A se­cret 2% growth jab

Financial Mail - Investors Monthly - - Opinion -

The fi­nance min­is­ter, like the rest of us, is look­ing for growth in the econ­omy. But there’s one al­most se­cret space where growth of as much as 2% could be found that he didn’t men­tion in his bud­get speech.

That twi­light zone is our poor pro­duc­tiv­ity.

Ac­cord­ing to the MMI Ef­fec­tive Em­ployee In­dex, we lose more than 120m days per year (or around 13 days per em­ployee per year) in pro­duc­tive work time. That lost time is es­ti­mated at roughly R70bn, or 2% of GDP. And that star­tling fig­ure does not ac­count for the in­creas­ing phe­nom­e­non of “pre­sen­teeism” — where em­ploy­ees are at work but not op­er­at­ing op­ti­mally.

Im­prov­ing pro­duc­tiv­ity should be a key fo­cus for ev­ery com­pany or or­gan­i­sa­tion man­ager, yet too of­ten it takes a back seat to cut­ting costs. One rea­son is a per­ceived in­abil­ity to mea­sure causal­ity in pro­duc­tiv­ity, while more di­rect bot­tom-line mea­sures are highly vis­i­ble.

MMI has filled that gap by build­ing, in con­sul­ta­tion with Unisa, a ro­bust model that re­veals the driv­ers of lost work time in SA. More than 70,000 data points, re­lat­ing to over 500,000 em­ploy­ees across 400 com­pa­nies, were an­a­lysed to pro­duce the in­dex, which en­ables man­agers to bench­mark their com­pa­nies’ per­for­mance and de­sign in­ter­ven­tions that will cut the num­ber of sick days, get staff back at work faster and im­prove their output when they’re there.

The most ob­vi­ous area for at­ten­tion is work­place man­age­ment. Proper anal­y­sis of claims data and sick-leave statis­tics can quickly lead to the cre­ation of a safer and health­ier work en­vi­ron­ment.

The sec­ond clear win lies in de­liv­er­ing em­ployee ben­e­fits that meet gen­uine needs and pro­vide in­cen­tives for the right be­hav­iours. Here are some con­cerns: Some dis­abil­ity cover in the rel­a­tively new tax en­vi­ron­ment is ef­fec­tively en­cour­ag­ing claimants not to re­turn to work, and ur­gently needs re­struc­tur­ing;

Men­tal health claims are on the rise, es­pe­cially in the higher de­mo­graph­ics, de­mand­ing greater sen­si­tiv­ity and new ben­e­fit con­di­tions;

Health cover needs to be ex­panded into the broader mar­ket; and

For re­wards and incentive pro­grammes to achieve real value they must not be gim­micky.

The third area is over­looked by many, and that’s the em­ployee’s fi­nan­cial well­ness, which we de­fine as the abil­ity to meet planned and un­planned ex­penses through their life­time.

There is clearly a sym­bi­otic ben­e­fit in fi­nan­cially well em­ploy­ees cre­at­ing a healthy and pro­duc­tive work­place.

Debt is a huge SA prob­lem — the MMI Unisa Con­sumer Fi­nan­cial Vul­ner­a­bil­ity In­dex shows that col­lec­tively we are in the “very ex­posed” cat­e­gory on this is­sue – but few man­agers ap­pre­ci­ate that em­ploy­ees un­der stress fi­nan­cially are un­likely to work op­ti­mally.

It makes enor­mous sense for com­pa­nies and their ben­e­fit part­ners to as­sist with the ba­sic steps of fi­nan­cial ed­u­ca­tion, plan­ning and debt con­sol­i­da­tion, while also de­liv­er­ing very clear com­mu­ni­ca­tion of ben­e­fits and pos­si­bly even pro­vid­ing work­place emer­gency loans.

Em­ployee fi­nan­cial well­ness is a vi­tal ecosys­tem that needs ur­gent at­ten­tion.

Pro­duc­tiv­ity must also be­come a key fac­tor in the na­tional eco­nomic con­ver­sa­tion, and be part of wage ne­go­ti­a­tions.

A proac­tive ap­proach to pro­duc­tiv­ity across the board would re­sult in hap­pier and health­ier staff con­tribut­ing to a bot­tom-line up­lift. And that could give the fi­nance min­is­ter a far eas­ier time of it next year.

Im­prov­ing pro­duc­tiv­ity should be a key fo­cus for ev­ery man­ager, yet too of­ten it takes a back seat to cut­ting costs

Schoe­man is CEO of MMI Cor­po­rate & Public Sec­tor

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