Some Japanese companies are starting to engage in strategic efforts to maintain and improve employee health. How do these efforts differ from previous forms of health management?

METI and the TSE announce companies that promote health from a management perspective

It has always been recognized that employee health impacts a company management and performance, and that employee health management is therefore important. Until recently, however, it could be said that efforts to maintain and improve employee health were performed for the benefit of the employee. In contrast, over the past few years, companies have started to view employee health from the perspective of company management.

With backing from the government, in 2015, the Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange collaborated to establish a system under which (listed) companies that consider employee health from a management perspective and make strategic efforts to support it are selected and announced as “Health Management Listings”. In addition, since 2016, a system has been established in which 500 corporations (not limited to listed companies) that implement superior health management will be designated as “Superior Health Management Corporations (White 500)” by 2020.

The costs of poor employee health

NRI’s Kiichi Nishio, who engages in health management-related consulting services for companies, explains the background of this trend as follows.

“Until recently, boosting corporate performance results was prioritized over employee health. Also, companies managed to cope by hiring someone new if an employee became sick. However, from a farsighted perspective, poor employee health impacts business performance and also involves costs. In addition, it has recently become difficult to acquire necessary human resources. I think companies have started to realize this.”

Apparently, another significant factor is that data analysis has revealed institutional health-related challenges that were not previously understood, making it possible to take concrete measures.

Health data analysis reveals management challenges

Since 2007,NRI has served health insurance associations to which company employees are subscribed by analyzing health check-up data and receipt data (medical remuneration statements) and proposing measures for improvement in response to health challenges revealed by such analysis. Nishio says that surveying data in detail, including trends over the course of five years or more, reveals health challenge tendencies that differ among companies or even departments and challenges that had previously gone unnoticed.

“Even looking at companies where employees are said to have high rates of depression, insomnia, mood disorders, and other mental illnesses, a detailed analysis of the data shows that each company differs, with some companies having high rates of illness among managers and others having high rates among on-site employees. There are also differences between departments, such as how outbreaks of mental ailments among employees in information system development are concentrated during difficult projects, whereas employees in system operation departments see few but constant outbreaks.”

Understanding these trends enables companies to enact specific solutions, such as promoting improved management methods, taking measures in advance when embarking on a difficult project, or the like.

Advantages to considering employee health in company management

Nishio suggests the following five advantages to considering employee health in company management.

1. Reduced medical and related benefit costs: If employees are healthy, the company’s medical costs are reduced.
2. Efficient cultivation of human resources: If an employee quits work as a result of poor health, a new employee must be hired and trained from scratch.
3. Reduced compliance risk: Reduction in suicide, sudden death, and mental illness lessens the risk of litigation.
4. Improved productivity: A sound mind and body are crucial to producing the greatest output in a limited amount of time.
5. 5. CSR and improved company image: Companies with healthy employees are viewed positively.

“Many executives agree that employee health is important. But because there are many other managerial challenges, it isn’t high on their list of priorities. If we can help them see that employee health levels have a significant impact on company earnings and stock prices, it will facilitate executive decision-making, and related efforts will make progress. I hope that in the future, securities reports will be able to reveal a company’s degree of effort toward health management and the risks of not achieving target numbers, and that we can provide evidence that companies that prioritize employee health are experiencing growth in the medium- to long-term.”