Organizational Wellness

How to Convince Your CEO and CFO to Invest in a Wellness Program

Oct 3, 2023
Last Updated May 9, 2024

Business leaders are excited about employee wellness. It’s hard not to be enthusiastic about improving workforce wellbeing in a world where nine out of 10 companies see a positive return on their wellness programs. They boost productivity while decreasing talent and healthcare costs. It’s a triple win!

But despite these many returns, one in five HR leaders doesn’t know how to measure their wellness program’s impact. And what CFO is going to greenlight a program without seeing the numbers?

Well, here are those numbers. From insurance costs to attendance rates, you can show how your wellness program will move the needle.

return-on-wellbeing-2024.png

How to Measure Your Wellness Program’s ROI

If you feel overwhelmed at the idea of proving the financial ROI of a wellness program to your boss, don’t worry! This doesn’t have to be an intimidating process. There’s a straightforward formula you can use to quantify your return:

Company Wellbeing ROI = Productivity Increases + Talent Management Savings + Healthcare Savings – Wellness Program Costs

Let’s explore how you can populate this equation to calculate your company’s individual return on wellbeing. 

Data to Measure a Wellness Program’s ROI

Measuring Productivity Increases

Wellbeing programs can boost employee productivity by increasing the average amount of work employees complete, as well as by decreasing absenteeism and injury rates. Figures you can track that capture both aspects of this improvement include:

  • Revenue per employee. Take your revenue over the last 12 months and divide it by the number of full-time equivalent employees at the company. The result will let you know how much revenue is generated, on average, by one full-time worker.
  • Profit per employee. Also known as net income per employee (NIPE), find this figure by dividing your net income over the last twelve months by the number of full-time equivalent employees at your company. If you see your profit per employee increase after the implementation of a wellness program, that indicates the initiative could already be paying for itself.
  • Workplace accidents. If an employee strains their back lifting construction materials or throws their back out when they lean over a low filing drawer, you have a workplace accident on your hands. Strength and stretching classes could help prevent such injuries — an attractive proposition given the average cost of a workplace injury claim is $40,000.

Measuring Talent Management Savings

Wellness isn’t optional for today’s top talent. A whopping 78% of employees believe their wellbeing is just as important as their salary, and they’re voting with their W2s: Seven out of 10  workers would consider leaving a company that doesn’t focus on employee wellbeing. A wellness program can help you woo future teammates and keep your current workforce, saving you costly recruiting and onboarding efforts. Numbers to collect before and after launching your initiative can include:

  • Time to hire. This measures how long it takes to move an employee from the start of the hiring process to accepting an offer. An attractive wellness program can help shorten this timeline, for example, by reducing the amount of time spent negotiating an offer with your top candidate.
  • Turnover rate. To measure this, divide the number of employees who leave in a specified time period by the average number of employees at your organization during the same period. The rate of employees leaving your organization can drop as a result of a wellness program, as they often improve employee satisfaction and people are less likely to seek a new position when they are pleased with their current position.
  • Candidate pipeline. Assess how many applicants you are receiving for your open job postings. This sum is the size of your candidate pipeline, or the number of workers interested in filing an opening at your company. Advertising your wellness program in job listings may increase the number of applicants you receive for each opening, which means you have a larger talent pool from which to hire.

Measuring Healthcare Savings

This is one of the most tangible measurements for capturing the success of your wellbeing program. Improving an individual’s health can decrease the cost of providing them health care, so the majority of North American employers save $3 in healthcare costs for every $1 they invest in a wellness program. (The savings are so consistent that many health insurance providers will give your company money to start a program!)

Gauging how a wellbeing program is impacting your healthcare spending will require looking at both your expenditures and employee health over time. Ways to monitor these include:

  • Costs per diagnosis code. A diagnosis code is an individual series of numbers and letters assigned to a disease. These can help you identify preventable conditions your employees are experiencing that may be ameliorated by a wellness initiative, and guide which ones you want to tackle first.
  • Place of service. With this information, you can see whether care was administered at a primary care office visit, urgent care or via telemedicine, each of which have a different cost. Visits to the emergency room are typically the most expensive.
  • Health risk assessments. These appraisals collect health information about participants to evaluate an individual’s current health status and habits, and to identify any potential hazards. These often include biometric screenings, which collect information like weight and blood pressure. When done repeatedly over time, they can help people track their health trajectory.

Measuring the Cost of a Wellness Program

The full cost of running a wellness program will rely on a variety of factors, from rolling it out to maintaining the initiative and measuring its impacts. Focus on uncovering isolated pockets of spending around your current wellness activities and highlight the cost savings associated with consolidating them into a holistic wellness program. Some of the expenditures you’ll want to keep in mind include:

  • Program enrollment. Some initiatives, like a Work Week Steps Challenge, can be rolled out without paying an external party. Others, like hosting a flu shot clinic, will have a cost.
  • Administration expenditures. The time your department puts into planning, promoting, and overseeing these programs is valuable. Estimate how many hours a program will take to oversee to evaluate how much it will cost the company in staff time.
  • Rewards and incentives. Some companies opt to incentivize participation in a wellness program with gift cards for the winner of a competition, or extra days off work for completing a challenge. Be sure to budget how much you plan to spend on any program rewards.

How to Communicate the Impact of Wellness Programs to Leadership

Have you collected your data? Great! Now it’s time to present to your leadership why rolling out a wellness program is a great investment. 

Consider sharing your idea prior to budgeting season when there may be funding available for new projects. Start by presenting internal data that quantifies why your employees need wellness support, like low employee net promoter scores, higher-than-average absenteeism, or growth in per-employee healthcare costs. 

It’s a good idea to present programs at this time you think would best address the wellness struggles your employees are facing. This enables you to give your C-suite a concrete idea of how much your proposed solution will cost and a projected point at which you anticipate returns. You can download Wellhub’ 2023 Return on Wellbeing Report for exclusive data and insights on where these programs produce returns and ways you can track that impact at your organization.

If you want additional support through this process, reach out to a Wellhub Wellbeing Specialist — they can help you gather data and frame your talking points!

Talk to a Wellhub Wellbeing Specialist_US1.png

Share


Wellhub Editorial Team

The Wellhub Editorial Team empowers HR leaders to support worker wellbeing. Our original research, trend analyses, and helpful how-tos provide the tools they need to improve workforce wellness in today's fast-shifting professional landscape.


Subscribe

Our weekly newsletter is your source of education and inspiration to help you create a corporate wellness program that actually matters.

By subscribing you agree Wellhub may use the information to contact you regarding relevant products and services. Questions? See our Privacy Policy.