August 18, 2021 by Andrea Rajic

What is the ROI of employee wellness programs?

Ask any business owner, and they’ll tell you that ROI is one of the most critical business metrics they track.

For some things, calculating ROI is pretty straightforward. For instance, if you want to know how many new leads or conversions your recent marketing campaign generated, you can use analytics tools to compare the money you’ve spent on ads and the money you’ve earned from them.

But what about your employee wellness program?

Over the past two years, companies have increased their budgets for this purpose by 22%: in 2021, an average budget for wellness programs reached $6 million per year. So how do businesses know that this investment pays off?

So, whether you offer nap rooms like Asana, or free Zumba classes like Microsoft, it’s good to know there’s a way to calculate the ROI of your employee wellness program. In this article, you’ll learn how.

What Is Wellness ROI?

In talks about wellness ROI, there have also been mentions of VOI, which stands for value on investment. That may be an even more suitable term to describe what a business owner can get from a well-thought-out and well-executed employee wellbeing strategy.

These strategies are being implemented in companies worldwide to reduce healthcare costs, increase employee retention rates and job satisfaction, and reduce absenteeism. Overall, these goals lessen the company’s expenses since they avoid high employee turnover rates and other inconveniences.

What to Consider When Calculating Your Employee Wellness Program’s ROI

In some companies, the entire program came back with a $1.50 to $3.80 ROI depending on the program aspect (disease management, lifestyle management, etc.) How did they get these numbers? There are several ways to measure the ROI of your employee wellbeing program, but it all comes down to comparing how much you’ve invested and how much you’ve saved in different areas of work. These are the factors you should include in your calculation.

  1. Absenteeism
    Are your employees often absent from work without a valid reason? That may indicate stress in the workplace, unsatisfactory interpersonal relationships in the office, or other issues that a wellness strategy may help solve.

    To tailor the program to fit the needs of your workforce, you need to find out the reason for a high absenteeism rate. When calculating the program’s ROI, there’s typically a correlation between this factor and your final numbers: the more your absenteeism rate drops, the higher your ROI.

  2. Sick Leaves
    The situation is similar with sick leaves. If your employees are often absent because they’re sick, explore the reason why that’s happening. They may be suffering from chronic illnesses, but there may also be ones caused by burnout, workplace stress, injuries at work, and more.

    Implementing programs that help people deal with stress, manage their time better, get in better physical condition, etc., can bring you a high ROI due to lower healthcare costs.

  3. Employee Retention
    Another rate that may correlate with your employee wellbeing ROI is your employee retention rate. Introducing a well-designed program that fits your employees’ needs can lead to a higher employee retention rate and a lower employee turnover rate, directly affecting the onboarding budget.

    It’s well-known that retaining good workers is less expensive than onboarding new ones. For example, a study showed that hiring a new employee and training them to replace their colleague who left could cost up to 33% of the worker’s annual salary.

  4. Productivity
    Often neglected, productivity can be an excellent indicator of how much your employee wellness program pays off. A healthy employee is a happy employee. A happy employee, especially if they feel engaged at the workplace, is 17% more productive than an average employee who doesn’t feel appreciated and recognized.

    A productive employee will manage their working hours more successfully, miss fewer deadlines, and have a lower absenteeism rate. That will allow them to have a better work-life balance and less stress, which means they may suffer from fewer health issues. This directly affects your healthcare expenses.

What Metrics Indicate a High ROI for Employee Wellness Programs?

Here’s a list of a few metrics you can track to calculate the ROI of your employee wellness program.

  • Number of health compensation claims
  • Number of disability claims
  • Absenteeism rate
  • Employee retention rate
  • Employee turnover rate
  • Medical spending
  • Productivity rate

For tracking all these metrics, it’s necessary to get to know your employees first. Thanks to annual checkups, you can find out how many of your employees, for instance, suffer from high blood pressure. Then, by implementing various strategies that help them reduce stress, eat healthier, have more physical activity, etc., you can experience improvements in more than one metric from the list.

What Drives the Costs of Your Employee Wellness Program?

You may have learned how to recognize the ROI of your employee wellbeing strategy, but how do you know what costs to include in your calculation?

The Services You Offer as Part of the Program

Sometimes referred to as indirect worker’s compensation, the benefits you offer to your employees as a part of your wellness program can involve gym memberships, different kinds of gift cards, insurance premiums, and more. If they’re related to a healthy lifestyle, these benefits are even more likely to attract your employees to use them.

The People Involved in the Program

You may need to hire more staff for your HR department to handle an employee wellbeing program, or if you choose to offer counselling or coaching as a part of it, you need to pay the person who will provide these services.

The Space

If you’re organizing workshops, lessons, or other activities and amenities as a part of the program, you need to think about where you’re going to organize them. If renting an additional space other than your office is necessary, that’s another investment expense.

Health Checkups

To learn about what your employees may benefit from, the company should organize health checkups. Depending on how you provide healthcare to your employees, these checkups can be a part of your annual fee, or you need to pay for them separately.

Tools

Think about how you’re going to collect your employees’ data and analyze it. If you already use analytics software, you may need to upgrade it, buy another app your employees can use (like health trackers), or purchase a completely new tool to manage the data effectively.

Program Promotion

Finally, for the program to be successful and popular among your employees, you need to promote it within your company. These activities may involve flyers, presentations, emails, meetings, etc. Bear in mind that a study by Gallup showed that only 40% of employees know what kind of wellness programs their companies offer.

What Should Your Employee Wellbeing Include to Get the Maximum ROI?

To make the most out of your employee wellbeing strategy, you should pay attention to the physical, mental, and emotional health of your employees, and focus on helping them maintain harmony both in the workplace and outside of it.

Physical Health

Helping your employees lead a healthy life can have a beneficial effect on their results at work. Moreover, a healthy dose of physical activity affects people emotionally, so they’ll be less likely to feel stressed at work. That will give them energy and increase their productivity.

This aspect of your program can involve gym memberships, hiking trips, presentations and courses about healthy diets, cooking classes, and more.

Emotional Health

To avoid burnout and disengagement at the workplace, you can organize coaching or counselling sessions for your employees, or offer soft skill training. Sometimes, poor time management has a negative impact on several aspects of a person’s life: they can’t create a work-life balance, feel stressed at work, and consequently, suffer from physical health issues.

Also, it’s necessary to pay attention to nurturing team spirit and good interpersonal relationships in the company, since it’s a major factor affecting how employees feel about their workplace. Focusing a part of your program on solving this type of problem can bring incredible results in a short time.

Mental Health

A study found that employees who feel recognized at work are almost three times more likely to be engaged at work. And we already said that engaged employees are also more productive, so it’s clear that’s the right way to go. Ways to keep your employees engaged is to provide them with career advancement opportunities, challenge them, praise them publicly, give them more freedom, and more.

This freedom is sometimes reflected in allowing your employees to work remotely, using flexible workspaces that are known to increase employee productivity, enhance their health, and reduce overall company costs, so that’s another plus for a higher ROI.

There’s No Working Well Without Feeling Well

Employee wellbeing programs have become a must – and for good reasons. They have numerous benefits for both employees and employers. Maybe the best thing about employee wellness is that these strategies are completely customizable and you can easily tailor your own according to what your team needs.

If you’re thinking about introducing (or keeping) remote work as one of the benefits of your employee wellness program, you’ve made a great choice. And you have a chance to enhance it even more by providing a productivity-boosting, inspiring, and engaging flexible workspace and allowing your employees to feel like they’re at the office while staying close to home.

Sounds fantastic, right? Find your ideal flexible workspace with Gable and book it for your team right away.

Written By

Andrea Rajic



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