Employee wellbeing programs wellness roi

 

Employee Wellbeing Programs: ROI vs VOI

These days there is a lot of talk about wellness ROI (return on investment) vs VOI (value on investment) of employee wellbeing programs. Some have suggested that wellness ROI is no longer important and that all wellness outcomes should be measured in terms of value.  To understand what wellness VOI really is we have to consider all of the reasons that companies do employee wellbeing programs in the first place. Most of the time a wellness program is implemented with the hopes of controlling healthcare costs, improving employee health, or improving employee productivity.

The table below is a pretty exhaustive list of the known reasons for doing worksite wellness. They range from saving healthcare cost dollars to just plain having fun.  Ninety-one percent of employers report offering health & wellbeing programs for reasons beyond medical cost savings.

Reasons for Doing A Wellbeing Program Type of Data Measure
Used
Manage or reduce health care costs
Reduce the number of sick days
Manage/reduce disability claims
Most companies have medical claims, absenteeism and disability data.
These are easier to evaluate because data is more readily available.
These are financial measures reported in dollars.
ROI
Reduce employee health risks
Improve employee job satisfaction
Improve employee productivity
Improve employee morale
Attract or retain talented employees
Improve employee energy levels at work
Increase on-the-job safety
Impact business performance and profitability                  .
Improve comradery and team effectiveness
Reduce presenteeism
Have fun
These outcomes are more difficult, if not impossible to accurately measure.
Special efforts and expense are required to get these data.
They are considered “softer” measures because they are often self-reported. They are not reported in dollars.
VOI

The best employee wellbeing programs have goals that include reducing healthcare costs, absenteeism, and disability can be evaluated by calculating the dollars saved by the wellness program divided by the dollars spent on the wellness program. This is the classic ROI analysis, sometimes known as a benefit-to-cost ratio.

Employee wellbeing programs wellness roi

For example, if a wellbeing program has an ROI of 3.1 that means that it saved $3.1 for every dollar that was spent offering the program. An ROI of 1 means the program broke even. I have published over a dozen scientific papers that have evaluated the ROI of wellness programs. Typically they look at healthcare cost saved divided by the cost of the program.

These are very large and complex actuarial studies that carefully compare healthcare expenditures of wellness program participants and nonparticipants across time.

This list of reasons below gives us a really good way of defining what VOI really is. Just like ROI, a wellness VOI analysis also tries to compare employee wellbeing program participants to nonparticipants but instead of looking at dollars saved, they look at other measures such as job satisfaction or employee morale.

Value on investment is not a very easy term to understand because it’s not very descriptive. Typically outcome measures that are part of value on investment are self-reported, require additional data collection and expense, and are generally considered “softer” measures.

It’s clear that the best worksite wellbeing programs impact employee morale, but how do you actually quantify employee morale? How do you measure team cohesiveness? How do you quantify company efforts to recruit and retain employees? These are all questions related to value on investment. A wellness VOI evaluation does not produce a numeric ratio like ROI does. The results of a wellness VOI study just state the facts: the program improved job satisfaction by X amount.

Some people think you have to pick only one measurement technique. They think that you should use either ROI or VOI, but not both. This approach makes no sense; the best worksite wellness programs can impact a wide variety of outcomes within an organization.

Some of those outcomes are measured in dollars such as healthcare cost claims, and some are measured in number of accidents per month, reductions in blood glucose, or self-reported job satisfaction scores. Not evaluating both financial outcomes as well as other outcomes is like accepting blood work to measure changes in health risks but ignoring results from self-reported depression or a dietary analysis. All the tests are important, they’re just measuring different kinds of things.

Employee wellbeing programs wellness roi

Value on investment is a simpler way of saying you want to find how your wellness program is affecting the more qualitative measures within your organization. As one who publishes scientific papers on wellness programs I have to admit that the data used in ROI analyses tends to be pretty reliable and somewhat easy to obtain.

After all, healthcare costs are expenses paid by a company. We know how much was spent and how it was spent. With enough digging we can get the claims data, split the data out by participants and nonparticipants, stretch the study out over a multiyear peroid, and get a pretty good idea of the trends of healthcare costs associated with the wellness program.

Companies don’t normally gather employee morale data. They rarely gather information on productivity, energy levels, or presenteeism. These types of data require special surveys and an extraordinary effort on the part of the company to collect and evaluate these variables.

Since most companies don’t readily have this type of data the research is not performed.  Researchers publish lots of ROI studies because, in most worksites, the data needed for ROI studies already exists.

Outside of the U.S. the VOI of wellness is about the only reason companies do wellness.  Around the world, the need to control employee-related healthcare costs is nonexistent.  In these countries worksite wellness programs are being used to improve productivity and to create added value from the workforce from the start.  There is little need to conduct to ROI analyses when VOI is the primary reason programs exist.

Use the free wellness ROI calculator right here. 

wellness roi calculators Employee wellbeing programs wellness roi

The Best Employee Wellbeing Programs Make the Wellness ROI to VOI Transformation

There is another reason why there is so much interest in the wellness VOI. Each year the number of companies doing wellness programs has increased. Today, most employees can participate in a wellness program through their employer. Not all of these programs are effective; in fact, some of them probably doing more harm than good. But as a whole, the overall quality of wellness programs has never been better.

You might be surprised to learn that most employers with an effective employee wellbeing program are no longer concerned about the ROI. They may have started a wellness program because they wanted to save healthcare cost dollars or improve employee health, but as the program matured leadership realized that the program has added considerable value to the organization.

WellSteps has some compelling evidence that this shift from ROI to VOI is real. WellSteps offers a performance guarantee. We guarantee in year one that over 50% of eligible employees will participate. In year two employees will demonstrate a significant and clinical improvement in health behaviors, and in year three we guarantee a positive ROI. In reality, by the time our clients get to year three they no longer care about the ROI. They and their employees enjoy the new culture that an effective wellness program can create.

Employees like the way they feel when they have healthy lifestyles. Employee morale and job satisfaction have been elevated and the overall mood and culture of the organization has changed. What starts as a business strategy to control employee-related expenses evolves into a culturally-driven transformation within an organization that encourages employees to have healthier lives.

What starts as a pursuit of a greater return on investment turns into a realization that there is tremendous value in having healthy, happy employees. It is as if these employer groups gradually discover the true value of having a healthy, vibrant, and productive workforce. It turns out that the VOI of wellbeing programs ends up being the most important outcome of an effective wellbeing program.

Employee wellbeing programs wellness roi

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For more on how to calculate VOI here is webinar video on Wellness VOI presented by Dr. Troy Adams:

About The Author

Dr. Steve Aldana

Dr. Aldana is the CEO of Wellsteps, a worksite wellness solution that leads the nation in wellness program deployment and engagement. Dr. Aldana authored over 75 scientific papers and 7 books on health risk management, healthy living, and health promotion programs. He has given over 350 keynote speeches across the U.S. on the ability of good nutrition and regular exercise to prevent, arrest, and reverse many chronic diseases. Email him at: steve@wellsteps.com

1 Comment

  1. The reality is that both ROI and VOI are measures of value. Both are measures of financial value. ROI is a cost/benefit measure, while VOI is a cost/effectiveness measure. (See the PHA/HERO Program Measurement and Evaluation Guide: Core Metrics for Employee Health Management, page 67).

    I would agree that we need to demonstrate worksite wellness program value in the broadest sense, not just financial value. The good news is that most, if not all the reasons for doing a wellness program can be measured accurately. Many scientifically validated survey instruments are available for the practitioner to utilize.

    ROI and VOI are both the result of outcome type evaluation strategies. It is important for worksite wellness practitioners to understand that outcome evaluation strategies are only one type of program evaluation. Process and impact type program evaluations should not be overlooked as ways to demonstrate program value.

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