further training, working from home, family days, volunteer days, financial educational programmes and free snacks. Google even lets you bring your dog to work. This may be a perk specific to Silicon Valley, but here in Dubai there can certainly be benefits tailored to our region. With a high foreign workforce, employers may offer relocation packages with a housing allowance or pay for flight tickets to visit relatives.

So with this in mind, here are just a few examples of the important role a CEO can play.

Mediation between HR and procurement: The CEO is perfectly placed to balance demands from these two competing departments, namely chief financial officers and procurement who target cost savings; HR targeting staff retention, morale and productivity. A CEO has a strong view of the overall financial outlook, allowing them to make important purchasing decisions while still factoring in the views of all parties.

Weighing up costs and benefits: Let’s take health insurance as an example here. This is now a legal requirement in Abu Dhabi and Dubai. A CEO will be able to weigh up the strongest driver of the purchasing decision – firstly complying with the law, then focusing on ‘price’ during a tough economic period but ‘attraction and retention’ when the focus is expansion.

The impact of a wrong decision can be considerable, especially when looking at staff turnover. A recent Manpower green paper states that it cost 1.5 times a worker’s salary to replace them. The Center for American progress (CAP) further reveals that this is higher still in the top paying jobs where it can jump to 213 per cent of the salary.

When talent leaves, there are direct costs – advertising, recruiting and training – but also indirect costs that are frequently ignored. High staff turnover disrupts workflow, raises risk of dissatisfied customers, increases overtime for other employees who have to make up the shortfall, and ultimately reduces morale.

Choosing benefits wisely: Top employers of choice recognise that benefits are an integral part of employee engagement and attracting the best talent. This may be one reason why 33 per cent of CEOs stated they were changing their talent focus to pay, incentives and benefits in a PwC CEO survey.

Participation and support: A 2010 report by Willis Towers Watson found that corporate leadership teams were increasingly recognising that a healthy workforce is strongly linked to the profitability of the company. In fact, the most successful wellness programmes were those with full senior leadership support. These programmes had CEOs and executives who volunteered to be health champions and participate in regular communication. Having a CEO take time to go for a fitness break is likely to make employees feel less conscious about doing the same.

Appointing the right person: Sometimes a company may leave important decisions, such as which insurance premium to choose, with individuals who may not have the best experience for such a task. A CEO is best placed to pick the right person to research and make recommendations on packages.

Benefits for everyone

CEOs are the figureheads of corporations. As such, a CEO who is committed and heavily involved in a company’s chosen benefits plan can have a strong influence on how cost-effective it is, how well received it is and how successful it is in the long term.

Showing such commitment can permeate the culture from the very start. But as much as employees need to be inspired and encouraged to participate in these programmes, CEOs need inspiration to implement them too.

Stephen MacLaren is the regional head of Distribution, Human Capital and Benefits at Al Futtaim Willis