These invisible balance sheet items drain profit and people

A commitment to human capital accounting can drive profit, improve productivity and enhance culture. In business, organizations get what they measure — which is to say that most leaders are burdened by an intense focus on profit and loss and often miss the underlying motivations of those dollars.

Workplace wellness programs started gaining traction in the 1980s and 1990s — about the same time workers started to see their healthcare costs significantly rise. The original idea was beautiful and simple: Giving employees access to well-being resources would make them happier, healthier and more productive. Unfortunately, the great idea stopped there.

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If organizations want employees to be happier, healthier and more productive (and who doesn't?), they have to measure happiness, health and productivity. That means determining which factors they can influence that will have the greatest impact on well-being. That also means figuring out how to leverage resources for better outcomes.

Just like a high-performing sales team focuses on many non-financial key performance indicators (KPIs) — outbound calls, new leads generated, monthly sales bookings — great companies are learning to measure employee engagement, job satisfaction and well-being in ways that matter. And having been on the dialing end of too many sales calls to count, I would suggest that real success is figuring out how to motivate and empower yourself and your team to make more quality connections, not just making a call or sending an email.

But what are the most important well-being indicators? There are several components of well-being, and we will start with the one that our team calls, "the least important, but the most essential." Financial wellness is why most people work and has become a particularly hot topic lately. Remove the paycheck and not many people would show up to work. The problem is that the dollars on the paycheck are not empowering financial wellness.

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In order to improve it, how might an organization measure financial wellness? There are lots of great ways to do that. PayPal measured net disposable income to figure out how much money employees had after they paid their obligations each month. What keeps many households from having more cash flow is high-cost, debt–like credit cards, which is at an all-time high. Measuring and eliminating that debt would certainly lead to improved wellness. The percentage people save from their paychecks is a predictor of long-term financial success. Anyone could measure net worth and how it changes during employment.

Financial stress is killing workplace productivity. Many employers are responding by adding financial wellness programs, but are still failing to measure the effectiveness of those initiatives. In fact, usage rates are shockingly low and skewed toward people who least need the assistance. Perhaps the programs are not the problem, but a failure to activate their potential.

If we measured, say, personal savings rates of our employees as a KPI, we would:

• Seek a program/methodology with a history of success in increasing personal savings rates.
• Account for the reasons people did and did not engage with the program.
• Address and eliminate the barriers to engagement and success.
• Continuously evaluate and improve the process.

Instead, many organizations become frustrated with low engagement rates and blame employees or providers. Or, perhaps even worse, do nothing but continue to offer the (usually free or low-cost) program that is not working.

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The opportunity to improve well-being begins with a commitment to measure and improve what matters most. Imagine what that might look like. Organizations could report to employees, candidates, customers and investors outcomes like:

• Employees here have 18% of their income left after meeting all of their obligations.
• Frontline employees see their debt decrease by over $2,000 a year at our company.
• All employees, regardless of race and gender, grow their net worth twice as fast (with higher personal savings rates) than the national average in this organization.

Companies that track and improve these metrics will have less turnover, burnout and dissatisfied employees. They will have higher productivity, retention and profit. But these improvements do not start with adding a financial wellness program; they start with accounting for the factors that contribute to financial well-being and committing to improving them.

This process works for physical health, mental wellness and even employee trust levels. In fact, every company we know is already using this process to try to increase their profits. It is time to apply data-driven KPIs to human capital to improve well-being and the balance sheet.