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/ Economics - New / Development Stages in Corporate Wellness Programs

Development Stages in Corporate Wellness Programs

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Corporate Wellness on January 29, 2014 - 12:07 pm in Economics - New

It isn’t quite the case that: “If you’ve seen one corporate wellness program, you’ve seen one corporate wellness program, but it’s close.  Wellness programs have been around for roughly 40 years, but they are still in a stage of development and adoption that mirrors the auto industry in the late 19th century, with enormous variation in the kinds of wellness “solutions”, technology, incentives, engagement levels, evaluation metrics, and success levels achieved.

Larry Chapman, one of the early wellness gurus and still active (check out his website:

www.chapmaninstitute.net) divides the types of development stages into three categories:

  1. Quality of Worklife
  2. Traditional
  3. Population Health Management

The Quality of Worklife approach focuses on employee morale, offering a wide range of programs that are intended to improve worker satisfaction, attitudes, loyalty, etc. and often including wellness efforts such as fitness centers (on-site or discounts arranged), concierge services, “stress breaks”, etc.  The hope is that workers will be happier, though formal evaluation of effects is rarely conducted, and financial ROI is rarely expected to be demonstrable.

The Traditional Wellness approach includes some identification of wellness levels, risks, etc., based on biometric screening, health risk assessment surveys, etc. with a few programs aimed at all workers with little differentiation among them, minimal incentives offered, and minimal evaluation performed.  This is probably the most common stage, though it includes an enormous variety of particular programs and investment levels.

Population Health Management is a more formal and systematic approach, aimed at all employees, and often spouses as well, where the employer recognizes the impact of spouse and even children health levels on health insurance costs, absence and presenteeism.  It includes a far wider variety of programs, aimed at those who are already well, but always at risk for adopting or relapsing into risky behaviors, those at various types and levels of risk, those with chronic conditions who will benefit from more careful self management thereof, etc. The level of investment is typically far greater than for traditional wellness, the participation rates far higher, and the incentives far greater, etc.  For all these reasons, evaluation is likely to be more rigorous, and to include a far broader range of impacts, including not merely health insurance, but workers compensation, disability, absence and presenteeism impacts.

There is a fourth stage of development that may be an “empty set” at present, though a number of employers are fast approaching it in the US, and some in Europe are already there, since the government often takes responsibility for employee health care.  This stage is at least where all employers can adopt the “Gretsky Principle” of focusing on where they intend to be in the long run.  It can be labeled the Workforce Value Management (WVM) stage.  It goes past the usual cost-saving focus of population health management to include the full range of value that can be affected by both the health-limited and discretionary effort levels of employees, and by both health and all other investments that can increase the employers net ROI on workforce investments.

For example, employers in the UK have gone as far as measuring and reporting positive gains in not merely reduced absence and presenteeism, but improved technical quality of production, customer service, satisfaction and loyalty, and the gaining of new business.  (Check out www.vielife.com for examples.)  Instead of aiming to merely maintain wellness levels at “no-risk”, WVM aims at promoting higher energy levels, improved performance of “workforce athletes”, and other significant improvements in the value contributions that employees as a whole make to the organization.

Focusing on the ultimate value that employees contribute greatly expands the scope of wellness and health management, but it also recognizes that wellness investment plans should complete for approval and adoption with other kinds of workforce investments that are intended and expected to improve the value contributions of the workforce.  These will include not only increased productivity and performance, but new ideas for process improvements (employee “citizenship”) that may save money, improve quality, add to competitive distinction, etc.  Other investments, in employee training, career development, pay for performance, etc. may offer distinctly better returns than will particular wellness options under consideration.

In many cases, of course, the predicted ROI from wellness investments will compete effectively with other kinds of investments.  The Chapman Institute, for example, has reported basic wellness investments averaging a 3.0:1 ROI ratio.  More advanced approaches were found to average a ratio of 6.3:1, while some “outliers” averaged 14.5:1.  If wellness investments can return from $3 to $6.30 to $14.50 for every dollar invested, it should be worth it to many employers to borrow money, if necessary, in order to achieve such gains, making it possible to greatly expand the scope of investments and returns.

Pay-for-performance system introductions have rarely yielded ROI ratios (total financial gains divided by investment expense) this high, though they have certainly yielded ROI net returns (total financial gains minus investment expense) that can be higher.  Best Buy corporate HQ, for example, achieved an increase in productivity of 35%, while reducing turnover from 16.7% per year to zero through a work anywhere/anytime policy.  Safelite auto windshield replacement firm achieved a productivity increase of 40% at a cost of only a 10% increase in employee compensation, while reducing departures of high-performing workers, and increasing departures of low-performers. 

Combinations of investments that improve the personal value that workers gain in return for their efforts should all expect to compete with each other rather than be restricted to silos such as “wellness”, “training”, “work/life balance”, etc.  While recognizing the potential effects that all such investments can have on workforce value contributions will complicate their planning and implementation, it will also greatly expand the potential for employers to improve workforce value, and thereby greatly increase employers ability to afford to improve value gained from as well as gained by their workforces.

About The Author

Scott MacStravic, PhD is a former health management executive and professor, writing mainly in the domain of workforce wellness planning, implementation and evaluation.  He is the author of ten books and over 1000 articles on wellness and related topics.

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