Measuring the Net Impact of Your Wellness Programs
Productivity. It’s the value of the goods and services your company produces per unit of labor, and a vital measure of competitive performance. Did you know it costs US employers $36.4 billion annually because employees miss days of work to treat chronic conditions — things like diabetes, high blood pressure, and heart disease? Additionally, mental health spending has been continually increasing, recently surpassing $225 billion.
Whether employees are working from home, in the office, or on the factory floor, employee expectations around safety, mental health, and well-being at work have changed amid the pandemic. Many employers are now stepping up their wellness offerings. Why? Such programs create a win-win scenario. As employees participate in these programs they are better cared for, in turn, boosting company productivity.
Measuring the Net Impact of Your Wellness Programs
To measure the quantifiable impact of an investment in wellness programs, organizations use return on investment (ROI) calculations which focus on health cost savings, business productivity, and reduction in sick days.
These measures tie wellness program outcomes to the financial performance of the organization. For example, SHRM reports that an employer’s wellness program could show a 50% ROI (or $1.50 in return for every $1 invested in the wellness intervention program).
For less tangible outcomes — metrics that are harder to gauge financially, like engagement — organizations may use the value on investment (VOI) framework introduced by Gartner. VOI attempts to capture the net value of a program, not simply the financial return.
The ROI of wellness
Before you calculate the ROI for wellness programs, remember to normalize the data on a per employee per year (PEPY) basis. A PEPY cost analysis starts with sums — such as program costs, gross margins, and quantity of sick days — and then divides those by the number of employees to calculate an average cost per employee.
This average lets you compare numbers between different business units or divisions. Depending on the size of the organization, this can also be calculated on a per 100 or per 1,000 employee basis. Under the ROI umbrella, the primary returns on investing in a wellness program will be a reduction in per-employee healthcare costs, an increase in productivity, and a reduction in sick days.
The VOI of wellness
Unlike ROI which measures explicit financial benefits, VOI measures softer outcomes like engagement, and commitment. VOI is generally measured in one of three ways: a pre- versus post-program comparison, comparison of participants versus nonparticipants, or a randomized clinical trial. The objective is to find a meaning differential, which then expresses the value as the percentage better (or worse) of the program provided.
Measuring return on wellness programs
So, what is the outcome of various wellness programs?
- One study conducted at a large telecommunications company found that the wellness program led to higher job satisfaction and lower employee absenteeism.
- Researchers found that when wellness programs involved wearable technology, employees increased their physical activity and healthy food consumption.
- A study of workplace wellness programs found that participation lowered employee stress.
- Researchers found a 4% improvement in productivity for wellness program participants.
The value of employee wellness programs
MetLife’s 2021 Employee Benefit Trends Study found that 62% of employees think benefits are now more important because of the pandemic. Fortunately, when created strategically and implemented with a campaign focus on participation, wellness programs are a win-win. Employers provide better care options for their employees, and both employees and employers benefit from increased job satisfaction, more physical activity, and higher productivity, all while decreasing stress and absenteeism.
Can corporate communications teams create campaigns to motivate employee participation and better educate employees about their wellness benefits? Definitely. Will those communications programs make a measurable impact on productivity? Absolutely.
