Depression is Eroding Canadian Productivity

1. Depression is Eroding Canadian Productivity . . . and HR can do something about it! Lou Pike, Ph.D / Chris Bonnett, MHSc cogent consulting group March 21, 2001

2. Today’s Goals • To make the business case • To sound the alarm • To offer aroot causeapproach • To suggest a central role for HR cogent

3. SOUNDING THE ALARM The Economic Impact of Depression in the Workplace cogent

4. Sounding the Alarm • Leading cause of Long Term Disability • Typically 3 of top 10 Rx drugs • Canadian study showed claimants using anti-depressants had largest share of drug costs, 23% of total! • 1.4 million Canadians • affects 4% of Ontarians ages 15 to 64 • one-third fail to seek treatment • only 6% - 10% properly treated cogent

5. Soundingthe Alarm • 10% in US have Major Depression episode • Cost is US$43 billion, 55% of this from lost productivity • Average Length of Disability • Major Depression = 40 work days • Non-mental Health = 29 work days • Costs • US $8,709 vs. US $2,059 / person / year (1997) cogent

6. Sounding the AlarmIt’s a Women ’s Health Crisis • 6-7% of women of prime working age are depressed • The average woman who requested EAP services with depression symptoms was between 27 and 46. (JOM, V. 36, n 9, 09/94) • The ratio is 2:1women/ men • By the year 2005, for every 10 men in the force there will be 7 women cogent

7. Sounding the Alarm • Group benefits - 13% payroll • Absenteeism - 7.8 days / 3% payroll • “Presenteeism” - 4.3 hours per week / 11.5% payroll • Tax waste - 40% of health care funding is inappropriate. Sources: KPMG (1999); Statistics Canada (1998); Burton, Conti et al, JOEM (1999); Macleans Health Report (1999) cogent

8. Sounding the Alarm • 500 employees • normal distribution; payroll $17.5 million • Costs* • typical benefit package; WSIB • absence; turnover; productivity loss Total: $1,102,500 Costing Details: Disability: 0.50 STD + 1.0 LTD + 0.50 WSIB = 2.0% - Absence: 0.50% - Productivity: 0.325 x 0.05 = 1.60% - Multiplier: 4.1% x 1.5 = 6.2% - Drugs: 0.10% - 6.3% x $17.5 mm =$1.1 million. All percentages are of payroll. cogent

9. The Impact of Depression and Stress Severing the Service-Profit Chain cogent

10. What Is Depression What It Is* ‘A spectrum of mood disorders that range in severity from major depression and bipolar illness. . . to brief depressive reactions’. What It Isn’t • Passing moods • Personal weakness cogent * International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM)

11. Persistent sad, empty or anxious mood. Loss of interest or pleasure in usual activities. Fatigue, decreased energy. Sleep disturbances. Eating disturbances. Chronic aches and pains. Increased accidents Difficulty concentrating, remembering, making decisions. Feeling hopeless or pessimistic. Guilt, worthlessness. Thoughts of death or suicide. Increased irritability. Excessive crying. Substance abuse. Symptoms of Depression cogent

12. Imbalance of brain chemicals called neurotransmitters Various physical diseases or illnesses Negative thinking patterns Family history of depression Difficult life events Certain medications Frequent and excessive alcohol consumption Causes of Depression: Individual Characteristics and Behaviour cogent

13. Causes of Depression:Organizational Characteristics • Technological change • Organizational and management practices • Job structure, design and fit “The hurried and worried organization” Source: Institute for Work & Health, 2000. cogent

14. Situational Stressors Unfavourable working conditions Rapid change Anticipatory Stressors Negative expectations Fear Poor reward Depression and Stress • Time Stressors • Work overload • Lack of control • Encounter Stressors • Role conflicts • Issue conflicts • Action conflicts cogent

15. How Stress Affects Managers • Stuck: Demand a single, standard, familiar approach. Less able to generate creative solutions. • Rigid: Intolerant of ambiguity. • Shortened Time Frame: Want the right answer, right now. • Myopic: Adopt a short-term perspective, crisis mentality • Directive: Consult and listen less to others cogent Source: Straw, Aanderlands, & Dutton, 1981; Weick, 1993

16. Stress Across Canada* • Percentage who reported they were as stressed as they could handle, or were on their way to being completely overwhelmed: • Alberta 38% • Atlantic Canada 41% • British Columbia 37% • Ontario 39% • The Prairies 32% • Quebec 64% *Stress is Everywhere and Getting Worse, Survey Says, Canadian Press Newswire, 17/12/97 cogent

17. The Costs of an Unhealthy Workplace 3 x Heart Problems 2 x Substance Abuse 3 x Back Pain High Effort, Low Reward + High Demand, Low Control 2-3 x Injuries 5 x Certain Cancers 2-3 x Conflicts 2-3 x Infections cogent 2-3 x Mental Health Problems Source: Shain, CAMH.

18. Productivity Profitability Competitiveness Intellectual capital Efficiencies Cooperation Speed Quality Standards Attract and Retain Team work Climate Stress Has Direct and Indirect Consequences Employers incur an additional $1.50 in workforce disruption for every dollar of disability claim paid out. (Birnbaum, et al.) cogent

19. Employee Satisfac- tion Profit- ability Customer Loyalty Revenue Growth Produc- tivity The Service-Profit Chain Employee Health cogent

20. Health Matters to the Bank of Montreal Shifting the Performance Curve Productivity, profitability, customer loyalty, and employee retention are outcomes correlated with a “healthy organizational climate”. cogent

21. “...and what HR can do about it!” cogent

22. The Changing Nature of HR • Operational to strategic • Qualitative to quantitative • Policing to partnering • Short-term to long-term • Administrative to consultative • Functionally oriented to business-oriented • Internal focus to external and customer-focus • Reactive to proactive • Activity-focused to solutions-focused cogent

23. What H.R.’s Customers Want • Pay my staff, on time, and the right amount. • Be there to solve their problems. • Hire new staff and help me keep the ones we have. • Do more with less! cogent

24. Traditional Approach: A Quick Fix • Wellness Programs • Drug Treatment • EAPs • Nothing at all ALL FOCUS ON THE INDIVIDUAL cogent

25. Finding Solutions:Getting to Root Causes • Management Decisions • Culture and Values • Policies and Procedures • Job Design and Fit • Workload cogent

26. Reduce Demands Set priorities Focus Improve the Process Set protocols for e-mail and voicemail Increase Control Auhority Collaboration Culture Communication Competence Addressing the Demand/Control Squeeze ‘It’s just good management’. cogent

27. Linking the Issue to H.R. Strategy How profits leak from an organization Turnover Absenteeism Substance Abuse Unresolved Conflict Unmotivated staff Low morale cogent

28. Productivity increases by about 20% after compan-ies implemented work/life balance programs. Staff turnover falls by up to 50% when employees are offered benefits such as child-care subsidies, elder-care programs and flexible hours. The cost of losing and replacing an employee: 50% - 150% of annual salary. 43% of junior managers value home over work time compared with top executives. 48% of employees feel guilty when they leave on time. Maclean’s: Redesigning Work* cogent * March 5, 2001

29. Employees Want a Better Deal* • Less stress • More stimulation • Better professional development • Increased recognition • Bigger say in how the job gets done * Values Shift: the New Work Ethic and What It Means for Business, John Izzo cogent

30. Our Business Case is... Organizational performance depends on healthy employees! cogent

31. In Conclusion • Organizational factors influence our health • HR can enrich the organization’s value to customers, investors and employees*. • We can achieve sustainable performance only by addressing root causes. • Managing depression is a logical part of the HR Mission, and a great opportunity to lead. Source: Ulrich, HBR, Jan-Feb 1998: p 125. cogent

32. The Parting Thought If...Depression harms employees and...responsible employers abate harm and...the issues are compelling and...the cost of inaction is high and...HR needs and wants to lead then... Now’s the time to act! cogent