Harvard researchers found that wellness programs at organizations resulted in gains of $3.27 for each dollar invested. Yet programs like these are few and far between. Even asking CEOs, like CEO of the Energy Project Tony Schwartz did at Davos, whether wellness programs are beneficial for business, and all CEOs said yes. Yet again, few implement wellness programs at their companies.
From pollution to eating habits to drug use, there is a recognizable pattern of humans making decisions based on the short term gains (laziness, enjoyment, small rewards), even when the long term costs are well known.
Our incentive systems have gravitated toward rewarding these short-term gains. Stock price now determines a CEO’s worth, rather than building a sustainable business. Daily poll tracking in politics makes politicians legislate for the immediate campaign rather than invest in long-term gains.
This makes companies more reliant on their current profits. And because politicians are always campaigning, they will pass laws to protect those profits in order to raise money for the endless election cycle.
On an individual level, neuroscientists have theories for how to retrain people to mentally account for the long-term costs and benefits in decision making, the type of thinking people more often rationalize away.
From a business and legislative level, we need to create incentives that encourage long-term planning because that, in the end, generates more revenue and profits even if there are initial losses. Reducing stock price as the main barometer of CEO performance would be the most obvious change (or adjust the time table to judging the stock price over a two year period rather than quarter to quarter).
The Innovator’s Dilemma further explains how companies ignore the long-term. Often, companies under-estimate the speed of changes to the market, preferring to hold onto their current profits rather than invest in a long-term risk. Newspapers, for example, have continued instituting paywalls online in order to stave the loss of readers from their more profitable print publications. The long-term plan would involve investing in the online market, recognizing that that is the growing market, possibly at the print publication’s expense. Because the longer newspapers wait, the more competitors step forward to dominate the new space. Kodak, who invented digital cameras more than a decade before everyone else, focused on its profitable photo printing business. By the time that business collapse, almost every other consumer electronic company had digital cameras on the market and Kodak is facing bankruptcy.