Human Capital & Careers

Employers Look to Trim Fat

Forget smoking -- some corporates say obesity is the real healthcare problem facing businesses.
Lisa YoonJuly 17, 2003

As any CFO knows, healthcare costs these days are pretty much detrimental to a company’s financial health. And as many employees know, companies have been asking workers to shoulder increasingly more of the bills. But lately, some employers are looking to workforce downsizing as a way to trim even more fat from the healthcare bill. No, they’re not laying anyone off. Instead, they’re asking workers to lose weight.

Now that SARS seems to be under control, it seems obesity is the latest “epidemic,” and it must be stopped, according to Dr. Vince Kerr, a director of Health Care Management at Ford Motor Co. To that end, the Washington Business Group on Health (WBGH) has launched the Institute on the Costs and Health Effects of Obesity. The Institute comprises a group of major employers, such as Ford, who are on a mission to help corporate America reduce the impact of obesity in the workplace. The Institute, according to its announcement, will explore the epidemic of obesity, propose solutions and strategies, and serve as a catalyst for change.

According to WBGH, obesity is even worse for the body than smoking. And an unhealthy body means a negative prognosis for the company coffers. (It’s no coincidence that the word “corporation” stems from the Latin for “body.”) “Organizations lose more than $12 billion per year [because of obesity],” said Kerr. That figure comes from higher use of health care services, lowered productivity, increased absenteeism, higher health and disability insurance premiums and other weight-related conditions. “[N]o company in America can afford to ignore the problem of obese and overweight employees,” said Helen Darling, president of WBGH.

Designed specifically for corporate audiences, the Institute will serve as a resource for large employers on the financial consequences of an overly tubby workforce. It will also offer strategies to decrease the incidence of obesity among U.S. workers and act as spokespeople for obesity. Their message: It could kill you, but it’s preventable.

The Institute’s first offering is the Employer Toolkit, a report on weight management that offers ways to help employees achieve healthier lifestyles. But that’s just for starters. Coming up: a national weight-awareness initiative, issue briefs, and an online resource center.

Because companies can’t fight obesity alone, there will also be a “corporate summit,” in which large employers discuss obesity-related challenges and share ideas for helping employees lose weight. “The Institute provides a crucial forum for private and public organizations to work together to develop innovative, proactive strategies for addressing obesity and its implications,” said Dr. William H. Dietz, director of the division of nutrition and physical activity at the Centers for Disease Control. “No single company or agency can solve the problem of obesity on its own.”

Other founding companies of the Institute include Fidelity Investments, General Mills, Inc., Honeywell, Morgan Stanley, PepsiCo, Saks Inc., and Starwood Hotels. Founding agencies include the U.S. Department of Health and Human Services, the Centers for Disease Control and Prevention, the Institute of Medicine, the American Association of Health Plans, Aetna, Pfizer Pharmaceuticals Group, and Whole Health Management Inc.

Mercer: New Analytics for HR ROI

CFOs are told over and over that investing in workers leads to a more profitable company. The problem, however, is that CFOs and human-resources heads don’t always speak the same language. While HR talks soft concepts like “satisfaction” and “retention,” finance chiefs crave the hard stuff. Numbers. Formulas. Dollar signs.

According to a report by Mercer Management Consulting, evaluating employee data with analytic modeling removes the guesswork, making everyone happy.

In the latest Mercer Management Journal, the consultancy outlines a series of steps to map the flow of employees throughout a company — how many come in, who moves up, and who goes away. This represents a data set that can determine all kinds of things, Mercer claims, such as what attributes and behaviors a company values in practice.

According to the consultancy, this method lets managers link specific human-capital practices to business results. One hospital chain in Mercer’s study found that its aggressive use of part-timers —- supposedly to save money -— was actually costing money. It turns out the part-timers knew little about local hospital practices, wasting the time of full-time staff. What’s more, their presence made full-timers miss out on advancement opportunities. Within months, the company had shifted toward a more effective staffing mix.

The idea behind Mercer’s analytical model is to sort out causes from correlations. But ultimately, it’s a new method with an old lesson: Do the homework before investing. Like other investments, workforce management is only as profitable as the thought put into it.

CFOs on the Move

  • J.D. Edwards CFO Richard Allen will get $1.8 million in severance if the proposed merger with PeopleSoft goes through, according to Dow Jones Newswires. Allen, who will stay for a six-month transition period, would get a quarter of his payment at the closing of the merger and the rest when he leaves. Allen also would be subject to a noncompetition and nonsolicitation agreement for a year after his employment ends, the company indicated in its registration papers with the Securities and Exchange Commission. The merger is not exactly a done-deal, however. Just days after PeopleSoft and J.D. Edwards announced that the two companies were merging, rival Oracle launched an unsolicited bid to acquire PeopleSoft.
  • Troubled Dutch grocery retailer Ahold is redoing the whole place with Ikea. The company said it’s appointing former Ikea exec Hannu Ryopponen as its new finance chief. Ryopponen was finance director of London private-equity firm Industri Kapital Group, but he previously worked at the Swiss furniture maker as VP of finance. As is well known now, ex-executives CEO Cees van der Hoeven and CFO Michael Meurs resigned in February as Ahold announced that its U.S. Foodservice arm had overstated profits by about $880 million from 2000 to 2002. Van der Hoeven was replaced in May by Anders Moberg, a former chief executive at Ikea. Once shareholders approve the appointment, Ryopponen will replace Dudley Eustace, a former CFO at Dutch electronics maker Philips who has been interim CFO.
  • Speaking of the land of cantons: Swiss financial-services giant Credit Suisse promoted American Barbara Yastine, CFO of Credit Suisse First Boston, to its executive board. According to the Financial Times, she’s the first woman to make it into the board. Yastine joined in November 2002 after 15 years at Citigroup, where she was CFO of global corporate investment banking. She’s widely considered a rising star with good relationship with her boss John Mack, and credited with driving forward cost-cutting at CFSB.