Human Capital

Do Companies Get Their Money’s Worth from ‘Wellness’?

Many companies plan to continue or expand financial incentives over the next three to five years; however, the effects of such programs are largely...
David McCannApril 19, 2019

The seemingly unending debate about the worth of employer-sponsored wellness and well-being programs didn’t get any closer to a resolution as a result of two new studies released this week.

A survey of 164 large companies by the National Business Group on Health (NBGH) and Fidelity Investments revealed that the average per-employee financial incentive to participate in such programs is $762 in 2019. That’s down a tick from $784 last year, but nearly three times the 2009 figure of $260.

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In addition, the proportion of employers offering incentives to spouses and domestic partners is now 58% in 2019, up from 54% in 2018. And the average incentive for spouses/domestic partners increased to $601, up from $596 in 2018.

In fact, according to the study, 40% of companies’ budgets for well-being programs are applied to such financial incentives.

As companies generally aren’t known for frivolous spending, they presumably believe that the programs and the associated incentives are worthwhile. Indeed, 82% of the surveyed employers, all of which offer at least one well-being program, said they plan to continue or expand incentives over the next three to five years.

And 78% of the employers said they consider employee well-being to have a meaningful role in their business strategy (although only 22% of them have connected well-being to any key financial or operational metrics).

“More employers view their investments in health and well-being as integral to deploying the most engaged, productive, and competitive workforce possible,” says Brian Marcotte, chief executive of the NBGH, a consortium of 420-plus large employers.

However, another study, by Zirui Song of Harvard Medical School and Katherine Baicker of the University of Chicago Harris School of Public Policy, offered up a discouraging picture of wellness programs.

The research involved 32,974 employees of BJ’s Wholesale Club. Those at worksites offering the company’s wellness program did report some positive health behaviors: an 8.3 percentage-point higher rate of engaging in regular exercise and a 13.6 percentage-point higher rate of actively managing their weight, compared with employees at other worksites.

“But there were no significant differences in other self-reported health and behaviors [including overall health, sleep quality, and food choices]; clinical markers of health; health care spending or utilization; or absenteeism, tenure, or job performance after 19 months,” the professors wrote in their study report.

They added, “Employers have increasingly invested in workplace wellness programs to improve employee health and decrease health care costs. However, there is little experimental evidence on the effects of these programs.”

While the professors’ study specifically looked at the effects of BJ’s health wellness program, the NBGH/Fidelity study uses the term “well-being” instead of wellness. That’s because it also considered other well-being programs:

“Their focus is holistic, with physical health being a component rather than the only priority,” says Marcotte. “Employers recognize that their employees have different needs and want to engage in different ways. Financial and emotional stress, for example, are major detractors from work performance, and employers are doubling down on these areas.”

Offered a list of motivations for sponsoring well-being programs, 82% of respondents identified managing health care costs as either the first or second most important.

A majority (59%) of the survey participants identified improved employee engagement as such, while 34% of them said so for assisting with recruitment and retention. But are they kidding themselves?

“While benefits like wellness programs might attract employees to a company and make them feel like the company cares about their health, these programs don’t guarantee employee engagement and retention,” Vicki Brackett, an employee engagement consultant and author of “The Leadership Toolbox,” tells CFO.

“Employees want to have a real stake in the success of the company,” Brackett says. “They want to be able to identify gaps in processes and be able to close those gaps. Employees want to be heard and feel like they contribute to the overall success. That is what engages them emotionally and keeps them engaged at work, and is ultimately why they stay.”