7 Ways to Measure ROI for Wellness Programs
Do you know if your employee wellness program is working? Here are several metrics to keep tabs on as you roll out a program.
Employee wellness programs are thought to produce a happier, healthier, and more productive workforce. However, some research indicates that companies are often disappointed with their program’s results. There are numerous reasons why employee wellness programs (and specifically wellness challenges) don’t work, but these problems can often be mitigated by appropriate planning, communication, and buy-in from senior leadership. The only way to really determine the efficacy of your wellness program is by measuring the return on investment (ROI) of the program.
Measuring ROI ensures that your program is meeting your goals, allows your team to make adjustments, and helps you receive buy-in for more budget or future wellness initiatives. You'll need to highlight data that supports how well-run health initiatives can reduce healthcare premiums for employers, decrease workplace absenteeism, and improve company morale.
Calculating ROI for wellness programs can be tricky. Many companies tie ROI to reduced health care costs. There are studies (like this Johnson & Johnson case study) that show wellness programs produce a return on investment of $1.88-$3.92 saved for every dollar spent on the program. To get a better measure of ROI, it's important to track more than just money saved. Other metrics or outcomes might be more difficult to measure or tie directly to wellness programs, but tracking them will still help you see patterns that emerge the longer your wellness program is running.
It's better to think about measuring value on investment (VOI) for these metrics vs. ROI. VOI looks at “softer” measures like job satisfaction or employee morale that are typically self-reported. VOI does not usually have a numeric ratio attached to it as ROI does.
Here are several metrics that can help you gauge how your program is performing:
One easy-to-measure item is how many employees participate in the program and the degree to which they participate. Low participation rates could indicate a lack of communication about the program or a flaw in the program’s design.
ROI traditionally measures generated revenue, but in the case of wellness programs, this will look like money saved rather than money generated. Financial outcomes often include reduced health care premiums. Companies may also save by implementing health savings accounts such as flexible spending accounts (FSA) or health savings accounts (HSA), which offer pre-tax savings.
You can measure employee satisfaction with the program numerically through a survey. However, it’s also important to highlight direct feedback from team champions, manager reviews, and stay or exit interviews. This feedback can help you iterate your program to make it more effective and engaging.
This can measure how connected employees feel to their workplace, how engaged they are with their work, and how strong they feel the company culture is. A well-designed wellness program can boost employee engagement and loyalty. A survey and direct verbal feedback can help you measure employee morale.
Related to the above, employees who feel healthier and believe their wellness is supported by their employer are less likely to need time off because of health issues or burnout and will be more present and productive at work.
Absenteeism can often be measured through sick days, but measuring presenteeism is more complex. Research on presenteeism (how mentally present someone is at work) indicates that healthier, less stressed employees are more engaged at work. An anonymous survey can help employees report if they have difficulty focusing on their work during the day or feel distracted by health or personal stress factors.
An engaging wellness program can help you stand out as an employer and attract top talent. In today’s competitive marketplace, highlighting your wellness initiatives acts as a selling point to potential hires, particularly Millennials and Gen Zers who strongly value mental health in the workplace.
An employer-sponsored wellness program can be a key tool for retention and help reduce turnover. Recent research published in Harvard Business Review shows that half of Millennials and 75% of Gen Zers have left a job for mental health reasons. A well-designed wellness program that targets mental health and increases employee morale, productivity, and employee engagement can help you retain top talent.
If you’re just getting started on your employer wellness journey, it can feel overwhelming to navigate the ins and outs of building a comprehensive program that employees engage with. Reach out to our team here or at email@example.com for more guidance as you design your employee wellness program.