Reimagining HR for Better Well-Being and Performance

Humans have been challenged to adjust to new ways of working since the first farmers abandoned the hunter-gatherer lifestyle. But the demands of work today exact a high price on employee well-being, as workers strive to cope with the rapid pace of technological change, the overnight disruption of entire industries by new upstarts, and the rise of uncertainty and volatility in every global market.

Roughly half the U.S. workforce struggles with burnout.1 Seventy-six percent see workplace stress negatively impacting their personal relationships.2 Excessive stress at work accounts for $190 billion in health care costs each year, plus hundreds of thousands of unnecessary deaths.3 And in the past three years, the stressors and disruptions of the COVID-19 pandemic have spun a rising storm into a full-on tornado — and made employee well-being an urgent priority for many business leaders.

The good news for organizations that want employees to thrive is that behavioral science has provided new insights and strategies that can help support mental health. (See “What We Need to Flourish at Work.”) But in order for managers to take full advantage of these insights and help individuals develop key psychological strengths, many organizations will need to reconsider Human Resources and Benefits functions that in some cases still carry the legacy of a bygone industrial era.

One of the challenges organizations face is structural. The two HR functions most closely connected to employee thriving — Benefits, and Learning and Development — evolved from two distinct historical traditions, and each remains somewhat siloed today. We’ll show why we believe that this two-pronged structure makes it challenging for corporations to tackle thriving holistically, and why each approach is insufficient on its own. We’ll also examine additional organizational barriers to flourishing, before offering solutions.

Helping the Suffering:
The Social Welfare Tradition

The harsh conditions of industrial factory work created a steep rise in alcoholism in the late 19th and early 20th centuries and brought related social ills. Business owners like Henry Heinz (founder of the eponymous condiments company) viewed their employees as wards under their care, and they sought to help and protect them; the HR function that grew out of this paternalistic tradition today goes by the name of Benefits. A vice president of Benefits (or Benefits and Total Compensation, if they also oversee pay scales) usually reports to the company’s chief human resources officer (CHRO), who in turn reports to the CEO.

Historically, there have been two types of services administered by the Benefits team that are most relevant to employee emotional well-being: health plans and the employee assistance program (EAP). The latter arose out of sobriety programs but came to encompass organizational support for an ever widening circle of psychological ills beyond substance abuse. Modern EAPs offer counseling for depression, anxiety, parenting and relationship challenges, and workplace violence. Ninety-eight percent of large companies offer their employees access to an EAP, which typically includes free counseling and referrals to mental health care.4

Despite their widespread availability, EAPs are woefully underutilized, tapped by just 4% of workers.5 Originally designed as private, confidential services used in the shadows, EAPs still carry too strong a stigma, and employees fear judgment or even penalties for accessing mental health services through their employer.

Benefits teams also offer employees access to mental health benefits through their health plans. Mental disorders that are serious enough get referred from the EAP to a therapist or psychiatrist within the plan. Clinical health care accounts for the vast majority of a corporation’s spending on all things mental health. Insurance covers therapy, psychiatry, inpatient psychiatric treatment, and psychopharmaceuticals. Many EAPs even sit within the health plan umbrella and are administered by the same parent company.

All of this means that employees have come to regard EAPs and mental health care benefits as programs for people who are already in pretty bad shape. Employees are grateful to have access to these services, but they tend to interpret any employer offerings labeled “mental health” as a euphemism for mental illness. As a result, despite immensely creative, committed efforts and increasingly diverse investments, it can be difficult for Benefits teams to change the employee perception that EAPs provide only remediation services rather than helping employees to thrive.

Learning and Development:
Upskilling the Able

The history of the Learning and Development function, like that of Benefits, begins with the Industrial Revolution. Before then, workers learned their trades on the job or in one-on-one apprenticeships. But with industrialization, factories needed to keep up with such an unprecedented pace of production that they began to offer training to larger groups, with classrooms often located right off the factory floor.

The need to onboard large numbers of people quickly and efficiently dovetailed with the principles of scientific management then being popularized by mechanical engineer Frederick Winslow Taylor. Machines had already greatly increased the efficiency of production; the next logical step, Taylor argued, was to increase the efficiency of the humans operating the machines. Through empirical study, best practices could be developed to reduce wasted effort and maximize productivity. Taylor’s ideas gradually morphed into some of the functions owned by modern HR’s Learning and Development team, or L&D. L&D is responsible for employee training, upskilling, learning, and professional growth in service of performance and productivity. A vice president of L&D — sometimes also called a vice president of Talent, or Talent and Development — usually reports to the CHRO and is a peer to the vice president of Benefits.

Given Taylor’s professional background, it’s unsurprising, though unfortunate, that his methods were mechanical in nature. He prioritized the findings of industrial engineering, business process management, and logistics over those of psychological science. In treating people like a type of machine, Taylor ignored the deeply human aspects of work. Despite its shortcomings, his system has remained influential for decades, with lasting consequences; much corporate training today continues to ignore how human beings actually learn and change.

For example, even in Taylor’s time, psychologist Hermann Ebbinghaus had demonstrated that without repetition, we forget almost everything that we are taught in a single go — up to 90% by the end of the month. But the majority of business training sessions are delivered as long one-off sessions instead of multiple shorter sessions repeated over time. In addition, we know that no two learners are the same, in terms of their strengths, their levels of motivation, and their funds of knowledge. However, most corporate training takes a one-size-fits-all approach that will bore some, go over the heads of others, and fail to inspire the majority, who are not yet ready to learn.

Harvard Business School professor Michael Beer has coined the phrase “the great training robbery” to describe the enormous amount of corporate spending wasted on training that doesn’t work. Up to 90% of corporate learning initiatives suffer from these design flaws, which minimize their effectiveness. Corporations in G20 countries spend roughly $400 billion on these programs annually.6 Call that $360 billion up in flames.

The Challenges of a Disjointed Approach to Employee Growth

In many modern HR departments, the Benefits and L&D functions exist as partially or fully siloed subunits, with one focused on employee health and the other on performance. But in today’s high-pressure workplaces, our emotional well-being and professional development needs are intimately intertwined. As we battle extraordinary uncertainty, the skills required to manage stress are the same skills that enable sustainable career growth. The modern professional cannot succeed in leadership without emotional regulation, for example, any more than they can conquer anxiety without addressing career turbulence. And yet so many of today’s most pressing workforce issues — like burnout, loneliness, and belonging — sit squarely at the margins of two separate functions.

Forward-leaning Benefits and L&D executives, including many whom we are privileged to have partnered with and learned from in our research, work hard to bridge this gap through frequent communication and collaboration. They report to CHROs who likewise understand this dynamic and model collaboration at the top.

At many enterprise companies, however, the siloing of Benefits and L&D remains a significant challenge to a holistic approach to thriving.7 In 2017, one of our authors (Gabriella) researched this gap across some of the largest companies in America. Her goal was to understand how each department thought about this overlap of their work with the other’s. The answers were hard to come by, because so often these functional counterparts knew little about each other’s team.

Occasionally, such division can even produce territoriality. For example, today all EAPs include some form of stress counseling; in addition, some Benefits teams invest in stand-alone stress management or resilience training solutions. This makes sense, because people with mental health conditions typically struggle to cope with stress and often have poor resilience. We also know that building resilience is good for productivity and retention, and that managers and leaders disproportionately influence the well-being of their teams. For these reasons, it makes equal sense for leadership to receive extra training in this area — a type of managerial training that would sit with L&D.

Shortly before the pandemic, the L&D team at a Fortune 100 company brought their CHRO a proposal for resilience training for leaders. When the Benefits team found out, they reminded the CHRO that they had already implemented a resilience program to lower stress. Adding another program could confuse people, they argued. Rather than bringing everyone to the table, the CHRO let the idea go, with the result that leaders didn’t get access to the more robust program. In retrospect, there would have been no better time to work on building leadership’s capacity to help their teams weather adversity.

A silver lining of the COVID-19 pandemic that we observed was increased collaboration across the aisles of HR. The pandemic loosed a tidal wave of psychological needs for workers and their families, sending HR teams around the world scrambling to help, often sacrificing their weekends in service of their workforces. For the first time, we found ourselves on video calls with both the vice president of Benefits and the vice president of L&D at the same time. Down in the COVID-19 foxhole, holding the line against emotional chaos, their teams had found in each other sorely needed allies. This chaos was the purview of L&D, because it was affecting the performance of every employee — but it was also the purview of Benefits, because it carried deep psychological risks.

New challenges to collaboration, however, surfaced in this climate. Benefits teams and L&D teams have different metrics of success that map to their organizational responsibilities. Benefits teams are expected to tightly manage health care spending and often employ actuaries for this reason. From their perspective, a thriving-related program is effective if it decreases the number of people who need to see therapists or psychiatrists. L&D departments, in contrast, don’t even have access to health care billing records, let alone track them. The metrics that matter most to L&D include productivity, innovation, and employee retention.

Ideally, this divergence should produce a creative tension that yields a more holistic design. One can imagine the vice president of Benefits and the vice president of L&D putting their heads together to codesign and cosponsor solutions that will achieve the aims of both teams. Thriving offerings can, in fact, improve both health care spending and performance metrics, but only if they are designed to do so from the start. Unfortunately, in practice, it’s often faster and simpler for the two teams to resolve their divergence by picking one or the other function to take the lead on a particular initiative. Whichever group ends up funding a given program then naturally dominates its design and metrics of success. When we privilege one type of outcome over the other — call it surviving versus thriving — the program’s focus narrows accordingly, along with the benefits to the organization.

The Proactive Organization

Both EAPs and corporate training programs represent post hoc responses to already urgent needs. This reactive posture stems from their legacy. However, far and away, the most effective type of intervention is to prevent individuals from developing diseases or problematic behaviors in the first place, known as primary prevention. This approach works best and costs the least — as long as we have the courage to act now, based on very likely future outcomes. Corporate leaders must always be thinking several steps ahead about human capital, understanding how the changes to come will affect their workforce, identifying the skills that will calm turbulence, and training their people accordingly.

In the realm of physical health, Benefits teams lead the way in future-minded thinking. They work to ensure that health plans cover all government-recommended preventive care services, such as immunizations. They look to experts and chief medical officers for guidance on the latest trends in prevention and health promotion. They advocate for offerings like gym memberships to help employees avoid heart disease, or smoking-cessation coaching to prevent lung cancer. In so doing, they lengthen employees’ lives and lower health care costs for both individuals and the corporations — a true win-win.

In the realm of psychological thriving, the primary prevention approach is usually thinner and harder to come by. Why should that be the case?

The answer is multifaceted. We’ve already seen one part of it: The holistic perspective needed to enable a proactive stance is challenged by the split between managing the costs of illness (Benefits) and managing the metrics of growth (L&D). Dividing remediation and growth can shortchange both and make it difficult to focus on building the core skills that unite them.

A second hurdle to implementing primary prevention springs from deeper-seated beliefs about human psychology. There are still a handful of influential corporate leaders who do not see employees’ psychological well-being as their responsibility. Perhaps they rose up in the ranks of corporations that lacked a culture of employee support. Even if, on some level, they recognize that thriving workers perform better, they might not see a reason to change things. Some point to low EAP utilization numbers — an artifact of stigma and, in some cases, low-quality services — as evidence that employees don’t want such help.

Third, there is the considerable challenge of proving the return on investment in prevention programs for psychological well-being. Any HR program will require a budget, and large-ticket items like resilience coaching or innovation training ultimately land on the desk of the CFO or their deputies. CFOs speak the language of efficiency: Considering such an investment, they want to know what cost savings or other efficiency will result.

Thriving is not an efficiency sale; it’s an effectiveness sale. Efficient solutions yield the same outcome more rapidly, with minimal waste. Effective solutions get us to the best outcomes, period. Enabling employees with skills like rapid rapport (the ability to rapidly build trust across diverse teams) or prospection (the ability to productively imagine and plan for future scenarios) prevents bad outcomes while improving performance and retention. Seeing the chain of causality clearly requires statistical regression models, familiarity with common psychometric measures, and a decent grasp of the epidemiology of mental illness. It looks nothing like the standard business case. It’s complex and, for that reason, easily dismissed as too fuzzy to merit investment.

Short-Term Pain for Long-Term Gain

Thriving also takes time. Corporate leadership focused myopically on short-term gains will not be enthusiastic about paying for thriving. Short-termism is an enemy of workplace flourishing — and therefore also the enemy of performance, productivity, and sustainable success. But the long-term gains in productivity from employee thriving will repay the investment many times over.

One of the great ironies, of course, is that businesses already spend a ton of money on programs that are neither efficient nor effective — yet they somehow get funded anyway. Remember that $360 billion up in flames? How did any of that make it past the CFO? This level of investment suggests that most corporations believe they should be doing something. That’s the good news. But the key players involved in approving major investments — including Procurement, Finance, Legal, and even many in HR — usually don’t have the expertise to determine which offerings will move the needle. It’s not easy to sort through what is actually evidence-based as opposed to what just sounds good on paper. The natural inclination for a nonexpert is to fund the cheapest option with the longest list of features. In the absence of the ability to weigh the performance and well-being impact of one offering over another, bells and whistles often stand in for value.

This leads us to the fourth and final hurdle to the proactive approach to employee thriving, which is apprehension about translating behavioral science research into practice. Do we really know enough to have a sense of which psychological skills will be most vital for success both today and in the future, and also lower the risk of psychological illness? Is the science precise enough to guide investment?

We believe that the answer to these questions is a resounding yes. We have more than 30 years of data documenting the relationship between improved psychological well-being and lowered risks of myriad mental and physical illnesses, and detailing the interventions that work. On the applied-science side, our industry is on its third or fourth generation of novel evidence-based interventions, platforms, tools, and services to support employee growth and well-being. Our research has identified the five key psychological skills that workers will need in order to succeed in our increasingly volatile, global, automated industries. Organizations may not be able to tackle all these challenges at once. But we have all the evidence we need to get started responsibly.

All the hurdles we’ve listed above are surmountable, as we can see from the experiences of those leading corporations that set their sights squarely on thriving itself. Such corporations work to bridge the gap between Benefits and L&D through collaboration at the highest levels of leadership.

At Hilton, senior L&D and Benefits leaders partner to think holistically about the support their people need most, working backward from the common desired outcome of employee thriving. As a result, the company is consistently rated one of the best places to work globally, regularly beating out higher-margin businesses for these accolades. Hilton’s success demonstrates that it’s not about spending more on your employee experience. There’s no need for perks like on-site putting greens or dry cleaning — it’s about spending more wisely. In the words of Hilton CHRO Laura Fuentes, “To me, it boils down to creating not a work experience or an employee experience but a human experience that makes people feel like they are seen, they are welcome, they are heard, they will be taken care of, and they can take care of their families and loved ones, and that they belong to something greater than themselves.”8 A vision that bold necessitates collaboration across functions.

In other organizations, it may not be enough to leverage existing structures and processes, in which case an even more radical approach may be called for. This approach would structurally unify those responsible for worker thriving, including large parts of Benefits and L&D, into a single unit we’ll call the Employee Thriving Team (ETT). The ETT would be responsible for the physical and emotional health, personal growth, and professional growth of each employee. Diverse stakeholders, from investors to customers to senior leadership, would rely on the ETT to keep the company’s most valuable asset — its people — at the ready to meet the unforeseen challenges to come.

The ETT’s leading indicators of success would include measures such as Marty’s assessment of positive emotion, engagement, relationships, meaning, and accomplishment (PERMA), and other metrics indicating levels of resilience, innovation, productivity, and prospection.9 Its major investments would be reviewed and approved by decision makers fluent in the behavioral sciences, with a focus on primary prevention. Continued funding for any program would be contingent upon measurable improvement in the ETT’s most important metrics: employee retention, performance, and health care costs.

This significant structural transformation would also require careful thinking about which functions that live under the umbrellas of Benefits and L&D today would need to be carved out in order to preserve this team’s focus. And such a substantial rewiring of HR — either by way of restructuring or through close and frequent collaboration between L&D and Benefits — requires the buy-in of not only the CHRO but also the CEO and even the board of directors. These leaders need to share a common vision of workforce readiness that honors employee thriving and agility as the company’s strongest bulwark against the accelerating uncertainty of the future.