The term “Wellness Program” is expanding in scope. According to a Gallup study, almost 85% of employers are now offering some kind of corporate wellness program. With so many corporate wellness companies and vendors in the market, employers are a fix to choose the best suitable wellness providers. If finding a good wellness vendor was challenging, evaluating the efficiency of the corporate wellness program is even more daunting.
Employee wellness programs aim to instill healthy habits, control or prevent chronic health conditions, and help employees lead a healthy lifestyle for holistic wellness. The outcomes of these employee wellness programs are designed for long-term goals. For example, employees who are smokers can sign up for the smoking cessation program of their corporate wellness program, which in the long run will indicate lower possible cases of cancer, lower healthcare costs, and lesser other smoking-related issues. However, not much can be evaluated from the short-term goals of the corporate wellness programs.
If evaluated in a short period since implementation, these employee wellness programs may only seem like an expense. However, evaluating with the right metrics can help in understanding the effectiveness of the employee wellness programs.
Although measuring Return on Investment (ROI) has been the usual evaluation metric, it can be calculated using hard numbers only. The other new metric that is getting popular in employee wellness discussions is – Value on Investment (VOI).
What is ROI?
Ideally, ROI or Return on Investment is a performance evaluation measure that calculates the efficiency and rightness of an investment. It is a measure that compares the efficiency of many different investments. It directly measures the profitability amount of a certain investment, relative to the cost of investment. The ROI of a corporate wellness program is measured by reviewing the year-over-year healthcare costs, employee compensation claims costs, disability management costs, and likewise. However, evaluating ROI only talks about the money invested and money returned, and it is most likely to ignore the underlying factors that can affect the business.
What is VOI?
Smart employers are now looking to measure the VOI or value on investment that identifies the overall contribution of the investment to your workplace culture and business performance. For corporate wellness programs, measuring VOI allows taking a holistic approach to evaluating its success. It takes into account many different factors, including the intangible assets that cannot be directly measured by the ROI metrics. In short, VOI metrics look beyond the financial return of the investment.
Measuring VOI of Employee Wellbeing Programs
Employee wellbeing programs include many features, modules, and aspects – all of which cannot be measured by a single type of metric. While some aspects may need to be measured by the ROI metrics, some fall under the VOI category.
Here are a few areas that should be looked into while measuring the VOI of the employee wellbeing programs.
Employee Engagement
According to SHRM, employee engagement is defined as the level of commitment and connection that an employee has towards their organization. A Gallup poll stated that US companies lose $450 – $550 billion worth of annual productivity, due to lack of employee engagement. Another Gallup poll reported that companies with a highly engaged workforce have 17% higher employee productivity. The higher the employee engagement, the higher is the employee productivity, retention, and lower turnover rates.
Well-designed corporate wellness programs with the right employee engagement strategies can help in improving overall workplace wellness. Employers can start by seeking employee feedback, anonymously, through employee pulse surveys or engagement polls. Ask questions about what they expect from the workplace, from the corporate wellness programs, their workplace and health concerns, how satisfied they are at work, and the changes they would want to see. Consider their opinions and take steps to address them, which will make them feel valued, thus boosting employee engagement and loyalty towards their workplace.
Employee Productivity
Employee productivity refers to the quality and amount of work performed by the employee. A Saïd Business School study revealed that happy employees were 13% more productive. Corporate wellness programs are a great way to motivate employees, and keep them happy and healthy. Ideally, it is calculated as – Productivity = Total output/total input. However, the equation may not work for all types of businesses. Another way of measuring employee productivity is by analyzing their performance and efficiency through set KPIs. This can allow understanding if your workforce is doing better to meet their goals after the implementation of the corporate wellness program, if the business is making more profit in relation to employee productivity, and if the quality of work has improved.
Reduced Healthcare Risks
Corporate wellness programs address chronic health conditions by reducing its risks before its gets serious affecting employee wellness and higher healthcare costs. An annual Business Group on Health (BGH) survey reported that there may be a 5.3% increase in employee health benefit costs by 2021. Studies show that almost $730 billion can be saved in healthcare costs by just changing lifestyle habits. For example, one-third of Americans have pre-diabetes, and 84% of them are not even aware of it.
Employers can assess employee health during the health risk assessment, and offer the best suited disease management programs to address the health concerns. Right from smoking cessation and responsible alcohol drinking programs, to stress management and other health conditions, comprehensive corporate wellness programs must be able to address it all to reduce employee healthcare risks, and reflect in better employee wellness and lower healthcare costs. A decrease in the healthcare risks and healthcare costs can help in measuring and analyzing the VOI of employee wellness programs.
Employee Retention Rates
Health and wellness are one of the top workplace trends for 2021. Employees are choosing employers who embrace workforce health and workplace wellness. To make sure they do not miss out on skilled candidates and retain them for a long time, employers are implementing employee wellness programs as a part of the workplace benefits and perks package. Employees who are happy with the workplace culture, and who feel their employers value their health and wellbeing are more likely to stay with the organization for a long time. So, measuring employee retention, turnover, and recruitment rates can help in analyzing the VOI of the workplace wellness programs.
Absenteeism Rates
Employees who are sick are less likely to come to the workplace or concentrate on work, which reflects poor workplace productivity and higher healthcare costs. Studies have proven that implementing the right employee wellness programs can reduce absenteeism rates as these programs help in improving lifestyle, reduce chronic health risks, and reduce complications. A Forbes study showed that employers save an average of $5.82 due to reduced absenteeism rates for every dollar spent on the right employee wellness programs. Employers can measure the VOI of the employee wellbeing program by checking the sick leaves or absenteeism rates due to health reasons.
Many employers have now realized that the effectiveness of the corporate wellness programs cannot be measured from the cost savings only. A 2019 Workplace Wellness Trends study reported that only 29% of the employers implemented corporate wellness programs as a means to reduce healthcare costs. However, the other 71% of the employers said their workplace wellness programs were aimed to improve overall employee wellbeing.
Measuring the VOI of the corporate wellness programs gives a holistic insight into its effectiveness than the ROI outcomes. It gives a full picture of many important factors required for workplace wellness and organizational productivity, other than just the quantifiable ones, to ensure the complete betterment of the employees and workplace.