Making Wellness Programs Work Well

Ensuring employees are feeling well is rapidly becoming a strategic corporate imperative.

• By Michelle M. Smith
• Jun 01, 2011

No one would argue that workplace productivity depends heavily on employee performance; what remains an ongoing topic of discussion is how best to generate that performance. While I believe there are many ways to optimize employee engagement and performance, there is a highly effective tool that's often overlooked: corporate wellness incentive programs.

Employees can't offer their best thinking, customer service, or workplace contributions when they're not feeling well, either from a temporary illness or an ongoing chronic condition. It's in everyone's best interests if we can minimize those occurrences. Given the cascading impact illnesses have on the business itself, making certain employees are feeling well is rapidly becoming a strategic corporate imperative.

The rapid pace of change, an increasingly competitive global marketplace, and escalating health-related costs are assaulting businesses already challenged by the economic uncertainty lingering from the Great Recession. Leaders are looking for every competitive advantage to regain market share and generate sustainable growth. I propose that the first place those leaders look for solutions is in the health of their workforce. The opportunities and advantages there are numerous.

Why Do Wellness?
The staggering economic costs related to employee health are exposed in the following pie chart. Each employee costs an organization about $35,000 per year in health-related expenses, from both the $13,662 in a variety of actual employer costs (represented by the health plan and sick leave slices) and the more than $21,000 in lost productivity from presenteeism.

While presenteeism doesn't result in a company's generating a check for actual costs, the tremendous expenses occur in wages paid while effort and productivity are significantly reduced because employees come to work ill. The U.S. Department of Health and Human Services estimates that every employee experiences an average of two separate presenteeism events per month from a wide range of illnesses, such as migraine headaches, depression, stress, arthritis, allergies, diabetes, sleep disorders, heart problems, or high blood pressure.

Average Annual Cost per Employee, 2010
$21,256 -- Presenteeism
$10,122 -- Health plan
$1,757 -- Sick leave
$1,111 -- Disability
$672 -- Worker's comp
Total = $34,918
Source: Goetzel, JOEM, (2004) data adjusted to 2010 by Mercer Employer Survey Results and by Collins Presenteeism study (2005) of Dow Chemical that was used for determining the presenteeism cost.

According to a Towers Watson Health Care Cost Study, health care costs per employee have ballooned by more than 40 percent in the past five years. While that's a stunning number in itself, consider that if food prices had risen at the same rates, we would be paying more than $80 for a dozen eggs and $102 for a pound of butter. Those are simply unsustainable numbers. All employers must take action to reduce these expenditures or put the future of their organizations at risk.

The good news in the dismal health care situation is that there is now substantial research reporting that 50-87 percent of health care costs are believed to be related to behavior and lifestyle, meaning that those behaviors are excellent candidates for an incentive program to modify or change unhealthy and risky behavior. In fact, a Partnership for Prevention study found that wellness programs have reduced absenteeism by 28 percent, worker's compensation by 30 percent, and health care costs by 26 percent.

The quantifiable benefits of focusing on wellness in the workplace are many: improving employee health; reducing the costs of health benefits, worker's compensation, sick leave and disability; and reduced losses from presenteeism. The International Foundation of Employee Benefits Plans found that 78 percent of wellness programs report a positive return on investment, and numerous studies have shown a return of $3.48 to $5.82 for every dollar invested.

While harder to measure, the intangible benefits can be equally impressive: increasing productivity, morale, and loyalty; as well as improving employee attraction, retention, and decision-making. Towers Watson's Staying@Work Report found that employee morale did measurably improve in 56 percent of the companies that offer wellness programs. Additionally, it found that companies with effective health management programs can expect to:

• Generate 20 percent more revenue per employee
• Improve market value by 16 percent
• Deliver 57 percent more in shareholder returns

How to Do Wellness
Successfully implementing an effective wellness incentive program begins with the same principles of program design that you would employ with any results-based incentive initiative. However, I would encourage you to seek professional assistance from an incentive professional well versed in wellness programs to help you navigate the legalities around the protection of medical information and the nuances of incenting and awarding healthy behavior.

Wellness programs have been around for a while, but many falter from a lack of proper employee incentives for participation and achieving results. In fact, this is a very important issue. A long-term study by Johnson & Johnson indicated that participation rates increased from 26 percent to 90 percent when employee incentives were offered, and health care costs decreased $225 for each employee who participated in the program -- so high participation rates are key to success. Lack of participation is often the greatest challenge with wellness programs, and you don't want to fall victim to it. Working with a qualified incentive company will help you avoid squandering your resources.

The first and most important step in getting started is having company leadership recognize that this is a strategic business initiative that should garner their full -- and visible -- support. Leaders at all levels should provide explicit support for the program by making positive personal statements and leading by example with healthy behavior in the workplace. Leaders can also be very helpful in identifying and aligning wellness program goals with corporate strategy.

The workplace environment also plays an important role in a wellness program. We'll assume that the workplace is of course clean and safe, but will your current culture support or detract from your efforts? Are healthy food choices offered in the cafeteria, meeting rooms, and vending machines? Is the culture one where employees are expected to work 60 hours per week and weekends? Are tobacco and alcohol use discouraged or encouraged? Are bike racks available and are staircases welcoming? Is "thank gosh its Friday" heard consistently from staff, and are employees who embrace healthy practices mocked by others?

If the physical and social culture is inconsistent with your wellness program goals, the culture will prevail over the best efforts of any wellness initiative. Address any cultural challenges head on so you don't derail your program before it gets off the ground. Ignoring challenges won't make them go away, and an incentive professional will help you identify potential issues.

I also would encourage you to include all of your employees in the wellness program, even those not taking part in your health plan. They still will benefit from the program, and it should help lower their number of sick days and worker's compensation claims. Likewise, carefully consider whether and how you want to include remote field staff, spouses, and family members. The more employees who participate, the greater your results; having families involved will provide an enhanced support system for employees. Many family members are also participating in your health plan, and their improved health will be a benefit, as well.

It's important that you broaden your perspective to include wellness opportunities outside of the workplace. A growing number of work absences and insurance claims are the result of accidents that happen in the home, during recreational activities, or in a vehicle. Also, when an employee misses work, it's increasingly due to caring for an injured or ill parent or child, so while family members may require a different or altered implementation strategy, it's well worth the effort to include them in your program.

As with any other incentive, it is essential that you continuously communicate and promote your program. Offering the program isn't enough. As I mentioned earlier, generating and maintaining high participation levels for wellness activities and results will mean the difference between success and failure, especially for employees working on longer-term goals such as smoking cessation or weight loss. Create an ongoing communications plan and use a variety of vehicles to distribute program information, updates, and encouragement. Each communication should include a call to action to keep everyone constantly involved. Don't neglect reaching out to participating family members to keep them fully engaged.

Sadly, only 20 percent of companies currently running wellness programs evaluate their results, and this is a shameful waste of resources and effort. Your incentive partner will establish the important metrics to measure, and I would encourage you to include a detailed analysis of your organizational savings. Where are you creating impact, and to what extent is that impact translating to savings? This will be powerful data to help you reallocate resources as you move forward and to demonstrate the rate of return you're achieving with the program.

Being proactive, innovative, and taking control of your own destiny is the new leadership call to action. While I'm not suggesting discontinuing health insurance coverage, it makes no sense whatsoever to exorbitantly invest all of our resources there. A much wiser course of action would be to invest more heavily in tools to educate and assist employees in preventing and controlling disease. It's a good people practice and a very smart business practice.

Make wellness work for your organization.

This article originally appeared in the June 2011 issue of Occupational Health & Safety.