Should employers incentivise employees to keep healthy?

Every facet of the current workplace healthcare mindset is focused on improving healthy-living behaviours among employees with many employers investing in plans to engage and interest employees in health and wellbeing. 

Incentivise Staff Health

If you read nothing else, read this…

  • Employers could incentivise to encourage staff to lead healthier lifestyles.
  • 29% of employee respondents would be comfortable if their employer incentivised for living more healthily (Towers Watson).
  • Incentivising employees is a common theme among US-based employers.
  • Employers could incentivise to encourage behaviours in employees such as quitting smoking or reaching health goals.

But sometimes attaining strong employee engagement with a broad health and wellbeing programme can be hard to accomplish. Encouraging staff to undertake a specific health behaviour such as a health screen, which can help employers to analyse health trends, is not always easy.

However, if an employer offered an incentive to employees in return for taking better care of their health, they may be more inclined to take action. 

Towers Watson’s 2013/14 Global benefits attitudes survey: developing a  culture of health and wellbeing – UK results , published in June 2014, which questioned 2,030 UK employees, found that more than a third (35%) believe employers should take an active role in encouraging their employees to live healthy lifestyles.

To do so, 29% of respondents said they would be comfortable if their employer incentivised healthier living, for example by giving prizes and awards, and offering lower health insurance premiums.

Only 22% said it is not the employer’s role to reward staff for living healthier lives, while nearly half (49%) remained neutral.

While this nature of rewarding employees for healthy behaviours has slowly started to take shape in the UK, across the Atlantic in the US, nearly seven out of 10 (68%) employer respondents deploy some form of incentive to inspire behavioural change, according to Aon Hewitt’s 2013 Health care survey , published in July 2013.

This has grown significantly since 2011 when it stood at just 37%.

Following the US incentivisation model for health

Rebekah Haymes, senior consultant at Towers Watson, says: “We can look at the US model, which is linked to healthcare costs and insurance, as the real driver in America. It does not seem to be having the same desired effect in the UK.”

Pharmaceutical giant Johnson and Johnson is just one example of an employer in the US using financial incentives for employees participating in a number of its programmes providing a range of health-related support and coaching (see column).

Meanwhile, Hallmark Cards (see box), which launched a financial incentive plan in 2011, has seen significant improvements in engagement and participation over those three years .

In comparison, to help boost engagement and participation in the UK, employers can use recognition programmes or build in measures to try to combat absence.

Dell, for example, created an effective peer-to-peer recognition programme that encourages employees to join together to take part in sports and social clubs, before sharing their experiences and success stories through social networks and blogs.

Beate O’Neil, head of wellness consulting at Punter Southall Health and Protection Consulting, says: “Incentivising does increase the uptake and participation of wellness programmes . But incentivising employees should not be about improving participation, the focus should be on driving improvement in an employee’s health and encouraging positive change.”

The aforementioned Aon research surveyed 837 employers in the US, of which more than half had locations elsewhere. The survey found that nearly half (46%) of respondents, and 66% of those with an incentive strategy already in place, position the incentive as a reward.

Incentives for specific behaviours

Nearly half (47%) have a specific incentive programme focused on those who smoke and/or use tobacco products. Of those, 43% position the incentive as a reward for non-tobacco use, 47% position it as a surcharge for tobacco use, and 10% use a combination of penalties and rewards.

“If employers in the UK are going to do this, incentives should be [based on] the results employees get from weight-loss programmes, quitting smoking or for hitting targets and improving their condition,” adds O’Neil.

Such financial incentives can encourage employees to attend wellness programmes, fitness classes or sign up at the gym, but employers could demand to see improvements before they reward employees with cash.

“There could be a lack of perception if employers demand to see improvement,” says Towers Watson’s Haymes. “Employers should demand to see change but should want to incentivise in a way that helps educate employees to start thinking differently about their health.”

If an employer takes this approach, the structure of the reward programme should communicate correctly to engage those who are not already taking part.

Healthy-living incentives beat cash payouts

Employers can offer a range of incentives, instead of just cash. For example, rewards could include free healthy meals at the staff canteen, a spa day, or tickets to sporting events.

Paul Bartlett, head of employee solutions at Grass Roots, says: “Employers should certainly be integrating their health and wellbeing into their reward strategy. Doing this can deliver engaged employees and improve motivation, but employers should not just give staff cash. That is like giving a Christmas bonus that gets sucked up by taxes and grocery spend.

“Employers should direct incentives towards healthy and physical options such as free gym membership or something that improves the work-life balance.”

The benefits of healthier employees

Encouraging employees to lead a healthy lifestyle will have numerous benefits, including increased productivity, enhanced employee engagement, lower absenteeism and even reduced staff turnover, but employers need to ensure they do not exclude staff. 

Louise Skinner, of counsel in the employment team at law firm Allen and Overy, says: “Although there are many benefits to incentivising a healthier workforce , it is important that no employee is disadvantaged as a result of an employer’s health-driven agenda. Employees who are disabled or older may be less able to take part in certain activities or initiatives, and it is important that they are not penalised as a result or else the employer could face discrimination claims.”

Strategies of the future will place even more emphasis on health and performance. The current focus on benefits plan management will subside as new solutions and emerging trends such as incentivising employees become more viable.

While behaviourial change can be tricky incentives can help, but these should not be forced upon staff. Organisations will need to keep schemes fresh and make incentives consistent while healthcare policies also need to be updated to stay exciting for employees.

Sally Luck, HR director, corporate services and wellness at Hallmark Cards, says employers should follow the US structure to get started on incentivising employees, but they should exercise caution.

“It’s a journey that does not happen overnight, it takes some time and a really dedicated individual to make sure it happens,” says Luck. “But do I think the UK should incentivise employees? Yes, but with some caution.

“Employers will not want to force this on employees but once staff understand then they will start to feel that the organisation really cares about them as a person, and as an important asset to the business.” 



Hallmark Cards has seen a number of improvements in workforce health over the past three years, since embarking on its programme to engage and educate employees to achieve healthier outcomes .

The organisation introduced a financial incentive plan for employee wellbeing in 2011, using its business-to-business subsidiary Hallmark Business Connections, which runs employee recognition programmes.

Since introducing financial incentives , the US card manufacturer has seen improvements in engagement and participation in its wellness programme. In 2013, 83% of employees participated in the financial incentive programme.

Through the programme, employees can be rewarded with up to $300 (approximately £175) for participating in health and wellbeing initatives. Up to $200 can be earned by taking part in preventive activities such as biometric and blood tests, physician checkups, health assessments, and educational activities such as attending lunch and learns and completing workshops on its online portal. 

Employees can earn a further $100 by attaining or making significant progress toward two healthy outcomes: body mass index (BMI) of less than 25 and blood pressure which is lower than 120/80. 

Sally Luck, HR director, corporate services and wellness at Hallmark Cards, says: “All our healthcare is done through an online portal where [staff] can complete health assessments. We have moved over the years from just boosting engagement to seeing employees really take full account of their healthcare.”

The use of incentives has also helped the organisation lower the rising cost of company-provided healthcare .

Luck adds: “We had a few good years where healthcare costs were mitigated because of this. Employees are healthier as a result but it does take a while for them to see the benefits.

“I think now our employees see that Hallmark is about employee wellbeing, that we care about them and that we want them to be healthy. I think incentivising employees has helped in that sense.”


Cary Cooper - Lancaster

For organisations, it pays to be healthy. The early years of the workplace wellbeing agenda has definitively settled that debate, no matter how often the bottom line benefits have to be reiterated in boardrooms across the world.

But individual employees are not about to go rifling through the latest set of results as motivation for an exercise kick, or a rethink of their work-life balance. So do employers need a more direct way of incentivising the health of their people? There are successful precedents for this kind of strategy.

The American pharmaceutical giant Johnson and Johnson has provided financial incentives for employees participating in a number of its programmes, providing a range of health-related support and coaching. And it appears to have worked. Smoking, blood pressure and cholesterol levels have all improved markedly over time. However, the success of this approach is all about nuance. Pound signs don’t simply equate to pure motivation.

A clear risk is that organisations turn health at work into something that’s transactional, or worse, parental. If the incentive is about simply signing up to a scheme, people are less likely to commit to action and ingraining habits that last.

There are subtler ways to incentivise that can encourage more positive behaviours, and as part of a clear commitment on behalf of the employer. Some organisations reward staff with extra days’ leave, the rationale being that paid sick leave is a perk that they haven’t benefited from over the years. This is the kind of policy which communicates more about an ethos which values health and wellbeing.

There is a message about work-life balance tied up in the reward too. It says ‘it’s okay to take time out’ and that the organisation does not expect or want people to be slaves to the office.

Whatever the finer points of any incentive scheme that employers choose to adopt, there is one common thread: its success can be largely attributed to the skill of managers in communicating and overseeing the programme within their teams. There are a huge range of factors which could affect how fair or motivating the scheme is, from long-term health conditions to workloads and resources.

One size certainly does not fit all, so it is vital to take a strong base with wellbeing strategy and allow some free rein to personalise how it’s delivered in practice.

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Applying pound signs to shift absence data simply will not work. As Einstein said, information is not knowledge and as with any health initiative, incentives need to be based on a clear appreciation of individual priorities and perspectives, developed through good managerial and personal relationships.

Sir Cary Cooper is professor of organisational psychology and health at Lancaster University Management School.