Employee wellbeing programs wellness roi

These days there is a lot of talk about wellness ROI (return on investment) vs VOI (value on investment) of employee well-being programs. Some have suggested that wellness ROI is no longer important and that all wellness outcomes should be measured in terms of value.  

What is ROI?

To understand what wellness VOI really is, we have to consider all of the reasons that companies do employee well-being 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 dollars to just plain having fun.  Ninety-one percent of employers report offering health & well-being programs for reasons beyond medical cost savings.

Reasons for Doing A Well-being 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 Goals of an Employee Well-being Program

The best employee well-being programs have goals that include reducing healthcare costs, absenteeism, and disability. These benefits can be quantified by summing 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 well-being 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. There have been several scientific publications 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 non-participants across time.

Use the free wellness ROI calculator

wellness roi calculators Employee wellbeing programs wellness roi

What is VOI?

Just like ROI, a wellness VOI analysis also tries to compare employee well-being program participants to non-participants but in addition of looking at dollars saved, they also 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 can be considered “softer” measures.

It’s clear that the best worksite well-being programs impact employee morale, but how exactly can employee morale be quantified? The same could be said for team cohesiveness, or recruitment, or retention.

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.

How Should VOI Be Used?

Some people think you must pick only one measurement technique. They think that you should use either ROI OR VOI, but not both. This approach makes no sense because even though it can be more difficult to measure “softer measures,” the best worksite wellness programs can impact a wide variety of outcomes within an organization.

Some of those outcomes will be measured in dollars such as healthcare cost claims, and some will be 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 change in blood glucose 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 just a simpler way of saying you want to find how your wellness program is affecting the more qualitative measures within your organization. The truth is 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 non-participants, stretch the study out over a multi-year period, 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.

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.

The Goals of the Best Employee Well-being Programs

There is another reason why there is so much interest in 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 well-being program are no longer concerned about the ROI. In the beginning, they may have started a wellness program because they wanted to save healthcare dollars, but as the program matured the value to the organization became apparent.

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 that employees will demonstrate a significant improvement in health behaviors, and in year three we guarantee a positive ROI.

In reality, by the time our clients reach year three, they no longer care about the ROI. They and their employees deeply value the new culture that an effective wellness program can create.

Employee wellbeing programs wellness roi

When a company does a well-being program right, employees like the way they feel when they have healthy lifestyles. Employee morale and job satisfaction are elevated and the overall mood and culture of the organization improves. What started as a business strategy to control employee-related expenses evolved into a culturally-driven transformation within an organization that will encourage employees to live healthier lives.

So the pursuit of an ROI turns into a realization that there is tremendous value in having healthy, happy employees. These employer groups gradually discover that there is true value in having a healthy, vibrant, and productive workforce. It turns out that the VOI of well-being programs ends up being the most important outcome of an effective well-being program.

SUBSCRIBE TO THIS BLOG

For more on to help understand VOI, here is webinar video presented by Dr. Troy Adams:

People Also Ask These Wellness Questions:

4.9/5 (18 Reviews)

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.

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.

Comments are closed.