Auditing Employee Wellness programs

9 January 2020

Health is defined by Safe Work Australia[1] as both physical and psychological health. Associate Partner – Audit, Todd Dewey, discusses the responsibilities of employers when managing the health and well being of their workers.

Regulation and risks.

In Australia all jurisdictions are covered by work health and safety legislation[2] which is designed to ensure the health and safety of employees and contractors through placing the responsibility on employers to ensure they provide a safe work environment without risks to health. Employers have a duty under this legislation, as far as practical, to eliminate risks to employee health and safety.

Work health and safety (WHS) related risks are commonly identified as a strategic risk on organisational risk registers. However, it is also common that these risks are focussed on compliance with legislation, and less common to see risks related to worker wellbeing or wellness associated with psychological health.

Work-related stress is the leading workplace health problem and a significant occupational health risk, one that is more significant than physical inactivity and obesity[3].

Risks leading to stress related incidents can include exposure to a poorly designed or managed work environment, a traumatic event, workplace violence, fatigue, bullying or harassment and excessive or prolonged work pressures.

Just as employers have responsibilities in relation to physical health, employers also have a duty in relation to psychological health which includes:

  • Providing and maintaining a work environment without risk to health and safety
  • Providing and maintaining safe systems of work
  • Monitoring the health of workers and the conditions at the workplace
  • Consulting with workers and their representatives on work health and safety matters, and
  • Providing information, training, instruction and supervision so workers can safely perform their work activities[4].

Benefits of effectively managing employee wellness

Clearly legislative compliance is an important factor. However, there are also financial and social benefits.

75% of employers offer wellness resources and information and/or a general wellness program[5].

While employee wellbeing is more than wellness, this is an encouraging statistic.

There are important business benefits to ensuring worker wellness. Depression and anxiety have a significant economic effect; the estimated cost to the global economy is US $1 trillion per year in lost productivity[6].

In addition to supporting employee’s physical and mental health, wellbeing programs can address employee burnout, stress, turnover, and absenteeism. These programs can also produce cost savings. A study on the financial return from wellbeing programs established that for every dollar spent, medical costs decrease by approximately $3.27 and by $2.73 for absenteeism. Employers who implement wellbeing programs are likely to see substantial positive returns within a few years.

So what should an internal auditor focus on when assessing an employee wellness program?

Psychological risks can be managed using the same methods and tools as for physical risks. The processes can include:

  • Identifying the hazard / risk and the root cause – individual, structural, organisational or environmental;
  • Assessing the risk in terms of likelihood and consequence;
  • Treating the risk; and
  • Monitoring and reporting.

Other factors to consider in an assessment of employee wellbeing programs include:

  • Is the organisation dedicated to wellbeing?

- Defined roles and responsibilities, workforce planning, performance measurement aligned to employee engagement, Code of Conduct and Ethics.

  • Does the organisation’s culture support wellbeing?

- Existence and effectiveness of policies and procedures supporting bullying and harassment, employee support and EAP programs, change management, whistleblowing program.

  • Does management and the Leadership team support wellbeing?

- Buddies, mentors and coaches, relevant training and education.

  • How are employees doing in relation to Health and Wellbeing?

- Role or task conflict.

  • Are current wellbeing programs valued by employees?

Answers to these questions can often be obtained through a survey, focus groups or interviews. Through adopting this approach to assessing employee wellbeing programs, internal audit will be able to assist the organisation to assess program effectiveness.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the thought or position of Findex or Crowe Australasia.

[1] Safe Work Australia Preventing Psychological Injury under WHS laws

[2] Work Health and Safety Act 2011

[3] Centres for Disease Control and Prevention

[4] Safe Work Australia

[5] 2018 Employee Benefits Report from the Society for Human Resources Management

[6] World Health Organisation. Mental Health in the Workplace May 2019