Forbes India 15th Anniversary Special

When private-sector firms create a culture of health

Investments in employees, consumers, communities, and the environment vary widely. A new study reveals this range and the hurdles to measuring success

Published: Jul 31, 2020 11:03:02 AM IST

When private-sector firms create a culture of healthImage: Shuttertock

Compare job offers from three different companies, and the odds are you’re considering more than just a paycheck. Businesses frequently toss a mix of perks into the package, ranging from health care coverage and sick leave to child care and volunteering opportunities.

These perks are part of companies’ commitment to health — and it’s not limited to employees’ fitness or blood pressure, explains Sara Singer, a professor of organizational behavior, by courtesy, at Stanford Graduate School of Business. Companies are also striving to improve consumer health through their products or to better environmental and societal health with sustainability initiatives and greener business practices.

Collectively, these efforts could have a substantive effect on the health of people and the planet. “The corporate sector has a huge footprint,” Singer says, “so it also has the opportunity to have an outsize impact through these actions.”

But precisely how much private-sector firms do — and toward what end goals — had never been systematically assessed. In a new study that surveyed more than 1,000 businesses across varied sectors, Singer and her colleagues found that many businesses have begun to include health — that of their employees, community, and beyond — in their mission statements and strategic plans.

Most businesses engaged in approximately 11 of 28 health-related actions included on the survey. Surprisingly, the size of a company made little difference in whether it set health goals. Industry also mattered little: For instance, companies in the health sector and those in the oil and mining industries made comparable efforts.

The team found one significant differentiator: Believing that investing in a culture of health would yield strong, positive returns made them more likely to undertake health-related actions. Including goals in a mission statement and strategic plans for a company also promoted a culture of health, “but believing that there would be a return on investment was the strongest motivator,” Singer says. “Finding that was a big ‘aha’ moment for me.”

Investing in Health
Previously, researchers have focused on private-sector practices around subsets of issues such as sustainability or consumer health. In the new study, Singer and her colleagues turned to a more holistic measure of an overall “culture of health” that encompasses several facets of well-being.

They created a survey that assessed company activities on four sets of actions. Those that benefited:

  •     Employee health, such as onsite benefits and health insurance
  •     Consumer health, such as offering low-calorie or allergen-free products
  •     Community health, such as sponsorship or volunteering
  •     Environmental health, such as sustainability commitments and greener manufacturing practices.

Singer and her colleagues gathered data from companies that had more than 50 employees, spanning agriculture, mining, food, technology, health, and other sectors. They found a wide range of practices, with a fourfold difference among the top-performers and those that were least engaged in health-related practices. “I didn’t expect such a large variation,” Singer says.

“I thought the size of a business or industry sector would be the key drivers, and they really weren’t,” says Singer.

The team found that a significant fraction of firms invested in the environment. One-third of survey responders were trying to switch to renewable energy, and nearly 40% were trying to offset negative impacts of production. To improve employee health, companies most frequently offered gym memberships. Only about 15% penalized unhealthy behaviors or offered financial perks for healthy choices.

Many businesses mentioned health-related targets in their corporate mission statements, and those that did were more likely to work toward their targets. Addressing health-related goals — and spanning all four dimensions — in a strategic plan was more effective than simply mentioning them in the corporate mission.

Hurdles to Health
The strongest link to action was the belief that there was a return on investment, Singer says, “but the proportion of companies that felt like they were achieving a positive return on investing in health was quite small.”

And only about one-half to one-third of firms felt their existing investments were paying off, Singer explains. Employee health initiatives had the greatest perceived returns, with 46% of companies saying they perceived a positive financial return from investing in this pillar. For community, consumer, and environmental health initiatives, the perceived return was positive for 39%, 36%, and 30% of companies, respectively. Companies saw employees’ lack of enthusiasm and leadership-level obstacles as the key barriers to more investment.

It’s still unclear whether believing in positive returns drives a company to take health-related actions or whether it’s just a correlation, Singer says. And it’s also unclear how firms evaluate different benefits when allocating resources toward them.

“We need to have conversations across the private sector among businesses about what they should be doing,” says Singer. “Learning from others could spur actions in the private sector as a whole.”

Measuring Gains
“We have seen investors, employees, consumers, and even some businesses say that the corporate sector should see itself as contributing to society, and employees seeking more meaning from work,” Singer says. “We hope businesses will begin to heed these trends.”

One reason for the present variations in practices is that measuring what health-related actions are most effective — and how and why they work — is tricky. While some businesses may be thinking about the financial benefits of investing in a culture of health, others may consider branding value or employee satisfaction as more important.

But these metrics are hard to gauge. “We need to find ways to make the intangible benefits more measurable,” Singer says. “Systematic ways to measure whether actions are working, and where to do more, would help businesses do better.”

“There are payoffs when a firm energizes employees and does good things for the environment — but they are not necessarily apparent by the next quarterly conversation with investors,” she adds. “We need to get people to talk explicitly about longer-term benefits and see the value of investment, rather than just the immediate monetary returns.”

This piece originally appeared in Stanford Business Insights from Stanford Graduate School of Business. To receive business ideas and insights from Stanford GSB click here: (To sign up : <a target="_blank" href=""></a>]]