Poor workforce health accounts for more than a quarter reduction in productivity while presenteeism costs businesses three times more than sickness absence, Legal & General has found.
The provider said that conservatively this could cost a business of 600 staff £2m per year.
L&G also revealed that the implementation of its programme produced a return on investment of £2.47 for every £1 spent.
It undertook a pilot project to improve the health and wellbeing of its staff and to understand the cost of poor employee health, including presenteeism, on the business.
Results from the two offices in Cardiff and Hove using the Health Manager system found that the impact of sub optimal employee health led to a 14% loss in productivity.
However, it also exposed the productivity lost through "presenteeism" - those at work but impaired by their health - was 12% or three times higher than the reported absenteeism rate of 4%.
Combining these two factors, it showed that poor employee health accounted for a 26% drop in productivity by working staff.
Using the baseline level of 14% productivity losses and an average annual salary of £23,500; L&G said that a conservative estimate of the cost of lost productivity from only those participants completing their Health Manager assessment (606 out of 1000) amounted to £2m per year.
And in the population who reassessed after six months, an average improvement in productivity of 1.83% was seen while absence rates also fell.
Figures showed that sickness absence was 15% better than the same period in the previous year and improved 13% on 2008-09.
A Legal & General spokeswoman told COVER that the insurer was now looking at rolling the programme out further across the company given the strong results.
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