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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.

Whether it 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?

The 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.

According 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 payroll costs.

The Kronos study revealed the following data points:

  • The 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.
  • The 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.
  • Incidental 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 hourly.

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.

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Tags: Continuous, HR, Human, Improvement, Proces, Resources, Training

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