At some point, a top-level HR, CHRO, and EHS manager are going to have a conversation with the CFO about financial metrics or return on investment. For the managing director to provide such metrics, the HR department needs to demonstrate that an employee wellness programme is having a positive impact. Many times that is not always feasible (or at all) due to the fact it cannot easily be quantified through a financial statement, except to say that employee wellness programmes continue to provide positive benefits to enterprises across India as this country follows a new trend in terms of treating employee health as an operational variable, which has a significant influence on productivity, turnover rates, regulation compliance and overall operating costs. The question is not whether these types of programmes deliver value to the enterprise or not, but whether or not you have accurately measured the value of these programmes. This document provides you with specifics on how to calculate the corporate health and wellness programme’s ROI, what metrics you should look at when determining the effectiveness of each type of health and wellness programme, how to determine how to have a conversation with your executives surrounding the health and wellness programmes, and finally, how the context of an enterprise in India will require more rigorous and data-driven approaches compared to what is currently taking place within the majority of enterprises.
The biggest difficulty with wellness programs for employees is NOT typically a lack of belief from leadership about the benefits of healthy employees performing better – it is the attribution of those benefits. For example, if there is reduced absenteeism, how do you determine if this can be attributed to the wellness program? Could it be because of the new Occupational Health Centre (OHC), different shift scheduling or seasonal factors?
The issue of attribution to wellness programs continues to exist, and as a result, there continues to be chronic underfunding of most wellness investments. When the ability to show a clean cause/effect relationship is not possible, you end up with anecdotal success stories and participation metrics that will not hold up during review at budget time. Therefore, the answer does not lie in achieving perfect data, but rather it requires a structured measurement framework which will create a credible directional case/argument for the wellness program regardless of whether there are controlled experiments available.
The Two-Layer Framework: ROI and VOI
Before you pull out your calculator and start crunching numbers you must first understand the different things that you are measuring.
Return on investment (ROI) is a financial profitability metric that compares the cost of a program to quantifiable savings (reduced medical claims, decreased absenteeism costs, reduced hiring expenses related to turnover, reduction in lost productivity due to illness). The formula for calculating ROI is relatively simple (Savings – Costs) / Costs); however, in order to calculate accurate numbers you will need an ongoing, consistent collection of data over time.
Value on investment (VOI) cannot be measured with traditional accounting methods. You will find this information in engagement surveys, employee satisfaction surveys, psychological safety surveys, brand strength surveys, and compliance surveys, etc. While these are not measures that will show up on a claims report, they most definitely have an impact on an organisation’s ability to retain and recruit employees as well as their long-term performance from an operational perspective.
The most effective business cases for corporate wellness programs do not focus primarily on either metric, but rather, the most effective cases for corporate wellness programs utilize both ROI and VOI metrics to tell the whole story.
The Four Key Metrics of Corporate Wellness ROI in Indian Corporates
Corporate Wellness Programme ROI conversations will see four primary types of categories driving financial return when discussing any type of manufacturing, OEMs, pharma or large corporation in India.
1. Reduction in Healthcare Claims
Engagement in regular health check-ups, the early detection of chronic disease, and the use of preventative services will directly reduce the occurrence of high-cost medical events. Employees who are regularly monitored through Occupational Health are less likely to develop untreated conditions, which can later lead to hospitalisation, lengthy sick leave, or work-related injuries. On a global scale, structured engagement of employees in wellness programs has typically led to several hundred dollars in savings on an annual basis per employee engaged in terms of medical claims alone; in addition, the trend is similar among the industrial workforce in India where there has been a large increase in lifestyle-related diseases and work-related injury risk factors.
2. The Cost of Absenteeism and Presenteeism
Absenteeism is an observable and quantifiable expense. Presenteeism (employees being present but not producing at full capacity) is not so visible; however, it is frequently a greater expense. When you consider the amount of lost productivity, covering for unscheduled absenteeism, and administrative costs; unscheduled absenteeism costs companies thousands of rupees per employee on an annual basis. By utilising a well-designed health and wellness program that addresses physical and psychological health risks, employers can meaningfully reduce the amount of absenteeism and presenteeism in their organisation within 12–18 months of implementing such programmes.
3. Reducing Compliance-Related Risks
One of the categories that organisations overlook when evaluating ROI on their initiatives is compliance-related risk. Non-compliance with the Factories Act, ESIC requirements and other mandatory health checks can result in organisations facing costs due to penalties, audit findings and reputational loss. However, having a structured health and wellness infrastructure that allows for regular health checks, creates digital health records and generates audit suitable reports is considered more than just an investment in wellness; it also serves as a means of managing the regulatory risk for the organisation, thereby reducing the overall cost of a large, non-compliance event that will likely outweigh many years of wellness expenditures.
Ways to Determine Your Model
By taking the four basic inputs listed below, you can build a simple ROI model for your workplace wellness programs without involving your data science team:
1. You will need your current annual healthcare claims cost per employee
2. The average number of unscheduled sick days per employee per year
3. Attrition and average cost-per-hire, and
4. Compliance-related costs (e.g. penalties, manual reporting, audit remediation).
Next, you can calculate your conservative improvement scenarios against this baseline. For example, if you assume a 10% to 15% decrease in claims; a one-day decrease in the average amount of sick leave; or a 2-3 point improvement in retention; even with reasonable and defensible assumptions, the return will be significant.
Data infrastructure is what distinguishes between a credible estimate of ROI and one based on speculation. Health data should be long-term, consistent, and accessible; thereby, avoiding issues of data being stored in paper records, lab results that aren’t accessible, or diagnostic records that aren’t easy to find. Indian enterprises are struggling with this infrastructure.
If you were to look, you will find that almost all major enterprises in India have health programmes available for employees in some form, however only a small percentage are capable of measuring and verifying the effectiveness of these programmes, by having the necessary health data connection/data flow, to do so. Several of these programmes maintain the original medical records on different types of paper, thus resulting in these programmes having fragmented vendor ecosystems where vendors are unable to connect their records of the health care provided to their clients and us, the employees. These fragmented vendor ecosystems often will typically not allow a business’ employer to properly correlate data between the defined segments of a business; thereby making it impossible to evaluate the business’s ROI, and/or measure the health of the employees.
An AI-powered health management platform will fundamentally change this situation by enabling businesses to combine their pre-employment health checks, periodic assessments, OHC record systems, and employee health data onto a single cohesive system for analysis and reporting.
UNO.Care Has Ended the Time for Businesses to Rely on Wellness as a Line Item in Their Budget to Generate a Return’,’”There is a Gap to Fill”’ – UNOCare
At UNOCare, we are focused on filling the gap between Workplace Health Management and Employee Wellness. With an AI-Powered Occupational Health and Employee Wellness Platform that is built specifically for Indian Enterprises (along with an all-new way to integrate Corporate Health Check-Ups, Pre-Employment Medicals, Digital OHC Management, Compliance Tracking, & Population-Based Health Analytics), therefore providing an Integrated Infrastructure for each area of Workforce Health Operations.
Our New UNO 360 Occupation Health & Safety and Wellness (OHSW) Software will provide HR Leaders, EHS Heads, & Plant Managers with Real Time Visibility to Employee’s Health Trends and Check-Ups Compliance Levels; without the complication of the other forms of collected statistics or data from an organization.
Furthermore, our Employee’s Health App provides More Individual Empowerment to each employee in the form of Individual Health Records, Health “Nudges”, & Health Check-Up Tracking via Mobile Devices.
This has significant implications when evaluating ROI through measurement. By having consistent health data flow across the entire employee lifecycle; we can begin to create longitudinal datasets that will provide credibility rather than speculation when calculating ROI. This will enable us to determine if employees who have completed periodic health check-ups had lower absenteeism in future quarters. Additionally, we will be able to determine whether the early identification of metabolic risk (e.g., in one facility) resulted in fewer high-cost interventions during the following year. Through the actual data generated from these actions, you will be able to show true returns on employee health and wellness investments.
This illustrates the disparity between regarding employee wellness simply as an HR expense versus regarding employee wellness as an investment in strategic infrastructure; therefore, it is a very important conversation for CHROs, EHS leaders, and operations leaders in India to have more frequently nowadays.
Business Case for a Healthy Workforce
It’s tempting to start with a big projection of the wellness ROI when you’re presenting to the senior leadership team, but a more conservative, credible statement will gain you more traction than a larger-than-life projection.
Organize your presentation into three parts:
(1) the current cost picture (the cost of the poor health, wellness-related absenteeism, high turnover, and the exposure to penalties that your organization incurs because of a lack of healthy workforce), (2) the positive changes resulting from the implementation of a structured, technology-supported wellness program, and (3) the plan for monitoring and reporting the return on investment during a specified period of time. In addition to quantitative data, use some qualitative data (e.g. employee engagement, employee satisfaction, and brand-image enhancement) to give the leadership team a more complete picture.
The most compelling business cases for wellness programs do more than calculate an expected program’s financial impact; they create the trust and validation required for the senior leadership team to support a long-term health management model that will produce compounding returns as the health-related costs in the organization go down.
The Real Issue Is Not Whether You Are Benefiting from the Wellness Programs; Rather, It Is Whether You Can Document That You Are Doing So.
Across all business sectors, There Is A Quantifiable Return On Employee Wellness Programs. The Whitepapers From Researchers Worldwide As Well As The Case Studies Of Businesses Operating In India Tell The Same Story. The Difference Lies In Your Measurement Capabilities — The Health Data Is Now Stored In Many Locations; Your Vendors Are Disparate; And Your OH & C Record Keeping Is Done Via Charting System — This Will Always Result In You Defending Your Expenditures, Instead Of Utilising These As Business Cases To Drive Future Employee Wellness Investments.
Transitioning From A Decentralised, Paper-Based System To A Centralised, Unified, AI-Enabled Solution Like UNO.Care Will Not Only Drive Employee Health Improvements But Change Your Ability To Capture, Communicate, Measure, Report On, And Continuously Optimise Your Investment In Employee Health.
Are You Prepared To Move From Your Gut Instinct To Data-Driven Health ROI? Learn How UNO.Care Can Provide The Insights Your Organisation Needs: Schedule A Demo Today!
