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Maximizing ROI on Corporate Wellness Programs
The ROI on corporate wellness programs is a key factor for employers, who want to ensure that their investments in employees yield tangible benefits.
As the workplace evolves and becomes increasingly demanding, employers and employees alike are seeking solutions to combat stress, improve well-being, and enhance overall performance. That's where corporate wellness programs come in. That’s all well and good, but it’s also important to understand the financial impact they have on a company's bottom line.
How Do You Calculate ROI for Employee Wellness Programs?
So, how can employers effectively measure the hard return on employee wellness programs? Here’s the 6-step method for calculating ROI:
1. Collecting HR Data
Before taking on a program, it's important to gather the right data to both understand the needs of your employees and accurately calculate the potential wellness program ROI. Here are some data areas to consider:
- 401(k) participation
- Other benefit participation
- Number of on-the-job accidents
- Employee turnover
- Number of employees working beyond retirement
- Cost of financial wellness program per employee
Remember to factor in payroll loans/advances, HR administration costs, wage garnishment, and any other relevant factors.2. Gain Insights through Anonymous Surveys
To gain a comprehensive understanding of the financial stress levels of employees, conducting anonymous surveys can be an effective tool. With anonymous surveys, employees can express their opinions freely without fear of judgment or retribution. Here are just some examples of questions you could ask, but be sure to tailor them to get the info that matters most to your business:
- What is your current level of financial stress on a scale of 1-10?
- Does financial stress impact your work concentration or productivity?
- How many hours per week are you consumed by financial concerns while at work?
- How likely are you to consider leaving your current employment due to financial stress?
- Do you feel that [Company Name] values and cares for you as an employee?
These questions can give you insight into:
- Current stress levels: Get a sense of the financial stress levels among your employees and what factors may be contributing to it.
- Retention and loyalty: Find out if your employees are considering leaving the company and what may be driving them away.
- Retirement readiness: Get a better idea of how many employees are on track to retire on time and what steps you can take to support them.
- Impact of financial stress on work: Evaluate the effect of employee financial stress on their productivity and the costs associated with it.
Now that you have the data you need, it's time to launch your chosen program. Communication is key to the success of the program. It's important to let your employees know about the program and its benefits and to encourage them to participate. Offering incentives can also boost participation and show your employees that you value their financial wellbeing. Whether it's through recognition, bonuses, or other perks, incentivizing your employees will demonstrate your commitment to their financial health.4. Measure the Impact and Continuously Improve
Let the program run its course, but after a sufficient amount of time (3-6 months), check in to see how it's doing. To do this, gather follow-up data to compare with the initial data collected. It's also important to check in on employee engagement and see if their financial stress, focus, and loyalty to the company have improved. You can also gather feedback on what they found helpful and what they'd like to see added to the program in the future.5. Time to Run Some Updated Numbers
Now it's time to calculate the before and after data:
- Calculate absenteeism by subtracting the number of sick days taken before the program from the number of sick days taken after.
- Measure the impact of the program on presenteeism to see if employees are more focused at work after the program was implemented.
- Take into account HR administrative costs, such as those related to garnishments and employee benefits questions, to determine the total cost of the program.
- Determine the difference in 401(k) participation by subtracting the pretax participation rate before the program from the pretax participation rate after.
- Calculate the difference in turnover rate by subtracting the turnover rate before the program from the turnover rate after.
- Determine the difference in on-time retirement by subtracting the number of employees who delayed retirement before the program from the number of employees who delayed retirement after.
- Consider other benefit participation as well to get a full picture of employee involvement.
- Evaluate the number of accidents that have occurred before and after the program.
To see what the hard return on employee wellness programs is, you’ll need to add up all the savings from Step 5. Then divide that number by the cost of the program and multiply by 100 to get the return on investment as a percentage.
For example, if you saved $500,000 from a program that cost $70,000, your ROI would be 500,000/70,000 x 100 = 714%. This means for every dollar spent on the financial wellness program, your company will have made $7.14 in return.
Proving that Corporate Financial Wellness Programs Work
It's important to understand that these programs can have a significant impact on a company's bottom line. To truly measure their success, we need to break it down into different components. This means taking a look at how productivity has improved and if absenteeism has decreased. Additionally, analyzing healthcare costs before and after the implementation of the financial wellness program is crucial to understanding the full impact of the program. By doing this, we can get a clear picture of the real savings that these programs can bring to a company.
Some Additional Food for Thought
A study from the Rand Corporation is a great example of showing the benefits and the return on investment of wellness programs. However, it only examined two aspects of the program: disease management and lifestyle management. The study did not consider the positive impact on employee morale and productivity, which is a crucial aspect of wellness programs and often ignored in ROI calculations.
Unfortunately, many employees struggle with financial stress, which affects their physical and emotional well-being. This can often lead them to spend hours at work trying to find solutions. Moreover, this stress can lead to a range of health problems, such as anxiety, depression, and heart disease, among others. This is why reducing employee stress is essential for not just their well-being but also for your company's bottom line.
While calculating the ROI on corporate wellness programs through lower health insurance premiums and fewer sick days is a great start, it's also important to consider the additional benefits, such as improved employee morale and productivity.
For example, consider asking these questions:
- What is the value of reducing employee stress in terms of lower health premiums and improved productivity?
- What impact would a 15% increase in productivity have on your company's bottom line?
- How important is it for your company to reduce employee turnover and attract better employees?
Investing in the financial wellness of your employees is an investment in your company's future. The right wellness program can have a positive impact on employee health, productivity, and overall satisfaction with their job. Educating employees on the importance of financial planning and offering support in addressing financial planning issues is an investment that can pay off in the long run.
Let us help you build a strong and financially stable workforce that can contribute to the growth and success of your business. Don't wait any longer, take the first step towards a better financial future for your company and your employees.