The Return on Investment of Employee Health and Wellness

There are many reasons a company may implement a wellness program. One reason is the boost in company culture that occurs when employee wellbeing is prioritized. In these instances the company sees the rewards from healthier employees being more engaged in their work and invested in their colleagues. As the saying goes, “a healthy employee is a happy and productive employee.” It is exciting to note that a vast majority of the wellness clients we speak with are looking for a positive shift in the realm of culture, rather than strictly a return in dollars and cents.  These groups truly care about creating something special for the individuals that make up the teams that they manage. Many of these forward thinking executives note that when their employees adopt personal lifestyle changes as a result of our wellness program and allow those benefits to feed into a positive cultural shift, the financial returns are soon to follow. 

Inclusivity is a key factor that promotes a favorable ROI, in terms of positive cultural change. An inclusive program promotes equitable access for all team members to engage with the program.  In many cases, we find that wellness programs only attract individuals who naturally gravitate toward a healthy lifestyle. Often, the individuals who have the education, time, resources, and support system to live a healthy lifestyle are those who are most excited to be a part of a program that creates positive cultural momentum. But, the highest cultural impact will come through reaching individuals who are least likely to engage. This is where the rubber meets the road with the adage “happier, healthier, more productive” employees. A truly inclusive approach pays massive dividends by meeting the needs of employees who experience disparities and seeks to understand the challenges they face. Once that occurs, solutions can be created that put the individuals that make up the team on a level playing field. This allows for positive conceptions of abilities to take hold in the workplace and adds rocket fuel to the corporate culture.

For many executives, bottom line and expenditures are paramount. This is especially true when there are so many factors that impact revenue including legislation, regulations, impact of pandemics, or natural disasters. For many companies, adding a wellness program needs to have positive impact and eventual cost savings to justify the investment.

A few weeks ago, we shared why it is important to implement organizational wellness and what it is (Organizational Wellness: What it is, Why is it Important, What Good is it?).  But, it is also imperative to understand the logistics of our program and where you will reap the benefits of your company’s investment. 

Data should be the focal point of solid decision making processes. We partner with organizations to identify what measurements to use to determine outcomes and assess whether the program is generating the returns to make it worthwhile. With the proper HIPAA compliant protocol, medical claims data is one way to measure the cost savings from a health insurance perspective.

The CDC reports that “chronic diseases like heart disease, cancer, and diabetes are the leading causes of death and disability in the United States. These conditions are the leading drivers of the nation’s $3.5 trillion cost in annual health care costs.” Because most employees obtain health insurance through the workplace, the employers are bearing most of this cost. If we can target the prevention of these conditions with focus on employee well being, employers will realize lower health insurance premium costs. 

ROI is further increased with leadership engagement. According to 431 US Benefit Managers surveyed in 2018 by the International Foundation of Employee Benefit Plans (IFEBP), the best success with their programs occurred when senior leaders were involved. They found 63% of companies realized a positive effect on employee engagement and satisfaction with leadership endorsement and visibility, and, in the same survey 57% of those companies experienced a positive impact on health care costs when leadership was involved. 

Why does more leadership involvement lead to a better ROI?  Employees seek to take on the attributes of those that they look up to and respect. The leadership team members set the example and this visible support becomes a strong motivator for the employees.  How many times have you been in the office and tried to be disciplined with your eating but tempted by the treats provided at work? One such example where leadership can have an impact is to bring in selections for snacks or meals which are still delicious but have better nutritional value. 

Leaders also set the tone for the wellness plan offerings and the more involved they are with communicating the availability and options of the programs the more apparent it is that the management is tuned in and cares about the program. Leaders should also attend any seminars or events that are offered and participate or show engagement with the topic as employees are likely to follow suit. We want to stress this: management participation is a KEY variable in program success.

So how much return on the dollar can an organization expect to see when implementing a successful wellness program? The common and widely accepted ROI is a 3:1 return on an effective wellness program according to the Society for Human Resource Management. 

Wellness Plans have two major costs: incentives and implementation costs. Incentives are often used to increase participation. There has been much discussion on the efficacy of using incentives for motivating employees. Tangible incentives are the costly incentives that include  providing cash, merchandise, additional days off of work, or avoidance of cost (for example: health premiums or deductibles). There are tax consequences with several types of tangible incentives so it is important to work with your CFO or tax advisor. However, if you can get creative with intangible incentives you will be able to build in motivators to your program that include a sense of accomplishment, recognition, and camaraderie. As for the implementation or program cost, employers may also have the ability to deduct the cost of the wellness program reducing tax liability. 

Another benefit that employers often report as a result of investing in employee wellness is attendance, which in turn impacts work productivity. Both attendance and productivity can be measured and reviewed over set periods of time. As employees learn from our program what conditions can be managed with lifestyle changes and what conditions actually need medical management they feel less of a need to miss work and can therefore utilize their paid time off for actual relaxing and recharging. 

Strategic planning will be the key to ensuring the program ROI is justified when considering cost and the satisfaction of the employee spending time participating in the program. It is both the dollars saved but also the value of enhancing your culture with the priority your organization places on care for its people. The team at Headquarters Physical Therapy is ready to work with you on your wellness initiatives. Contact us today to see how we can create a customized platform for your company to maximize your investment.