Business investment in employee wellness services is big, and growing bigger. From 2011-2016, the industry generated an estimated $6 billion in revenue in the US, says IBIS World. The corporate wellness services industry grew a healthy 4.8% over the last five years, and is projected to grow by 7.8% in the next five years.
More businesses are choosing to offer workplace wellness programs. According to the 2016 Aflac WorkForces Report, 54% of businesses have implemented company-sponsored workplace wellness programs, compared to just 30% in 2012.
An impressive 85% of CFOs take part in employee benefit programming decisions. It’s a good sign that so many business leaders are taking stock of employee health and wellness services.
But what’s being decided, exactly? Of course, managers care about financial benefits when it comes to investing in these programs. But it’s not all about the measurable ROI. Business leaders invest in employee wellness programs to promote productivity and a workplace culture of health and wellbeing that employees value, too.
Trend 1: Interest in Corporate Wellness as a Smart Business Strategy is Growing
Senior executives and managers have come to view employee wellness programs not just as a standard benefit, but as a strategic priority.
Reducing medical care costs is an important goal, but so is attracting and retaining talent, and building a culture of engagement in better employee health.
How well CEOs and CFOs can achieve these goals depends on how well they understand the impact of workplace wellness programs, and assessments of employee wellbeing.
There are as many ways to put wellness programs together as there are companies to provide them. What matters, says Alan Kohll in Forbes, is “to take evidence-based health information and integrate it with your specific company.”
Measuring How Employee Wellbeing Affects Employer Health Costs
A number of efforts have produced evidence-based information for decision-makers. One study assessed employee wellbeing in relation to organizational costs.
Tom Rath and Jim Harter of Gallup Consulting explored the impact of employee wellbeing on how organizations achieve their goals. Their 2010-2011 report, Economics of Wellbeing studied 5,271 full-time US employees.
They measured costs associated with chronic diseases (such as high blood pressure, depression, and back pain) and acute illness such as “unhealthy days.” Then they scored employee wellbeing with an assessment tool and formed three groups: employees who were thriving, employees who were struggling, and those who were suffering.
Some highlights among the findings:
Health-related costs were 41% lower for thriving employees than for struggling employees
Costs were 62% lower for thriving employees than for suffering employees
Turnover costs were 35% lower for thriving employees as compared to those struggling in overall wellbeing
Turnover costs were 52% lower for thriving employees as compared to those suffering in overall wellbeing
Only 12% of employees in the study strongly agree that they have substantially higher overall wellbeing because of their employer. This may point to an opportunity for employers to improve awareness and access to services, to increase healthier choices and wellbeing among those employees who are struggling.
Trend 2: Decision Makers Want to See and Measure Program Effectiveness
Wellbeing is a very general concept, and companies can define and promote it in infinite ways. Some programs are more effective than others. What really drives the return on investment?
A Rand report, Do Workplace Wellness Programs Save Employers Money? studied this question. Analysts gathered data from almost 600,000 employees at seven employers, and 10 years of data from one Fortune 100 company.
They looked at two common program components: lifestyle management (to reduce health risks such as obesity and smoking) and disease management (to improve self-care among those already managing a disease or chronic condition).
Averaged across both components, employers saved about $30 per member per month. A closer look, however, found that disease management led to 85% of the hard cost savings, “generating $136 in savings per member per month” as compared to the lifestyle-management component, which saved $6 per member per month.
Despite reported benefits as such lower absenteeism and costs, some employers need more evidence before putting a program in place. Almost a quarter (22%) of employers do not offer a wellness program “due to the difficulty in quantifying the return-on-investment,” writes Audrey Tillman, Executive VP of Aflac Corporate Services.
Trend 3: Employees and Employers Both Value Wellness Programs
Employers want to gain the competitive advantage of retaining talent in the form of bright, healthy and productive employees.
Offering wellness programs that employees value is critical to attracting and retaining them. According to the 5,000 employees in the Aflac WorkForces Report survey:
60% of employees were likely to take a job with lower pay but better benefits
42% said improving the benefits package was one way their employers could keep them, ranked above getting a promotion
16% have turned down a job or left a job due to the benefits offered
A solid majority of employees — 61% in the Aflac WorkForces Study — say they’ve made healthier choices due to their companies’ wellness programs.
These employees also say they have higher job satisfaction levels. At the same time, employers credit the programs with decreasing their overall healthcare costs, while helping them attract the right people for the company.
Implications for Decision Makers
More employees and employers are embracing corporate wellness programs as a way to manage medical costs and improve wellbeing and engagement at work.
There are significant benefits to employee wellness programs beyond cost savings. Employers look for and expect more productivity and engagement, fewer absences due to illness, lower turnover, and increased job satisfaction.
However, if financial return is a priority, employers need to pay careful attention to the components of their programs. Some data show that a program focused on lifestyle management can reduce absenteeism and achieve important goals. However the financial upside may greater for programs focused on managing chronic conditions.
Good corporate health programs also play a role in attracting employees with sought-after skills. Not only do they help all employees be their most productive, they can also support a workplace culture offering greater job satisfaction, employee wellbeing, and a competitive edge.
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