A quick summary:
Corporate wellbeing programmes save your company money and improve employee wellbeing - but how do you measure their success? Here's a quick guide to understanding ROI for wellbeing initiatives:
- Healthcare Savings: Wellbeing programs can reduce medical costs by up to £5 for every £1 spent.
- Improved Productivity: Absenteeism drops by 25%, and thriving employees report 56% fewer sick days.
- Retention Benefits: Companies with wellbeing programs see a 25% lower turnover rate and higher employee satisfaction.
- Key Metrics to Track: Measure healthcare cost reductions, absenteeism, productivity, and employee retention.
To calculate ROI, use this formula:
ROI = (Net Financial Benefit / Program Cost) × 100
Start tracking your program's impact with health assessments, surveys, and real-time analytics tools. Dive into the details below to learn how to combine financial and non-financial metrics for a full evaluation.
Core ROI Metrics for Wellbeing Programmes
To measure the ROI of wellbeing programs, it's essential to focus on metrics that directly impact your organisation's financial performance. Here's how you can evaluate the monetary value of your wellbeing efforts.
Health Insurance Reduction
Health Insurance premium increases are a significant expense for businesses. By comparing year on year premium rises before and after implementing a wellbeing program, you can identify its financial impact. Start by establishing a baseline and monitoring changes over time. This approach highlights not only cost reductions but also overall program effectiveness.
Work Performance Metrics
Employee performance is another area where wellbeing programmes can make a difference. Consider these data points:
- Employees now average 7.8 sick days per year.
- Mental health-related leaves have surged by 300% between 2017 and 2023.
- Workplace health programs have been shown to cut absenteeism by 25%.
Tracking absenteeism, productivity, and engagement before and after programme implementation reveals how wellbeing initiatives improve work performance.
Employee Retention Impact
Wellbeing programmes don't just improve performance - they also help retain employees. Here are some key stats:
- Companies with wellbeing programmes experienced a 25% drop in employee turnover.
- Organisations with highly effective wellbeing programs report a 9% voluntary turnover rate, compared to 15% for less effective programmes.
- 86% of employees are more likely to leave a job if their wellbeing isn't supported/
To measure retention impact, track:
- Turnover rates
- Exit interview insights
- Stay interview feedback
"We are embedding health and wellbeing at the heart of our business strategy because our people are our greatest asset, and we recognise that a healthy, happy, and committed workforce is vital to our business success." - Alex Gourlay, former co-chief operating officer of Walgreens Boots Alliance, Inc.
ROI Data Collection Steps
Collecting accurate data is key to effectively measuring the return on investment (ROI) of wellbeing programmes. Once you've identified the ROI metrics, the next step is to focus on gathering precise data that quantifies the programmes impact.
Health Assessments and Employee Surveys
Health Risk Assessments (HRAs) provide a baseline for tracking key health metrics over time. Alongside HRAs, employee surveys help capture participation and satisfaction levels. Here's what to collect:
There are several key types of assessments used to monitor employee wellness, each with specific metrics and collection frequencies. Health Risk Assessments are conducted annually and focus on metrics such as BMI, blood pressure, and cholesterol levels. Wellbeing Programme Surveys are collected quarterly and measure participation rates and satisfaction levels. Mental Health Check-ins are performed monthly to evaluate stress levels and work-life balance. Finally, Physical Activity Tracking occurs on an ongoing basis, monitoring exercise frequency and the achievement of fitness goals. These assessments help organisations maintain a comprehensive view of employee health and wellbeing.
"When an organisation invests time, money, and effort in their employees' wellbeing via corporate wellbeing programs, they should measure the return on this investment." - CoreHealth Marketing
This self-reported data helps establish a foundation for further analysis of medical and behavioural outcomes.
Medical Data Analysis
Medical metrics provide hard evidence of the program's effectiveness, complementing survey insights. Studies indicate that employees with higher engagement and wellbeing significantly reduce health-related costs. For example:
- Employees with high engagement and wellbeing are 82% more likely to develop a new illness within a year.
- Thriving employees incur 42% less health-related costs compared to those struggling.
- Participants in wellbeing programs report 56% fewer sick days on average.
These metrics, tracked securely and confidentially, offer a deeper understanding of the programmes impact on health outcomes.
Employee and Manager Input
Feedback from both employees and managers is essential for capturing the full scope of a wellbeing programmes impact. This input combines quantitative data with qualitative insights.
It's worth noting that 92% of employees value working for a company that prioritises emotional and psychological wellbeing. Regular feedback ensures your program aligns with employee expectations while delivering measurable results.
ROI Calculation Methods
Using collected data, calculating ROI helps quantify the financial and organisational outcomes of wellbeing programmes. This method highlights both direct and indirect gains.
Basic ROI Formula
The ROI formula is straightforward:
ROI = (Net Financial Benefit / Cost of Program) × 100
Here, Net Financial Benefit is the total financial gains minus the program costs. For instance, Johnson & Johnson reported an ROI of 2.71:1 from their wellbeing programmes - every dollar spent saved them $2.71 in healthcare expenses.
Direct Costs include programme fees, incentives, and equipment, and are measured by actual expenditure. Healthcare Savings refer to reduced claims and prescription costs, typically measured through year-over-year comparison. Productivity Gains are reflected in decreased absenteeism and improved output, and can be measured by calculating hours saved multiplied by the hourly rate.
These categories align with the cost reductions discussed earlier. But wellbeing programs also deliver value that goes beyond financial metrics.
Direct and Indirect Benefits
Wellbeing programmes provide measurable returns and less tangible advantages. While ROI focuses on financial results, Value on Investment (VOI) includes non-financial benefits [4].
Direct benefits:
- Lower healthcare costs
- Reduced absenteeism
- Fewer workers' compensation claims
Indirect benefits:
- Higher employee engagement
- Greater job satisfaction
- Improved employer reputation
These indirect benefits can be harder to measure but are equally important when evaluating programme success.
Data Presentation Tips
To make ROI data impactful for stakeholders, prioritise clarity and relevance. Jess Jurva, Chief Customer Officer at Conductor, advises:
Tips for effective ROI reporting:
- Focus on strategy: Share high-level insights that align with business goals, highlighting key metrics like reduced healthcare costs and productivity improvements.
- Use visuals: Charts and graphs comparing current results with baseline data or industry standards can make the data easier to digest.
- Tell a story:
"It's important to tell the story of where you were, where you are now, and where you're going. Also, incorporate performance benchmarks for key competitors to contextualise your data and tie decisions to positive or negative outcomes."
– Jess Jurva, Chief Customer Officer, Conductor.
ROI Examples and Tools
ROI Tracking Software
Modern analytics tools make tracking ROI easier and more precise by automating data collection and analysis. These platforms often include features such as:
The table outlines key features that enhance program effectiveness through data and reporting tools. AI-Driven Analysis transforms raw data into actionable insights, saving time on manual calculations. Real-Time Tracking monitors participation and outcomes, enabling quick programme adjustments. Comprehensive Metrics track both ROI and non-financial benefits, providing a complete view of programme value. Lastly, Visual Reporting creates easy-to-understand charts and graphs, which simplifies communication with stakeholders.
A 2022 report from the International Foundation of Employee Benefit Plans noted that nearly 70% of organisations now evaluate both financial and non-financial outcomes, such as employee morale, engagement, and job satisfaction.
Conclusion
Summary for Decision Makers
Measuring ROI effectively involves combining financial results with broader outcomes that highlight value.
Key factors for success include:
- Thorough Data Collection: Track healthcare costs, absenteeism, productivity, and employee satisfaction.
- Balanced Metrics: Incorporate both financial (ROI) and non-financial (VOI) outcomes.
- Regular Monitoring: Keep an eye on program participation rates and trends.
- Strategic Alignment: Ensure wellbeing programmes align with your organisation's larger goals.
These elements support core metrics like cost savings, performance improvements, and employee retention, showcasing the programmes overall impact. Using these insights can help refine and enhance strategies.
Improvement Actions
Leverage data-driven strategies to improve ROI. Prioritise mental health initiatives to achieve a 4:1 ROI and regularly collect feedback through surveys to fine-tune your approac.
Wellbeing programs work best when they are integrated, diverse, and aligned with business objectives. Support from senior leadership and managers is also crucial Set clear goals and consistently review performance to maintain long-term success.
