Measuring return from corporate wellness programs is tricky. While measuring return on investment, or ROI, can be difficult, it doesn’t mean that programs aren’t important. Measuring value on investment, or VOI, can be just as important.
Let’s examine VOI. We’ll cover how it’s different from ROI and why it’s important to consider the VOI for corporate wellness programs.
What is ROI?
According to Investopedia, ROI “is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments.” It continues, “ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost.”
ROI measures how well a particular investment is performing. When measuring ROI for corporate wellness programs, you generally look at health care costs, disability management claims costs, and workers’ compensation claims costs.
What is VOI?
The concept of VOI was first introduced by Gartner Research back in 2001. It loosely defines VOI as, “the intangible assets that contribute heavily to an organization’s performance.” It adds, “The intangible assets include knowledge, processes, the organization structure, and ability to collaborate.” VOI is determined through “soft benefits” or competitive differentiators that aren’t easily quantified.
How are VOI and ROI Different?
ROI describes the monetary return received on a financial investment. It’s the amount of money made when compared to the amount of money invested.
When it comes to wellness programs, don’t simply look at dollars and cents. Examine VOI for a true picture of what you’re getting from your investment. It takes into account everything that makes your business successful, particularly human capital.
How Do I Measure VOI?
When looking at your wellness program, there are some things that fall under VOI and some that fall under ROI. Measuring VOI means looking beyond financial return to examine other intangible measures. While they may not be easily measured financially, they still have a huge impact on your company culture and performance.
Let’s examine what you should look at when measuring VOI.
Employees who are sick or stressed are more likely to miss work. Studies show that employee wellness programs decrease absenteeism. In fact, employers who implement a health and wellbeing solution see a drop in absenteeism-related costs by about $2.73 for every dollar spent.
When evaluating the VOI of your program, the impact on absenteeism is something you definitely need to examine. Are you seeing fewer sick days?
Productivity and Performance
Productivity and performance refer to the amount and quality of work produced by an employee. A recent study shows that companies with employee wellness programs experience dramatic gains in worker productivity.
How you determine improvement will vary based on your company. For example, if you’re in manufacturing, use a labor productivity equation. This means productivity = total output/total input. Your output is the value of goods produced. Your input is the number of labor hours used to produce them. For example, say your company generated $100,000 worth of goods, utilizing 2,000 labor hours. You divide 100,000 by 2,000 to get 50. As a result, your company generated $50 per hour of work.
However, this equation may not fit for every industry or job role. In that case, you can measure productivity and performance in other ways. An easy way is to measure employee performance against set goals or KPIs. Has your team done a better job of meeting goals since the implementation of your wellness program? Are you more profitable now? Has the quality of work improved?
Employee Engagement & Satisfaction
According to the Society for Human Resources Management (SHRM), employee engagement “relates to the level of an employee’s commitment and connection to an organization.” It goes on to say that, “Employee engagement has emerged as a critical driver of business success in today’s competitive marketplace. High levels of engagement promote retention of talent, foster customer loyalty, and improve organizational performance and stakeholder value.”
Corporate wellness programs offer guidance, services, and resources that help employees feel better. And when they feel better, they’re happier and more engaged in their work.
So how do you assess employee engagement? One easy way is to collect opinions from your employees. Consider using an unbiased third-party to survey your employees. This creates a sense of anonymity where employees are more likely to share honest feedback. It’s important to get a gauge on things like, how valued they feel, how satisfied they are with their job and your company, and what benefits are important to them. When you solicit their thoughts on a regular basis and take steps to incorporate feedback, you’ll see an upward trend in engagement.
Reduced Health Risk
One thing that modern corporate wellness programs do really well is address risks before they become more costly medical issues. Take for example, prediabetes. It’s estimated that more than one-third of Americans have prediabetes. Of those, more than 84% don’t even know it! Therefore, getting employees involved in a prediabetes program early on can help mitigate the development of diabetes.
You can evaluate this data by looking at past trends and comparing them to current numbers. Has the number of employees living with diabetes remained steady rather than increased? Is that different from previous years? Are employees getting the support they need to self-manage their condition? You can determine this by looking at your medical and prescription claims data.
Recruitment and Retention
Employees want to work at places that make health and wellbeing a priority. Therefore, having a corporate wellness program helps you recruit and retain top talent. Secondly, those who work for companies with a wellbeing program are more likely to recommend their workplace to others. Moreover, employers with highly effective wellness programs report significantly lower voluntary attrition than do those with low effectiveness (9% vs. 15%).
One good way to determine if your program is contributing to recruitment and retention is to ask your employees. Find out from new employees why they chose your company. For current employees, ask them what’s keeping them there.
Benefits are incredibly important to jobseekers. Look at your competitors and what they offer. Are you offering more robust wellbeing services? If so, it’s likely that you’re attracting better talent than them.
Why is it Important to Consider VOI?
More employers are learning that you can’t judge the effectiveness of a wellness program on cost-savings alone. For example, in the Workplace Wellness Trends 2019 Survey Report, when asked why they offer wellness benefits, 71% of employers said it was to improve overall worker health and wellbeing. Only 29% said they offer them to control or reduce health-related costs.
Additionally, more emphasis is placed on employee support now than ever before. We’ve learned that during this public health emergency, people can feel disconnected and access to mental health care is limited. Corporate wellness programs are extremely valuable in helping them get the help they need, when they need it, to improve health and wellbeing.
In conclusion, when you look at the VOI of your corporate wellness program, you’re taking a more complete, holistic view than by simply looking at ROI. You go beyond what is quantifiable and take into consideration other factors that are equally (if not more, some would argue) important.