Are Wellness Programs Right for Your Company?

Magazine Contributor
Writer and Author, Specializing in Business and Finance
10 min read

This story appears in the May 2015 issue of Entrepreneur. Subscribe »

Workplace health initiatives— ranging from flu shots to support groups to stress management— are on the rise. Such programs can increase productivity and morale, as well as possibly reduce insurance premiums. But what are the risks for employers, and what is the ROI? Is wellness right for your company?

After the local chamber of commerce coaxed members to adopt programs that encourage employees to get healthier, the leadership team at Milwaukee branding agency Core Creative surveyed its staff of 45 to determine where they could use help. Their workplace wellness program started with simple efforts: lunch-and-learn sessions, stretching exercises and a small wellness library. Employees participated enthusiastically, so finance and HR vice president Patti Schauer incorporated more initiatives.

With an annual budget in the “low five figures,” Core Creative’s monthly wellness events extend far beyond such staples as smoking-cessation support and annual flu shots. For example, financial wellness sessions teach employees about buying cars and houses or saving enough money for retirement—an effort stemming from the belief that financial management can be a major stressor that chips away at overall physical health. 

“We take a holistic approach to it,” says agency partner and president Ward Alles. “It’s not just diet and exercise. It also has to do with stress management and time management, which can be problems, too.” 

Core Creative hosts on-site yoga and healthy cooking classes, and the company recently subsidized fitness trackers for employees. Core won the Milwaukee Business Journal’s Healthiest Employer Award in 2013, and the following year it earned the Small Business Well Workplace Award from the Wellness Council of America. 

A trend toward wellness

Workplace wellness programs like Core’s are growing steadily. The Family and Work Institute’s 2014 National Study of Employers found that 60 percent of U.S. employers offer some type of wellness program, compared with 51 percent in 2008. A 2014 study by Optum, a health information and services business owned by United Healthcare, found that small companies with up to 99 employees offer an average of 5.2 programs; employers overall offer an average of eight. 

As the programs become more popular, they’re increasing in scope to cover financial health, stress reduction and other areas, creating a more comprehensive view of employee wellness beyond biometrics like blood pressure, cholesterol and weight, says Tom Gubanc, senior director at the Cleveland Clinic Wellness Enterprise. 

“A lot of times, you’ll ask the executives, ‘What’s the largest [employee wellness] priority?’ and they’ll say, ‘Boy, obesity is our biggest problem.’ But if you survey the employees, almost 100 percent of the time, they’ll say, ‘We’re too stressed,’” Gubanc says. Taking a wide view in programming can help tackle multiple concerns. 

In addition to the potential benefits for employers and employees, the upswing in wellness programs may be driven by incentives provided by the Affordable Care Act (ACA), which encourages healthy work environments. In 2014, the ACA increased permissible financial incentives for employees participating in non-discriminatory health-contingent wellness programs from 20 to 30 percent of the cost of health coverage, and up to 50 percent for programs aimed at quitting tobacco use. These incentives may be in the form of premium reductions or cash rewards. The goal is to encourage healthier behaviors, which may reduce absenteeism and healthcare costs, while improving productivity. 

More employers are taking advantage of that option, says Bruce Elliott, manager of compensation and benefits at the Alexandria, Va.-based Society of Human Resources Management. They’ll typically ask employees to provide the insurer with cholesterol, body mass index (BMI), blood pressure, pulse and other measurements to possibly qualify for the incentive.

Designing a program that works

Smart employers are getting more than premium savings out of such data. Elliott says that by working with the health insurer to evaluate aggregate data from incentive reporting, programs can be tailored to mitigate risks. 

“If you have an employee population with a high BMI or high level of bad cholesterol, rather than doing exercise programs, you may want to talk to your employees about nutrition, diet and how to shop for vegetables and fruit, as basic as that is,” he says.

In addition to customization, successful wellness programs have other aspects in common, according to Jason Lang, team lead at the Centers for Disease Control and Prevention’s Workplace Health Programs. It’s important to a program’s success to have a designated person to head it up, even if it’s only part time, as well as leadership commitment. 

Programs should be designed with a range of strategies so all employees can feel included. For example, combining relaxation techniques (which are suitable for everyone) with on-site health initiatives like blood pressure screenings and healthful food options, as well as exercise programs that can be modified for different abilities, will keep your program inclusive. 

That’s exactly what the independently owned Hotel Valley Ho in Scottsdale, Ariz., does. Its 270-person staff skews young, with the largest age segment between 20 and 29, says HR director Laura Camarillo, who heads up wellness efforts. The hotel offers employees health-oriented lunch-and-learn sessions and an awareness program about getting up and moving throughout the day, especially for those with desk jobs. The latter has encouraged camaraderie among workers who “grab someone from their area and go for a brief walk,” she says.

Cautions for employers

In addition to leadership buy-in, it’s a good idea to have your legal counsel review your wellness program. The last thing you want to do is inadvertently violate a law or regulation. For example, if your wellness incentives consist of exercise programs that exclude people with disabilities from participating, you might be running afoul of Americans with Disabilities Act laws, Elliott says. 

Privacy issues may also be a concern. Any employee health data collected must be kept private, so it may be prudent to introduce additional security measures or to use a third party (like your insurance company) to collect such information. In addition, you need to ensure that your plan’s incentives don’t make the alternative cost-prohibitive for your employees. In 2014, the Equal Employment Opportunity Commission (EEOC) filed three lawsuits against companies over their wellness programs. 

“The problem is when these [incentive] numbers get so big that for a low- or mid-wage worker in particular, it’s becoming de facto mandatory, because it’s ‘I can either pay $1,000 a month for my health insurance or I can pay $100 a month. I’m going to enter the plan so I can pay $100 and afford my healthcare,’” says employment attorney Christopher T. Parkin, an associate at Stamford, Conn.-based Shipman & Goodwin LLP. He says one of the enforcement actions the EEOC brought in October involved a company that “was saying, basically, you can enter into our [wellness program] or, if you don’t enter the wellness [program], we won’t pay your health insurance.” 

In a May 2013 statement, the EEOC admitted that it needs to issue clarification on the meaning of voluntary as it pertains to workplace wellness plans. However, the agency has yet to definitively do so, Parkin says.  

Measuring success and ROI

What are the returns on all the time and effort spent on wellness programs? A well-publicized study conducted over seven years at PepsiCo, published in the January 2014 issue of Health Affairs, found that disease management programs targeted at conditions like hypertension and Type 2 diabetes returned an average of $3.80 for every dollar invested, while “softer” lifestyle programs returned only $.50 per dollar invested. 

Most experts admit that it’s hard to track exactly what the payoff is. Lang at the CDC says it may not be feasible to track dollar-for-dollar ROI at small and midsize businesses. Instead, he suggests focusing on what you want to improve—perhaps fewer sick days or greater productivity. Lang also recommends tracking participation rates in various programs and cutting those that are less popular. 

At Core, success is tracked through metrics like participation in the walking program, as well as employee demand. Most of the firm’s employees participate in some wellness activities, Schauer says. 

Stephanie J. Pronk, senior vice president of clinical and health improvement solutions at Aon Hewitt, an HR consulting firm based in Chicago, says employers need to think about the overall value of their investment. Are you reducing absenteeism or improving engagement? Is your retention improving? These are factors that have value and contribute to overall ROI.

“Many times when we talk to CEOs of small, midsize or even jumbo-size employers, engagement that leads to client retention may be more important than getting a hard dollar amount tied to healthcare costs,” she points out.

Camarillo says she knows Hotel Valley Ho’s program is working in a variety of ways. Within six months of implementing a weight-loss program, the company’s employees had lost a total of 799 pounds. In addition, aggregate data from her insurance company indicates that employee medication usage is declining. She has also seen a shift in the culture wherein more employees forgo burgers and fries in favor of healthful lunches. Not bad for the roughly $22,000 the company spends annually on wellness programs. 

But there’s one success story that makes Camarillo emotional. The initial employee survey revealed many smokers, so Hotel Valley Ho’s management made cessation a priority, offering an extra $10 per paycheck to nonsmokers, plus another $10 per paycheck for the rest of the plan year just for getting an annual physical exam—potentially adding $40 per month in compensation for participating employees. Within two months of starting the program, an employee stopped by Camarillo’s office, shut the door and hugged her. The woman, a former smoker, got her physical because of the incentive. Her tests resulted in an early-stage cancer diagnosis. 

“[Her] doctor said, ‘If you hadn’t had these blood tests where we could see there was something in your white blood count, we wouldn’t have caught this until we would be having a totally different conversation,’” Camarillo recalls.

So, while it may be difficult to trace the absolute return on every dollar spent, a focused, informed investment in supporting better employee health seems to pay off in some way. By letting your employees’ data help you decide how to structure and track your wellness program initiatives, you may find results that range from engaging to life-saving. 

Where to get help

Need tips on starting a wellness program at your company? Start here. The Society of Human Resources Management’s website has a number of articles on wellness programs to
get you started. The Affordable Care Act allowed the CDC to invest more resources into its workplace wellness assistance tools. Check out its basic worksite health page and Work@Health program. Membership organization the Wellness Council of America has a “free resources” section on its website with useful tools and information.

More from Entrepreneur
Our Franchise Advisors are here to help you throughout the entire process of building your franchise organization!
  1. Schedule a FREE one-on-one session with a Franchise Advisor
  2. Choose one of our programs that matches your needs, budget, and timeline
  3. Launch your new franchise organization

Book Sale - Save 60%!

Through 6/20/21, save on our collection of recommended side hustle and Start Your Own books, including:

  • Start Your Own eBay Business
  • Start Your Own Business
  • Start Your Own Etsy Business
  • And more

Use code SIDEHUSTLE2021 to claim your savings!

Make sure you’re covered for physical injuries or property damage at work by
  • Providing us with basic information about your business
  • Verifying details about your business with one of our specialists
  • Speaking with an agent who is specifically suited to insure your business

Latest on Entrepreneur