Effects on Businesses as It Relates to Employee's Smoking Habits - Research Paper Example

? Business of the The use of tobacco has become a growing concern for not only the government but also organizations. The government record says that every year many individual die due to the communicable and non-communicable diseases caused by smoking tobacco. Smoking reduces the life expectancy of an individual. Apart from these, the use of tobacco or smoking is also a concern for the organization. Estimation says that every year the cost that the company incurs for the employees has increases by considerable amount for smokers. This has created a concern for the human resource department. The premiums of the health insurance are seen to rise and now the companies are looking towards shifting this cost towards the employees. Some of the organizations are charging surcharges, while some others have decided not to recruit smoker at the first. This has created hue and cry among the experts and they demand stricter action from the side of the government. Table of Contents Introduction 4 Affect of smoking 4 Discussion 6 Results 9 Recommendations 13 Reference 14 Introduction In recent times the smoking habit of the employees has become a major concern for the employers of United States. It has been seen that when the employees make a positive move towards the lifestyle by leaving their smoking habit both the society and employers benefits at large. Though there is clear evidence of harmful effect of cigarette smoking on the health of the employees; yet there is much debate regarding the matter. Research has also established that there is a reciprocal relationship between smoking and financial stress and social disadvantage. Several researches have also highlighted on the link between various form of social deprivation and high smoking rates (Stobbe, 2013). Rising number of research also focuses on the relationship that intensification and reinforcement of material hardship and financial stress is caused by smoking. The result shows the formation of a vicious cycle between smoking, financial stress and deprivation. There is an emergency to break this cycle not only because of the benefit of the individual but also for the society at large. The main aim of the study is the negative impact of smoking on the financial condition of the organization. Affect of smoking Health Hazards The use of tobacco is not only a chief cause of death from non-communicable diseases such as respiratory disease, cancer and heart disease but also from communicable diseases like tuberculosis, which exaggerates and activates the use of tobacco. The use of tobacco causes 600,000 deaths all over the globe and reduces the life expectancy of an individual by 20 to 25 years. According to the Centre for Disease Control and Prevention (CDC) smoking causes a rise in the risk of infertility, abdominal aortic aneurysm, peripheral vascular disease, chronic obstructive lung diseases, lung cancer, stroke and coronary heart disease. Smoking affects almost every organ in the human body (Centers for Disease Control and Prevention, n.d.). This association can be adjusted through environmental and other exposures and the effect can be moderated via early detection and screening. However the affect of smoking generally increase with age and the burden of chronic and non-communicable diseases increases (African Union, n.d.). Cost for Employers In 2000 smoking was one of the primary factors that caused death. Apart from mortality the economic burden caused by death is also of significant amount. As per the estimation of Centre for Disease Control and Prevention (CDC), every year the cost of estimation increases by $167 billion in United States. This estimation includes both $92 billion, the cost of loss of productivity resulting from the loss of productive life on the event of premature death and $75 billion resulting from the indirect healthcare cost (Centers for Disease Control and Prevention, n.d.; NBC News, 2005). There are some addition costs that are bear by the employer of the smokers like effect of second hand smoking on the other employees, environmental impacts, cost of cleaning and maintenance, rise in the cost of facility due to establishment of ventilation system, increase in the cost for fire insurance, cost incurred due to early retirement owning to the health problems due to smoking, increase in the compensation and accident cost to the workers and low productivity due to more number of smoking breaks and illness (Bunn, et al., 2006). Estimations According to the estimation of National Health Interview Survey (NHIS), the number of current smokers is 44.5 million, which signifies about 21% of the total adult population. The same survey claims that about 46.0 million adults consider themselves as the former smokers. Out the total number of current smokers about 37.5 million claims that they are regular smokers and smoke every day (Cancer Council NSW, 2008). Among the number of people who smokes regularly about 41% has taken measures to quit smoking by stopping smoking for more than one day. The U.S. surgeon General claims that quitting smoking has significant and immediate health benefits for both smokers and people without smoking related diseases. They also claimed that former smokers are seen to live longer than continuing smokers due to the reduced risk of lungs disease, stroke, heart attack and cancer. Discussion A recent research has claimed that employees who smoke costs $6000 more every year to the employers than the employees who do not smoke. This study has considered the accounting part that is connected with the savings that may come out when the smoker dies at a younger age than the non-smoker which results into drawing lower pension costs. The study was headed by Micah Berman of Ohio State University argues that study has found an increasing trend among the employers to ban the smoking practice in the workplace and they also look for not recruiting the smokers at the very first place (Keenan, 2013; Tobacco.org, n.d.). This action has been seen as a relevant step taken by the organizations. Many of the studies have shown that a higher amount of cost is induced by the smokers on the health care system and the health insurers. This is due to the fact that even if the health insurance companies manage the benefit for themselves, the companies go for self insurance that is paying the health care cost. Hence the employee who smokes, costs more to their employers. Loss of productivity also takes place when employee goes for more number of smoke breaks. These breaks are seen to increase when the employers ban smoking inside or anywhere with the office premises and workplace. The study while calculating the cost that the employers incur due to the smoking habit of the employee considered the cost of presenteeism that implies that the employees are at work but lacks in putting full effort that they are supposed to do, cost incur due to the employees taking more number of sick leaves, due to more number of smoke breaks and finally the cost of the benefits that the organization enjoys for not paying the pension to the employees who have died prematurely. In a journal Tobacco Control the actual estimation of excess cost incurred annually for recruiting a smoker is estimated as $5816. The employer believed that smoker employees cost them more even after adjusting the all sorts of cost and benefits that they provides (Fox, 2013). If the lowest possible cost that is incurred by the organization is calculated by assuming those eight minutes of a day, then most of it goes for taking smoking break. In such cases the estimation of cost for the employer in a year comes to be at $1641.14. But in reality much larger amount of times in spent in taking smoking breaks that comes to be as two 15 minutes smoke breaks a day that generates a cost of about $3077. The loss of productivity has been calculated in the study based on the benefits and the average wage paid to the employee working full time and who is addicted to smoking. The wage is assumed to be as $26.49 per hour with number of working days as 232 (Fox, 2013). In US most of the employers are seen to offer 401K plan to their employees, which is based on the investment that the company makes on the employees and not on the life span of the employees. When the research was conducted on 21% of the employers who offers well defined benefit pensions, it was found that the total lifetime savings for each person comes as $10,123 for the male smokers and $383 for the women (Fox, 2013). It is lower in case of women because of the fact that they have lesser amount of money coming up for the pension. When the researchers tends to find how much unproductive the smokers are; the results said that employees are occasionally unproductive in one way or the other but it is true that a negative impact is created on the productivity separately, apart from the loss of work time due to absenteeism and smoking breaks. This is due to the fact that nicotine is an addictive drug and very powerful. This nicotine is present in the tobacco. By smoking cigarette the smokers satisfies its thrust for nicotine but the affect of nicotine wears off quickly. Research has proved that 30 minutes from the last inhalation the smoker starts to feel the symptoms of both psychological and physical withdrawal. The smokers perceive this withdrawal symptom as a clarifying and relaxing effect of the nicotine. The cost of presenteeism is $461.91 for each employee per year, who smokes whereas on the other hand the excess cost for absences is $517 (Fox, 2013). According to the records of Centers for Disease Control and Prevention 19% of the US adults are engaged into smoking and 443,000 premature deaths has been caused by the use of tobacco (Centers for Disease Control and Prevention, n.d.). $193 billion cost is resulted from loss of productivity and health expenses due to the smoking habit (Fox, 2013). Thus the discussion suggests that the employers are incurring higher cost for the employees who smoke. It is not only that their productive working hours reduces due to the large number of smoke breaks but the company has to also incur cost by providing additional number of leaves owning to illness to which the employees who smokes are more prone. Apart from these the organization that provides separate smoking zone within the campus, need to install additional safety devices like fire alarm, smoke detectors and sprinkler. Installing these equipments requires investment of additional amount. Furthermore the discussion also proves that due to all these disadvantages that the employers found because of recruiting smokers so they are now more inclined towards recruitment of non smokers. This is expected to result into not only reduction in the cost but also increase in the productivity of the employees. Results It is clear from the above discussion that the recent trend suggests that employers are more inclined towards banning smoking within the organization and not recruiting the smokers at the very first place. Numerous companies have framed policies that support smoke-free workplace and a large number of organizations are also seen to refuse recruiting candidates with smoking habits. Alaska Airlines is one of such organization who follows the same principle. Marianne Lindsey, a spokesperson from this organization claimed that the organization has been following the no smoking policy from mid of 80’s and even go for testing the presence of nicotine in the candidates upon hiring them but only in those states in which they are allowed to incorporate such policies. The organization has even initiated a free quit smoking program for the employees and the dependent that have either started smoking after getting recruited or were recruited before this no-smoking policy was incorporated. The management of Alaska Airlines claimed that might be they are not well aware of the direct relation between medical cost and smoker employees but they definitely understand that the organization will benefit more from the healthy employees rather than the unhealthy one (Fox, 2013). However there are large numbers of protest against these policies. District of Columbia especially has framed certain laws that restrict the companies from disciplining or banning smokers; however the employers can charge high premium for the health insurance. Many public health experts have asked to initiate softer approach. The director of American Heart Association, Laurie Whitsel claimed that the smokers are successful in quitting smoking if they have more resources and opportunities to quit. It is high addictive and requires much time to quit (Fox, 2013). Dr. Ezekiel Emanuel, the former adviser of White House and his colleagues have also raised their voice against banning smoking in the workplace. They believed that the employers should design some constructive approach rather than punishing the smokers. They even stressed that while hiring the employers should see whether the employee is capable of meeting the responsibilities and the job requirement and should extend genuine support to those employees who are wishing to quit smoking (Fox, 2013). In recent times more and more employers are seen to claim that larger amount of health care cost needs to be paid by the workers who smoke and have high cholesterol or overweight. This is seen to be a practice of penalizing the employees who are leading an unhealthy lifestyle rather than gratifying them for their good habits. In the recent survey it is seen that the percentage of employers who are looking for penalizing the employees have doubled to 19% of 248 of the American employers in the last two years. It is expected that this number will double again in the coming years. Another survey conducted by Mercers confirmed that about a third of the employers who are having employee strength of 500 or more are trying to make the employees join wellness program that offers financial discounts in form of discounts on insurance. Companies like General Mills, Lowe’s, Safeway, PepsiCo and Home Depot has also supported the decision to charge higher premium from the employees who are leading unhealthy lifestyle. Wal-Mart has taken the step by charging additional surcharge of $2,000 per year from the employees who are smokers. The steps were taken by the employers by pointing the reason being the rising cost of health insurance due to obesity and smoking. Whether it is giving discount or charging additional costs in both the cases the smokers has to pay more than the other workers who are meeting the health standards of the company (Abelson, 2011). Most the health and benefit specialists has said that the programs like discounts on health insurance that are billed as encouragement for wellness has become penal for the people who are suffering from health problems, which are not under their control; like incase of addiction towards nicotine, which make it difficult for the person to quit smoking and at the same time obesity is another problem that cannot be easily eradicated. The step taken by Wal-Mart that is the amount of $2,000 for the smokers have been seen to be much higher than the other surcharges that has been imposed by other employers. The ways by which the employees of Wal-Mart can save themselves from the surcharge was by attesting from the doctors that it is medically impossible and inadvisable to quit smoking or get enrolled for the quit smoking program started by the employer. As claimed by the officials of Wal-Mart is that this initiative is not just about creating a healthy option for the employees but also focus on some cost shifting initiatives. Greg Rossiter, the spokesperson of Wal-Mart claimed that increase in the premium for tobacco users has been implemented due to the fact that the about 25% more health care services are consumed by the tobacco users rather than the non tobacco users. The company who has more than one million employees have claimed that the employees have quit smoking in order to qualify for the lower premium and about 13,000 employees has enrolled for the antismoking program started by Wal-Mart (Abelson, 2011). As led down by the Federal Government many of the company’s charges a flat, smaller amount and restricted the financial penalties below 20%. One of the competitors of Wal-Mart named Target is seen to charge no extra amount for the smokers for their insurance while Home Depot charges $20 per month from the smokers. On the other hand PepsiCo charges about $600 more from the smokers unless they enroll and complete the antismoking program initiated by the company (Abelson, 2011). In this context some of the critics claimed that the initiative taken by Wal-Mart can force some of the employees to go for less expensive plans or even look for completely dropping the coverage. The surcharges and strict health targets can end up into putting those who are already in high risk into danger. Thus these initiatives can lead to some unintended consequences. American Heart Association and American Cancer Society have generated warning signals for the federal officers stating that giving too much latitude to the organization may lead to danger. They have highlighted the other side of the problem, which says that these initiatives can create policies that discriminate between healthy and unhealthy employees. Experts have pointed that these measures are creating huge worries since they may be used to drive away the potential employees or existing employees on the grounds of unhealthiness (Abelson, 2011). Presently the current regulations sates that the workers who do not meet the health standards laid by the organization, they need to pay 20% of the insurance cost. The federal health care law has elevated the amount to 30% in 2014 and this signifies almost half of the cost of a policy (Abelson, 2011). Thus the results shows that in order to reduce the cost burden or rather to shift the cost burden the organizations are seen to increase the amount of premium charged for the health insurance of the employees. Apart from this they have also designed some programs that help the employees in quitting smoking. In order to ensure that more and more people join these programs the employers have laid down ways like enrolling for the programs may waiver the extra premium. But experts and benefit analyst believe that though these measures are helping the employers but the employees are at a losing end. Recommendations The whole discussion and results leads to the following recommendations: The government needs to take strict initiatives in order to stop the use of tobacco in form of smoking not only in offices but also in public places. The government should increase the tax on the tobacco related products especially cigarettes. Government should impose high fines when the individuals who are found smoking in public places. They should launch campaigns that highlight on the negative effect and severity of smoking habits. The organizations should be frame strict policies against smoking of cigarette during working hours. The organization should also incorporate some initiatives that encourage the people who maintain a healthy life style like for example rewarding them with cash benefits. Reference Abelson, R. (2011, November 16). The Smokers’ Surcharge. The New York Times. Retrieved from http://www.nytimes.com/2011/11/17/health/policy/smokers-penalized-with-health-insurance-premiums.html?pagewanted=all&_r=1&. African Union. (n.d.). The impact of tobacco use on health and socio-economic development in Africa. Retrieved from http://www.au.int/ar/sites/default/files/The%20Impact%20of%20Tobacco%20Use%20Report%20(English)_3.pdf. Bunn, W.B., Stave, G.M., Downs, K.E., Alvir, J.M.J. & Dirani, R. (2006). Effect of smoking status on productivity loss. JOEM. 48(10). 1099-1108. Cancer Council NSW. (2008). The reciprocal relationship between social disadvantage, financial stress and smoking: What does the research tell us? What can community service organisations do? Retrieved from http://www.cancercouncil.com.au/wp-content/uploads/2011/11/Reciprocal-Relationship.pdf. Centers for Disease Control and Prevention. (n.d.). Economic facts about U.S. tobacco production and use. Retrieved from http://www.cdc.gov/tobacco/data_statistics/fact_sheets/economics/econ_facts/. Fox, M. (2013, June 3). Smoking employees cost $6,000 a year more, study finds. NBC News. Retrieved from http://www.nbcnews.com/health/smoking-employees-cost-6-000-year-more-study-finds-6C10182631. Keenan, K. (2013). APOV: Higher tobacco taxes and smoking bans could save lives. The Daily News. Retrieved from http://thedailynewsonline.com/opinion/article_14003e1e-e8e0-11e2-95e4-001a4bcf887a.html. NBC News. (2005, June 30). Early smoking deaths cost billions in lost wages. Retrieved from http://www.nbcnews.com/id/8419913/ns/health-addictions/t/early-smoking-deaths-cost-billions-lost-wages/#.UdzsUztHJB1. Stobbe, M. (2013, March 28). Real people hurt by smoking star in graphic new ads. NBC News. Retrieved from http://www.nbcnews.com/health/real-people-hurt-smoking-star-graphic-new-ads-1C9127806?franchiseSlug=healthmain. Tobacco.org. (n.d.). Headlines. Retrieved from http://www.tobacco.org/. Read More