Wellness ROI vs VOI: The Best Employee Well-being Programs Use Both
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 Wellness 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 |
|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.
|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
|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.
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 wellness ROI analysis, sometimes known as a benefit-to-cost ratio.
For example, if a well-being program has an wellness 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 wellness ROI of health promotion 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
What is Wellness VOI?
Just like ROI, a wellness VOI analysis also tries to compare employee well-being program participants to non-participants, but in addition to 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 wellness VOI 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 wellness ROI OR wellness 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.
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 wellness 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 – the data on wellness VOI. 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 wellness ROI studies already exists.
Outside of the U.S. the wellness VOI 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 wellness 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 do 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 wellness 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 wellness ROI to wellness 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 wellness ROI. They and their employees deeply value the new culture that an effective wellness program can create.
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 (a wellness ROI focus) evolved into a culturally-driven transformation within an organization that will encourage employees to live healthier lives (a wellness VOI focus).
So the pursuit of a high wellness 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 wellnessVOI of well-being programs ends up being the most important outcome of an effective well-being program.SUBSCRIBE TO THIS BLOG
For more help on understanding wellness VOI, here is webinar video presented by Dr. Troy Adams:
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