Depression is Eroding Depression is Eroding Canadian ProductivityCanadian Productivity

. . . and HR can do something about it!

Lou Pike, Ph.D / Chris Bonnett, MHSc

cogent consulting groupMarch 21, 2001

Today’s Goals

• To make the business case

• To sound the alarm

• To offer a root cause approach

• To suggest a central role for HR

cogent

SOUNDING THE ALARM

The Economic Impact of Depression in the Workplace

cogent

Sounding the Alarm

• Leading cause of Long Term Disability• Typically 3 of top 10 Rx drugs

– Canadian study showed claimants using anti-depressants had largest share of drug costs, 23% of total!

• 1.4 million Canadians– affects 4% of Ontarians ages 15 to 64– one-third fail to seek treatment – only 6% - 10% properly treated

cogent

Sounding the Alarm

• 10% in US have Major Depression episode– Cost is US$43 billion, 55% of this from lost productivity

• Average Length of Disability– Major Depression = 40 work days

– Non-mental Health = 29 work days

• Costs– US $8,709 vs. US $2,059 / person / year (1997)

cogent

Sounding the Alarm It’s a Women ’s Health Crisis

• 6-7% of women of prime working age are depressed

• The average woman who requested EAP services with depression symptoms was between 27 and 46. (JOM, V. 36, n 9, 09/94)

• The ratio is 2:1 women/ men• By the year 2005, for

every 10 men in the force there will be 7 women

cogent

Sounding the Alarm

Group benefits - 13% payroll

Absenteeism - 7.8 days / 3% payroll

“Presenteeism” - 4.3 hours per week / 11.5% payroll

Tax waste - 40% of health care funding is inappropriate.

Sources: KPMG (1999); Statistics Canada (1998); Burton, Conti et al, JOEM (1999); Macleans Health Report (1999)

cogent

Sounding the Alarm

• 500 employees– normal distribution; payroll $17.5 million

• Costs*– typical benefit package; WSIB– absence; turnover; productivity loss

Costing Details: Disability: 0.50 STD + 1.0 LTD + 0.50 WSIB = 2.0% - Absence: 0.50% - Productivity: 0.325 x 0.05 = 1.60% - Multiplier: 4.1% x 1.5 = 6.2% - Drugs: 0.10% - 6.3% x $17.5

mm = $1.1 million. All percentages are of payroll.

Total:Total: $1,102,500$1,102,500

cogent

The Impact of Depression The Impact of Depression and Stressand Stress

Severing the Service-Profit Chain

cogent

What Is Depression

What It Is*

‘A spectrum of mood disorders that range in severity from major depression and bipolar illness . . . to brief depressive reactions’.

What It Isn’t

• Passing moods

• Personal weakness

* International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM)cogent

Symptoms of Depression

• Persistent sad, empty or anxious mood.

• Loss of interest or pleasure in usual activities.

• Fatigue, decreased energy.• Sleep disturbances.• Eating disturbances.• Chronic aches and pains.• Increased accidents

• Difficulty concentrating, remembering, making decisions.

• Feeling hopeless or pessimistic.

• Guilt, worthlessness.• Thoughts of death or

suicide.• Increased irritability.• Excessive crying.• Substance abuse.

cogent

Causes of Depression: Individual Characteristics and Behaviour

Imbalance of brain chemicals called neurotransmitters

Various physical diseases or illnesses

Negative thinking patterns

Family history of depression

Difficult life events

Certain medications

Frequent and excessive alcohol consumption

cogent

Causes of Depression:Organizational Characteristics

Technological change

Organizational and management practices

Job structure, design and fit

Source: Institute for Work & Health, 2000.

cogent

“The hurried and worried organization”

Depression and Stress

• Time Stressors– Work overload– Lack of control

• Encounter Stressors– Role conflicts– Issue conflicts– Action conflicts

• Situational Stressors– Unfavourable working

conditions– Rapid change

• Anticipatory Stressors– Negative expectations– Fear– Poor reward

cogent

How Stress Affects Managers

• Stuck: Demand a single, standard, familiar approach. Less able to generate creative solutions.

• Rigid: Intolerant of ambiguity.• Shortened Time Frame: Want the right answer,

right now.• Myopic: Adopt a short-term perspective, crisis

mentality• Directive: Consult and listen less to others

Source: Straw, Aanderlands, & Dutton, 1981; Weick, 1993cogent

Stress Across Canada*

• Percentage who reported they were as stressed as they could handle, or were on their way to being completely overwhelmed:– Alberta 38%

– Atlantic Canada 41%

– British Columbia 37%

– Ontario 39%

– The Prairies 32%

– Quebec 64%* Stress is Everywhere and Getting Worse, Survey Says, Canadian Press Newswire, 17/12/97

cogent

The Costs of an Unhealthy Workplace

High Effort, Low Reward

+High Demand,Low Control

3 x Heart Problems

3 x Back Pain

5 x Certain Cancers

2-3 x Conflicts

2-3 x Mental Health Problems

2-3 x Infections

2-3 x Injuries

2 x Substance Abuse

cogentSource: Shain, CAMH.

cogent

Employers incur an additional $1.50 in workforce disruption$1.50 in workforce disruption for every dollar of disability claim paid out. (Birnbaum, et al.)

Stress Has Direct and Indirect Consequences

• Productivity• Profitability• Competitiveness • Intellectual capital• Efficiencies• Cooperation

• Speed• Quality• Standards• Attract and Retain• Team work• Climate

The Service-Profit Chain

cogent

Profit-Profit-abilityability

EmployeeEmployeeSatisfac-Satisfac-

tiontion

Produc-Produc-tivitytivity

CustomerCustomerLoyaltyLoyalty

RevenueRevenueGrowthGrowth

Health Matters to the Bank of Montreal

Shifting the Performance Curve

Productivity, profitability, customer loyalty, and employee retention are outcomes correlated with a “healthy organizational climate”.

cogent

“...and what HR can do about it!”

cogent

The Changing Nature of HR

Operational to strategic Qualitative to quantitative Policing to partnering Short-term to long-term Administrative to consultative Functionally oriented to business-oriented Internal focus to external and customer-focus Reactive to proactive Activity-focused to solutions-focused

cogent

What H.R.’s Customers Want

• Pay my staff, on time, and the right amount.

• Be there to solve their problems.

• Hire new staff and help me keep the ones we

have.

• Do more with less!

cogent

Traditional Approach: A Quick Fix

Wellness Programs

Drug Treatment

EAPs

Nothing at all

ALL FOCUS ON THE INDIVIDUALcogent

Finding Solutions: Getting to Root Causes

Management Decisions

•Culture and Values

•Policies and Procedures

•Job Design and Fit

•Workload

cogent

Addressing the Demand/Control Squeeze

• Reduce Demands– Set priorities– Focus– Improve the

Process– Set protocols for e-

mail and voicemail

• Increase Control– Auhority

– Collaboration

– Culture

– Communication

– Competence

‘It’s just good management’.cogent

Unresolved Conflict

AbsenteeismTurnover

Unmotivated staff

Linking the Issue to H.R. Strategy

How profits leak from an organization

Low morale

Substance Abuse

cogent

Maclean’s: Redesigning Work*

• Productivity increases by about 20% after compan-ies implemented work/life balance programs.

• Staff turnover falls by up to 50% when employees are offered benefits such as child-care subsidies, elder-care programs and flexible hours.

• The cost of losing and replacing an employee: 50% - 150% of annual salary.

• 43% of junior managers value home over work time compared with top executives.

• 48% of employees feel guilty when they leave on time.

* March 5, 2001

cogent

Employees Want a Better Deal*

• Less stress

• More stimulation

• Better professional development

• Increased recognition

• Bigger say in how the job gets done

* Values Shift: the New Work Ethic and What It Means for Business, John Izzo

cogent

Our Business Case is...

Organizational performance depends on healthy employees!

cogent

In Conclusion

Organizational factors influence our health HR can enrich the organization’s value to

customers, investors and employees*. We can achieve sustainable performance

only by addressing root causes. Managing depression is a logical part of the

HR Mission, and a great opportunity to lead.

cogentSource: Ulrich, HBR, Jan-Feb 1998: p 125.

The Parting Thought

If...Depression harms employees

and...responsible employers abate harm

and...the issues are compelling

and...the cost of inaction is high

and...HR needs and wants to lead

then... Now’s the time to act!cogent