Wellness ROI (As published in The Guardian of 5/7/2016)

Similar to any other business initiative, your Wellness Program should have a tangible, sustainable and an economic rationale to prove its impact on your bottom-line.   The big 5 economic costs related to employee health and wellness are:

  1. Medical Insurance Costs – Escalate with increasing number of claims.
  1. Sick Leave Absenteeism costs – It is not a good thing for people to be sick as it adversely affects all work in a wide variety of ways. Workers don’t get much done for the business when they are home in bed.
  1. Workers Compensation Costs – Work related illness and injury are often a significant issue for employers, particularly by type of industry and occupation
  1. Disability Costs – Prolonged absence from work due to injuries, sickness.
  1. Presenteeism Costs – When employees chose to be at work with an underlying health condition, like allergies, headaches, or colds, productivity suffers

Best Practice wellness programs have a measurable impact on all these cost areas. A strong economic rationale for worksite wellness around these five economic variables will make organizations realize that wellness is as non-negotiable as any other mission critical part of the organization – just like accounting and HR

According to a survey by the Society for Human Resource Management (SHRM), more than two third of respondents from organizations that offered wellness initiatives indicated these efforts were “somewhat Effective” or “Very Effective” In reducing the costs of health care.

The Return on Investment (ROI) related to employee wellness programs typically includes the overall health care cost-savings achieved, as well as productivity increases due to a reduction in sick days taken by employees. Calculating the ROI based on hard savings numbers provides most companies with the justification for implementing such programs

An article in the Harvard Business Review demonstrated how ROI can be attained through employee wellness program, where every dollar invested yielded $6 in health care savings.

When employees are not feeling well, either physically or emotionally, their productivity declines. Consider the difference between an employee who rolls out of bed and drags in to work versus and employee who exercise before coming to work. Exercise produces endorphins, which increase energy, enhance mood and promote overall wellness. The result? The employee who is exercising, and typically healthier as a result, will likely show up to work with more energy and enhanced positivity.

If this employee interacts with customers, it can translate into a significantly higher customer experience and an increase in sales. When this employee interacts with co-workers, it could mean a generation of new ideas or solutions to business challenges, a more positive working environment and more value produced by each employee, all of which positively affect the company’s bottom line.

While the concrete savings from reductions in health care costs and employee sick leave is a good method for calculating ROI, the additional benefits achieved by improving employees health and well being should be taken into account as well.

Reply back to bhakti@impactafya.com with your feedback and we welcome your suggestions for corporate wellness issues you’d like to see covered in our future columns.

Bhakti Shah, MPH is the Founder and Managing Director of ImpactAfya Ltd, collaborating with Workplace Options and Mayo Clinic, USA to provide Corporate Wellness Solutions in East Africa. Bhakti is also the Immediate Past President of the American Chamber of Commerce in Tanzania and the District Chair for Health Concerns for Rotary District 9211.