Corporate Wellness Programs

The implementation of corporate wellness programs continues to increase as companies recognize their benefits including improved employee morale and productivity, along with a reduction in employee turnover. Recently, employees have started seeing these programs as an essential part of their benefits package. Regardless of the labor market, gaining and retaining key personnel can be a critical determinant for new hires in a competitive job market.

During the past decade, analysts report healthcare costs have escalated to an estimated $900 billion, more than half of which is paid by employers. While corporate wellness programs have been in existence since the mid-1970’s as an attempt to minimize healthcare premium increases, worksite wellness programs continue to increase as a cost containment response to the escalating price of healthcare. As healthcare costs jumped to some 24 percent of average corporate after-tax profits in the early 80’s, worksite wellness programs entered their fastest period of growth. Another reason for the growth of wellness programs is the 8% to 10% yearly increase in insurance costs. While the exact cost effectiveness of these programs is difficult to measure precisely, a study by the U.S. Office of Disease Prevention and Health Promotion suggested the average cost-to-benefit impact of wellness programs was a $2 healthcare cost saving for every $1 spent on the programs.

Coors Brewing Company, one of the earliest adopters of worksite wellness programs, found their return on investment ranged from $1.24 to $8.33 for every dollar invested in these programs. A survey of Fortune 500 firms found a focus on wellness could lower employee health and disability costs by as much as 31% or $2,398 per employee. In another example, Union Pacific Railroad in Omaha cut their health costs by 5% and estimated indirect productivity gains at three times more than the direct medical cost reduction. The railroad’s self-care initiative achieved a $1.26 million savings, for a benefit cost ratio of $2.77 to $1.00.

Types of Corporate Wellness Programs

Wellness programs may range from relatively low cost informational efforts to higher cost programs, which may involve a company partnership with a local fitness facility or an on-site fitness center. To gain the maximum cost containment from a healthcare perspective, organizations must consider wellness commitments with the additional emphasis of fitness facilities combined with health education and follow-up. Typically on-site wellness participation by employees’ averages between 20 and 40 percent, although with the use of incentives, such participation levels can rise to an average of between 60 to 70 percent. Cost reductions increase with rising employee participation rates.

Benefits, like wellness programs, are often as important as is the base salary in an employee’s overall compensation package. According to the Bureau of Labor Statistics, benefits account for 27.7 percent of total employee compensation. Concern over the rising healthcare component of benefits provides an incentive for employers to subsidize and actively promote health improvement benefits. Wellness programs, which include physical fitness classes and equipment as well as programs such as smoking cessation, stress management and nutrition, emphasize lifestyle behaviors that can improve health. Examples of offerings that may be part of a corporate wellness program include:

· On-site screenings for hypertension, diabetes

· Smoking cessation programs

· On-site breast examinations and/or self-examination classes

· Exercise and weight management programs

· Nutrition counseling

· Programs to discourage drug use and alcohol use

· Prenatal care programs

· Self-testing for colorectal cancer

· Programs on seat-belt benefits

· Menopause education and awareness programs

· Flu vaccinations

· Disease management programs

· Asthma, and allergy management programs

· Golf leagues

· Non traditional activities like acupuncture, yoga, meditation, and tai chi classes

· Flexible work schedules, part time schedules, and telecommuting

· Work sabbatical program

· Work/Family balance programs

· Parenting programs and help finding childcare

· Eldercare assistance

· Retirement planning and college planning seminars

· Pneumonia vaccinations

As fitness concerns and corporate use of wellness programs evolve, three levels of program focus have been identified. Level one programs focus on short-term awareness issues using workplace posters, health fairs and brief classes or seminars. Level two programs involve behavioral change with an intermediate term focus. Level three programs also target behavioral change, but as part of an on-going continuous process. A Public Health Survey found that while 80 percent of businesses offered programs that corresponded to level one, about half that number provided programs targeting behavioral change. According to a U.S. Bureau of Labor Statistics Employee Benefits survey, 34 percent of all full-time employees had access to level two wellness programs. These programs were as likely to be included in employee benefits packages were severance pay (35 percent); vision care (24 percent); or paid personal leave (22 percent). At a managerial level, this benefit appears to have increased in importance with almost half (47 percent) of all professional and technical employees having access to company wellness programs.

Benefits of Corporate Wellness Programs

Satisfaction with worksite wellness programs delivers value beyond healthcare cost savings to organizations. Offering a company wellness program not only aids in recruitment, but such programs also lend themselves to team building and increased workplace productivity. In addition wellness programs have been linked to lower absenteeism, disability claims, and other drains on payroll. Still other indirect costs of poor employee health are reduced efficiency, poor morale, increased worker training and replacement costs, property and casualty loss and even loss of competitiveness.

Labor market conditions can significantly affect organizational benefits objectives and offerings. Even with periods of rising unemployment, shortages of employees with critical skills may still exist. Retaining the critical employee means an increased pressure on organizations to provide valuable benefits plans. Wellness programs offer organizations such a tool in attracting and retaining key employee groups and lowering organizational costs through reduced turnover. Even in periods of higher unemployment, organization’s overall cost savings and profitability can be enhanced by reduced healthcare expenditures, fewer workplace accidents, and fewer lost time due to illness.

Design and Implementation Issues

The challenge to most organizations today is not whether to offer a wellness program, but how to design and target such programs for maximum long-term effectiveness. Designing a wellness program as part of a benefits package to attract and retain key employees should begin with the needs and preferences of potential end-users. Since all employees are not motivated by the same health promotion and fitness concerns, organizations need to approach implementing an effective wellness effort in the same manner they approach their customer markets--targeted by employee segment. Simply installing a fitness facility or wellness program is not enough. A company must develop innovative, population-specific incentive programs to encourage on-going participation.

As with customer markets, the initial step should be identifying key employee segments, which have distinctly different sets of needs. Distinguishing between different segments’ characteristics and needs provides the organization with the basic information needed to design wellness programs to meet corporate objectives. Creation of a valued benefit must be treated as part of an organization’s internal marketing strategy. Shaping wellness offerings to better fit the unique needs of employee segments enhances the likelihood of higher levels of participation on a sustained basis – the result most likely associated with significant cost containment and enhanced productivity.

A survey by the American Journal of Health Promotion found just half of the 39 million workers with access to on-site health programs actually took advantage of them. In the absence of such a targeted, employee-centered approach to program development, worksite wellness offerings often are shaped more by organizational objectives than the needs and preferences of the intended participants—the employees. The Wellness Councils of America give “Gold Awards” to organizations with exemplary workplace wellness programs. Their winners report listening closely to the interests of their employees in surveys, focus groups, and in one-on-one interviews, and they also work to change the corporate culture to fit employee wellness needs.

Managers should develop a survey or other feedback mechanisms to ensure employee’s needs are being met by the wellness programs. Internal organizational communication should stress the presence of wellness activities and highlight key offerings. Corporate newsletters and e-mail can be an effective communication tool. Ongoing interventions and wellness program modifications will remain important as the age of workers continues to rise and thus health care needs of the aging segments will change. Companies are encouraged to tailor incentives as needed to encourage continued participation. Some companies have used rebates, discounts, extra vacation days, and prizes to encourage participation. Penalties used for non-participation can include increased health care premiums. Companies may find they must offer release time to employees in order to encourage maximum worker participation.

Dr. Marilyn M. Helms is the Sesquicentennial Endowed Chair and Professor of Management at Dalton State College and welcomes your comments at mhelms@email.daltonstate.edu.