Insurance giant Aetna (AET) rewards its employees monetarily for sleeping, helps them pay off student loan debt, offers tuition assistance, encourages them to partake in yoga-mindfulness, and pays a minimum base wage that’s significantly higher than the federal minimum wage.
In all, the company spends about $70 million per year on these programs without putting a dent in the bottom line, according to CEO Mark Bertolini. In fact, he says it’s helped the company by reducing health care costs, creating more productive and engaged employees, which results in higher customer retention rates.
This all started back in 2007 when Bertolini approached his team about doing yoga and mindfulness, something he practices on a daily basis. He was able to get the Chief Medical Officer to sign off on the initiative on the condition that they conduct a study on the impact of mind-body stress reduction.
What they soon learned is that the employees with the highest levels of stress had around $2,500 more per year of health care costs.
“And so, we put them through mindfulness and yoga we measured their heart rate ability afterward, looked at their health care costs a year later, and we saw $3,000 reduction in health care costs and 69 minutes more in productivity,” Bertolini said in a recent interview with Yahoo Finance.
During the study, the 700 participants were asked to keep a journal. In those journals, Aetna learned that quality of life is a major source of stress. For example, some employees were worried about having to pay bills or not having enough money to cover their bills. Some were on food stamps or had children on Medicaid.
‘People, planet, then profits’
Those revelations led the company to look closer at its people and understand why they were facing these sorts of challenges at home.
“We’re a big company. We do well. Why aren’t some of these employees doing well?” Bertolini said. “What we did that we found that we had a vast majority of these families were female head of household, a lot of them were single female head of household. We had a lot of kids on Medicaid a lot of families on food stamps and what we did is we said, ‘What is their wage like?’ And it was about $12, $12.50 an hour.”
As a result, Aetna raised its minimum base wage for employees to $16 per hour.
“That started a whole thought process in the organization that created this idea of ‘What more can we do for our employees to make better people?’ Because these are the people taking care of our customers who need support,” Bertolini said. “And that began the whole idea of paying for sleep — $300 for twenty nights in a row seven-and-a-half hours. We increased our tuition assistance to $5,000 a year, and we now repay student loans up to $10,000. And now we have pet therapy, so we have dogs and cats and rabbits … people lined up and down the hall to have time with these pets. It’s amazing.”
It’s a model that he thinks other corporations can and have to replicate.
“This whole idea of dealing with a social ecosystem is about more moral authority than formal authority. It’s about mission. It’s about people, planet, then profits,” Bertolini said. “And so if you have to build an organization like that, it requires trust, and you only get that if you give it. And so this mission-oriented, trust-based model of running a business within a social ecosystem requires different leadership than we’ve traditionally seen in the CEO suite. And I think that’s the next big step for corporations is to understand that and act on it. You can do good and do well.”
‘Quality of life’
A recent change Aetna announced is the relocation of its headquarters from Hartford, Connecticut to New York City’s trendy Chelsea neighborhood. Bertolini characterized the move as a “quality of life issue.”
“It’s about talent in a very specific way,” he said. “Because of what we do as a company and the way we behave everybody wants to come work for us, and they love to work for us. The problem is keeping them.”
This generation of talent wants to live in communities where they can walk, go to restaurants, and access parks.
“Hartford is a beautiful place, but it doesn’t have the vibrancy it needs for us to keep people once we get them and that’s the issue. It’s quality of life.”
Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.