What is the Hard Return on Employee Wellness Programs?

One of the most frequently asked questions is the tangible benefits of wellness programs. There are ongoing debates about whether they are just a passing trend. Some data is available that states that such programs genuinely contribute to both business profit and employee health, but it is not substantial enough. 

As the interest and investment in employee wellness programs increase, discussions about their return on investment (ROI) gain momentum. However, while the program is ongoing, it’s challenging to quantify the financial impact precisely. Research from the University of Texas MD Anderson Cancer Center indicates that well-designed and efficiently implemented employee wellness programs can yield significant and profitable ROI, reaching as high as six to one.

Common Success Factors for Positive ROI

Wellness programs have different outcomes. However, there are common success factors that make them more effective and ROI-driven. A study by the Center for Studying Health System Change (HSC) shows that customised wellness programs are effective. 

A good work environment is essential for any wellness plan to work. A strong plan and long-term strategy must back the programs. For an organisation committed to employee well-being, the outcome of a wellness plan results in an improved happiness index. However, connecting this intangible measure to measurable metrics is not a simple task.  

Effective wellness plans have a few commonalities:

1. Integrated to the organisational needs,

2. They have to be comprehensive but detail-oriented

3. They must cater to the diversified needs 

4. Align to the organisation’s business strategy

5. Endorsed by senior leadership and managers. 

Organisations mostly use healthcare costs, productivity, or absenteeism to measure improved ROI. For that matter, there is no universal standard for measuring ROI. As a result, it may be challenging to put a monetary figure on the results achieved. Sometimes, an alternative approach called value on investment (VOI) gets used. Here, one can measure if a non-financial metric has increased after the implementation of the program.

Elevate employee engagement and well-being with a comprehensive Corporate Wellness Program that goes beyond the ordinary

Common Ways to Measure ROI

Some common ways to measure ROI or VOI 

1. Productivity

An employee wellness program can have measurable outcomes like more high performers at work. Sustained positive initiatives like proper nutrition and planned activity levels are likely to improve employee health. However, to ascertain whether a wellness program has made employees more productive, an organisation needs to have a way to measure productivity. For example, it can measure the increase in labour hours and customer satisfaction. However, the metrics can differ, and they have an indirect association with employee wellness. As an area, this is grey and direct measurable impacts are sometimes difficult to arrive at. 

2. Engagement

Wellness programs can lead to an improvement in employee engagement. As a result, employees have greater job satisfaction. An engaged employee is more likely to stay committed to their jobs and be more task-oriented. It may result in metrics like higher target achievement, quick turnaround time, innovative thinking and less absenteeism.

3. Healthcare Spending

One of the easiest ways to measure ROI is to calculate healthcare spending and insurance claims. Effective wellness programs can eradicate common causes that lead to lifestyle diseases like high BP, diabetes, and cancer. Since lifestyle diseases account for the most significant healthcare expenditures, reductions in these risk factors can drastically decrease organisational investment in healthcare.

4. Employee Turnover and Retention

Lower employee turnover and higher retention rates are a byproduct of an effective wellness program. When employees make positive changes to their health, they become more productive and engaged, resulting in greater job satisfaction.

One of the leading factors in employee turnover is poor mental well-being. According to the American Psychological Association, burned-out employees are over 2.5 times more likely to leave their jobs. Employers offering wellness programs that support better physical and emotional health may consequently see higher retention rates.

5. Talent Acquisition

Growing businesses are always on the lookout for new talent to strengthen their team. Having attractive perks and a positive culture are becoming more important to job seekers than compensation alone. Wellness programs help increase an organisation’s ability to attract and retain talent. Robust wellness programs give organisations a competitive edge in the job market, allowing them to earn a return on investment through better talent recruitment strategies.

6. Health Metrics

Effective employee wellness programs should improve the health and well-being of participants. Having your employees keep track of key health metrics can help managers gain insight into whether the wellness interventions are working.

Inspiring Behavioural Changes

Wellness programs play a crucial role in encouraging healthy habits among employees, reinforcing the importance of investing in health.

Decrease in Absenteeism

Healthier employees are less likely to miss work due to minor illnesses, contributing to increased overall work hours. Along with this, workplaces following wellness programs observe a decline in absenteeism, leading to enhanced productivity.

Positive Health Benefits

Comprehensive wellness programs covering various dimensions lead to improved productivity, efficiency, and increased company profits. Organisations focusing on holistic well-being report positive health outcomes, creating a conducive work environment.

Some of the critical measurable health metrics include:

• Weight loss
• Blood pressure
• Amount of physical activity
• Smoking and drinking habits
• Sleep Quality

Improvement in any of these areas indicates that the employee wellness program is yielding a value on investment.

How to Increase ROI on Corporate Wellness Programs

No matter how your organisation measures ROI or VOI, there are specific ways to implement a wellness program to ensure its effectiveness.

Below are some tips on how to yield a higher ROI on wellness programs:

1. Maximise participation: Aim to have at least half the staff enrolled and participating. The more employees enrol and participate, the lower the average cost of operating the program. Therefore, it will produce more tangible outcomes.

2. Incentives and Recognition: When designing a wellness program, consider the incentive or reward structure that will motivate employees to stay committed. When employees are highly motivated by specific types of incentives or rewards, it increases their chances of getting the results they set out to achieve.

3. Make Participation Seamless: Make wellness a part of a regular workday. Create adequate information flow to communicate the wellness program and how to register and participate. Promote it as part of your organisational culture. Appoint dedicated Wellness Champions who can help employees stay motivated.

Implementing an Effective Employee Wellness Program

Earning an ROI on workplace wellness programs is definitely possible. Even a small gain is a starting point as it shows that the program helps employees improve their health. However, changing mindset and creating healthy habits is a long-term process. 

The Final Word

Achieving success in employee wellness is a gradual process. The emphasis must be on the importance of investing in a tailored, outcome-oriented program aligned with your company’s workforce, goals, and needs. Clear and consistent communication about the program is crucial for long-term success. Over time, you can anticipate a decrease in costs linked to health and absenteeism, as well as a decline in sick pay expenditures. Simultaneously, there should be an increase in workforce engagement, productivity, and retention. This holistic approach also fosters heightened workforce motivation and positively influences both employee and customer relations.

Research Sources

1. Employer Wellness Initiatives Grow Rapidly, but Effectiveness Varies Widely