In the past couple of weeks we have seen and heard from a number of
business owners who have tried to put a price tag on the implementation
of the Affordable Care Act cloaked in the argument as to why they have
to add costs to their ultimate end users- the customer.
is the owner of Papa John’s Pizza or the franchise owner of Denny’s
they seem to be forgetting one very important piece of the picture. In
each case where would these organizations be if their human capital made
the concerted decision that since we have been categorized in such a
low number, we are going to go where we are more appreciated?
demographics of our businesses have changed. The old adage that the
proof is in the profit has morphed into how can we show that our human
capital asset are a vital part of our organization. Telling the world
that we have to raise our prices $.15 because we have to provide the
benefits to our employes to make them more productive for the
organization leaves the wrong impression in that regard.
to a presentation at the 2010 SHRM conference in San Diego, a study
sponsored by Kronos and conducted by Mercer found that unplanned
absences cost the organizations in this country 8.7 percent of the total
The Kronos study revealed the following data points:
combined total costs for incidental and extended disability absences —
the kinds of absences employers try to minimize — add up to 8.7 percent
of payroll. This figure is more than half the cost of healthcare,
measured at 13.6 percent of payroll in Mercer’s 2009 National Survey of Employer-Sponsored Health Plans.
total costs of all major absence categories— including direct and
indirect costs —average 35 percent of base payroll. These costs range
from 29 percent for exempt employees, 36 percent for nonexempt salaried,
39 percent for nonunion hourly, and 38 percent for union hourly.
unplanned absences also result in the highest net loss of productivity
per day (i.e., work that is missed or postponed by not being covered by
others): 19 percent versus 13 percent for planned absences and 16
percent for extended absences.
- The number of incidental
unplanned absence days per employee per year averaged 5.4 days across
all employee classes, and ranged from 3.9 for exempts, to 4.9 for
nonexempt salaried, to 5.8 for nonunion hourly, and 7.3 for union
Based on these data points explain to me the logic
of the Papa John’s et al comments. If I am correct in my assumptions
that the CEO of Papa John’s and the Denny’s franchisee are not capable
of being in every facility that their organization’s runs 24/7 then
making the investment in a healthier workforce in the long run means
that the organization actually saves sources of funding for the profit
down the road.
There are numerous examples in the business world
of when human capital left in mass the organization rapidly dissolves
and goes out of existence. The human capital assets of today’s business environment expect to
be appreciated. Take for example Gen Y – if they do not feel a part of
the organization they are gone in an average of 18 months. So do you
risk alienating the next generation of your workers by telling them that their value to your organization is $.15 per customer. I would think not.