The ROI of Employee Wellness Programs

by Stephanie Benson Garr on Oct 31, 2016 8:00:00 AM

employee wellness programsIt's hard to ignore any sort of program that claims to better minds, bodies, and your bottom line. Corporate wellness companies like Limeade strive to address core business goals while improving employee heath, well-being, and performance.

But are these types of programs effective? There are a few main points that all CEOs need to consider when deciding whether a wellness plan is actually worthwhile: Will it offer a significant savings in healthcare? Reduce sick days? Improve performance and productivity? Increase employee morale and satisfaction? Let's take a look:

 

Reducing Costs and Driving Profits

With an 80% increase in healthcare costs in just the past decade, it's no surprise CEOs are jumping to find a wellness program that can help significantly reduce these rising numbers. And while every study that has analyzed this data seems to reach a different conclusion on the actual ROI, there does seem to be a direct link between employee wellness programs and an overall savings in healthcare costs for a company. A well-publicized study by RAND Corp. examined 10 years of data from a Fortune 100 employer, whose wellness program reduced the company's average healthcare costs by about $30 per member per month (that's roughly $360 per employee annually).

But this doesn't even take into account how increased healthcare costs directly affect employees as well. According to ADP, employee contributions to healthcare premiums have also skyrocketed, leading to lower employee morale and job satisfaction. So, while a wellness program can help both employer and employee save some cash on healthcare, it will also naturally boost overall morale.

 

The Right Type of Program Matters

The RAND study looked at both the lifestyle management (diet, exercise, and lifestyle changes) and disease management (heart disease, diabetes, etc.) aspects of the employer's wellness program. They found an overwhelming effectiveness in the latter component: employees participating in disease management saved the company $136 per month with almost 30% reduction in hospital admissions. This equated to a return of $3.80 for every dollar invested in the program. This makes sense because these at-risk employees are the ones that will depend on healthcare the most. So, when it came to looking at lifestyle management, the ROI was only $1.50 for every dollar.

But this is a bit too linear of a conclusion. Preventative measures associated with lifestyle management may not show such crystal-clear returns in the short-term — that's the nature of prevention. However, a focus on lifestyle management can significantly increase performance and productivity, almost immediately. One meta-analysis of 42 corporate wellness studies found a 25% reduction in absenteeism and sick leave, which directly impacted employers' bottom line.

Then, there are the natural side effects that are nearly impossible to quantify but will undoubtedly affect a company's overall success. Just take a wellness program that incorporates regular exercise: among other benefits, exercise produces endorphins, which increase energy and enhance mood, which will significantly impact an employee's focus, engagement, and collaboration and communication with coworkers and customers.

corporate wellness 

What Program Is Right for Your Company?

According to the Towers Watson and National Business Group on Health report, companies with "highly effective" wellness programs have shown annual savings of more than a whopping $1,600 per employee.

So, what does a "highly effective" wellness program offer? The report cites the biggest obstacle for a company is employees' engagement in their own health. So, first and foremost, the company's leadership needs to establish trust, know what motivates their employees, and actively participate and support health and productivity goals. These goals should be clearly linked to the company's overall values and goals.

The key to driving increased profits is to view these wellness programs holistically. When implemented effectively, a wellness program won't just reduce healthcare costs, sick days, and absenteeism, it will also boost employee engagement, productivity, and morale — all of which will significantly impact your bottom line and keep your business thriving.

 

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This post was written by Stephanie Benson Garr

Stephanie Benson Garr is a freelance writer and editor based in San Francisco, California. She has written for outlets including Spin, Rhapsody, Yoga Journal, and Stubhub. When she’s not tapping at a keyboard, she is traveling to (or dreaming about) an exotic location, tossing together a healthy meal, or attempting perfect balance on a yoga mat. She also runs a travel blog with her husband at Big & Small Travel.

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