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How Corporate Wellness Programs Pay for Themselves

October 23, 2014

What if I told you that you could invest one dollar in your business that would generate three dollars in return. Is that an investment you would make?

That's how much you can save by investing in corporate wellness. Programs that reduce healthcare costs, increase productivity, decrease absenteeism, and increase job satisfaction are well worth investing in. The data proves it.

The exact amount you save depends on a number of factors, but the overwhelming evidence is that you will experience a positive ROI that could reach as high as $3 dollars for every buck you invest, according to Ron Goetzel, Director of the Institute for Health and Productivity Studies (IHPS) at the Johns Hopkins University Bloomberg School of Public Health. A recent meta-analysis of 51 studies of wellness programs produced a lower figure but still showed an average return of $1.38 for every dollar invested. Either way, the program pays for itself … and then some.

corporate productivity

Figuring out what to measure – and how – is an important aspect of launching a wellness program and proving its ROI. Because you can't manage what you can't measure. There are ample online resources to help you get started, such as this informative benchmarking advice from the Wellness Council of America.

Some of the biggest areas of potential savings include:

  • Health insurance costs: This is the big one of course, with companies spending thousands of dollars per employee on healthcare. Even a small reduction in these costs will produce bottom line impact.
  • Absenteeism: Are you seeing reduced absenteeism after implementing a wellness program? Numerous studies suggest that you will.
  • Productivity: Obesity is actually a factor in reduced productivity, a phenomena dubbed "presenteeism," which is defined as a sick or distracted employee who chooses to work anyway at a decreased performance level. A study by Cigna found that presenteeism due to obesity accounts for 39.4% of the total cost of obesity for U.S. employers.
  • Job satisfaction: You can measure employee happiness on the job, which will translate into better productivity and reduced turnover costs.
  • Recruitment costs: For companies that compete for workers, having an attractive and successful wellness program can reduce the cost of finding and hiring the most desirable employees.

That's some of the data worth measuring. How can you get this information? Here are some ideas:

  • Analyze your health insurance claims: You can work with your health insurance provider and third-party consultants to learn whether benefit claims have been reduced after you implement a wellness program. Fewer claims will result in lower insurance costs.
  • Employee satisfaction surveys: You should ask your employees periodically if the program is working for them, and whether they are experience changes in job satisfaction as a result.
  • Productivity measurement: Depending on the type of business, you should have systems in place to measure how productive your workforce is. You can adjust these systems to account for the effects of wellness programs, for instance, by comparing the productivity of healthy workers to obese workers and those who take a high number of sick days.
  • Health risk assessment (HRA) and biometric analysis: Actually measuring your employees' health and wellness will tell you a great deal about how your program is working. By conducting such testing on a regular basis, you'll know how to create the maximum ROI for the business and the best outcomes for your employees.

With more than enough evidence in hand that these programs work, the corporate wellness revolution is underway. Just last month, CEOs of major corporations including Coca-Cola, Verizon, and Bank of America formed The CEO Council on Health and Innovation to "improve the health and wellness of employees and the quality and cost-effectiveness of care."

They already know that their wellness programs are paying dividends that will only get better over time. It's time for all companies large and small to make the investment, as it's one of the best things you can do for your company and for your employees.

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Jeff Hyman Chief Executive Officer

Jeff is a serial entrepreneur with a relentless passion for creating innovative companies & brands. He is driven by the belief that every individual is capable of doing incredible things once given the opportunity and knowledge. He holds a BS from The Wharton School at University of Pennsylvania and an MBA from The Kellogg Graduate School of Management at Northwestern University.

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