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Japanese Companies Look to Cut Costs by Curbing Smoking

Concerned about lost productivity and higher employee healthcare costs, many employers are taking serious steps to eliminate smoking among employees. In Japan, a number of companies and educational institutions are now even basing hiring decisions on whether an applicant smokes.

Some scientific evidence suggests that employers’ concerns about the added costs costs are valid. A 2018 study conducted by Ohio State University found that smokers in the U.S. cost private sector employers an average of $5,816 extra per year, excluding additional costs that the employees themselves may pay. These employer costs include “excess absenteeism,” “presenteeism” (lower productivity on the job), “smoking breaks,” “excess healthcare costs” and “pension benefits,” with time devoted to smoking breaks making up the majority of costs. Stopping smoking eliminates lost time for smoke breaks entirely, unlike other high-cost factors like healthcare and absenteeism, which could continue after an employee stops smoking.

Smoking is more prevalent in Japan than in the United States, especially for men.

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Although the rate has been falling steadily, a 2018 national study showed that 28.2% of men and 9% of women in Japan smoke, compared to 15.8% of men and 12.2% of women in the United States, according to the Centers for Disease Control and Prevention.

In April, more than 20 Japanese companies signed onto a corporate partnership to promote anti-smoking steps. Starting in spring 2020, for example, insurance company Sompo Japan Nipponkoa Himawari will not hire any new employee who smokes, and will require its high-level officials to sign a document pledging not to smoke during work hours. The private sector in Japan is not alone in pushing for less employee smoking—Nagasaki University announced last month that it would stop hiring faculty who smoke and banned smoking on campus, and Oita University has “put priority on nonsmokers” when hiring.

Part of this effort is incentivizing quitting.

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Employees who quit smoking at Japanese company Rohto Pharmaceutical Co., for example, get tokens they can use at the company cafeteria or for other benefits. Marketing firm Piala Inc. is also offering an extra 6 paid days off to non-smoking employees, and 4 of its 42 smokers have reportedly quit smoking thus far.

While programs to incentivize quitting may seem intuitive, according to Ohio State’s Micah Berman, lead author of the school’s study, these efforts may also be pricey for employers. “Employers should be understanding about how difficult it is to quit smoking and how much support is needed,” he said.
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“It’s definitely not just a cost issue, but employers should be informed about what the costs are when they are considering these policies.” These can include the costs of direct incentives like the ones noted above, or the additional healthcare cost of prescription drugs or counseling to help quit. However, in the long-term, companies that implement cessation programs—especially those that have a large number of smoking employees to start—are likely to see the benefits outweigh initial investment costs within 4 years.

Companies may save money by encouraging employees to quit smoking, especially in lost time and healthcare spending, but they should examine the costs and benefits of instituting formal or informal policies to change their employees’ habits. Running afoul of legal protections, as well as making workplaces unfriendly to employees who smoke, being perceived as interfering with employees’ activities outside of work and other considerations may outweigh employers’ concerns for their workers’ health and excess spending.

Japanese companies have stated that they believe these steps are legal, and some U.

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S.-based companies, including Scotts Miracle-Gro and Weyco, Inc., have reportedly made similar efforts to discourage their workforces from smoking. Some companies in the U.S. may be unable to explore such potential programs, however. According to legal experts, “around half of [U.S.] states currently legally protect employees from being denied positions, or having employment contracts terminated, due to tobacco use.”

Solving the Talent Crisis in the Risk Profession

BOSTON—In a time when skills become obsolete much quicker than in previous eras and the professional landscape is rapidly evolving, businesses need to be more agile and adaptive. Companies with these characteristics tend to meet their clients’ expectations more effectively, have higher employee engagement, and see more success generally. They can accomplish this by bringing on and nurturing younger or newer talent.

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While more schools are offering risk-related academic programs, however, the industry is still not attracting enough young people to its ranks.

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How can companies attract new talent to the risk management industry and keep them from leaving?

“I hear people saying all the time, ‘I wish next-generation people would stay,’” said Monica Merrifield, vice president of risk intelligence at YMCA of Greater Toronto. At today’s RIMS 2019 session “Solving the Talent Crisis in the Risk Profession,” Merrifield and fellow panelists Joseph Milan, principal at JA Milan and Associates LLC, Grace Crickette, vice president of administrative affairs at the University of Wisconsin-Whitewater, and Andrew Bent, risk director at Sage Group plc., discussed why young people aren’t joining the risk management field, and what companies can do to bring them into the industry and keep them there.

Crickette described the next generation as purpose-driven and passionate, expecting a company to have a bigger vision and to be clear about the employee’s role in that vision. They work best in high-collaboration and low-hierarchy environments, and expect a variety of work, as well as meaningful interactions with leadership. They are interested in creating a pathway to growth more than advancement—not necessarily a ladder, Crickette said, but “a lattice.” In part, companies and hiring managers can attract these young professionals by examining their own operations and internal culture to ensure that they address these concerns and are open to new perspectives and contributions. When companies emphasize the values of diversity (both of ideas and people), humility, and learning from mistakes, this will make them more appealing for the next generation of talent, Merrifield said.

Merrifield and Crickette also stressed the importance of cultivating new talent, and how young professionals can grow by seeking out mentors and sponsors who will create opportunities for them, even if those opportunities are not at their current company.

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“Don’t wait for a sponsor, ask for a sponsor,” Crickette said. Multiple panelists also encouraged young professionals to pursue education and accreditation for advancement and growth in a risk management career, Crickette urging young people to take more tests and get professional designations to set themselves apart and learn more, and Milan describing the benefits of the RIMS-CRMP certification. Milan also advised young professionals to be courageous enough to share new ideas in their workplaces, and Merrifield said that they should focus on soft skills, which are less likely to be automated in the future.

When people lament that they wish millennials would stay, Bent said he responds by pointing to studies showing that millennials are actually more loyal when their employers present them with a “why”—a deeper purpose for their work and a reason to stay. He said that companies should examine what they are actually doing to attract and retain younger talent, keeping in mind that millennials and younger generations are better at moving on when they see that a new opportunity elsewhere is better.

Crickette added that the industry needs to show young people that there is more to the risk management business than just insurance, and explain how diverse the field is. Bent and Milan both also said that the risk profession is mostly associated with bad things happening, and that risk management professionals could help change that perception by showing how risk management can create opportunities, showing up in their communities during both good times and bad.

It is possible to get young people to join and stay in the risk management profession, these experts stressed, but companies must do the work to adapt to the employees they want, creating opportunities for young risk management professionals to engage and grow.

Pregnancy-Tracking Apps Pose Challenges for Employees

As more companies embrace health-tracking apps to encourage healthier habits and drive down healthcare costs, some employees are becoming uncomfortable with the amount and types of data the apps are sharing with their employers, insurance companies and others.

This is especially true for apps that track fertility and pregnancy. As the Washington Post recently reported, these apps collect huge amounts of personal health information, and are not always transparent about who has access to it. The digital rights organization Electronic Frontier Foundation even published a paper in 2017 titled The Pregnancy Panopticon detailing the security and privacy issues with pregnancy-tracking apps. Employers can also pay extra for some pregnancy-tracking apps to provide them with employees’ health information directly, ostensibly to reduce health care spending and improve the company’s ability to plan for the future.

Given the documented workplace discrimination against women who are pregnant or planning to become pregnant, users may worry that the information they provide the apps could impact employment options or treatment by colleagues and managers. Pregnancy-tracking apps also collect infinitely more personal data than traditional health-tracking apps and devices like step-counters or heart rate monitors. This can include everything from what medications users are taking and when they are having sex or their periods, to the color of their cervical fluid and their doctors’ names and locations.

Citing discomfort with providing this level of information, the Washington Post reported some women have even taken steps to obscure their personal details when using the apps, for fear that their employers, insurance companies, health care providers or third parties may have access to their data and could use it against them in some way. They use fake names or fake email addresses and only give the apps select details or provide inaccurate information. Fearing the invasion of their newborn children’s privacy, some have even chosen not to report their children’s births on the apps, despite this impacting their ability to track their own health and that of their newborn on the app.

Like many other apps or online platforms, it may be difficult to parse out exactly what health-tracking apps are doing with users’ information and what you are agreeing to when you sign up. When employers get involved, these issues get even more difficult. By providing incentives—either in the form of tangible rewards like cash or gift cards, or intangible benefits such as looking like a team player—companies may actually discourage their employees from looking closely at the apps’ terms of use or other key details they need to fully inform the choice to participate or not.

While getting more information about employees’ health may offer ways to improve a workforce’s health and reduce treatment costs, companies encouraging their employees to use these apps are also opening themselves up to risks. As noted above, apps are not always transparent as to what information they are storing and how. Depending on the apps’ security practices, employees’ data may be susceptible to hacking or other misuse by third-party or malicious actors. For example, in January 2018, fitness-tracking app Strava released a map of users’ activity that inadvertently exposed sensitive information about military personnel’s locations, including in war zones. Given the kinds of personal details that some apps collect, health app data could also put users at risk of identity theft or other types of fraud.

Tracking, storing, and using workers’ personal health information also exposes employers and insurance companies to a number of risks and liabilities, including third-party data storage vulnerabilities and data breaches. This is especially important in places governed by stringent online data protection regulations like the European Union’s General Data Protection Regulation (GDPR). In addition to the risks of reputation damage, companies that are breached or otherwise expose employees’ personal information could face significant regulatory fines.

People using health-tracking apps, especially fertility-related apps, should weigh the costs and benefits of disclosing personal information against how apps and others are using this information. Companies who encourage their employees to use these apps and collect their personal health details should also be as transparent as possible about how they are using it, and implement measures to protect workers’ personal data to the fullest extent possible and ensure that managers are not using this data to discriminate against workers.

Are Your Employees Preparing to Quit?

A new study shows that changes in employee engagement and loyalty can indicate whether an employee is planning to leave, and these changes may start up to 9 months before an employee quits. In The 9-Month Warning: Identifying Quitters Before It’s Too Late, workplace data analytics firm Peakon and its research arm Heartbeat drew on polling of 30 million employees in 125 countries to help employers spot the signs and mitigate resulting risks.

Turnover and recruitment to replace departing employees is costly for companies. The hiring process can take weeks or months, and includes both direct and indirect costs from paying recruiters to staff time and lost productivity. Training new staff also takes time and money, and losing institutional knowledge when an employee departs can slow operations or, in a worst-case scenario, can even compromise client relationships or handicap major aspects of the company’s business. There can also be reputation costs, especially if the potential applicants see a stream of departures.

The study stresses that decreasing employee engagement—which it defines as “the level of personal investment an employee has in their work”—is an important indicator of imminent departure. Nine months before quitting, researchers found an employee’s engagement and loyalty to the company drop significantly. The study measured engagement by asking respondents, “How likely is it you would recommend [Company Name] as a place to work?” and measured loyalty by asking, “If you were offered the same job at another organization, how likely is it that you would stay with [Company Name]?”

Various factors contribute to a decline in engagement and loyalty, including in some counterintuitive ways. The study shows that respondents considered unchallenging work more of a reason to leave than having too much work. When their work is not challenging, employees’ sense of accomplishment begins to significantly drop 9 months before quitting, while their feelings about their workload stay relatively steady until their departure.

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Additionally, the study found that communication and relationships between managers and employees may be more important for retention than salary level or other factors. Employees are more likely to leave if they feel unable to discuss their pay with their manager than if they feel underpaid, and their manager’s support is more important than relationships with colleagues, feeling at home at an organization or believing in its mission.

When employees believe that they do not have opportunities for growth, they also become more likely to leave. This includes personal growth, advancement within the company and whether their managers encourage and provide pathways for growth.

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“When we feel our role is helping us develop into our best self, it can have an incredibly powerful impact on employee engagement,” the study explained.

Companies can address these factors in a number of ways, including offering training programs and growth opportunities, starting an employee recognition program, implementing more frequent or more in-depth employee engagement surveys and providing additional training for managers. One way companies can incentivize these steps is by tying executive pay and other rewards not just to financial performance, but also to retention.

By ensuring that employees feel challenged in their work, feel comfortable communicating with their managers and providing opportunities for recognition and growth, employers may reduce staff attrition and save on costly recruitment and training.

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