Health & Wellbeing: How to prove perks’ cost-effectiveness

The benefits of staff health and wellbeing programmes may seem obvious, but finance directors will want bottom-line proof of their effectiveness, says Sam Barrett

Jamie Barnes, client services director at benefits consultancy Enrich, says: “It is an age-old problem. Although common sense suggests health and wellbeing initiatives can deliver significant benefits, these are not easily identified on a balance sheet. From the finance director’s point of view, such benefits have a negative impact on the bottom line.”

But although the business benefits might not show up on the balance sheet, it is still possible to identify them and give them a financial value. Charlotte Bray, specialist consultant at Aon Consulting, says: “Health and wellbeing strategies can bring lots of benefits, such as increased productivity, improved staff retention, greater employee and customer satisfaction, and lower sickness absence. It is difficult to translate these into figures, but not impossible.”

Sickness absence levels

The place to start is probably with sickness absence levels. Mike Blake, group sales manager at PMI Health Group, says: “Improvements to absence are the easiest thing to prove. Unfortunately, although many organisations know they need to improve, they do not have the data to show the extent of the problem. I would recommend getting this before they implement any health and wellbeing initiatives because it establishes a baseline from which to make improvements.”

Sickness absence management systems can record this data, but ensuring there is consistency around sickness reporting can go a long way to improving the quality of data. Employers must also be aware that absence can fluctuate, because of swine flu for example, so this needs to be taken into account when analysing trends.

Other areas that generate business benefits are less easy to measure than counting sick days. Measuring staff productivity depends largely on the nature of the organisation. For instance, it is relatively straightforward for a manufacturing firm, but much less so for professional organisations.

Employee engagement

Employee engagement may be a better indicator of productivity. “Employers can run surveys to keep tabs on employee satisfaction, although the cost of reduced satisfaction tends to come through in areas such as increased staff turnover and sickness absence,” says PMI’s Blake.

Measuring the business benefits of health and wellbeing perks is problematic, but it can be more difficult to do this around some than others. For example, screening will identify issues such as high blood pressure or raised cholesterol levels, but these may not manifest themselves as health problems for years. Similarly, because the serious health problems associated with smoking do not usually occur until people are at least in their 50s, a smoking cessation programme can show little immediate advantage. Jill Pollock, health and wellbeing consultant at Bupa, says: “A lot of employers question why they are making improvements to staff health that will have a long-term effect, potentially felt only long after the employee has left the organisation.”

Financial incentives

But she argues that even though major health benefits might not come through for many years, there can still be financial incentives for employers to take such steps. “If organisations introduce these types of programmes, they will often see improvements in employee engagement, with knock-on effects in productivity, recruitment and retention,” she explains.

Vielife’s Colling believes employers should be more creative when considering longer-term initiatives such as smoking cessation programmes. “Smokers work about a month less a year than non-smokers,” she says. “If they take five cigarette breaks a day, that is about an hour a day they are not working. Multiply this for the year and employers have lost more than a month’s work.”

These types of benefit might be difficult to measure, but there are some that deliver more immediate results. For example, where employers need to demonstrate business benefits quickly, a stress management plan is worth considering, says Colling. “A highly-stressed workforce will not be as productive as it could be. Teaching employees how to deal with stress and helping them to build resilience will deliver fast results.”

Cost-effective extras

The PruHealth plan offers cash incentives for engaging with health and wellbeing. Staff receive up to £150 back, depending on claims and how actively they engage with the health plan, while employers receive a profit share of 25% of the difference between the premium and the claims paid.

“We are looking at introducing an employer incentive that reflects the level of health and wellbeing engagement,” says Priestley. “It can be difficult to measure, but our model is built on the principle that healthier people require less medical treatment. Given the implications of this, it has to be a business benefit.”

Case Study: Kwik Fit Insurance

Kwik Fit Insurance has just under 1,000 employees at its offices in Lanarkshire, most of whom work in the company’s call centre.

Elizabeth McVeigh, senior HR co-ordinator at the firm, says: “This can be a very targeted and competitive environment, so it is essential we look after employees’ health and wellbeing.” To do this, Kwik Fit Insurance employs its own occupational health nurse, who is responsible for overseeing a number of health initiatives, including an on-site gym and fitness instructor, lifestyle screening, massages, healthy-eating programmes and counselling. She also runs a drop-in service for staff suffering from minor ailments, dealing with everything from contraceptive injections to taking out stitches.

“We know the drop-in service saves employees a lot of time,” says McVeigh. “They can pop in to see the nurse rather than having to take a morning off to see their GP.” Although McVeigh has not measured the time and cost savings of this service, she has measured the benefits delivered by other parts of the company’s health and wellbeing strategy. “Since we introduced the strategy in 2005, we have been tracking different measurements to see how effective it is,” she says. “These include the results of our employee survey, employee retention levels and sickness absence figures.” Between 2005 and 2008, Kwik Fit Insurance has seen gains in employee satisfaction and retention, while absence has fallen by almost 50%, from 6.7% to 3.7%. On top of this, earlier this year, the company won a Gold Award from the Scottish Centre for Healthy Working Lives.

How to maximise health and wellbeing benefits

Being able to demonstrate the value of an organisation’s health and wellbeing strategy will help to convince even the most cynical of finance directors, but it is also worth ensuring employers choose the initiatives that will deliver the biggest benefits.

Charlotte Bray, specialist consultant at Aon Consulting, says: “A health risk assessment, such as the online tools offered by medical insurers, will give a good indication of what health problems are the most common among employees. This will help employers target their health initiatives.” Jessica Colling, product director at Vielife, also recommends asking employees what they would like. “A health risk assessment might indicate there are a lot of smokers in an organisation, but if none of them wants to stop, the employer is unlikely to run a successful smoking cessation programme,” she says. “Giving staff some say over the health initiatives they want will increase participation and improve results.” To maximise effectiveness, it is also important to review the strategy regularly. As employees engage with health and wellbeing programmes, their needs will change and an annual repeat of the health risk assessment will highlight this.

Finally, employers should not forget to communicate the initiatives to employees. Jill Pollock, health and wellbeing consultant at Bupa, explains: “Employees are often unaware of what is available, so make sure you have a good communications and marketing plan to support any health and wellbeing plan.”

More articles on workforce health benefits

Click on the links below for more sections:

Health & Wellbeing: Comment by Debbie Lovewell, deputy editor

Health & Wellbeing: Providers braced for the demands of swine flu

Health & Wellbeing: Interview with Mike Izzard, chairman of the Association of Medical Insurance Intermediaries

Health & Wellbeing: Employers need strategies for prevention and cure

Health & Wellbeing: Flexible working can reduce staff absence

Health & Wellbeing: How to rein back private medical insurance costs

Health & Wellbeing: Musculoskeletal disorders need a formal strategy