It has been widely published that ROI of wellness programs range from very little to $6 return for every $1 invested. We all want that $6 return! But how do you get that? And how do you know you’re getting it?
When evaluating the ROI of your workplace wellness program, start with the goals of your program - decreasing healthcare costs, morale, retention, employee engagement - as that changes what you measure. Next, ensure the correct people - HR, CFO, management - are involved with implementing your program. Last, determine how long you will let the program run before measuring ROI.
- Start with Why -
To better understand the ROI of your wellness programs, we have to talk about execution. Like everything in business, success depends heavily on execution. And it all starts with why you are implementing the programs. What is the problem you are solving by implementing a wellness program? Are you trying to improve employee turnover or offer benefits to attract new talent? Are you trying to decrease health insurance overhead costs? Or are you trying to improve employee engagement? The desired end state will heavily influence every other aspect of execution.
Lowering healthcare costs has a very direct and measurable return. If you have an employee population with high health risks or high healthcare costs and you effectively implement wellness programs that focus on curbing those costs – you can hope to have a measurable, positive ROI. Your insurance carrier should be able to give you quarterly or annual reports that clearly articulate your costs that you can compare.
Improving employee turnover or attracting new talent is a slightly harder to measure. You need to first establish the benchmarks you are measuring against which depends heavily on your organization. Are you growing quickly and hiring constantly? How long do your employees stay at your company? And what is the sentiment of your current employees? If you aren’t already doing this, I highly recommend finding or building a measurement tool to understand how satisfied your employees are. This takes time and some trial and error to get right. But if done correctly you will understand your culture, what you’re doing right, and what you can improve upon. This will pay infinite dividends in time and money when your organization is trying to figure out why employees are happy or not, which programs to implement, and whether the programs you implement are working, which includes your wellness programs.
Measuring employee engagement can involve a mix of easy and not so easy data points. It should be relatively easy to measure sick days per employee. It might be slightly more difficult to measure how productive and engaged your employees are. Some organizations are lucky and their work is easily trackable by projects completed or already use project management tools to track productivity. If you are not in this category, something is better than nothing. Find a way to track productivity and employee engagement.
- Who is on the Team -
The next important aspect of execution that will significantly impact your ROI is who is implementing your wellness program. In an ideal world, a few key departments would collaborate efficiently and effectively for a great implementation of wellness programs. But most likely one department will take the lead and get a helping hand here and there. We’ll dive into what each department can help bring to the table.
We’ll start with the mostly likely option for implementing wellness programs. There are a lot of great reasons HR should be involved in implementing wellness programs. Employees are most likely used to discussing their benefits with HR and expect them to be the trusted source of this information. Utilizing that perception can improve employee adoption. Additionally, HR is most familiar with the current benefit offerings and understands how the new wellness benefits will integrate alongside current and past offerings as well as health insurance plans.
CFO or Finance:
The finance department can be a powerful force for helping obtain resources to implement the programs and analyzing the results of programs. They can be great for dense analytics, and depending on the department, can help create great measures for analyzing some of the less tangible or less clearly monetary returns.
It is crucial to have some involvement and buy-in from the management team. They will have the most interaction with employees and the most influence. When management leads by example, talks to their teams about why these programs are important, and follows up to see if people are using and enjoying the programs – people generally will use the programs. Alternatively, we’ve all had corporate programs that get implemented, but when you talk to leadership, they brush them off as being less important than your primary job duties – so they get ignored. It is important for the utilization and culture of the organization that leadership expresses the importance of taking care of oneself and using the wellness programs.
- When to Evaluate -
The last thing regarding execution is how long you plan to run the program before evaluating ROI. This will depend on the type of program you are implementing and your tolerance for investment. Regardless, whatever you decide to measure, ensure you record initial benchmark measurements. This will give you data to compare against.
You can start measuring changes with culture and employee sentiment quarterly. The changes in projects, personnel changes, and programs can have an effect in three months, so this is a good timeline for evaluating these changes. If you have a large enough organization, try surveying random samples so you aren’t burdening the same people every quarter for another survey to fill out. Once you have a good system in place, mark your calendar for three months out to re-evaluate.
Evaluating health insurance costs will naturally occur annually. You can inquire with your insurance carriers to produce these reports. They should be relatively easy to compare form year to year.
Ensure you continue to measure and evaluate the ROI of your wellness programming. As your organization changes, personnel change, and business changes, the needs of your wellness programming will change. Also, new technology, research, and insights are constantly emerging about how to invest in workplace wellness which will influence your organization's workplace wellness decisions.