• Daniel Carpenter

Workplace Wellbeing Programs, Beyond Return on Investment

Updated: Mar 27

Introduction

The first question that will be asked when contemplating the implementation of a workplace wellbeing program is “does this make good business sense?”. Improving employee health and wellbeing is often seen as an “optional extra”, “nice to have'' and a “soft HR benefit” or, in other words, a potentially unnecessary business cost reserved for the altruistic.

We make the case that this viewpoint is not only short-sighted but works counterproductive to an effective, thriving and enduring organization. We question the use of the "return on investment" as the only metric for success in this domain and provide the rationale for the primacy of the "value of investment". We will also outline the intermediate benefits that the best workplace wellbeing programs can elicit and how these can translate into company performance and financial gain down the road.

Return on Investment (ROI)

Workplace wellbeing programs are traditionally sold on the premise that employers want healthy employees, as these workers tend to be more productive and experience less absenteeism. More productivity and less absenteeism translates to better company performance and lower costs, therefore improving revenue and justifying the cost of the program. But is it prudent to view the utility of a workplace wellbeing program simply through the lens of a “return on investment”? Is it even possible to measure success on these terms? Should we allow the value of health to be siloed into the notion of profit margins?

Whether workplace wellbeing programs provide a positive return on investment is still very much up for debate (1,2,3&4). Calculating accurate numbers are complicated, especially when it comes to umbrella terms as multifaceted as wellbeing, productivity and performance. The pursuit of this question in scientific research, from case studies to meta-analyses, by nature, lack methodological consistency and homogeneity in research design, contributing to wide error margins and inherent biases (5). Even in America where healthcare costs (using insurance premiums as a proxy) are monitored and available. According to Jim Purcell, Co-Founder of the "Returns On Wellbeing Institute, LLC" (6).:

“Healthcare costs are set by complicated rating systems. For smaller employers, employee health claims are “community-rated” and averaged together with other insured companies within large pools of “healthy” and “unhealthy” employees.

Even if your wellness program delivers stellar results and reduces insurance claims by making your employees healthier, these ‘wins’ will get buried in the collective average of your insurance pool.”

It’s a small logical step to understanding that in the countries like the UK, in which healthcare is freely available for most, the ability to draw clear-cut conclusions regarding return on investment gets even more complex. What is clear, however, is that poor employee health is expensive and costs companies and society as a whole (7).

Value of Investment (VOI)

It seems there is a necessary paradigm shift occurring, in which workplace wellbeing programs are being viewed as a good (and necessary) business practice, which are valued in more ways than pure financial gain.

When a company decides to invest in the wellbeing of its employees, what are the motivations behind such a decision? Do employers genuinely care about our employee’s health and wellbeing (and therefore willing to invest in it), or are they investing in employee health to increase productivity and maximise returns. We suggest a combination of the two.

Although a good workplace wellbeing program will likely improve employee productivity, the motivation behind the investment will ultimately determine the goals of the program and how success is defined. Put another way, return on investment can be achieved, but only if employees value the program, fostering widespread "buy-in" throughout the company (from the board to the floor so to speak). This buy-in nearly impossible if the motivation behind implementing a workplace wellness program is strictly down to profit margins, as opposed to the improvement of employee health and wellbeing itself.

Here, we have outlined a clear comparison between return on investment (ROI) and value of investment (VOI) in terms of their metrics;


ROI



VOI



Human Sustainability


Stanford Professor of Organizational Behaviour, and Author of “Dying for a Paycheck”, John Pfeffer has made the case that human sustainability has received relatively little attention in the business world in the past. He describes human sustainability as;


“The capacity of humans to endure and remain productive over time”


In his seminal paper “Building Sustainable Organizations” (8), he cites examples of organisational actions and decisions that affect employees and their health, leading to a call for the management of human resources in ways that enhance human sustainability.


Employee health must become a priority within companies, around which management criteria are based and research outcomes are collected. A sample of workplace experiences affecting health includes the provision of health insurance and basic physical and psychological health needs, as well as the effects of layoffs, work hours, work-family conflict and work stress. Human sustainability includes energy, vitality, joy, engagement, enthusiasm and feeling alive.


“Human energy helps organizations function more effectively”

Corporate Responsibility

This brings us to the notion of corporate responsibility, which currently goes as far as paying employees for their services. However, it is becoming clear that trading health and wellbeing for financial wealth is a trade of diminishing returns. For example, it is now well-known that job satisfaction and emotional wellbeing experience a distinct decoupling from annual income beyond a certain threshold (9).

It is also clear that population health as a whole requires the engagement of multiple community partners, including employers, who are responsible for playing a vital role in promoting health and wellbeing in the workplace.

Instead of investing more money on salaries and bonuses (which are often spent on counteracting the negative effects of work, such as lack of sleep and physical activity, as well as chronic stress), doesn’t it make more "business sense" to invest in health and wellbeing support in-house?


We believe that all employers should provide an environment and culture which actively promotes the attainment of basic health and wellbeing needs amongst all employees. It is important, therefore, to provide opportunities for employees to improve their health and wellbeing literacy, in theory, and practice.


A Business Case for Employee Wellness


This is the World Health Organisation's business case for employee health and wellbeing (10). It provides a schematic of the potential problems companies may run into if they don’t address employee health.



Business Benefits


As well as avoiding the downsides to poor employee health, there are benefits to be gained from workplace wellbeing programs. Research carried out by the Greater London Authority provides a range of intermediate benefits which have the potential to develop into financial gains down the line (11).



Summary

To view the implementation of workplace wellbeing programs from the perspective of strict return on investment is not only unrealistic but somewhat short-sighted. Adopting a value of investment approach allows for a broader array of metrics to be used to determine whether a program and how it needs to adapt to the company’s needs moving forwards. Although these metrics may be seen as “soft” data, they can be highly effective at identifying employee’s current status, needs, efficacy and support when it comes to health and wellbeing. Human sustainability and corporate responsibility are overlooked factors when it comes to both employee wellbeing and population health as a whole. Both of these factors should be addressed within an effective workplace wellbeing program.



References


  1. https://www.jstage.jst.go.jp/article/joh/57/3/57_14-0217-RA/_pdf

  2. https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Documents/RAND_RB9744.pdf

  3. https://hbr.org/2010/12/whats-the-hard-return-on-employee-wellness-programs,

  4. https://www.rand.org/content/dam/rand/pubs/research_briefs/RB9700/RB9744/RAND_RB9744.pdf

  5. https://www.personneltoday.com/hr/employee-wellbeing-programmes-return-investment-false-profit/.

  6. https://www.forbes.com/sites/jimpurcell/2020/02/11/employee-wellbeing-a-new-perspective-on-roi/

  7. https://www.hse.gov.uk/statistics/cost.htm

  8. https://pdfs.semanticscholar.org/ac1c/5fabf37f913d5f1ddedeb1e13c2a3123d43a.pdf

  9. https://www.cnbc.com/2020/05/26/how-your-salary-and-the-way-you-spend-money-affect-your-happiness.html

  10. https://www.who.int/occupational_health/healthy_workplace_framework.pdf

  11. https://www.london.gov.uk/sites/default/files/gla_migrate_files_destination/health-wellbeing-2012.pdf




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