Many organisations use health and productivity management (HPM) strategies but many researches indicate that predominantly management still views health as a cost instead of viewing it as an integral part of human capital investment. Business leaders need to rationalise their human capital investment as demographic trends in the global workforce show that skilled human assets will be scarce commodities of the future.
Business strategies geared towards productivity and efficiency are equated with developing human capital. But on the other hand, most research areas in the emerging field of HPM has been investigated through the eyes of medical scientists and it poses a dilemma within itself inasmuch as valuable research findings remain almost esoteric to managers and policy makers.
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From a macroeconomic perspective, productivity is defined as the amount of output per unit of input (labor, equipment, and capital). There are many different ways of measuring productivity. In a factory, for example, productivity might be measured on the number of hours it takes to produce an item or product, whilst in the service sector productivity might be measured on the revenue generated by an employee, divided by his/her salary. Capital can be defined as cash or goods used to generate income.
In other business settings, it can be described as the net worth of a business, i. e. the amount by which its assets exceed its liabilities (Cobb & Douglas,1928). This can be represented in the the Cobb-Douglas functional form of production functions which is widely used to represent the relationship of an output to inputs. It was proposed by Knut Wicksell (1851-1926), and tested against statistical evidence by Paul Douglas and Charles Cobb in 1928. For production, the function is
Y = AL? K? Y, is the output , and is a combination of the elements of labor input (human capital), which is represented as L. Other elements include capital input (physical assets) K. The constants in this equation are A, ? and ? , which are constants determined by technology. From a microeconomic perspective, human productivity could be defined as a product of an effective workforce (EWF), which can be presented the equation (Imai, 1995): EWF = f [(OS+OL) (BS+BL)]
EWF means an effective workforce, OS refers to the operational skills and processes to make and move products or provide services, OL means the operational learning of new skills and processes to make and move products or provide services, BS refers to the behavioral skills and processes to cooperate and create the making and moving of products or services, and BL means the behavioral learning of new skills and processes to cooperate and create the making and moving of products or services (Imai, 1995).
The equation looks straightforward enough combining the causal relationship between learning and behavior (individual) in relation to work related organisational skills (social/workplace). The main criticism of this model, however, is that it did not considered how the workforce health status affected workforce functional and performance levels. The EWF equation is important as it clearly presents a challenge, as from such a conception it would be easy to understand how inviting it is to complete the equation by adding to it the wellness factor, that is health and wellness functions which form the core concern for most organisations.