By Karin Tryggvason

The purpose of most health and wellness initiatives is to reduce costs associated with workplace illness including extended health benefits, WorkSafeBC claims, absenteeism, presenteeism, training or hiring new employees to cover time lost by employees on short-term or long-term disability, and general loss of productivity which results in an average loss of three per cent of revenue annually.¹ To maximize ROI, HR needs full management support, targeted areas of focus, and program evolution in response to employee needs.

The greatest barrier to making the case for ROI is the lack of analysis by companies who implement programs, with less than one per cent analyzing their ROI.² Most companies do not establish baseline profiles prior to program design or develop goals against which a program can be evaluated, monitored and the resulting data analyzed. Other barriers include:

• lack of expertise, staff and resources to collect signifying data,
• inadequate information systems,
• difficulty collecting and integrating data from a variety of internal and external sources and
• no standardized evaluation criteria.³

A well-designed program typically costs $7 – $15 per month per employee. With an average of 7.8 sick days per year, even a one-day reduction could save an employer $17 per month per employee. A minimal five per cent reduction in medical claims can achieve an additional $6.25 savings per employee per month for a total of $23.25 returned on every $7-15 spent. Add in the three per cent of revenue no longer lost to reduced productivity and the financial benefit is significant. Small changes make big differences over the long term.

Companies declare goodwill on their financial statements and employers should consider this added value when determining program ROI. There is no value formula for saving an employee’s life, however, it’s an experience Telus has provided many times because of the company’s breast cancer screening program.⁴

Social responsibility and the ability to attract and retain talent through an improved wellness culture must be considered when determining returns on effective programs. Metrics to include are:

• turnover
• recruitment costs
• employee engagement rates
• program engagement rates
• corporate reputation
• customer satisfaction and
• change in organizational culture.

Steps to improve ROI in Health and Wellness Plans
Maximizing ROI involves full commitment from top management down. A health and wellness culture is established through leadership by example. Ideally, programs should be developed and monitored by a committee of employees and management in the same way as a Joint Health and Safety Committee operates. Work to include Union representatives where applicable, EAP providers, HR personnel and vendor partners both in program design and communications with employees so that the intentions, benefits and goals of the program are clear. To encourage employee involvement benefits must be conveniently accessible and no- or low-cost.

Just having a program does not guarantee a positive ROI, although some insurers do offer reductions in group premiums for companies with health and wellness initiatives. Gearing the program to employee needs and interests is the most significant variable that contributes to improving ROI.⁵

Standardized programs are better than none, however, with the top successful initiatives having general health implications being EAPs, first aid and CPR courses, and flu shot programs.⁶ More so than fitness subsidies, employers should be offering blood pressure and cholesterol screening to tackle heart disease and diabetes, both of which are on the rise in the labour force in general.

Before engaging in any initiative goals need to be established. Health risk assessments (HRA) will establish your baseline for evaluation and identify the specific areas your program should target. Designing a program that aligns directly with HRA results addresses actual employee needs which encourages participation.

Strategies should include short-term and long-term goals to keep employees engaged. Create or obtain education and awareness materials to communicate the intention of the program, specific information pertaining to services available and indicators that will be used to evaluate the success of the program.

Organizations should routinely monitor and evaluate six key areas to determine the effectiveness of their programs and guide subsequent evolution:

1. Short-term disability data,
2. Long-term disability data,
3. Biometric screening initiatives,
4. Productivity,
5. Presenteeism, and
6. Employee engagement.⁷

Only through continuous evaluation and review can HR determine if the individual aspects of the overall initiative are working for the organization and employees. The program should evolve to include new health concerns that impact their workforce and eliminate what is not benefitting stakeholders based on results, not ideals. Where an initiative is not achieving desired results, the initiative needs to change not the organization’s commitment to health and wellness.

Data that should be evaluated include

• time lost to long-term and short-term disability claims,
• training or hiring costs associated with time lost to STD and LTD
• EAP reports/risk factor assessments,
• EAP participation rates,
• Insurance premiums,
• prescription drug coverage (typically 25-40% of total benefits cost) and
• other extended health benefit costs.8

The Bottom Line
It is the employer’s responsibility to create a culture of health and wellness. Firms that strategically plan their programs to target the specific needs or health concerns of their employees and who monitor their program results enjoy higher returns on their investments. In organizations where cost benefit is the determining factor of the program’s existence it is crucial to evaluate program ROI. Without returns that are measurable it is very challenging to harness management support.

Because cost savings involve health insurance premiums, WorksafeBC remittances and other indirect costs, the initiative will take 3-5 years to fully realize returns but those organizes that commit to a health and wellness culture, from CEO to entry-level worker, reap the highest benefits.⁹

Karin Tryggvason (BA, CHRP Candidate) is an emerging HR professional, having recently graduated from Kwantlen Polytechnic University with a Post-Baccalaureate Diploma in Human Resources Management.

References:
1. Ovsey, Dan. (2012) Health promotion in the office leads to improvement in bottom line, insurance rates. Financial Post. May 15, 2012.
2.Silliker, A. (2012). Employers not evaluating effectiveness of wellness programs: Conference board. Canadian HR Reporter,25(15), 8-10, p.8; Thorpe, Karla. (2012) Workplace wellness programs: A sound investment. Conference Board of Canada. September 26, 2012.
3. Buffett, E. (2010). Don’t reinvent the wheel. Benefits Canada, 34(3), S2,S4-S5; Dobson, S. (2011). “Missed opportunities’ in wellness arena: Survey. Canadian HR Reporter, 24(20). pp. 3,17; Jansen, G. (2011). Wellness strategy. Benefits Canada, 35(4), 59-59.
4. Silliker, 2012, p.10
5. Jansen, 2011
6. Klie, S. (2009). 91 per cent of firms offer wellness program. Canadian HR Reporter, 22(19), p.1,12.
7. Buffett, 2010
8. Klie, 2009; Dobson, 2011
9. Berry, L.L., Mirabito, A.M., Baun, W.B. (2010). What’s the hard return on employee wellness programs? Harvard Business Review. December 1, 2010