When making policy decisions around wellness initiatives, companies often find it difficult to quantify the success of these programs in a definable way. There are many reasons wellness ROI is difficult to measure. Because of the sheer number of variables to be considered, there is no simple, standard formula into which HR departments can plug a set of numbers to get an answer to the ROI question. Any calculations in this area require considerable critical thought.
Pitfalls of Program Design and Company Culture
One of the problems facing HR departments is the inaccessibility of several baseline elements that must be tracked accurately in order to calculate their programs' ROI. Poor original structuring of wellness initiatives compounds the problem. If the wellness program is not structured in such a way that there is accountability for employees involving concrete, measurable tracking of progress, it will be virtually impossible to calculate ROI with any degree of success.
Other issues complicating the problem of calculating ROI for a wellness program are lack of time, resources, or manpower. Measuring ROI successfully requires an investment of time, making it easier for some companies to lose enthusiasm for wellness initiatives long before they will actually begin to pay off. Many argue that ROI numbers will not really tell a true story of the effectiveness of a program for at least three to four years. That span of time can seem like an eternity to a business concerned with maintaining its financial position in an ever-fluctuating economy.
Also, there are sometimes issues within a company culture that create problems for accurate ROI calculation. For instance, if a company is suspicious of the ability of its wellness program to produce concrete results, it will probably also be reluctant to actually do the work to arrive at concrete figures to gauge ROI. Because implementation of a wellness program may not be the most popular choice among employees, there is a great deal of pressure on those heading such initiatives to produce quantifiable results quickly. Taking on a wellness initiative must be a carefully considered process, and everyone involved has to go in with realistic expectations if the program is to succeed.
Difficulty of Measuring Intangibles
Adding to the complexity of the process, HR department employees sometimes lack the analytical expertise to assign monetary values to intangible results. For instance, how does one quantify the positive result of an employee who quits smoking because of participation in a wellness program? Obviously, there is benefit to the employee, and reasonably speaking, he’ll be faced with fewer health issues due to his success in beating the tobacco habit. However, how can results like this be calculated as real monetary gain?
One way is to depend on a claims-based ROI study, which should show a decrease in the insurance claims for the employee who has quit smoking. But claim reductions may not be immediate, nor may they necessarily follow the projected path. Basing ROI projections on a strictly claims-based ROI study will not provide the full picture of the success or failure of wellness initiatives. Unfortunately, the calculation of ROI in this case is not a straightforward process.
Measurement is Crucial to Success
One of the most important elements to a successful ROI tracking program is full buy-in from those undertaking it. A great deal of work is involved in adequately measuring wellness ROI, so it’s not a job to be taken lightly. The best way to get buy-in from people is to help them understand why what they’re doing is important – they must be able to see the benefits of accurately and realistically measuring ROI, and clearly demonstrate to company management what those benefits are and why their calculations are valid and important.
There is no doubt that accurate ROI calculation is difficult. However, it is a necessary part of promoting, implementing, and sustaining a wellness program that truly works.
Contact us for more information about wellness programs for your enterprise, and be sure to stay tuned for the next installment of this post, about ways to calculate wellness ROI.