The purpose of well-being programs is to create an environment where employee’s physical, cognitive and emotional energies can thrive. For a company to be successful, managers need their employees not only to survive, but to thrive. Similarly to any other project that a company takes, it is important to have good metrics to evaluate the effectiveness of a program. Most financial executives and senior company executives are familiar with Return on Investment (ROI) for evaluating projects. We discuss how to similarly use ROI to evaluate wellbeing programs.
A recent report from the SHRM Foundation, in collaboration with Globoforce, titled “Creating a More Human Workplace Where Employees and Business Thrive,“ explains that caring workplaces produce employees who love their jobs and are more productive and engaged.
Measuring the benefits: ROI and other measures
Most companies put more effort in measuring potential savings because wellness programs generally save money rather than generate revenue.
ROI of Well-being Programs
A return on investment measure aims at calculating the exact dollar savings from an investment. The formula is straightforward:
If we look at wellness programs as an investment cost, then the total earnings are the savings as a result of the program. There are several challenges on calculating such savings:
- First, savings can be difficult to measure in dollars.
- Second, it can be difficult to determine how much of the savings come from each new program.
While it is more challenging to measure the ROI of a workplace wellness program, there are four factors that have data that can be analyzed. Most companies can easily report the costs in dollars but can only track data on three of the four categories.
- Savings on Medical Claims
Having a program that educates employees on better usage of medical resources can decrease overall medical claims. The decrease in claims is part of the savings in the measure of ROI.
- Savings in Disability Claims
Similarly to medical claims, a decrease in the disability claims directly impacts the bottom line and reflects in the ROI from a wellbeing program.
- Percentage Decrease in Absenteeism
A strong wellness program that encourages healthy behavior also means less sick days off from employees.
- Percentage Decrease in Employee Turnover
Losing and replacing employees is a costly hardship on companies. There may be a direct lack of production and efficiency when a vacancy is left open. There are costs associated with recruitment, hiring, onboarding, and training. (See related article on Decreasing Turnover)
Successful wellbeing programs are built around helping employees reduce healthcare costs, including absence for sick days taken and employee turnover. An example of this is Continuwell’s Health Ambassadors well-being program, aimed at helping employees manage chronic conditions and reduce disability claims.
Example: Measuring ROI from a Health Ambassador Program:
- Direct and Immediate Benefit:
Decrease ER Utilization: Based on Data from the Continuwell Health Ambassador program, Continuwell has observed that on average, 1 out of 7 callers are diverted from unnecessary emergency room visits by our nurses (i.e. 14% of callers). Historical data also shows an expected utilization between 10 and 25% percent a year. See table for a sample expected ROI from Continuwell nurse calls.
Assume N. of Employees
Annual Fee for Choice Plan
ER Visits Saved from Past Data
Assume Cost of Unnecessary ER Visit
Family Size Estimate – 3 Family Members Per Employee
Example: ROI from ER Savings Estimate for Different Utilization Rates:
Annual % of Calls
Expected Annual N. of Calls/
N. of Saved ER Visits –
ROI from ER Savings
In addition to direct measures of dollars saved, there are other items that can be difficult to measure in exact amounts. Unlike investment in a project decision, which lead to dollars earned, wellness programs impact results associated with people. Many of these results have to then be translated into dollar values which can be challenging and not clear-cut. For example, some companies observe an increase in employee loyalty and commitment following the implementation of a new program. How do you translate increase commitment into dollar values?
VOI of Well-being Programs
Measuring the value of most well-being programs in the workplace falls outside of the traditional categories. The benefits are difficult to measure in dollars, yet still have been shown to contribute to significant financial gains for companies when implementing a quality well-being program.
- Reduces health risks
- Reduces absenteeism
- Increases productivity
- Improves job safety
- Improves morale and loyalty to the company
Low Cost to Implement
It does not take a major investment to begin your company’s wellbeing program. According to SHRM, “The most common wellness benefit is providing wellness resources or information.”
Example: In the Continuwell app, employees can easily search and access the resources that their company provides. Administrators can even send well-being tips to employees through push notifications.
These are just a few of the great resources available to employees.
For more information about VOI programs, please fill out the form below to be contacted by one of our wellness analysts. We would be happy to explain more about the differences in the programs available and talk with you further about how these programs can be implemented into your organization.
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