May I help you?

Beyond Return on Investment in Corporate Wellness

November 15, 2019

Poor Employee Health is Costly for Employers

Employee health represents a significant burden for organizations in terms of health care costs, absenteeism and loss of productivity. Health risks such as obesity, depression, and inactivity often lead to poor employee health and the development of chronic diseases such as diabetes that further drive employer costs. Health risks also tend to increase with age and older workers will soon account for a larger share of the working-age population. Furthermore, the current workplace demographics in developed countries paints a picture of aging workers with increasing health risks and younger employees who show significant signs of poor health at an earlier age, due to sedentary lifestyles, poor nutrition, and obesity.

Common Risk Factors Contribute to Excess Employer Costs

We know from large studies the risk factors that not only predispose employees to a chronic disease but also drive excess employer health costs. These are obesity, stress, smoking, depression, poor diet, inactivity, excessive alcohol use and high blood pressure, cholesterol, and blood sugar. As these risk factors increase, and they tend to do this with time, so do employer costs. And the costs of poor employee health are considerable. Results from a landmark study of over 92,000 employees in 7 large U.S. companies reported that obesity, inactivity, depression, smoking, and high blood sugar were the top 5 employee health risks that contributed the most to excess employer health costs, with an average of $347/employee/year. The conclusion was that well-designed and targeted corporate wellness programs can result in significant benefits for companies in the form of substantial savings, as these costly health risks can be preventable making the business case for corporate wellness even more compelling.

Beyond Return on Investment in Corporate Wellness

Corporate Wellness Program Benefits

Corporate wellness was born about 40 years ago in the U.S. as a result of the need to take preventive actions to decrease workplace injuries that were negatively affecting productivity and increasing employer costs. Since these early times, corporate wellness programs have evolved, so at least in large companies in the U.S., they are considered part of the regular benefits package for employers. This, however, is not the case in other countries such as Canada, so much of the research and work in corporate wellness has been conducted by large employers and researchers in the U.S.

The introduction of the health risk assessment and biometric screenings, such as blood pressure, cholesterol, blood sugar, triglycerides, and BMI, offered the opportunity for employees to become aware of how their personal lifestyle habits affect their health. Equally important, however, was the awareness on the part of employers of the prevalence of major health risks in their workforce that would contribute to absenteeism and excess health costs. This realization fuelled the growth of corporate wellness that initially consisted of fitness programs, nutrition, and other health information in an attempt to reduce sick days and health claims. These corporate wellness programs evolved over time to become more comprehensive and include annual company-wide health risk assessments with biometric screening, health counseling and coaching, wellness challenges, variety of health resources, newsletters, immunizations, and specialized services. And to motivate and engage employees to participate, many organizations also include incentives and a variety of rewards linked to specific health goals. The business case for these wellness programs is based on the findings linking employee health with employer costs and reported wellness program benefits of lower absenteeism, fewer claims, improved job satisfaction, retention, engagement, and productivity, resulting in improved profitability and Return on Investment in Corporate Wellness. And in order for companies to determine the Return on Investment in Corporate Wellness of their corporate wellness programs and justify their spending, tangible metrics commonly used include changes in health claims, sick days or workplace injuries. But as corporate wellness is evolving into a more holistic framework, so are the expected wellness program benefits, giving rise to the broader metric of Value on Investment (VOI).

Beyond Return on Investment in Corporate Wellness

Beyond Return on Investment in Corporate Wellness

The benefits of Return on Investment in Corporate Wellness go beyond the financial outcomes of changes in pharmaceutical or other health claims, sick days or workplace injuries, that are usually measured in ROI analyses. While these are important metrics, they should not be the first line of attack. A number of other changes must be achieved before Return on Investment based on these quantitative end-points can be realistically measured. And a key metric change in employee health behavior, a critical prerequisite before measurable changes in health, sick days and injuries would occur. Unhealthy behaviors result over time in unhealthy risk factors and in order to reverse this trend, employees must drop their unhealthy behaviors, adopt healthier behaviors at work and at home and maintain these over time, before measurable changes in health would be evident.

Corporate Wellness Should Be Embraced by Governments and Communities

Furthermore, employees need to buy into a healthier lifestyle that needs to be embraced by their families too. They need to eat healthy at work, but also at home. They need to engage in increasing their fitness level at work and in their personal life and must embrace a healthier lifestyle for the long-term, at work, home and in their community. And employers need to promote a culture of wellness, where employees are supported in reaching their health goals. Wellness cannot be just another employee benefit. It must be embedded throughout the organizational culture and actively promoted by senior and middle management throughout the company. And most importantly, wellness must be promoted in communities and schools, where employees and their families live and work. Healthier employees make healthier citizens and both businesses and communities benefit. It makes sense that a collaborative approach where wellness is promoted and valued by both the business sector as well as governments and communities at large would yield far better results than a wellness approach only where individuals work.

Value on Investment in Corporate Wellness

It is for some of these reasons that the metric of Value on Investment (VOI) has been recently suggested. This metric goes beyond the quantitative Return on Investment in Corporate Wellness to measure changes in health behavior, employee recruitment, retention, morale, engagement, productivity, presenteeism, job satisfaction, and other qualitative measures. However, these measurements require more time-consuming interviews and surveys and knowhow in different methods of qualitative analyses, often not available in the workplace. Also, the attraction of Return on Investment, in the form of specific dollar value, is sought by companies and their wellness providers in an attempt to justify the company investment in corporate wellness. Other helpful metrics include changes in health risk status classification (high, medium, low risk), participation rates in wellness challenges and other offerings and changes in health awareness. While these metrics are included in comprehensive health risk assessments, metrics on recruitment, retention, morale, and presenteeism require additional data and methodologies that are often beyond the knowledge base within a company.

Change in Health Behaviour a Prerequisite Step  in Corporate Wellness

Published reports on Return on Investment in Corporate Wellness have documented the positive return for employers. However, recent studies using a randomized trial methodology where employees who had access to wellness offerings were compared to employees who did not have access to the program failed to show better health outcomes or lower health spending in the wellness group. However, the employees were followed over 18 months only. The study is continuing so results will be tracked over 36 months, which is likely a more realistic timeframe for this type of study. The study reported a change in healthier behavior among the wellness group employees, which the researchers agreed is the necessary first step over the first year or so before the change in behavior can translate into health-care savings or reduced absenteeism. While quantitative changes in health spending and absenteeism were not found over the 18 month period, dramatic changes in physical activity, healthier eating, drinking more water, reduction in prescription medications and visits to doctors were reported in the wellness group employees, further supporting the broader metric of VOI in determining wellness program benefits for employers.

In summary, the conversation about wellness is shifting away from the narrow, dollar-value, quantitative focus on Return on Investment to the broader, qualitative process outcome of VOI. It is widely accepted that on average, healthier employees have lower health-care spending, which lowers employer-sponsored insurance premiums, they take less sick days, are happier and more productive. And other benefits employers expect from their corporate wellness programs are to improve recruitment and retention, be an employer of choice, improve morale and job satisfaction, help employees make health decisions at work, in addition to business performance metrics and profitability. Return on investment is simply too narrow a metric to capture the value of health and the benefit of corporate wellness.

Request a Demo