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Should Employers Ignore Employees’ Life Assets?

by Scott MacStravic

Employers have the option of ignoring employees’ “life assets”, if they wish, though there are significant advantages to partnering with employees in the management thereof. These assets include:

  • Health
  • Power
  • Talent
  • Time
  • Wealth

Any one of all five can be left to employees entirely to figure out how best to acquire, maintain, and grow these assets — or be the focus for employer-sponsored initiatives to guide and support employee efforts.

Health is an obvious asset for employees to protect and improve over time, and one that is highly advantageous to employers. Healthier employees cost significantly less in sickness care costs, along with workers compensation and short/long-term disability costs. They are also more productive, with fewer absences and less impairment due to chronic disease, risk conditions or risky behaviors. And they have been found to promote customer satisfaction, market share, new business, added revenue and profit, as well.

Power is a touchy asset, since employers want to wield power over employees, else how can they be managed. On the other hand, employees who feel empowered, have the autonomy to take care of many problems they face on their own, not only need less management and its overhead costs, but are also happier, more likely to remain an employee, and yield many of the same advantages as do healthy employees.

Talent management (TM) has recently become a major focus for C-level executives and the firms they lead, as really valuable high-performers are increasingly scarce and expensive to lose. While business leaders and managers tend to give themselves more credit than they may deserve for the performance of their firms, most appreciate how much more valuable a really good employee can be compared to merely a warm body occupying a position.

Time management is important both on and off the job. How much time employees have available to devote to work, how well they use this scarce asset by managing the scheduling and completion of tasks, coordinate their performance with other related employees and functions, etc. makes a big difference to their overall productivity. The amount of their day that they actually spend on work vs. gossip, breaks, self-focused activities, etc. is also a key factor in productivity and performance.

How much time they have after work to spend with their families, devote to favorite activities, manage their lives, etc. is equally important, since it can greatly influence their productivity and performance. Work/life balance has become a major factor in attracting and retaining talent, whereas employees who feel their life is not in balance may demand higher compensation to remain with their employer. When Best Buy gave employees the power to manage their own time as well as place where they worked, it found productivity improved by 35% and turnover dropped from 16.6% to zero at its corporate office. [M. Conlin “Smashing the Clock” Business Week Dec 11, 2006]

Wealth has always been a key factor in attracting and retaining, as well as motivating employees to optimum levels of performance. Incentives and rewards have long been one of the most effective ways to stimulate employee performance. When one windshield repair firm switched from an hourly pay to a performance-based system, it found productivity increased by 44%, while its labor costs increased only 10%. [E. Lazar “Performance Pay and Productivity” American Economic Review 190:5 Dec 2000 1346-1361]

Moreover, the wealth impact of employee benefits, such as pre-tax spending and retirement accounts, is a major concern of all employees, or at least those planning or hoping to enjoy a comfortable retirement. The impact of health spending accounts is intended to make employees more likely to be healthy, for example, as well as more prudent in their use of sickness care.

Employers in more paternalistic days often included explicit support for employees life asset management, but many have given it up, believing that it costs too much, does not pay off for the business, or that employees won’t remain their long enough to show a positive ROI from the investment. But while turnover rates may be higher than in the old days, many employers still enjoy rates in the 5% to 10% range, or at least no more than 20%, meaning most employees will remain long enough for the investment to pay off.

And such investments help to reduce turnover. Healthier employees need not leave for health reasons. Wealthier employees have less need or reason to leave. Those who can manage their time better are also more likely to remain, and those who enjoy power or autonomy are significantly happier at work. While employers may feel that it is their employees’ responsibility to get the education, training and development they need, those employers who remain at least partners in their employees’ talent development seem to do significantly better in terms of their financial performance.

Moreover, employers who integrate their life asset management support in a strategic fashion can gain the greatest combined impact across all five assets, and across their own performance. Each of the five assets tend to affect or are affected by the others, so only an integrated approach can hope to achieve the best overall impact on the set of assets, and thereby the greatest overall impact on employee attraction, performance, and retention over time.

1 Comment »

  Bill wrote @ May 24th, 2007 at 3:27 pm

I really like your approach to evaluating what’s important to an employee. As the world landscape continues to change, it’s going to be more important than ever to attract and keep the best talent.

One other asset that I would add to the list is relationships. Whether it’s family, friends, or business relationships; these can be great motivators for employees.

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