One of my favorite years was 1973 – I completed my doctoral degree that year, and attended a summer program at M.I.T. offered by its gurus on “systems dynamics”, which I thought was worth as much as my entire previous academic coursework. Jay Forrester was the “father” of systems dynamics, while Peter Senge came out a couple of decades later with his book on “The Fifth Discipline”, which included systems thinking as the fifth and in many ways over-arching the other four.

Systems thinking has far more reasons to be resisted than embraced by managers. It looks for the interconnections across organizational and functional silos, threatening the separate fiefdoms that most managers depend on for their success. It makes planning, strategic management, and even daily supervision much more complex, and threatens to produce the “paralysis of analysis” when a given system’s boundaries, in time and space, cannot be understood.

But it also has a virtue that tends to override the reasons for resistance to it – it often identifies solutions that would never have been imagined otherwise, and thereby produces disruptive innovations that make enormous positive differences in the way things are done. In a recent example, the Health as Human Capital Foundation contrasted systems thinking to “magic-bullet solutions” in the contexts of sickness care and employee health management (EHM). [W. Lynch & H. Gardner “Please Don’t Complicate Things with New Information. I Like the Old (Wrong) Answer Better” Health as Human Capital Oct 21, 2007 (hhcf.blogspot.com)]

The sickness care example cited the discovery in the 1980s that the bacterium H. Pylori was the cause of most ulcers. This meant that traditional care aimed at reducing stomach acids, managing stress, avoiding spicy in favor of bland foods, etc. were made almost immediately obsolete. But this obsolescence, traditional treatment is still “conventional wisdom” due to the unwillingness of people, including physicians, to change their minds, and vested interests in old products and services.

In the EHM context, the magic bullet is any specific program or intervention intended to improve employee health and reduce sickness care, disability, absence, presenteeism, turnover, and other labor costs, while improving workforce and the organization’s performance. If the “problem” were simply a matter of employees not being healthy, such a solution might work well. But the “systems” problem relates to the entire set of dynamics that affect employees’ behavior, not just their health.

Any employers’ combination of all employee benefits, total compensation policies and practices, training and development, including disability and time-off policies tend to create “winners” and “losers” among employees who adopt particular behaviors. I recall when a former employer’s policy of permitting unlimited accumulation of sick leave and vacation time led to its having an obligation to pay one employee more than two year’s salary when he left – not because he had never taken time off, but because the record system showed none.

Employee productivity and performance, the main focuses of EHM, are affected by vastly more factors than their health, and their health is affected by vastly more factors than whether employees have a health spending/savings account, or an opportunity to enroll in an EHM program. The total number of factors that affect employee productivity and performance is huge, and the total value of the effects of these factors is far greater than that of health improvements alone. Without motivation and technological as well as personal capabilities, the healthiest employees may never produce much more than they do now.

The move toward “value-based” benefit design is going in the right direction, though not far enough. The total set of policies and practices that relate to employees, not merely their fringe benefits, will determine their ultimate delivery of value to their employers. Single “solutions” such as pay-for-performance, tele-commuting, EHM, EAP, and other non-systematic approaches to the problem risk not just failing to solve the problem, but making things worse, given the interconnectivity of factors that affect it. Many existing policies and procedures may already be discouraging high performance, and encouraging poor health, as well as meager productivity.

Despite the greater difficulty and time required to engage in systematic thinking, identifying a larger set of causes and effects than one-shot solutions, modern computer capabilities and people trained in systems thinking can make it far more convenient to apply than was true forty years ago. EHM is clearly a promising ingredient of a solution to both the healthcare cost crisis and productivity/labor cost challenges, but it will work a lot better if developed and applied in the context of the full systems dynamics in which it will operate.