Find A Formula For The Population In Terms Of T Business Leaders – Understanding The Worksite Wellness ROI Trap (Don’t Get Caught!)

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Business Leaders – Understanding The Worksite Wellness ROI Trap (Don’t Get Caught!)

ROI (Return-on-Investment) is considered a great measure of success for a workplace wellness program. And you want to know how to best implement ROI, right?

As an organization leader, it is important for you to understand the many issues, challenges, and obstacles to using ROI as a measure of workplace wellness program success. Lack of knowledge, misunderstandings, or misconceptions about ROI and its use can create many unintended consequences.

ROI is a method of calculating return on investment. ROI is the basic formula: net income divided by costs. Therefore, ROI is a methodology that uses factors that can be quantified in financial terms. The more difficult it is to measure costs and benefits in financial terms, the more valuable the ROI number derived from the formula becomes.

All top-notch, effective and successful wellness programs include measurement and evaluation, including ROI as part of their program design. Because measurement and evaluation processes are methodical and systematic, they are designed as part of the program delivery process.

A commonly reported rule of thumb is to spend 5 – 10% of your program budget on measurement and evaluation. ROI evaluation alone can cost upwards of 3 – 5% of a program’s budget.

The ROI methodology is well documented in the research and program evaluation literature. Ron Goetzel, Ph.D., a leading workplace wellness program researcher, writes: “Conducting a rigorous and reliable ROI analysis is time-consuming, expensive and requires a high level of expertise in statistical analysis, healthcare research, econometrics and benefit planning. . Design. Well-designed ROI studies of workplace health promotion programs are rare.” (1) While being able to demonstrate to senior leadership the value of investing in workplace wellness is certainly important, ROI is certainly not the only evaluation mechanism and may not be the best one to use.

Since ROI is a monetary or financial measure, the challenge of its application to workplace wellness lies in replacing the income portion of the formula with benefits from the program. The key here is to develop derived benefits in a reliable manner. In order to successfully use the ROI formula, one needs to understand the nature and types of costs, cost savings and cost avoidance.

If able to generate a hard and reliable ROI number, it’s important to remember that ROI is only an indicator of financial payoff. When presented as a stand-alone number, ROI does not tell the whole or complete story of the value a workplace wellness program provides. Other data are needed to demonstrate program success from other, different perspectives.

The ROI trap occurs when we justify the value of workplace wellness solely on the basis of financial measures of success. What about non-financial measures of success? Qualitative measures of success are just as important as financial measures.

Employee surveys and focus group questions about any changes in behavior, key learnings, personal or family benefits derived from the participant can all qualitatively demonstrate the value gained from the program. Participant testimonials are also a great way to qualitatively demonstrate value. When employees say, “It’s nice to have company care; it made me think about what I eat, or thanks to the company I’m much healthier now,” senior leadership can clearly see, on a personal level, the value employees derive from the program.

A typical ROI financial number reflects the return on investment based on health care cost savings. But everyone in the field knows that the value of workplace wellness programs includes more than just health care savings. What about savings from reduced absenteeism, presenteeism and turnover? What about financial benefits due to increased productivity and morale, or benefits due to the employer being a great place to work?

I don’t believe the usage and issues and costs associated with operating a valid ROI are well understood. If they were, I think there would be less demand and pressure to produce an ROI number. I also don’t think as a field that just because one organization achieves a positive ROI just because we explain well, doesn’t mean another organization will because of differences in leadership style, employee demographics, organizational culture and programs/interventions offered. between two entities. Therefore, program ROI should not be generalized between programs.

When using ROI as a measure of program success, it’s important to make sure the ROI process is understood and followed, and that you understand what the ROI number actually means. ROI in workplace wellness should be seen for what it is, a process improvement tool.

Reference:

(1) Goetzel, Ron and 21 other authors. 2014. Do workplace health promotion (wellness) programs work? Journal of Occupational and Environmental Medicine (JOEM), Volume 56, Number 9, pp. 927-934.

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