EMPLOYEE ASSISTANCE PROGRAM. Employee Assistance Program. what is the return? Drake International 1

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1 Employee Assistance Program what is the return? Drake International 1

2 EMPLOYEE WHITE PAPER ASSISTANCE PROGRAM EMPLOYEE ASSISTANCE PROGRAM what is the return? DRAKE WORKWISE Drake WorkWise is a leading national provider of quality, cost effective psychological, organisational consultancy and OH&S services, to over 230,000 staff throughout Australia. Working with a clientele of some of Australia's largest organisations, as well as smaller businesses across the broad spectrum of the Australian workplace, Drake WorkWise builds customised, creative and impactful partnerships. Drake WorkWise, combined with Drake International, forms one of Australia's largest, most reputable and longestrunning Human Solutions companies. DRAKEINTERNATIONAL Drake International is a global HR Services company and a leader in sustainable HR practice and talent management. Established in Canada in 1951, Drake s business philosophy has stayed true since inception organisations achieve the highest level of performance when they are staffed with the right people, working with the right skills, knowledge and behaviours, using the best processes and technology-driven solutions. One of a highly select number of global organisations providing a network of services so comprehensive it adds value across the entire HR function, Drake s portfolio of offerings include: Permanent and flexible recruitment Retention strategies and consulting Psychometric, behavioural and skill assessments Top performer profiling Team Building Training and development courses Six Sigma Employee assistance programs OH&S training and consulting Performance management solutions Succession planning Knowledge management systems Call Centre & Payroll Outsourcing Executive Coaching Since 1951, Drake has grown to span numerous borders, industries and professions. With 22 metropolitan and regional offices across Australia, as well as New Zealand, Singapore, the Philippines, Hong Kong, South Africa, the United Kingdom, Canada and the United States, Drake is positioned to help you manage your greatest asset your people. The information contained in this white paper is general information meant to provide an introduction to the topics covered. To find out how this information applies in practice to any specific situation, readers are advised to seek a consultation with a qualified consultant at Drake. 2 Drake International

3 CONTENTS EXECUTIVE SUMMARY... 4 COUNTING THE COST OF MENTAL HEALTH ISSUES IN THE WORKPLACE... 4 EAPS, INDIVIDUAL WELLBEING AND ORGANISATIONAL PERFORMANCE...6 MAKING AN EAP WORK HARDER - MAXIMISING THE EFFECTIVENESS OF AN EAP...8 COULD YOUR ORGANISATION BENEFIT FROM INVESTING IN A HIGH-PERFORMING EAP?...9 Drake International 3

4 EXECUTIVE SUMMARY Employers have come to recognise the benefits of providing Employee Assistance Programs (EAPs), reflected in their increasing adoption over the last 20 years across a wide range of industries and work settings. However, some organisations continue to view EAP as an employee benefit offered to improve quality of work life and morale, a nice to have add-on, or a form of employer brand enhancement. In fact, an EAP can have a significant return on investment. Employers often underestimate the cost of employees mental health and life problems to the business, and how prevalent such issues are within the Australian working-age population. By helping to resolve employees' personal and professional problems, EAPs mitigate associated business costs such as absenteeism, presenteeism, turnover, conflict and insurance claims, and enhance employee engagement and productivity. Addressing psychological wellbeing is as important as looking after the OH&S issues of employees, and is increasingly subject to the same forms of workers compensation claims and litigation. Organisations can cover their staff with an effective EAP program for less than a dollar a week. In fact, rigorous economic analysis in referred journals and studies indicates that EAP provision represents a sound strategic business decision, delivering a highly competitive return on investment (ROI) of between 300 and 700 per cent. COUNTING THE COST OF MENTAL HEALTH ISSUES IN THE WORKPLACE The impact of psychological issues on work productivity has received steadily increasing attention, with stress now identified as the biggest cause of workplace absence. The CBI/AXA annual absence survey, released in May 2008, found that non-work-related stress, anxiety & depression were the most common causes of long-term absence. Further, a report by the Royal College of Psychiatrists in March this year concluded that sick leave due to mental health problems such as stress is more likely to be longer than those caused by physical health problems, accounting for 47% of long-term absences. A recent snapshot of Mental Health issues in the workplace: On average, 217 million workdays are completely or partially lost among workers aged 18 to 54 due to mental disorders, translating to an annual cost to businesses of $17 billion dollars 1 It is estimated that 1 in 5 working-age Australians will experience a mental illness at some time in their life Depression reduces workplace productivity. Over 6 million working days are lost each year, with another 12 million days of reduced productivity per year. Depression alone costs Australian business hundreds of millions per annum Australian-based research indicates that each employee with untreated depression will cost their organisation $9,660 per year According to the 2007 Mental Health & Wellbeing Survey, Australian GPs provided 11 million services for mental health issues that year Workers with depressive disorders have almost four times more health-related lost productive time than their non-depressed counterparts 2 Substance abuse is prolific amongst working-age population, with 44% of working Australians engaging in risky and high-risk drinking at least occasionally, according to the 2001 National Drug Strategy Household Survey In a recent US-based survey, 62.7% of adults in the age group of 18 to 64 who had a past-year substance use disorder were employed full time. Among this group who experienced psychological distress in the past year, 50.7% were employed full time. 4 Drake International

5 Costs of stress-related presenteeism and absenteeism in Australia Medibank-commissioned research 3 conducted by Econtech in 2007 found that: Stress-related presenteeism and absenteeism are costing the Australian economy $14.81 billion a year. Stress-related presenteeism and absenteeism are directly costing employers $10.11 billion a year. Stress related presenteeism Stress related absenteeism Total cost to economy Total Cost $9.69b $5.12b $ 14.81b Direct cost to employers Labour productivity loss $6.63b $3.48b $10.11b 0.89% 0.47% 1.36% It has also been found that across a wide range of industries, that up to 80% of organisations productivity costs related to psychological issues are costs associated with presenteeism; manifesting as low energy levels, impaired concentration, poor work quality and quantity. The remaining 20% of productivity costs were accounted for by absenteeism 6. Importantly, although presenteeism can be addressed to some extent by effective and supportive management practices, it has been demonstrated that the most important variable in mitigating/improving presenteeism is spending to save, involving the provision of effective personal treatment programs 7. Days lost per worker per year Presenteeism a hidden but higher cost than absenteeism Absenteeism, defined as both absence from and lateness to work, is a relatively easily measured and visible organisational cost. However, mounting evidence suggests that presenteeism, a less-easily quantified issue, is a far more significant cost to business. Presenteeism encompasses employee characteristics such as inability to concentrate, impaired interpersonal communications, the need to repeat tasks, working too slowly, and low performance measures such as poor quality or poor quantity of work 4. According to recent research across a wide range of industries, presenteeism was found to cost between two and four times as much as absenteeism. In dollar terms, it has been estimated that annually, absenteeism accounts for $5 billion dollars of costs associated with mental health problems; compared to $15 billion dollars accounted for by presenteeism 5. Drake International 5

6 EAPS, INDIVIDUAL WELLBEING AND ORGANISATIONAL PERFORMANCE The impact of personal problems upon work performance is well-documented. An Employee Assistance Program is a pro-active personal support strategy for employees who are experiencing personal or work problems, and assists employers when faced with an employee who has not responded to normal supervision. An effective EAP addresses these issues by delivering confidential, evidence-based, brief solutions-focused counselling which provides the employee with tools to address the presenting problem, and, for more complex or chronic issues, linkages to external, specialist providers and services. Improvements in psychological wellbeing translate to improved work performance, which is the fundamental outcome of an effective EAP. The Broader Benefits of an effective EAP In assisting employees to manage psychological issues and the demands of an increasingly hectic lifestyle, EAPs have consistently demonstrated provision of the following organisational benefits: Improved employee retention, savings in training costs, expertise protection Reduced managerial burden resulting from problem employees Disciplinary issues are handled more effectively and constructively Improved workforce engagement and job satisfaction Increased motivation, productivity, innovation and wellbeing Reduced stress in the workplace Reduced presenteeism Reduced absenteeism (25-50% reduction) Reduced workplace conflict Reduced workers compensation claims Minimised negative impact of restructuring During restructuring, redundancy and organisational change, EAP provision can ensure impacted staff are supported EAPs also play a preventative role, addressing problems before they become so significant that they result in absenteeism, presenteeism, significant accidents, injuries and OH&S issues. Research also indicates that EAP users build coping strategies that may be applied to future issues, and that elements of EAP treatment contributes to better overall job function 8. EAP versus external mental health providers Workplace education about EAPs has been demonstrated to stimulate policy development and other changes to the work environment that contribute to a culture of better employee mental health. EAP providers (as opposed to treatment providers sourced privately by the individual) can build up knowledge of the organisational culture, functioning and procedures. Over time, they take on aspects of organisational development by providing meaningful feedback to the organisation regarding systemic issues. The organisation s culture is influenced by the existence and embedded values of the EAP, and the EAP becomes part of the organisational learning, problem-solving and adaptation mechanisms 9. EAPs may be characterised as a workplace mechanism that bridges the gap between treatment and prevention 10. As such, there is a genuine synergy between EAP and workplace-based wellbeing programs which are being adopted by many progressive organisations today. The importance of 24-hour availability A service that is genuinely available 24 hours per day, 7 days per week is key to providing an effective EAP: Employees are often too busy dealing with work demands to contact the service during business hours, or may work in open-plan environments lacking privacy. Additionally, crises may erupt for employees at any time of day or night. In today s volatile social, environmental and economic climate, a 24-hour EAP service should also form a critical component of organisations Business Continuity Plans, as a means of managing and mitigating extended absences arising from crisis. Employers should ensure the EAP phone line is placed high on the list of cascade numbers in these plans. Cost benefits of an EAP a meaningful Return on Investment Mounting evidence demonstrates that EAPs represent a solid business investment, making a unique contribution to an organisation s overall performance across the broad spectrum of today s workplaces. There is a growing recognition amongst employers that tackling mental ill health, far from being a soft area of people management, in fact reaps tangible and significant financial rewards. 6 Drake International

7 Unlike most expert and specialist services contracted by an organisation, effective EAPs do not cost a huge amount when averaged over the total workforce numbers. Depending on the size and nature of an organisation, they range from $20 per employee per annum to $60 to $100 per employee per annum. Of course, controls need to be set on open access to counselling, and on the frequency and duration of access. The cost per employee of EAP provision varies according to its scope of the service (e.g. availability to family members), its takeup or utilisation rate (some industries have a much higher propensity of usage), and the type of counselling expertise required. Organisations have unique needs and stressors, and EAP providers tailor their EAP provision and costs to the organisational context and business needs. Surprisingly, many organisations do not make an economic evaluation of their EAP, rather, it is considered to be part of the organisation s culture and as such not subjected to quantification. It may also be argued that the broader, less tangible benefits of an EAP outweigh the narrowly-costed benefits. Nonetheless, adopting an EAP should be a business decision and like any investment, should offer long-term pay-offs. Overwhelmingly, current research involving rigorous economic analysis demonstrates that EAPs are highly cost-effective, in terms of savings generated for employers. Some recent data on Return on Investment from EAPs: A 5:1 reduction in work hours and wages lost following the implementation of an EAP 2007 research on 480 employees found that on average, 1.86 days per person was saved in a year, translating to an estimated annual employer cost saving from EAP treatment of $2,543,984 Annual payoffs between three and seven times the cost of the EAP provision have been demonstrated by a range of studies research across a broad range of employer groups demonstrated that an average of 6.36 hours were saved per week per person as a result of improved functioning after EAP treatment. According to this research, for every $1 spent on an EAP, organisations can expect a return of between $5.17 and $6.47 a Return on Investment of between 517% and 647% 13 The true value of EAP is likely to be underestimated by the Return on Investment data, given the preventative implications of effective EAPs. The demonstrated bottom-line benefits of an EAP The business benefits of an EAP can be evaluated by comparing the cost of the EAP against the costs of organisational performance problems such as: Absenteeism Lateness Accidents Stock loss Workers compensation claims Turnover EAP investment can also be assessed by comparing the cost of the EAP program against the value of such factors as: Improved morale and positive changes in the organisational culture, Productivity Higher quality products and services 11. Drake International 7

8 MAKING AN EAP WORK HARDER MAXIMISING THE EFFECTIVENESS OF AN EAP Certainly, not all EAPs are created equal, and it has been argued that some EAP models may perform better in certain work settings than others. There are some clearly identifiable key characteristics of high-performing EAPs. Organisations should seek and expect their EAP to provide the following best-practice deliverables to maximise their Return on Investment: Expert consultation for employees and managers Training for key HR staff and management in identifying and helping to resolve behavioural, health, or job performance problems Confidential, appropriate, and timely assessment services Referrals for specialist diagnosis, treatment and other assistance Availability of psychometric testing and assessment in certain situations, particularly, managerial referrals Education and information about mental health and substance use and prevention strategies, including consultation with employers about environmental changes that may reduce the incidence of employee problems Coordinated policy development and statements concerning occupational health, particularly concerning substance use developed in partnership between the EAP provider and the employer Self-referral to encourage high utilisation of the service without fear of jeopardising employees opportunities for career advancement (a culture of proactive selfmanagement) Services provided offsite and confidentially (to the extent provided by law) A highly visible and well-marketed service with reminders regularly circulated through various media within the organisation Drake WorkWise: a track-record of effective, well-utilised EAPs Drake WorkWise EAPs often achieve higher utilisation rates than other program providers, which is a direct result of creating throughout the whole organisation, a culture of proactive self management when issues are impacting on performance. Drake WorkWise achieves these outcomes by: Partnering and understanding the organisations culture and business drivers that impact all areas of performance Providing a rollout of services, compelling publicity materials and strategic updates that encourage a culture of self management Working closely with managers in our client organisations to help address personal and work issues impacting on staff and providing genuine 24/7 clinical access engaging highly experienced, committed, clinically qualified psychologists (each consultant bringing a minimum of ten years experience to the team) to achieve the individual wellbeing outcomes which contribute to overall organisational performance 8 Drake International

9 COULD YOUR ORGANISATION BENEFIT FROM INVESTING IN A HIGH-PERFORMING EAP? If you would like to know more about Drake WorkWise EAPs, please contact us: Clinical and Psychological Wellbeing Services FOOTNOTES 1. Hargrave, G., Hiatt, D., Alexander, R. & Shaffer, I., (2008). EAP Treatment Impact on Presenteeism and Absenteeism: Implications for Return on Investment. Journal of Workplace Behavioural Health, 23(3), Stewart, W., Ricci, J.A., Chee, E., Hahn, S.R., & Morganstein, D. (2003). Cost of lost productive time among US workers with depression. Journal of the American Medical Asssociation 289(23), Econtech (2007), Economic Modelling of the Cost of Presenteeism in Australia, commissioned by Medibank Private. 4. Hargrave et al (ibid) 5. Hertz, R.P., & Baker, C.L. (2002). The impact of mental disorders on work. Groton, CN:Pfizer Pharmaceuticals Group. 6. Hargrave et al (ibid) 7. Hemp,P. (2004). Presenteeism: At work but out of it. Harvard Business Review, Blum, T.C., & Roman, P.M. (1995). Cost- Effectiveness and Preventive Implications of Employee Assistance Programs. U.S. Department of Health and Human Services Center for Substance Abuse Prevention 9. Berridge, J.R. & Cooper, C.L. (2004). The Employee Assistance Programme: Its role in Organisational Coping and Excellence. Personnel Review, 23(7), Blum & Roman, ibid 11. Berridge & Cooper, ibid 12. Berridge & Cooper, ibid 13. Hargrave et al, ibid Drake International 9

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