Determining the ROI for a company wellness program: the importance of establishing a weighted scale
The advisory committee formed by Optima Global Health met for the second time at the beginning of May. The meeting allowed members to discuss measures to enable small, medium and large businesses to understand and recognize the concrete benefits of an employee wellness program.
Although a large number of entrepreneurs are sensitive to their employees’ welfare, a wellness program’s return on investment remains difficult to assess. For this reason, several have delayed implementing such programs within their organization.
Results are necessary to move forward
According to the Conference Board of Canada report entitled, “Making the business case for investments in workplace health and wellness”, senior managers know full well that investing in employee health and wellness is profitable and that this type of program generates positive performance for the organization. However, they would like to be able to quantify the effectiveness of these programs and require concrete examples in order to move forward.
In addition, there are many reasons why organizations cannot focus on this process: difficulty establishing causal links or gathering data from various sources (insurers, program providers, etc.); lack of staff, resources, funds, expertise or understanding; subjectivity of the information disclosed by the employees; lack of reference measure and long-term vision; etc.
In light of this situation, Optima Global Health believes that it is crucial to find a method to support entrepreneurs in this rigorous analysis. This requires a full review of occasional absence data (short and long term), disability claims, employee assistance programs (EAP), use of prescription medication, supplemental health-care benefits and workplace health and safety claims.
Absenteeism: a serious problem
Because absenteeism is a costly, major problem for employers, organizations still need to be sensitized about this issue. Optima Global Health continues moreover to demonstrate the power of health and wellness programs to contribute to a company’s profitability by emphasizing that it is not only about reducing costs but also about increasing earnings. These programs improve employee health and wellness, reduce the number and duration of disability cases, and much more.
Health and wellness programs usually require three to five years before yielding positive performance. However, in some cases, effects are seen within six months of the program’s implementation. In addition, the impact is usually more noticeable when organizations invest in intensive, well-focused programs.
Improved work environment, increased employee commitment and positive changes in their overall health will be noticed on a yearly basis. While some Canadian companies, such as the Desjardins Group, were able to establish a financial return on investment, this example is not representative of most employers’ current priorities.
The results of a study published in 2011 by the International Social Security Association confirm the profitability of prevention. The study reports that investments in health and safety provide direct benefits to the company, with a ratio of 2.2. This means that companies can expect a potential return of $2.20 per year per employee for each dollar invested in prevention. In addition to these very interesting financial results, the same study also mentions benefits that include a reduction in the number of accidents and safety rule violations, increased employee awareness, an overall improvement in the company’s image and positive reinforcement of its internal culture.
Finally, regardless of the company’s size, Optima Global Health and its advisory committee work actively to create a model that will meet the needs of SMB presidents and the managers of medium and large companies. They are looking for concrete references and examples to demonstrate the actual impacts of prevention in relation to costs incurred when there is no program in place.
Although extensive research has focused on company absenteeism, these studies did not reveal their method of calculation. On which criteria must we base ourselves to establish a realistic and flexible scale in line with the companies’ objectives? Regardless of these objectives, Optima Global Health maintains that it is imperative to define precise parameters quickly in order to properly calculate the return on investment and the effectiveness of a company health and wellness program. The solution rests on implementing a weighted scale that targets the elements to be considered in evaluating the return on investment.