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Do Workplace Wellness Programs Really Work?

Do well-being programs work? For many years, the answer to that question has focused on whether health promotion can save employers money on healthcare costs. Now, new bodies of research show that the value of well-being programs is better measured by the impact they have on other less tangible, yet still critical, metrics that affect business results.

Are workplace wellness programs effective?

In the last several years, various studies cast doubt on whether well-being programs really work. The JAMA study and the Illinois Workplace Wellness study are two of the more widely covered studies that highlighted a lack of savings on healthcare costs for employers.

But the question remains: is that all we should be looking at when gauging the success of a well-being program? While cost-savings are important, they can often be elusive because:

  1. Studies are typically conducted over a short period of time (12-18 months), which isn’t enough time for long-term behavior changes to translate to lower healthcare costs, and
  2. Even if employee healthcare claims did drop, there may not be a measurable decrease or a direct correlation between your program and actual costs. This is due to several factors, including insurance companies’ claim requirements.

Perhaps most importantly, focusing on cost-savings neglects the other, arguably more important, effects a well-being program can have on an organization’s bottom line, like:

Reduced turnover.

Gallup estimates that the cost of replacing an individual employee ranges from one-half to two times the employee’s annual salary. In the U.S., businesses are losing a trillion dollars each year due to voluntary turnover. This includes the costs of hiring and training new employees, but also the less tangible losses of knowledge, competitive advantage, and reduced morale.

Having a well-being program in place sends the signal to current employees that the organization cares about their health, leading them to stay longer. In fact, according to Mercer’s 2017 National Survey of Employer-Sponsored Health Plans, employers who create cultures of health see 11% lower turnover than employers who do little to prioritize employee well-being. Even the Illinois Workplace Wellness Study found that wellness program participants formed better impressions of their employers, and felt their employer cared about them and their well-being.1

Better talent acquisition.

Well-being programs have become a powerful tool to attract new employees and a major differentiator among potential employers’ benefits packages. This is especially important for millennials and Gen Z workers, who now make up more than half of the workforce. A 2016 Aflac survey found that health and wellness programs are significant factors in millennials’ decision to take or remain in a job. And our own recent study showed that millennials and Gen Z expect more well-being offerings than other generations. They also actually use the well-being programs their employer offers more than other employees.

Increased engagement.

U.S. employee engagement typically hovers somewhere around 30%, which means a shocking 70% of employees report to work each day disengaged. Thus, increasing engagement is a huge priority for organizations, especially because highly engaged business units see a 41% reduction in absenteeism, a 17% increase in productivity, and 24% less turnover.2

Employee well-being programs can make a difference. Research by Optum shows that compared to employees whose employer offers zero health and wellness programs, those who are offered 7–8 program categories are:

  • 117% more likely to be satisfied with their job;
  • 178% more confident in navigating the health care system; and
  • 57% more likely to continue working for their employer.

The same Optum study found that employees who participate frequently in the well-being program are:

  • 88% more likely to feel valued by their employer;
  • 18% more likely to take responsibility for their health and well-being; and
  • 45% more likely to rate their work performance as higher than co-workers.

Greater morale.

When a company is dedicated to a culture of well-being, it shows. From healthy options in the cafeteria to outdoor walking spaces to lunchtime yoga sessions, an organization that focuses on well-being lives and breathes it in everything it does. And employees just seem, well, happier.

A well-being program also creates an umbrella under which an employer can house all of the programs it offers to make employees’ lives better—and we know from our experience with the pandemic that employers do need to play a role in this space. Mental wellness, financial wellness, resilience-building, stress management—a good well-being program contains support for all of these and more. It all adds up to better health, happier employees and an overall great place to work.

When employers make a substantial investment in a well-being program, it’s natural to want to see a return on that investment. We encourage organizations to look beyond direct cost-savings and consider the long-term, indirect ways a well-being program can impact the bottom line: retention of key talent, greater employee engagement, and a culture of well-being that pays dividends in the form of happier, healthier employees.

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