Human Capital Management

The Importance of Employee Well-Being & Human Resource Competencies

Companies often are skeptical of the importance of well-being at the office, because of the misconception that focusing on well-being cuts into work time and doesn't affect key business outcomes.

Nope. Misconception confirmed. Well-being is the catalyst companies need to cultivate engaged, thriving employees who perform at their best every day. And a company well-being program — if done right — can cut down on skyrocketing employee health costs, while allowing productivity to soar.

Research reveals that when companies add a well-being focus to their engagement program (strength focused), it has an accelerating effect. Together, these two approaches help establish a workplace culture that enhances employees' lives. In a company that supports employees' well-being and engagement, workers are more likely to be thriving overall, which helps boost their individual, team and organizational performance.

Workgroups that were engaged and thriving in their well-being had 38 percent fewer unhealthy days, illustrating the added benefit of a well-being focus.

Gallup and Healthways have developed a comprehensive, definitive source of well-being measurement, the Gallup-Healthways Well-Being 5. This scientific survey instrument and reporting experience measures, tracks and reports on the well-being of individuals and organizations. The five essential elements of well-being are:

Purpose: Liking what you do each day and being motivated to achieve your goals.

Social: Having supportive relationships and love in your life.

Financial: Managing your economic life to reduce stress and increase security.

Community: Liking where you live, feeling safe and having pride in your community

Physical: having good health and enough energy to get things done daily.

At the insurance company Gallup studied, workgroups that had high strength-focused engagement and high well-being, had 30 percent lower turnover than average. As expected, workgroups that were less engaged and had low well-being had a turnover rate 48 percent higher than average.

For well-being programs to succeed, they must first be part of a well-communicated, company-wide strategy backed by executive leadership. When companies build an engaging culture in which employees can thrive, it ultimately helps them win customers.

In essence, well-being promotes the greater business good — and what's good for the individual is good for the organization and its customers. Because of this, an organization needs to think about the work experience from their employees' point of view, and consider whether policies, structures and workplace culture are adding to their well-being or detracting from it. (Heifetz, Stover, Wood 2013)

We are about to take a slight, but necessary turn in our journey to organizational excellence. We’ve just finished looking at employee and leadership initiatives that have proven to enhance an organization’s profits, people and progress.

You may be asking, “How is my company going to be able to implement these changes and focus on my business operations and bottom line?” Answer: Human Resource Professionals (yes, it was a rhetorical question).

How Does HR Add Value to an Organization?

For companies that consider employees their most valuable assets, human resources has extreme value. In the most general sense, HR serves to motivate employees to top performance and maintain an organizational culture of high morale. Strategic HR has emerged with a prominent role in building and developing a strong organization.

People and Performance — In a March 2011 McKinsey Consulting Quarterly article, Nora Gardner, Devin McGranahan and William Wolf explained that more companies are finally coming around to the understanding that HR manages a key link to company success — people and performance. The long-term success and financial performance of a company is directly correlated to the talents, motivation and accomplishments of its people. People make and sell products, work with customers and collaborate on decisions. A primary way HR adds value to a company is by promoting this link and facilitating a company culture of employee development, focused on strengths, growth, and rewards for strong performance.

Talent Acquisition and Retention — Hiring and retaining top talent is a foundation of high-performing companies. HR is largely responsible for building and managing the systems that recruit, attract, hire, train, motivate and retain a company's best employees. This includes establishing strong job designs and hiring the right employees to match. It also involves building strong interviewing and screening processes, planning orientation and training, developing successful employee evaluation tools and constructing motivating compensation programs.

Legal Protection — One of the less-heralded ways HR adds value to a business is through legal protection from discrimination and wrongful termination lawsuits. HR professionals must be continually up to speed on employee laws and educate company executives and managers. They must also design hiring and promotional systems that promote fairness and equality.

Planning — As proactive HR strategies have overtaken reactive responses to employment conditions, HR professionals play a stronger role in planning. HR directors commonly serve on company management teams and participate in strategic planning. This includes assessments of company strengths, opportunities and challenges. HR participants contribute the current view and future expectations of people, initiative and resource needs based on business goals.  Kokemuller (2013)

Who Outsources HR Processes — Small businesses to large corporations decide for one reason or another that outsourcing human resources functions is a way to improve efficiency and minimize staffing costs. Many companies use HR Outsourcing consultants for project work (e.g. design a compensation program) or for times of increased HR needs (e.g. new business needs large number of new-hires).

The Everest Research Institute in Dallas suggests a significant percentage of small businesses are finding human resources outsourcing is the answer to avoiding labor costs and expensive technology, as “HR outsourcing among small businesses has gone up considerably.” The growth rate of HR outsourcing is likely to increase as more small businesses focus on their product and service offerings instead of staffing an in-house human resources department.

HRO Effect on Business Performance — Business performance is an important consideration when small business owners weigh the pros and cons of HRO (Human Resource Outsourcing). One school of thought is that a small business can focus its energy and expenditures on developing the product or service it sells. This enables a small company to allocate its resources to areas that will build their business, instead of recruiting staff, maintaining personnel files and other human resources tasks.

In future columns, we will discuss the value of specific areas of best-practice Human Capital Management. The information and options for selective utilization of any/all of these areas of HCM services will provide small and mid-size businesses with important assistance in creating a culture of excellence.

William Kreider is the founder and CEO of HR Future Group, a firm that offers a full service suite of human capital management services for small businesses. From HR Outsourcing, Cloud-based Payroll, HRIS, Time & Attendance, and Benefit Administration, to Compensation, Leadership Coaching, Talent Acquisition and other HCM consulting services, HR Future can assist your business. Mr. Kreider has significant executive experience in all areas within the HR profession in a variety of industries. For more information, please email him at or call 610.584.2467.