Advisers are facing a battle to make employers and workers realise employee assistance programmes are more than just a telephone counselling service, writes Peter Madigan
The employee benefits market can be cut-throat and ruthless at times. Protection providers compete with occupational health (OH) therapists and private medical insurers for a cut of companies' benefits spending. Between those three there seems little room for the humble employee assistance programme (EAP).
Marketed as a low-cost but highly effective means of combating workplace absence and boosting productivity, EAPs deal with the psychological stresses of modern life in the workplace and beyond.
Counselling is the key feature of such programs and covers issues as diverse as legal and financial advice, family and emotional counselling for personal issues, and occupational problems.
This is provided face-to-face and over the telephone, an aspect of the service that has come to define EAPs and one providers are keen to shirk.
"We have to work to explain to employers what EAPs are and what they do because in the past we haven't done a very good job. For the most part, those who have heard of EAPs think of them as just telephone counselling," says Pam Saunders-Ward, Talk24 EAP managing director.
This is clearly a major obstacle that the industry will have to overcome before it can claim a larger cut of the employee benefits pie - but other providers feel it is not employers who are harbouring misconceptions.
"Employers recognise the all-round nature of the service delivered through an EAP but they are not always effective at communicating the message on to employees who often perceive an EAP as a stress counselling line," says Colin Whitehead, sales director at ICAS.
The term "employee assistance programme" is vague at best. How exactly does it assist employees? Aside from the core counselling services, other features include manager mentoring and performance management and critical incident support following a traumatic event.
What employers can expect from their EAP can vary greatly, however, from provider to provider.
Greater pressure
"As this market has developed in the last 25 years there has been greater pressure on prices due to increased competition so prices - and consequently services - have been cut back to the stage where we are now when to some people an EAP is little more than a telephone counselling service and a cheap add-on to an employee benefits package," says Richard Hopkins, managing director at Dovedale.
"EAP providers have no one to blame but themselves because most haven't taken the time to educate employers about their real needs."
So what can be done to illustrate the true worth of an EAP? Use of the term "programme" indicates a raft of measures to address a given problem. If an EAP is nothing more than a counselling service then that is what it should be called.
Some providers are fighting back and diversifying their propositions to illustrate the true value of an EAP.
"As well as offering all the services you would expect from a typical EAP we also offer cognitive behavioural therapy and physical treatments such as physiotherapy, osteopathy and chiropractic therapy. As far as I know, we are only provider in the UK to offer these services," says Saunders-Ward.
OH therapists have confirmed the reluctance of EAP providers to use their services.
"When we were growing our client base we approached employee assistance firms as well as occupational health providers about our services such as posture coaching, stress management techniques and the use of massage in the office to combat workplace stress and increase productivity," says Katharine Dever, director of London-based occupational health and well-being therapist Office Om. "While we formed links with OH providers the EAP community simply didn't seem interested in diversifying their business."
Although the traditional OH model has been reactive in treating physical ailments after they have forced an employee to take time off work, it is a matter of time until they begin to expand into stress management and other areas traditionally catered for by the EAP market.
Medical model
The demand is certainly there, as Whitehead observes. He says: "Occupational health provides a different service based on the medical model, while EAP services are based on providing psychological and emotional support to achieve the same goals. Research has proven that in 90% of workplace absence cases mental health will be a factor."
If the need for psychological assistance is growing, then so should the EAP market. According to the Employee Assistance Programme Association around 1,200 UK companies have EAPs in place - with around 300 of these just having access to a telephone helpline service.
This figure translates into around 15% of all employees in the UK so there is plenty of capacity for growth, although figures in Britain are relatively disappointing compared with other nations.
"In Australia and Ireland they have around 30% of their working population covered under EAPs and in America that number is nearer 55%. There are cultural reasons for these differences but there are also other factors that can determine the strength of the market in a country," says Hopkins.
Multi-nationals
"There needs to be multi-nationals who have used EAPs in other nations as well as a welfare tradition that has been undermined so the employer has to provide care themselves. Finally, there needs to be a legislative framework to make the purchase imperative and give the company a reason to take one out," he adds.
The UK fulfils these criteria and should be a fertile ground for growth.
The 2002 landmark case Hatton vs Sunderland saw the Court of Appeal rule that an employer which "offers a confidential counselling service with access to treatment is unlikely to be found in breach of duty [of care]."
It is hard to imagine a more positive result for EAP providers but consultants feel that the ruling is not the victory many assumed it would be.
A number of EAPs have affiliated themselves with insurers to offer their services alongside a group income protection (IP) policy. Norwich Union's program is supplied by Corecare while Canada Life works with ICAS to offer an EAP on top of their IP proposition.
The cost of these services varies from as little as £6 per employee per year for basic counselling services up to £50 per employee per year for a full package. For an adviser setting up an IP policy for a large employer, bolting on an EAP, affiliated with the insurer or independent of it, could be lucrative.
The biggest challenge is convincing an employer that they will receive a large return on their investment.
"ICAS can demonstrate a return on investment of up to £18.50 for every £1 spent. The actual return is dependent upon a number of interrelated factors such as number of employees, absence rates, utilisation rate of EAP and of course EAP itself," says Whitehead.
Although individual providers may provide case studies in which particular companies enjoy strong returns, independent research as to the effectiveness of EAPs in general is harder to find.
"There's a lot of old research in US that highlights return on investment but over here we have none. We'd love to have it to show to clients but it's elusive," says Hopkins.
EAP providers seem to be moving in new directions in terms of the support they are offering to employees and this trend may indicate the best way forward for the market.
Polarisation
"I think there will be a polarisation of the market in the coming years. At one end we shall see the low-price EAP continue to survive off employers looking to cover their backs in case they get sued.
"At the other end of the market we will see the development of niche players who may move into the role traditionally filled by occupational health providers and performance management services," says Hopkins.
Whether this is the case or not, advisers will have to work hard to ensure that they stay abreast of developments in a sector that looks set to take on an ever greater role in the employee benefits matrix than ever.
