Many CFOs are asked to move mountains. Andy Hunziger, CFO of Lincoln Industries, is asked to climb them — once, sometimes twice a year.
The mountain-climbing expeditions, part of the $100 million company’s wellness program, are just one of the ways Lincoln CEO Marc LeBaron makes his direct reports sweat — literally. “At least once a month, the senior team does some sort of rigorous physical exercise,” says Hunziger, ranging from group exercise classes to brisk 12-mile walks. Meanwhile, participation in quarterly weight, blood pressure, and other health checks is expected of all 400 employees at the Lincoln, Nebraska-based metal-finishing company.
The sweating and the checkups pay off: indeed, Hunziger can quantify the benefits. Lincoln’s wellness program saves the company some $2 million a year, he estimates, with about half of that coming from lower-than-average health-insurance costs. (Lincoln is consistently about $3,000 below the national per-employee average.) A big part of the balance comes from the reductions in workers’ comp insurance rates that have occurred as the program has taken off over the past seven years, and from an estimated $4,000 savings per year per employee who quits smoking. Below-average absenteeism and turnover also contribute to the savings.
All told, Lincoln reaps “a 5-to-1 ROI” on its wellness program, says Hunziger. That includes the costs of employing a wellness staff, various incentives, and activities like the mountain climb with the CEO, which is a reward for employees who achieve a certain level of fitness.
These days, it’s rare for a small or midsize company to have such a robust wellness program, and rarer still for a CFO of one to be able to track the returns from it. In general, “the smaller the company, the less likely it is to have wellness programs,” says Laurel Pickering, executive director of the Northeast Business Group on Health, a network of employers and insurers. In large part that’s because most companies in that range don’t self-insure, so “at some level, it doesn’t matter how healthy their employees are, the insurance costs stay the same,” notes Pickering. Also, many smaller companies don’t have the space or the personnel to offer such programs. But that could change as more evidence of the monetary value of wellness efforts emerges.
The Case for Wellness
For the most part, smaller companies that get into the wellness game have a long history of cultivating a work-hard, play-hard culture — a culture often driven by the CEO, and not for monetary reasons. Industries in which the work is physically taxing, such as manufacturing, have an additional impetus to keep their employees healthy.
“We really believe in [wellness], and it’s who we are,” says Hunziger, who has been at Lincoln for seven years. The company’s program began with the hiring of a wellness manager in 2000 and has evolved to include a tobacco-free campus, regular physicals and key health-metrics checks, and on-site physical therapy and massage. The mountain climbing started in 2005. Next up: an on-site, full-service clinic, which will be free to employees.
This type of evolution has also occurred at Dealer.com, a Burlington, Vermont-based company that designs and manages Websites for auto dealers. The original founders held “board meetings” on local ski slopes, and have expanded their incentives to keep employees physically active as the company has grown — which is to say, substantially. In 2010 revenues hit $85 million, a 60% increase over the previous year, while the workforce has doubled over the past 18 months, from 250 to 500. Now, Dealer.com annually spends about $4,000 per employee on group exercise classes, personal training, massages, gym subsidies, and on-site organic cuisine, says CFO David Stetson. That’s on top of about $7,000 per employee per year for traditional benefits.
Wellness has been “an important part of the company all along,” but the program “really crossed the chasm” in the past year, says Stetson, noting that Dealer.com brought in a top personal trainer at the director level.
Return on Exercise
For companies that have exercise buffs as CEOs, quantifying the returns from a wellness program may be an afterthought, but it’s one that can be useful in terms of maximizing the investment or explaining the line item to a potential investor.
Stetson says part of his job now is to figure out what the company is getting back for all that spending as the company matures. “Hard returns on wellness are really important statistics,” he says. “Our board, the institutional investors, and some of the investment banks we’re talking to all want to know: What’s the ROI?” He is beginning his measurement program by tracking the number of employees participating in group exercise classes (recently 462 out of the 500 total) and such niceties as chair massages (345 per month).
Already, though, he knows some of the softer returns, such as a turnover rate way below the national average and the boon to recruiting. “This is not just about blood-pressure screens,” says Stetson. “This is about ‘We want to give you a better life.’”
Such enthusiasm from top-level management is critical if a wellness program is going to succeed, experts say. In fact, starting a program because of the expected returns could well be a fruitless exercise if executives aren’t interested in it. Both Hunziger and Stetson say that a commitment to the programs was expected of them when they took their roles, and that they are in better shape than when they began. Stetson participates in a yoga class, eats lunch in the organic café, and gets regular chair massages. “Wild horses would not drag me from it,” he says of the latter.
Hunziger, meanwhile, says he emphasizes the participation aspect when he gives presentations about the program to executives at other companies. “Senior leadership buy-in and action are vital,” he says. “If you’re a three-pack-a-day smoker, don’t expect your company to be wellness focused.”