There are different ways that companies can measure which health and wellbeing strategies offer the best value for money for their particular organisations, as Sam Barrett explains
The healthy employee is, in theory, a more productive one. But while there are plenty of different initiatives that claim to deliver this, determining what’s really effective for your organisation requires some hard facts.
Measuring return on investment (ROI) for your healthcare interventions can highlight what works and enable you to demonstrate to stakeholders – including your finance director – that your strategy delivers value.
But it’s not going to be an exact science, explains Iain Laws, managing director, UK healthcare and risk at Jelf Employee Benefits. “When you invest in the health of your workforce, your investment can come back in myriad ways, including reduced absence, higher productivity and savings on insurance costs,” he says.
“It can also be difficult to determine whether something is a direct result of your strategy or another influencing factor. This makes calculating ROI far from easy.”
Keep it simple
To avoid spending weeks with a calculator analysing every detail, the experts recommend a simple approach to the maths.
Carl Chapman, head of wellbeing at Barnett Waddingham, says that if you focus on every change you can soon be overwhelmed by data. “With a health strategy you could look at improvements on blood pressure, diabetes risk, cholesterol, smoking habits, weight and so on but you’d end up with such granular data that it’s virtually worthless. Pick something that’s easy to track: if you make it too onerous, you won’t do it,” he says.
To cut through the data, the first thing to establish is the reason for introducing the benefits. “Different companies will have different drivers behind their choices, but these objectives should help you determine what to measure,” explains Jessica Silva, solutions director at Vielife.
For instance, if the reason for the strategy is to cut sickness absence or reduce the number of employees with unhealthy BMIs, measuring change in these two areas could suffice. However, if your motivation is to be regarded as an employer of choice, you could choose from a mix of different metrics, including staff retention rates, customer satisfaction, employee engagement and productivity.
As an example, as part of its ROI calculations, one motoring breakdown assistance company looked at its customer retention rates. It found that customers who had to wait more than 30 minutes for a mechanic were less likely to renew. By investing in its employee health and wellbeing programme, it was able to reduce absence and ensure that more of its customers were seen in under 30 minutes, increasing the probability of a renewal.
Statistical starting point
As well as picking the right data to track, you also need to be sure you have a baseline statistic from which you can chart progress. This needs to be a reliable figure but Chapman says most firms will have something that can be used. “Use something you already record, such as absence rates or productivity data or use a health risk assessment tool to generate a baseline figure,” he suggests.
Many of the health insurers can provide free tools, such as online health risk assessments to help gauge the level of health and wellbeing across your workforce.
Completed anonymously by the staff members themselves, these give feedback on their overall health and offer suggestions for ways to improve.
For example, Axa PPP healthcare has a calculator that crunches data on everything from weight and diet to exercise habits to see how a person’s health age stacks up against their actual age.
Using these types of tool can create a bit of fun as well as giving people valuable feedback. In addition, employers receive anonymised data to get an overview of their workforce’s health, using repeat assessments to see how its interventions lead to improvements over time.
Although these tools could be used to produce some of the data required to measure the effectiveness of a health strategy, Laws cautions against being too dependent on the results.
“They’re free and easy to use but employers can find that, unless they offer some form of incentive to complete them, they’ll end up with a disappointing take-up,” he says.
Knowing what sort of ROI figures to expect is also important. Although health and wellbeing is a relatively new area of employee benefits, there are plenty of studies showing the results for different organisations. For example, Vielife publishes a compendium of research evidence.
However, as health is unique to each individual, it’s wrong to expect exactly the same outcomes.
“An ROI of 6:1 is often quoted, but this can be towards the high end,” explains Silva. “It’s worth tracking ROI but we do find that, in terms of figures, most companies are simply happy to see a return.”
To help turn some of the statistics into hard cash, some providers have done the number crunching for you.
For example, according to Axa PPP healthcare, removing one health risk from an employee drives a saving of £600 a year from factors such as reduced absence and improved retention.
Chris Horlick, distribution director at Axa PPP healthcare, says these risks can be anything from smoking to obesity or inactivity. “You don’t have to take too many risks out of a company to make a direct impact on the bottom line,” he adds.
A matter of time
While having a target to aim for can help, it’s also essential to put realistic time horizons on any initiative you introduce. Silva says that ideally a company should look to a timeframe of three to five years for any strategy.
“You won’t get results overnight but do expect to start seeing improvements after a year in areas such as productivity,” she says. “It does vary from company to company with factors such as pay a significant influencing factor, too.”
Although a strategy should be long term, with so many different initiatives available, it’s fine to factor in an element of trial and error. As well as replacing any initiatives that aren’t working, you might also want to consider changing some of the statistics you measure, as this can reinvigorate the programme.
As an example, if you introduce a weight loss programme, measure the weight lost to underline the success of those taking part. You could consider adding further incentives to the participants by offering a pound-for-pound donation to charity.
But, whatever your reasons for adopting a health and wellbeing policy, it’s important not to be over-focused on determining ROI. While it’s great to prove that your strategy has more than paid for itself, the motivation for this type of investment can go far beyond driving up profits.
A quick look at some of the lists of top-performing companies shows that employee health and wellbeing is a common feature. Achieving this status can deliver more than a simple ROI for many employers.
There are other reasons for looking beyond the finances, as Dr Doug Wright, medical director at Aviva UK Health, explains: “Improving employee health has benefits that go beyond the workplace and last for much longer than most companies ever intend to measure them.
“Changing employees’ behaviour will benefit society for years to come.”
Wellbeing and healthcare will be key topics THIS WEEK at Reward Live. For the full programme, please CLICK HERE.