How to prove the ROI of your wellness program

Employee well-being underpins an organization’s success. If you want a more profitable, productive and thriving organization, follow this advice.

Employee wellness tied to productivity

The concept of “employee well-being” was initially mostly about lowering insurance premiums.

Organizations would push “wellness programs” that encouraged positive, healthy behaviors among workers. At some point, the definition of wellness expanded to include financial and emotional health, too.

When you’re buying a machine or training a new worker, it’s easy to look at the investment and the output to determine a return on investment. Trying to calculate the ROI of employee well-being, however, is inherently challenging because well-being is an intangible aspect of employment.

That’s not to say it’s immaterial (nor unmeasurable).

Connecting well-being to engagement and productivity

According to the Harvard Business Review, high stress lowers productivity and performance. Unfortunately, stress affects virtually every person in the workplace today, be it work-related, financial, emotional or otherwise.

Financial stress in particular is a major challenge for workers, because lots of Americans live paycheck to paycheck. CNBC reported last year that nearly eight out of every 10 workers is one paycheck away from serious financial troubles. Obviously, it’s hard to give your best effort on the job if you’re struggling to pay the bills.

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Lack of sleep is another issue that profoundly affects productivity. According to a recent Yahoo article, researchers found that the average person sleeps approximately six and a half hours a night.

On any given day, then, your workers are likely either stressed out or tired—and probably both. What effect does that have on your bottom line?

Calculating ROI for engaged workers

Supporting employee wellness is an easy way to spark employee engagement—and engagement is a key factor in calculating the ROI of employee well-being. As outlined by the U.S. Chamber of Commerce Foundation, businesses with highly engaged employees are up to 21 percent more productive, have 25 percent less turnover (in high-turnover industries) and have up to 37 percent lower absenteeism rates.

Using these three crucial metrics, you can estimate the impact of increasing employee engagement:

Productivity

If the average worker contributes $10,000 of value to the business, increasing that by 21 percent and multiplying it across a workforce of 1,000 is a net benefit of more than $200,000.

Retention

The longer workers stick around, the more employers save on turnover costs associated with hiring and training. TLNT estimates turnover costs to be $19,000 for an employee making $50,000 per year.

If your execs are skeptical of the bottom-line benefits of engagement, suggest they write a $19,000 check every time someone heads toward the exit. Surely they’d appreciate a 25 percent reduction of that expense.

Absenteeism

Engaged workers take less unplanned time off to binge on Netflix or play hooky. Lower absenteeism leads to improved customer experiences and reduced overtime costs to fill in for unexpected absences, which further boosts the bottom-line impact of engaged workers.

Pursuing employee well-being is not just a nice thing to do. Organizations that are keen on maintaining productivity, retention and profitability should make worker wellness a top priority.

Ben Eubanks is principal analyst at Lighthouse. A version of this post first appeared on ADP’s Spark blog.

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