Looking for how to measure the success of your Employee Wellness Program? This article will help you understand the metrics of success and how to make the case for employee wellness in your organization.
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ROI and VOI – Metrics for Evaluating Your Employee Wellness Program
According to Gallup, around 85% of employers today have some type of corporate health and wellness program. With the term ‘wellness program’ expanding in scope, the metrics we use to evaluate the success of these programs has had to evolve over time as well.
In this guide, we’ll break down the difference between Return on Investment (ROI) for wellness programs and Value on Investment (VOI), and why it is vital to consider both when evaluating your employee wellness program.
The Expanded Definition of ‘Employee Wellness’
Within organizations, the traditional definition of “wellness” has long focused on specific physical fitness and lifestyle management activities—such as eating a healthy diet, exercising regularly, and quitting smoking.
Advocates historically argued that focusing on these things can help lower the cost of healthcare claims, thus benefiting an employer’s bottom line. However, this definition misses an important and overarching reality: physical fitness alone does not constitute wellness.
Gallup and Healthways developed a more comprehensive tool to measure five metrics of wellness, all of which contribute to the overall well-being of an individual:
- Career purpose
- Social connectedness
- Financial stability
- Community engagement
- Physical health
And while it’s not explicitly stated, mental health is woven throughout all five elements and plays a big role in whether an employee is thriving, getting by, or struggling in the workplace.
When discussing wellness in this guide, and in general, we are referring to each of these elements that improve the overall wellbeing for your employees and your entire organization.
Accounting for Employee Wellness: Defining ROI for Wellness Programs
While employee wellness programs are often classified as an expense for an organization, that limited scope does not take into account the various financial benefits an effective employee wellness program can provide.
This is because many organizations don’t take into account exactly how to measure and assign value to their employees’ health and wellness outside of a single metric: savings on healthcare claims and insurance costs.
While discussing the return a company can achieve may be inclusive of these savings, measuring a comprehensive wellness program’s benefits requires a more holistic approach that calculates multiple success factors.
Evolving Wellness Program Success Metrics: Value on Investment (VOI)
Employee wellness programs have recently started being measuring by more than just ROI – one metric that is becoming increasingly popular in discussions of employee wellness is Value on Investment (VOI). This metric diverges from ROI which can only be calculated using hard numbers.
The difference between ROI and VOI is a very important concept to understand when learning how to measure the success (or failure) of an employee wellness program.
The Pitfalls of Solely Measuring ROI
When measuring wellness program ROI, most companies tend to judge how much money they save by reducing total healthcare claims. This singular view and calculation uses year-over-year changes in healthcare claims and subtracts the cost of the employee wellness program to determine their savings.
While this straightforward approach may mirror other expenses in an organization’s bottom line, organizations miss the mark by taking such a narrow approach when evaluating effectiveness and success. Solely evaluating a metric like total claims cost ignores the other factors that can affect a company’s bottom line.
The benefits of an employee wellness program range from some things that are easy to assign monetary value to all the way to things that are ‘softer’ but no less important.
The Benefits of Measuring VOI
Organizations that measure VOI are taking a more holistic approach to evaluating the success of their employee wellness programs. Approaching this process from a lens of VOI takes into account various factors like employee engagement, morale, recruitment, and feelings of belonging and purpose.
Value on Investment (VOI) can also be measured across other areas of the business such as:
- Higher customer satisfaction ratings
- Increased profitability for the company
- Increased productivity from the employee
- Lower turnover
- Fewer safety incidents
- Lower levels of shrinkage (employee theft)
- Fewer missed workdays
- Better product quality (measured by product defects)
- Lower healthcare claims costs
By working together, ROI and VOI can provide a more holistic picture of the success and effectiveness of your organization’s employee wellness program.
How to Maximize VOI For Your Organization
Employee wellness programs that are the most successful are ones that reach all of your employees, regardless of where they are in the world or along life’s journey.
Burnalong works with leading employers, insurers, universities, hospital systems, and more to boost employee engagement 5x over traditional wellness programs. We achieve this by meeting your employees where they are and engaging them with social motivation tools and unparalleled choice and diversity.
Speak with one of our wellness consultants to learn more about how Burnalong can help boost the VOI of your employee wellness program today.