Measuring the real benefits of corporate wellness programs
By: Mady Peterson
To appreciate the difficulty of measuring the benefits of corporate wellness programs, start with the numbers we do have. Only 28% of organizations surveyed by the International Foundation of Employee Benefit Plans measure the success of their wellness programs with traditional ROI. When you switch to asking CFOs — the typical keepers of an organization’s hard numbers — that drops to 6%.
If the CFOs aren’t convinced, we aren’t doing our jobs communicating the benefits of employee wellness. Because the truth is, even beyond the obvious health costs, workplace well-being has plenty of numbers working in its favor.
Let’s admit: Not all employee wellness programs offered a hard return
The hodgepodge of corporate wellness “solutions” in the market has earned the industry detractors. Many programs past — and unfortunately even a few present — were too punitive, centering what employees were doing wrong instead of why the company cared. Separated from company culture and business goals, these employee wellness programs were destined to fail.
As employers have learned to approach holistic well-being, and the employee engagement that makes it possible, outright failures have decreased. Still, there are plenty of programs not living up to their full potential. Offering payment reductions for employees who participate breeds resentment from those who don’t, and gives off the impression that a company will pay only for bad metrics like weight loss rather than employee health and happiness. It’s only when a wellness program is designed as a clear expression of company care for employees that you start to see results.
Employee wellness ROI can be measured, with effort
If your company well-being program is only being measured by its effect on insurance premiums, you’re missing most of the data. There are already decades of proof that wellness programs can improve employee health and reduce company healthcare costs, from Harvard Business Review roundups to primary source research. It’s not so much a question of whether workplace wellness programs save employers money. They do. The better question is what else can they do for your business.
Absolutely you should measure both corporate healthcare costs and employee health risks. If your corporate wellness program is successful, you can expect both to generally follow a downward trend. Even the best program won’t be able to show reduced costs quarter over quarter or year over year. There are always outliers, and always correlations and causations that aren’t clearly captured in the data.
Living through a global pandemic has forced this point. If employers saw flu cases plummet in 2020, common sense says the wellness program’s annual flu shot reminder doesn’t deserve all the credit. Still, there are enough contributing factors that no one can say for sure without more proof. The data is messy.
A full understanding of why employee wellness programs are important
The hard-dollar approach to measuring employee wellness ROI can be teased out, but it’s far from the most interesting number your well-being program has to offer. Instead, smart organizations are taking a more nuanced, holistic view of the value, looking at softer benefits like employee morale and how they lead directly to the tangible outcomes of employee retention.
This shift in measurement is coinciding with a shift in motivation. Employers are moving away from the carrot method, and the stick it comes with, precisely because of the resentment and lack of efficacy mentioned above. These new-school well-being programs encourage participation in a simpler way: They’re fun. And when wellness programs promote fun alongside health, all sorts of knock-on benefits follow as employees start to enjoy themselves.
What metrics really measure workplace wellness benefits
What really has the power to move your business? Chances are health insurance premiums are not top of your CEO’s list of make-or-break metrics. They’re far more likely to be looking at retention rates, productivity and profit than benefits costs.
So give them that proof.
Employee well-being program participation vs. outcomes
Looking to prove your program is effective purely through participation isn’t likely to fly with the C-suite. Really, all a high participation rate does is show that employees are spending time completing the tasks — not necessarily a positive on its own. And yet 73% of the organizations Limeade surveyed measure the success of their workplace wellness programs by employee participation and satisfaction, not just results.
Instead of sticking to the shallow metrics of completion, consider how you might collect data on the results of that participation. Showing that 93% of people completed the employee engagement survey is great. Showing that 16% more employees feel like the company cares about them versus the year before is far better.
Every leader can relate to the pain of losing a trusted employee — as can every colleague. There’s the cultural loss, the dip in productivity and the hit in morale as the team scrambles to cover the dropped work. And then there are the incredibly high costs of finding and training a replacement.
The Society of Human Resource Management estimates that it costs employers the equivalent of six to nine months of an employee’s salary to find and train a replacement. Other studies place the estimates even higher.
That’s a pressing problem to solve, with a clear dollar figure attached. So, consider this: Employees who participate in the Limeade program are 3x less likely to leave the company than those that don’t. Ironically, solving for retention can also solve for acquisition. Nearly all employees with high well-being and organizational support would recommend their employer as a great place to work.
Retention is binary — people either stay or do not stay, simplifying the measurement process. Productivity is a spectrum. Comparing how much employees get done day-over-day is only possible in specific jobs, where the tasks don’t vary.
Still, there are concrete productivity drains, like the people who miss work due to financial emergencies, according to 37% of HR professionals. There’s also the option to measure self-reported productivity. We know that 47% of employees say problems in their personal lives affect their performance. Self-reported performance is particularly interesting because it doubles as a metric of employee efficacy. If employees feel like they’re having an impact on the business, they’re less likely to experience burnout, which stems from a low sense of purpose and a high sense of pressure.
Keeping employees and raising their productivity has an inevitable effect on the one thing company leadership cares most about: performance. The industry touts engagement stats often, and for good reason. Employees with strong well-being are 38% more likely to be engaged in their jobs.
But again, engagement on its own isn’t a goal. It’s what happens when employees are engaged that matters. An Aon Hewitt report shows that workplaces with high engagement are 78% more profitable than those without, and a Hay Group report showed engaged companies’ stock prices increase 2.5x as fast as competitors.
When to look for the benefits of corporate wellness programs and what to do with the data
None of these great results happened overnight. Many of them took years of dedicated support for employee well-being initiatives. The last thing we’d recommend, however, is waiting years to measure whether your program has been effective. Instead, measure it live and adjust as you go.
Results may take years, but insight is often available on demand. This is a case where looking at participation can be helpful — if no one is using the program, you won’t be able to say one way or the other if it worked. Once usability is confirmed, you can move into measuring opinions. Do people like the wellness initiatives being made available to them? Is it intuitive? Convenient? Without cash incentives, the new well-being programs rely on being fun to use. Make sure that they are.
When employees are using the program, and indicating that they intend to continue doing so, then you can assess whether it’s moving your people in the right direction. Outcomes won’t be available, but trendlines will. Looking at them regularly — and with the proper context of what else might have influenced them — will give you time to adjust and course correct before too much time is sunk. Even once you’ve reached the program goals, pulse surveys and intermittent measures will help you to continuously improve.
Free Resource: The Impact Conversation Guide
Use this guide to frame an effective conversation that addresses the organizational reasons for re-focusing the way your company measures program success.
Who to thank when workplace wellness programs generate savings
Wellness programs create a wealth of outcomes, without any clear heroes. And that makes it hard for champions to come forward. A properly structured well-being program can increase a sense of inclusion across your team. Does it fall in the Diversity and Inclusion budget then? It can increase employee engagement and get more people reading company messages. Should communications take the credit?
These complications — what to measure and who to thank when calculating the benefits of employee wellness programs — that’s their promise. Well-being never was the sole concern of benefits managers focused on healthcare costs. It was always the throughline running under a business, influencing its success in seen and unseen ways.
By teasing those associations out and putting real numbers behind them, you can turn your well-being program from a cost-center to a value producer — and raise the profile of your employee wellness team in the process.