Making the Business Case for
Investments in Workplace Health
and Wellness
Karla Thorpe
Director, Leadership and Human Resources Research
The Conference Board of Canada
May 14, 2014
conferenceboard.ca
Project Purpose
The overarching purpose of this project was to…
“Provide employers from small, medium and large sized
organizations with advice and guidance on how to make the
business case for investments for workplace health and
wellness programs.”
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Project Advisory Board
We have assembled a broad mix of representatives to
serve on our Advisory Board including our sponsors,
interested CASHC members, and other experts from:
• ACTI-MENU
• Ceridian
• Co-operators
• H3 Consulting
• Health Canada
• Healthy Enterprises
Group
• Homewood Human
Solutions
• Medavie Blue Cross
• Mercer
• Pfizer
• Reformulary Group
Inc.
• Sanofi
• Standard Life
• Sun Life Financial
• TELUS Health
Solutions
• WSIB Ontario
• VON Canada
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Key Areas of Investigation
• Demonstrating the impact of an organization’s health
and wellness programs
• Positioning and sustaining health and wellness
programs in the face of competing organizational
priorities
• Making health and wellness programs strategic and
essential
• Exploring tangible and intangible outcome measures
and metrics
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Why Should Employers Invest in Wellness?
• Control the financial costs associated with an unhealthy
workforce
• Build the organization’s profile as a socially responsible,
top employer
• Demonstrate legal due diligence
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How Can Employers Promote Workplace
Health?
• Create a healthy organizational culture
• Create a healthy physical work environment
• Provide resources to help employees maintain or
improve their health status
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Framework for Creating a Comprehensive
Wellness Program
Source: The Conference Board of Canada.
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Framework for Creating a Comprehensive
Wellness Program
Source: The Conference Board of Canada.
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Benefits of Measuring ROI
• Can help justify spending on
programs
• Measuring the impact of
wellness initiatives allows
employers to target their
programs more effectively
• Measurement provides
feedback and the opportunity to
fine tune existing programs
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Benefits of Measuring ROI
• Demonstrates that the employer
cares and wants to have a
healthy workforce
• Helps rally the organization
behind the program’s success
• Shows non-participating employees what can be achieved
• Employees get direct feedback to evaluate their health
status and take accountability for their own health
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How Do You Calculate ROI?
ROI =
(Gain from Investment – Cost of Investment)
Cost of Investment
or
ROI =
Net Savings
Program Cost
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Measurement of Wellness Programs
• Employers are still in the infancy
stages
• About a third of employers evaluate
program outcomes but very few
analyze the ROI for wellness
programs in a rigorous way
• Organizations are more focused on
demonstrating positive impacts and
outcomes than a positive ROI
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Barriers to Measuring ROI
•
•
•
•
•
Access to data
Confounding effects
Lack of staff/resources/funds
Lack of expertise
Difficulty integrating data from
various service providers
• Privacy/confidentiality issues
• Subjective measures
• Engaging employees in initiatives for
baseline measurement
Source: The Conference Board of Canada
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Measurement Framework for Wellness
Programs
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Measurement Framework for Wellness
Programs
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Fictional Example of a ROI Calculation – The
Program
The overall goals of the wellness program were to:
• Provide health risk assessments and biometric screening
clinics
• Increase employee participation in these activities
• Reduce the overall number of health risk factors in the
workforce
• Reduce casual absences due to health-related issues
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… The Specific Goals
From the first biometric screening clinics and health risk
assessments:
• Employees’ level of physical activity
• Smoking cessation
• Stress management
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… The Initiatives
• An HRA every 18 months
• Biometric screening clinics every 18 months
• Health coaching by phone for smoking cessation and
stress management
• Fitness and weight-loss initiatives
• Changes to organizational practices and the work
environment to promote a mentally healthy workplace
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Exercise 1. Total Cost Calculations
At your table :
1. Identify the various program elements that must be taken
into consideration when calculating the total cost of the
wellness program.
2. Determine the cost of each program element.
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… Total Cost Calculations
Biometric Screening Clinics
• First clinic (at start) : 222 participants
• Second clinic (after 18 months) : 250 participants
• Third clinic (after 36 months) : 278 participants
• Cost per participant : $ 50
Cost of biometric clinics:
750 participants x $ 50 per participant = $ 37 500
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… Total Cost Calculations
Incentives
• In total: 750 participants in the biometric screening clinics
• Incentive: $ 25 gift card
Cost of incentives:
750 participants x $ 25 per participant = $ 18 750
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… Total Cost Calculations
Smoking Cessation Program
• 74 smokers identified during a HRA, 19 enroll in the
smoking cessation program
• Cost per participant : $ 75
Cost of smoking cessation program:
19 participants x $ 75 per participant = $ 1 425
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… Total Cost Calculations
Stress Management Program
• 92 employees identified as having high stress levels, 51
enroll in the stress management program
• Cost per participant: $ 75
Cost of stress management program:
51 participants x $ 75 per participant = $ 3 825
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… Total Cost Calculations
Walking Challenge Program
•
•
•
•
•
Year 1: 53 participants
Year 2: 122 participants
Year 3: 234 participants
Year 4: 250 participants
Cost per participant: $ 100
Cost of walking challenge program:
659 participants x $ 100 per participant = $ 65 900
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… Total Cost Calculations
Gym Subsidies
•
•
•
•
•
Year 1: 25 participants
Year 2: 54 participants
Year 3: 68 participants
Year 4: 72 participants
Cost per participant : $ 250
Cost of gym subsidies:
219 participants x $ 250 per participant = $ 54 750
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… Total Cost Calculations
Communication Campaign
Cost of the communication campaign: $ 2 500 per year
Cost of the communication campaign:
$ 2 500 per year x 4 years = $ 10 000
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… Total Cost Calculations
Salaries of the Wellness Team
Wellness leader:
• Salary: $ 48 000 annually
• Works exclusively on managing the wellness program
Human resources director:
• Salary: $ 96 000 annually
• Spends 10 per cent of her time on the wellness program
Cost of salaries for the wellness team:
[$ 48 000 x 4 yrs] + [10% x ($ 96 000 x 4 yrs)] = $ 230 400
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Exercise 2. Total Savings Calculations
At your table :
1. Determine the savings gained by the organization from
each program element.
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… Total Savings Calculations
Smoking Cessation Program
Of the 19 employees who enroll in the smoking cessation program:
•
•
•
•
Year 1: 3 employees quit smoking
Year 2: 2 employees quit smoking
Year 3: 2 employees quit smoking
Year 4: 2 employees quit smoking
Smokers cost organizations approximately $ 4 256 more per year
than do non-smoking employees.1
1
Bounajm, Stonebridge and Thériault, Smoking Cessation and the Workplace, 4.
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… Total Savings Calculations
Smoking Cessation Program
• Year 1: 3 employees x $ 4 256 x 4 years =
$ 51 072
• Year 2: 2 employees x $ 4 256 x 3 years =
$ 25 536
• Year 3: 2 employees x $ 4 256 x 2 years =
$ 17 024
• Year 4: 2 employees x $ 4 256 x 1 year =
$ 8 512
Estimated total savings:
$ 102 144
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… Total Savings Calculations
Reduction in the prevalence of health risks in the
workforce
According to data from the benefits provider, on average, for
each risk factor identified in the workforce, it costs an
estimated $ 2,000 annually in productivity, benefits, STD, and
LTD.2
2These
costs are for illustration purposes only. Actual costs may vary depending on the organization.
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… Total Savings Calculations
Total cost for the 4 years:
If the wellness program had not been implemented:
= $ 562 000 x 4 years = $ 2 248 000
After implementation of the wellness program:
= [$ 562 000 x 1.5 yrs] + [$ 338 000 x 1.5 yrs] + [$ 220 000 x 1 year]
= $ 1 570 000
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… Total Savings Calculations
Reduction in the prevalence of health risks in the
workforce
Total cost for the 4 years:
• Without the wellness program: $ 2 248 000
• With the wellness program: $ 1 570 000
Estimated total savings:
= [cost without wellness program – cost with wellness program]
= [$ 2 248 000 - $ 1 570 000]
= $ 678 000
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… Total Savings Calculations
Changes in Direct Costs of Casual Absences
Through its human resources information system, the
organization has tracked changes in casual absence due only
to health-related reasons since the start of the wellness
program.
• Total payroll: $ 25 800 000
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… Total Savings Calculations
Estimated cost = casual absence x total payroll
Ex. At the start of program = 0.058 x $ 25 800 000 = $ 1 496 400
Estimated savings for each year
= estimated cost at the start of program – estimated cost for the
year in question
Ex. At the end of Year 1 = ($ 1 496 400 - $ 1 421 580) = $ 74 820
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… Total Savings Calculations
Changes in Direct Costs of Casual Absences
Estimated savings for each year:
• Year 1:
$ 74 820
• Year 2:
$ 145 899
• Year 3:
$ 213 425
• Year 4:
$ 277 573
Estimated total savings:
= [$ 74 820 + $ 145 899 + $ 213 425 + $ 277 573]
= $ 711 717
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ROI Calculation
102 ,144
1,491,861
ROI = ( Net savings / Total cost of program )
= ( $ 1 491 861 - $ 422 550 ) / $ 422 550
= 2.5
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Caveats
The method presented here is simple and can be used to
demonstrate the impact of wellness programs.
• It is not a rigorous or exhaustive study of the effects of
wellness programs.
• Many external factors, outside of the wellness programs,
can lead to changes in employee behaviour.
• This example supposes that all organizational programs
and practices have stayed the same.
• No overhead or administration costs, other than the
salaries of the wellness team, have been considered.
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Questions? Contact Us…
Karla Thorpe
Director
Leadership and Human Resources Research
thorpe@conferenceboard.ca
(613) 526-3090, ext. 408
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conferenceboard.ca