Financial Benefits of a Comprehensive Health & Wellness Plan

Company investment in employee health and wellness is becoming a necessity for maximal company productivity. This belief is can be an integral part of how business operates. A recent submission to the Harvard Business Review stated,

“Employee wellness programs have often been viewed as a nice extra, not a strategic imperative. But the data shows otherwise. The ROI on comprehensive, well-run employee wellness program can be as high as 6 to 1″

L.L. Berry, A.M. Mirabito, and W. B. Baun (2010)

With returns as high as 6 to 1 it would be advantageous for a company to emphasize employee health, as optimal company health can decrease expenditures and optimize profits and increase productivity on factors such as:

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  • Health Insurance
  • Disability Costs
  • Absenteeism
  • Presenteeism
  • Organization Social Profile

Health Insurance

Decreasing expenses on employee health insurance is one of the first ways a healthy workforce can benefit a company. For example, CMP Advanced Solutions saved over $250,000 from 2007 to 2011 on decreased health expenditures and insurance premiums. A four year study done by Ozminkowski et al., (2002), found Johnson & Johnson saved an average of $224.66/employee/ year of the study. Figure 5 compares the net health expenditures of Highmark Inc. for employees participating in an offered wellness plan and those who did not participate. This graphs shows that for those who engaged in the wellness programming had substantially lower health related costs then those who did not. Finally, a review of 56 peer reviewed journals found an average of 26.1% reduction on health related costs.

net health exp

Figure 5 Highmark Inc. Health expenditures for employees in a wellness plan compared with those who are not.

Disability Costs

As outlined in “The Cost of an Unhealthy Corporate Culture” disability is a large expense for Canadian companies. However, companies that have invested in a comprehensive health and wellness plan have made an impact on these costs. From 1995 to 2000 Irving Paper implemented a number of health promotion programs that encouraged and promoted a healthy lifestyle. During that time Irving cut their short-term disability cost by 50%, for a savings of $800,000. Additionally, The Canadian Institute of Stress (Bell Canada Operators Service research) states that stress control programs can decrease loss time due to disability by 52%5.

Absenteeism

As outlined in “The Cost of an Unhealthy Corporate Culture” absenteeism currently costs Canadian employers $5.48 billion/year9. A review of 56 peer reviewed journals found that companies that utilized a comprehensive wellness strategy had an average of 26.8% reduction in sick leave. In order to address absenteeism, MDS Nordion created a healthy workplace based on management commitment and employee participation. MDS saw a reduction in sick days to less than 4 days/year/employee5, 20. This is far below the national average of 7.4 sick days/ year/ employee5, 19.

Presenteeism

Ensuring optimal employee productivity is imperative to revenue and achieving returns for shareholders. According to a 2010 study by Towers Watson, companies with highly effective health plans had an 11% increase in revenue/employee and a 28% higher shareholder return. Additionally, North American companies that invest more in health and wellness than the national average outperform the market by 45% and have returns that are 86% higher than companies spending below the average2.

Organization Social Profile

Research has shown that investing in employee health and wellness will increase the social profile of a company8. Companies with a better social profile have higher retention rates, greater employee satisfaction and an edge in attracting top talent.

Employee Retention

As highlighted in previous sections (Impacts of a Unhealthy Corporate Culture: Organizational Social Profile) replacing employees can be very costly to Canadian companies. Research has shown companies with a wellness plan have an average lower turnover rate of compared to those that do not5,8.  Additionally, Renaud et al., (2008) reported large financial organizations in Canada saw a decrease of 54% in employee turnover after implementing a wellness plan.  After Delta hotel created a healthy workplace initiative, their employee turnover decreased to 19-22%18. This rate is substantially lower than the industry average of 40-60%18,19.

Employee Satisfaction

The Canadian Institute of Stress researched the impact of a health and wellness plan on employee grievances and found a well-designed wellness plan can decrease employee grievances by an average of 32%5. Irving Paper saw a reduction in employee grievances while implementing a health program from 50 per year pre-program to only 11 per year post program. This equates to a reduction of 78% in employee grievances5. These statistics suggest when a company invests in the health and wellness of its employees, there is a greater amount of employee satisfaction at work.

Employee Attraction

The attraction of top talent is paramount for a company to stay competitive in today’s business climate. Sanofi Canada (2011), found that 48% of Canadian workers would choose a comprehensive health and wellness plan over $20,000 per year8. These statistics support the necessity of a comprehensive health and wellness plan to today’s and the future workforce within Canada.