Do Corporate Wellness Programs Really Work?

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corporate wellness programs

I lead a pretty active lifestyle.

I lift weights, I love hiking, and I make it to the occasional yoga class (but, please, no hot yoga—I tried it once, and never again).  

I also make an effort to eat at least a couple of vegetables every day. I drink my three liters of water. I’ve embraced kale.

Like most people, I care about my health, and I try to make it a priority. So, the idea of corporate wellness programs is incredibly appealing. I mean, lunchtime yoga? Perks for healthy habits? Sign me up.

I’m not alone—in the 21st century, workplaces that merely ask employees to punch a clock just aren’t cutting it.

Not only do we want a workplace with a strong company culture, we want workplaces that work with us. We want workplaces that care about us as individuals, that have a vested interest in our health and wellbeing.

Plus, business owners want healthy employees (read: less sick days) who will stay with a company and give it their all.

The rise of corporate wellness

Here’s where employee wellness programs come in.

Wellness programs are more popular than ever, with more than two-thirds of U.S. employers currently offering some kind of wellness program.

With rising insurance costs and our growing concerns for health in general, their popularity is no huge surprise.

It seems like a wonderful idea: The employer offers incentives for employees who attempt to maintain a healthy lifestyle, and both the employer and the employee reap the rewards.

But, what’s the real return on investment? What is the actual impact of wellness programs, both on employee health, your company culture, and on your business’s bottom line?

Are wellness programs even effective, or are they a total waste of your time and money?

What is a wellness program?

First of all—what is a “wellness program,” really?

If it sounds like a vague concept, that’s because it isa wellness program is what the employer makes it. There aren’t any hard and fast rules.

However, there are some basic parameters. Healthcare.gov defines a wellness program as

“a program intended to improve and promote health and fitness that’s usually offered through the work place, although insurance plans can offer them directly to their enrollees.”

So, wellness programs are organized by an employer and offer employees benefits for living a healthy lifestyle and doing their part to prevent future health issues.

This can include:

  • Giving employees discounts on their monthly health insurance premiums
  • Cash rewards
  • Providing discounted or free gym memberships
  • Offering healthier food options at work
  • Access to smoking cessation and weight-management programs

Are wellness programs effective?

No beating around the bush—this really is the million dollar question.

Wellness programs are a great idea, but do they actually work?

The results vary. On the one hand, sterling examples like the one provided by Johnson & Johnson seem to indicate that wellness programs can be highly successful—the company estimates that it has saved $250 million on health care costs over the last decade.

However, not every wellness program outcome seems to paint such a nice picture. The research on the subject indicates that the average cost savings are negligible.

So, that begs the question—what is going wrong?

Why are these programs, which sound like a great idea in theory, so effective for some companies, and not so much for others?

And, more practically, what can employers who wish to offer wellness programs do to maximize the effectiveness of their programs?

Communication is key to a wellness program that works.

Why your wellness program isn’t working, and how to fix it:

Employees need to know the program exists

It’s pretty obvious—you need to know something exists to take part in it.

However, a surprising reason for lack of employee engagement in wellness programs? Employees simply don’t know they’re even offered.

A recent RAND Corporation study found that while 85 percent of U.S. employers with 1,000 employees or more offered some form of wellness program, only 60 percent of employees at these companies were even aware that the program existed.

Furthermore, of this 60 percent who knew that a wellness program was an option, only 40 percent actually participated in it.

How can you use this information to make your wellness program more effective?

  • Make sure each and every employee is familiar with your wellness program options
  • If you are rolling out a new wellness program, dedicate a day (or potentially several) to help familiarize your employees with the new program
  • Make sure that all future employees are onboarded successfully and know how to participate
  • Nominate a “wellness leader” with whom your employees can speak, should they need more information

Motivate with carrots, instead of sticks

When it comes to wellness programs, people prefer positive incentives.

It’s not surprising; would you prefer to be rewarded for good behavior, or punished for failing to meet a standard?

If you picked the first, you’re like me—and the research agrees.

Heavy-handed, punishing, mandatory wellness programs are common reasons for employee dissatisfaction.

The analogy of carrots and sticks is used frequently to describe this phenomenon:

While some employers motivate with incentives (i.e., the dangling carrot), other wellness initiatives motivate with the stick, and penalize employees for failing to live up to certain health requirements.

This includes such penalties as charging individuals who smoke or have a higher BMI (body mass index) more on their health insurance.

Wellness initiatives that are more focused on penalizing noncompliance are generally less successful overall, as employees prefer programs that work with them, rather than against them.

Case study: Lowes tobacco-free policy

For example, before Lowes initiated their tobacco-free policy in 2015, they gave employees plenty of advance warning—years, in fact.

In the early 2000s, they began to phase in the changes, offering to help subsidize employee efforts to quit smoking.

In 2011, they began offering $50 monthly insurance discounts to employees that agreed that neither they or their families would use tobacco products.

Ultimately, they gently introduced their tobacco-free policy, without alienating employees or leaving them struggling with an addiction.

So, not only is the negative approach potentially less effective when it comes to improving employee health, but employees aren’t fans of it either.

It’s better to motivate by offering perks for good behavior, rather than punishing ones that aren’t as healthy. For example, here at Palo Alto Software, the more often employees use their gym membership at our local athletic club (which we have access to at a discounted rate to begin with), the less an employee has to pay for their membership. So, the more we go, the less we pay—rewarding participation, rather than punishing nonparticipation.

How can you use this information to make your wellness program more effective?

  • Institute policies that reward employees for participating in healthy behaviors, like exercising and not smoking
  • Create programs to help employees who may be struggling with implementing these healthy behaviors, such as one to help your workers quit smoking
  • Reframe your wellness initiatives so that they are there to help your employees foster good behaviors, rather than punishing them for bad ones

Some wellness programs shift the cost onto workers, instead of “saving” money

Clearly, the “stick method” isn’t working.

Employees hate it, and punishing employees for poor health habits is less than effective.

But, that’s not the only reason that these penalizing wellness programs aren’t that great.

While it may seem like it’s saving you money, the reality is that many of these types of wellness programs are simply shifting the cost from the employer to the employee.

Wait—hang on. That doesn’t seem fair, does it?

Under the Affordable Care Act, employers can charge penalties for health-contingent wellness programs up to 30 percent of the total cost of an employee’s premium. That means that in some cases, employees can be charged for things like smoking or having a higher body mass index.

So, while charging certain employees more is legal (in the case of smokers, up to 50 percent more than the price of the premium), your employees may view this as unnecessary, unethical, and in some cases discriminatory.

Just because you can, doesn’t mean you should—especially if you want employees to love your wellness program and stay with your company.

How can you use this information to make your wellness program more effective?

  • Focus on offering programs to help your employees become healthier—rather than simply charging for unhealthy behaviors
  • Work with your employees to help them develop healthy habits
  • Don’t just shift the healthcare costs onto your employees; it’s not only unfair, it can also be discriminatory

Weight control wellness programs don’t work, period

Losing weight is a common goal. So, it makes sense that employers would want to help motivate their employees to get to or maintain a healthy weight.

However, while the goal of increasing employee health and quality of life through weight loss programs is well-intentioned, workplace weight loss initiatives have been proven wildly ineffective.

The results are shocking:

According to the American Journal of Managed Care, “no corporate weight control program has ever reported savings or even sustained weight loss using valid metrics across a sizable population for two years or more, accounting for dropouts and nonparticipants.”

You read that right—no program. Not one.

I don’t know about you, but that’s the most final word I’ve heard on a topic in a while.

Not only are they generally ineffective, but weight loss based wellness programs have seen backlash as they penalize employees who do not (or in some cases cannot) meet weight requirements; not only that, in some instances, they actually end up encouraging unhealthy weight loss practices.

That’s pretty much the opposite of the goal of a wellness program, don’t you think?

Additionally, there’s an argument that the over-reliance of wellness programs on employees’ BMI is misguided, as some say that the BMI may not be the best indicator of overall health.

How can you use this information to make your wellness program more effective?

  • Avoid making it about weight—focus on wellness programs that encourage healthy behaviors first and foremost
  • Emphasize rewards for healthy eating and exercise; while this may result in weight loss, framing it as such is ineffective and sometimes hurtful
  • Consider partnering with a local athletic club, or joining up with some healthy local restaurants to encourage employees to be active and eat healthier
  • Wellness is about more than weight—so approach healthy weight loss as a positive side effect, rather than the main goal

Too many wellness programs are only focused on physical wellbeing

Wellness is so much more than just the physical. Unfortunately, many wellness programs seem focused on physical health alone. Mental health challenges, like depression and stress have huge effects on the overall wellness of employees, and can hurt productivity and employee output as well, costing a business money.

Workplaces that encourage wellbeing beyond the physical, and also consider social, emotional, financial, and community wellbeing have fewer sick days and are more likely to keep employees at their current jobs. For example, some businesses have found that offering a service such as a nondenominational chaplain has improved employee well being outside of the physical. Stress-management should also be a wellness program consideration, as The Society for Human Resource Management notes that stress is responsible for absenteeism in over half of the 550 million working days lost annually in the U.S.

How can you use this information to make your wellness program more effective?

  • Focus on wellbeing beyond the physical—it can lead to happier, healthier employees
  • Consider offering your employees access to relaxation tools, such as meditation or yoga classes—maybe partner with a local studio, or bring in a yoga instructor for weekly lunchtime yoga sessions in the office.
  • Include well-rounded access to mental health services, should your employees be suffering from emotional upheaval, stress, or a mental illness such as depression.

Wellness programs are more effective when considering long-term ROI

Think of your wellness program like planting your garden in the spring. You get the soil ready. You plant your seeds.

The next morning, you run outside, eager to check on your garden and—nothing. Not a single bud has sprouted magically overnight.  

You swear the whole thing is a bust, that gardening is a scam, and decide to scrap the whole project. Right?

No, of course not—that’s not how gardening works (or, you know, business—or anything else worth doing). It requires patience. You can’t expect overnight results.

The same can be said for your wellness program. At the end of the day, wellness programs are really only truly effective when they are looked at over the long term. This means it may take a business years to really see a return on investment from their wellness initiatives.

In the case of the Anderson Cancer Center, after six years their lost work days declined by 80 percent, and their calculated cost savings totaled 1.5 million.

Johnson & Johnson has been the poster-child company for successful wellness programs, with a wellness credit program, first instituted in 1995, that has a participation rate of 90 percent of employees out of the 31,000 employed in the United States.

However, what do these examples have in common? Time—and lots of it.

In the case of Johnson & Johnson, 20 years have passed since they began offering $500 dollar credits toward the annual premiums of employees who completed a health assessment.

The return on investment for wellness programs doesn’t happen overnight, either in savings or in improved employee health and quality of life.

How can you use this information to make your wellness program more effective?

  • Change takes time; accept that if you plan on instituting an employee wellness program, it will not bring you huge savings all at once.
  • Commit to it—if your employees know you’re in it for the long haul, rather than just to save a few quick pennies, they may feel more inclined to participate
  • Employees will appreciate your investment in their health over the long term—which leads to a dedicated staff and potentially increased productivity

Why do you want to institute a wellness program?

Why do you want to start one in the first place? Before you institute a wellness program or revise your current offerings, sit down and answer this question, honestly.

Is your main goal to save money?

Or, do you want to improve the health of your employees, and create a company culture that values healthy habits and employee wellbeing?  

If you answered the latter, you may be more successful in the long run. After all, cost-savings are debatable, depending on how well the program is structured, and these savings can take years to pay out. Wellness programs are the opposite of a quick fix to money troubles.

However, if having less stressed, healthier, and more engaged employees and a shared company culture that values well-being is of importance to you, a wellness program may be a good fit for your business and prove successful. An office of happy, healthy employees is a beautiful thing—and a great wellness program can create just that. Just be patient—wait for those little plants to grow.  

This article was first published in October 2015 and updated in June 2018. 

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Briana Morgaine
Briana Morgaine
Briana is the content marketing specialist for Palo Alto Software. She enjoys discussing marketing, social media, and the pros and cons of the Oxford comma. Briana is a resident of Portland, Oregon, and can be found working remotely from a variety of local coffee shops. She can also be found, infrequently, on Twitter.
Posted in Management