{"id":13043,"date":"2023-05-25T06:21:26","date_gmt":"2023-05-25T10:21:26","guid":{"rendered":"https:\/\/www.wellable.co\/blog\/value-on-investment-case-for-employee-wellness-program-benefits\/"},"modified":"2024-07-18T07:55:15","modified_gmt":"2024-07-18T11:55:15","slug":"voi-roi-measure-the-return-on-employee-wellness-programs","status":"publish","type":"post","link":"https:\/\/www.wellable.co\/blog\/voi-roi-measure-the-return-on-employee-wellness-programs\/","title":{"rendered":"How To Measure The Return On Employee Wellness Programs"},"content":{"rendered":"\n

Management often looks for returns to justify the financial and labor investment involved in running employee wellness programs<\/a>, just as they would with other business initiatives. Two common perspectives are return on investment (ROI) and value on investment (VOI). This article covers the differences between ROI and VOI, the limitations of relying solely on ROI, and strategies to measure the true impact of wellness programs.<\/p>\n\n\n\n

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What Are The Benefits Of An Employee Wellness Program?<\/h2>\n\n\n
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Employee wellness programs offer a multitude of benefits<\/a> that contribute to a positive wellness program ROI and organizational success:<\/p>\n\n\n\n

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  1. Improve employee health:<\/strong> Regular wellness initiatives encourage healthier lifestyle choices and offer tangible strategies for improving physical health. <\/li>\n<\/ol>\n\n\n\n
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    1. Boost<\/strong> engagement and productivity:<\/strong> When employees feel their best, they perform their best. Engaged employees are more motivated, focused, and committed to their work, heightening productivity levels and indirectly boosting wellness program ROI. <\/li>\n<\/ol>\n\n\n\n
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      1. Alleviate stress:<\/strong> Mental health and stress management initiatives can significantly reduce workplace stress and improve mental well-being. <\/li>\n<\/ol>\n\n\n\n
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        1. Reduce absenteeism:<\/strong> Healthy employees are less likely to take sick days, ensuring consistent productivity. Reduced absenteeism impacts the wellness program ROI by lowering indirect costs related to lost workdays. <\/li>\n<\/ol>\n\n\n\n
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          1. Raise morale:<\/strong> Wellness programs can boost morale and job satisfaction, creating a more positive and self-motivated workforce. <\/li>\n<\/ol>\n\n\n\n
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            1. Support retention and recruitment:<\/strong> Companies that invest in their employees\u2019 well-being tend to have lower turnover rates. This positively contributes to the wellness program ROI by eliminating costs associated with hiring and training new employees. A strong wellness program also makes an organization more attractive to job seekers who prioritize work-life balance. <\/li>\n<\/ol>\n\n\n\n
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              1. Build teamwork:<\/strong> Group wellness activities foster camaraderie and teamwork, resulting in improved collaboration and communication. <\/li>\n<\/ol>\n\n\n\n
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                1. Strengthen company image:<\/strong> Companies known for their commitment to employee wellness often enjoy a better reputation and stronger brand loyalty. <\/li>\n<\/ol>\n\n\n\n
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                  1. Aid in managing high-cost health conditions:<\/strong> Wellness programs provide support and resources for managing chronic conditions, potentially reducing healthcare costs and increasing the wellness program ROI. <\/li>\n<\/ol>\n\n\n\n
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                    1. Increase resilience:<\/strong> Wellness initiatives that focus on building resilience help employees cope with challenges and stressors at work and in their personal lives. <\/li>\n<\/ol>\n\n\n\n

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                      Calculating Return On Investment (ROI) For Wellness Programs<\/h2>\n\n\n\n

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                      What Is ROI?<\/h3>\n\n\n
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                      ROI is a financial metric used to evaluate the profitability of an investment, measuring the gain or loss generated relative to the investment’s cost. Traditionally, ROI has been a popular method for executives to justify wellness programs, especially for organizations focused on cost containment. One key measure of wellness program ROI is the reduction of healthcare claims and costs. However, ROI has its limitations, and research indicates<\/a> that employers offer health and wellness programs for many reasons beyond just cutting healthcare costs.<\/p>\n\n\n\n

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                      Risks Of Measuring Wellness Programs By ROI Alone<\/h3>\n\n\n\n

                      To accurately measure the value of any corporate program, success metrics must align with the initiative’s overall goals. Employee wellness programs aim to improve overall well-being and cannot be fully evaluated by medical cost savings alone. <\/p>\n\n\n\n

                      While reducing healthcare claims and costs is an important goal, it does not capture the complete value of wellness programs. Equally important benefits include increased employee productivity, improved morale, and reduced turnover. For example, initiatives like stress reduction and mindfulness may not show immediate financial returns but can significantly boost job satisfaction and employee engagement<\/a>. These benefits, though challenging to quantify, are essential for employee well-being and contribute to a sustainable, successful organization. <\/p>\n\n\n\n

                      Focusing exclusively on wellness program ROI can lead to a short-term mindset where employers seek quick returns on their investment, potentially overlooking programs that offer long-term benefits. Additionally, ROI calculations often ignore indirect costs, such as lost productivity due to absenteeism or presenteeism (when employees are present but not fully productive).<\/p>\n\n\n\n

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                      What Is VOI?<\/h3>\n\n\n
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                      VOI is a comprehensive measure of all the benefits conferred by employee health and wellness programs<\/a>. Focusing on VOI doesn\u2019t exclude financial returns; rather, it encompasses additional metrics like productivity, employee morale, retention, and satisfaction, all of which impact an organization\u2019s bottom line. Among employees with wellness programs, 89% report being happy with their job<\/a> and would recommend the company to a friend. Only 17% would recommend a company that is not committed to improving workforce well-being. <\/p>\n\n\n\n

                      By considering this broader context, companies can achieve a complete view of program effectiveness that encompasses more than just dollar-to-dollar cost. This perspective enables organizations to fine-tune their wellness programs and maximize success. <\/p>\n\n\n\n

                      Some VOI metrics are easier to track than others, but few are impossible to track. Examples of VOI metrics include employee engagement, safety incidents, absenteeism, and turnover. Many companies already track this data but don\u2019t analyze it in relation to workforce health. For example, there is a direct link between employee wellness programs and the all-important ability to attract and retain talent. <\/p>\n\n\n\n

                      To summarize the difference between VOI and ROI, check out this\u202fWhiteboard Wednesday video:<\/p>\n\n\n\n

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