Value of Investment: Part 4 in the 6-Part Series
Workplace wellness programs have been steadily gaining popularity in recent years, and the benefits are becoming more apparent as time passes. But in addition to all the enthusiasm surrounding corporate wellbeing, employers still want to know the financial implications. Many are looking for a positive return on investment (ROI), but they likely will not see the results they hoped for. The truth is that ROI is not designed to measure the value of wellbeing efforts. Instead, looking at the value of investment (VOI) will give a better idea of how wellness programs are affecting your company.
Why Return on Investment Doesn’t Work
ROI refers to the financial gain your company gets from an investment, and is meant to measure its efficiency. This usually works well, but with wellness programs it becomes tricky. Reporting for corporate wellness programs can be inaccurate, because while health indicators and expenditures are measurable, the connection between the two is murky. It is difficult to determine which savings can be attributed to the wellness programs and if that offsets the costs.
Furthermore, it will take a few years before the full benefits of your wellness program become clear. It is a long-term investment, and expecting an immediate ROI is unrealistic. Measuring the success of a wellness program involves much more than just financial savings and costs, and these metrics are more nuanced. As LuAnn Heinen, VP of the National Business Group on Health, told Limeade:
In traditional wellness programs, we measure success by participation and ROI on medical costs, but in today’s approach it’s not about ROI. It’s about productivity, and business metrics, and retention, and customer satisfaction. It’s not about health and benefits in silos, but about broader well-being, and that includes social connectedness, financial security, emotional health and job satisfaction.
Value of Investment: Tracking Wellness Goals Rather Than Cost Savings
A more holistic approach to measuring your wellness program is to look at its value of investment, or VOI. It’s a broader and more detailed approach, and it goes much further than ROI does; indeed, ROI is actually a component of VOI.
A study by Optum and the National Business Group on Health found that there are three primary reasons corporations invest in health and wellness programs:
- Reducing employee health risks
- Reducing healthcare costs
- Improving employee productivity
Based on these responses, it is clear that ROI cannot measure the success of all three components; instead, a more overall look at VOI will be more illuminating for businesses that want to understand the program’s success.
Michael Staufacker, director of health management at Emory University, described what kinds of metrics matter in measuring wellness programs:
We look at things like reducing employee health risks, improving employee productivity, job satisfaction, business performance metrics. Are we retaining and recruiting the employees we need? Are we improving employee morale? It’s not expected that we prove ROI for other benefits. We don’t expect the health plan or EAP to show ROI, so why should we expect it of wellness?
The Optum and National Business Group on Health white paper identified key metrics to track in determining VOI:
- Health & wellness program engagement (defined as participation)
- Healthcare costs
- Days absent
- Wellness program satisfaction
- Health risk
- Job satisfaction
They found that some metrics are easier to track than others. Safety, days absent, retention, and healthcare costs are easy because they can be evaluated within the Human Resources department. On the other hand, health risk, business performance/profitability, satisfaction, food consumption, productivity, and employee morale can be trickier, especially because some of them may belong to other departments rather than HR.
The Bigger Picture
In order for a wellness program to be successful, it needs to be part of an overall culture of health. Rather than using the carrot-and-stick method popular in decades past, it is now clear that employees respond better when it is part of a larger picture. As Ann Mirabito, a business professor at Baylor University, explained:
The ideology behind successful workplace wellness programs is that employees deserve to be healthy, not that this is a great way to save money for the company…Wellness programs cannot be imposed from the top down because they won’t be accepted by the employees. Successful programs are created by the employees. Organizations that have this culture have created social norms around healthy behaviors.
In this way, value of investment helps show the bigger picture of your corporate health. By measuring what aspects are improving, you can better understand you company’s culture of health.
VOI is still a developing movement, and more research will continue to unfold about the best ways to measure your metrics. As you begin tracking VOI, you will find that it is much more illuminating than just focusing on ROI. Beyond just financial implications, the value of investment will show how your wellness program is improving other aspects of your company, from job satisfaction and employee morale to productivity, days absent, and retention.