1. conferenceboard.ca Making the Business Case for Investments in Workplace Health and Wellness Karla Thorpe Director, Leadership and Human Resources Research The Conference Board of Canada May 14, 2014

2. 2 The overarching purpose of this project was to… “Provide employers from small, medium and large sized organizations with advice and guidance on how to make the business case for investments for workplace health and wellness programs.” Project Purpose

3. 3 ACTI-MENU Ceridian Co-operators H3 Consulting Health Canada Healthy Enterprises Group Homewood Human Solutions Medavie Blue Cross Mercer Pfizer Reformulary Group Inc. Sanofi Standard Life Sun Life Financial TELUS Health Solutions WSIB Ontario VON Canada Project Advisory Board We have assembled a broad mix of representatives to serve on our Advisory Board including our sponsors, interested CASHC members, and other experts from:

4. 4 Demonstrating the impact of an organization’s health and wellness programs Positioning and sustaining health and wellness programs in the face of competing organizational priorities Making health and wellness programs strategic and essential Exploring tangible and intangible outcome measures and metrics Key Areas of Investigation

5. 5 Why Should Employers Invest in Wellness? Control the financial costs associated with an unhealthy workforce Build the organization’s profile as a socially responsible, top employer Demonstrate legal due diligence

6. 6 How Can Employers Promote Workplace Health? Create a healthy organizational culture Create a healthy physical work environment Provide resources to help employees maintain or improve their health status

7. 7 Framework for Creating a Comprehensive Wellness Program Source: The Conference Board of Canada.

8. 8 Framework for Creating a Comprehensive Wellness Program Source: The Conference Board of Canada.

9. 9 Benefits of Measuring ROI Can help justify spending on programs Measuring the impact of wellness initiatives allows employers to target their programs more effectively Measurement provides feedback and the opportunity to fine tune existing programs

10. 10 Demonstrates that the employer cares and wants to have a healthy workforce Helps rally the organization behind the program’s success Shows non-participating employees what can be achieved Employees get direct feedback to evaluate their health status and take accountability for their own health Benefits of Measuring ROI

11. 11 or How Do You Calculate ROI? ROI = (Gain from Investment – Cost of Investment) Cost of Investment ROI = Net Savings Program Cost

12. 12 Measurement of Wellness Programs Employers are still in the infancy stages About a third of employers evaluate program outcomes but very few analyze the ROI for wellness programs in a rigorous way Organizations are more focused on demonstrating positive impacts and outcomes than a positive ROI

13. 13 Barriers to Measuring ROI Access to data Confounding effects Lack of staff/resources/funds Lack of expertise Difficulty integrating data from various service providers Privacy/confidentiality issues Subjective measures Engaging employees in initiatives for baseline measurement Source: The Conference Board of Canada

14. 14 Measurement Framework for Wellness Programs

15. 15 Measurement Framework for Wellness Programs

16. 16 The overall goals of the wellness program were to: Provide health risk assessments and biometric screening clinics Increase employee participation in these activities Reduce the overall number of health risk factors in the workforce Reduce casual absences due to health-related issues Fictional Example of a ROI Calculation – The Program

17. 17 From the first biometric screening clinics and health risk assessments: Employees’ level of physical activity Smoking cessation Stress management … The Specific Goals

18. 18 An HRA every 18 months Biometric screening clinics every 18 months Health coaching by phone for smoking cessation and stress management Fitness and weight-loss initiatives Changes to organizational practices and the work environment to promote a mentally healthy workplace … The Initiatives

19. 19 At your table : 1.Identify the various program elements that must be taken into consideration when calculating the total cost of the wellness program. 2.Determine the cost of each program element. Exercise 1. Total Cost Calculations

20. 20 Biometric Screening Clinics First clinic (at start) : 222 participants Second clinic (after 18 months) : 250 participants Third clinic (after 36 months) : 278 participants Cost per participant : $ 50 Cost of biometric clinics: 750 participants x $ 50 per participant = … Total Cost Calculations $ 37 500

21. 21 Incentives In total: 750 participants in the biometric screening clinics Incentive: $ 25 gift card Cost of incentives: 750 participants x $ 25 per participant = … Total Cost Calculations $ 18 750

22. 22 Smoking Cessation Program 74 smokers identified during a HRA, 19 enroll in the smoking cessation program Cost per participant : $ 75 Cost of smoking cessation program: 19 participants x $ 75 per participant = … Total Cost Calculations $ 1 425

23. 23 92 employees identified as having high stress levels, 51 enroll in the stress management program Cost per participant: $ 75 Cost of stress management program: 51 participants x $ 75 per participant = $ 3 825 Stress Management Program … Total Cost Calculations

24. 24 Walking Challenge Program Year 1: 53 participants Year 2: 122 participants Year 3: 234 participants Year 4: 250 participants Cost per participant: $ 100 Cost of walking challenge program: 659 participants x $ 100 per participant = … Total Cost Calculations $ 65 900

25. 25 Gym Subsidies Year 1: 25 participants Year 2: 54 participants Year 3: 68 participants Year 4: 72 participants Cost per participant : $ 250 Cost of gym subsidies: 219 participants x $ 250 per participant = … Total Cost Calculations $ 54 750

26. 26 Communication Campaign Cost of the communication campaign: $ 2 500 per year Cost of the communication campaign: $ 2 500 per year x 4 years = … Total Cost Calculations $ 10 000

27. 27 Salaries of the Wellness Team Wellness leader: Salary: $ 48 000 annually Works exclusively on managing the wellness program Human resources director: Salary: $ 96 000 annually Spends 10 per cent of her time on the wellness program Cost of salaries for the wellness team: [$ 48 000 x 4 yrs] + [10% x ($ 96 000 x 4 yrs)] = … Total Cost Calculations $ 230 400

28. 28 At your table : 1.Determine the savings gained by the organization from each program element. Exercise 2. Total Savings Calculations

29. 29 Smoking Cessation Program Of the 19 employees who enroll in the smoking cessation program: Year 1: 3 employees quit smoking Year 2: 2 employees quit smoking Year 3: 2 employees quit smoking Year 4: 2 employees quit smoking Smokers cost organizations approximately $ 4 256 more per year than do non-smoking employees. 1 1 Bounajm, Stonebridge and Thériault, Smoking Cessation and the Workplace, 4. … Total Savings Calculations

30. 30 Smoking Cessation Program Year 1: 3 employees x $ 4 256 x 4 years = $ 51 072 Year 2: 2 employees x $ 4 256 x 3 years = $ 25 536 Year 3: 2 employees x $ 4 256 x 2 years = $ 17 024 Year 4: 2 employees x $ 4 256 x 1 year = $ 8 512 Estimated total savings:$ 102 144 … Total Savings Calculations

31. 31 Reduction in the prevalence of health risks in the workforce According to data from the benefits provider, on average, for each risk factor identified in the workforce, it costs an estimated $ 2,000 annually in productivity, benefits, STD, and LTD. 2 2 These costs are for illustration purposes only. Actual costs may vary depending on the organization. … Total Savings Calculations

32. 32 Total cost for the 4 years: If the wellness program had not been implemented: = $ 562 000 x 4 years = $ 2 248 000 After implementation of the wellness program: = [$ 562 000 x 1.5 yrs] + [$ 338 000 x 1.5 yrs] + [$ 220 000 x 1 year] = $ 1 570 000 … Total Savings Calculations

33. 33 Reduction in the prevalence of health risks in the workforce Total cost for the 4 years: Without the wellness program: $ 2 248 000 With the wellness program: $ 1 570 000 Estimated total savings: = [cost without wellness program – cost with wellness program] = [$ 2 248 000 - $ 1 570 000] = $ 678 000 … Total Savings Calculations

34. 34 Changes in Direct Costs of Casual Absences Through its human resources information system, the organization has tracked changes in casual absence due only to health-related reasons since the start of the wellness program. Total payroll: $ 25 800 000 … Total Savings Calculations

35. 35 Estimated cost = casual absence x total payroll Ex. At the start of program = 0.058 x $ 25 800 000 = $ 1 496 400 Estimated savings for each year = estimated cost at the start of program – estimated cost for the year in question Ex. At the end of Year 1= ($ 1 496 400 - $ 1 421 580) = $ 74 820 … Total Savings Calculations

36. 36 Changes in Direct Costs of Casual Absences Estimated savings for each year: Year 1: $ 74 820 Year 2: $ 145 899 Year 3: $ 213 425 Year 4: $ 277 573 Estimated total savings: = [$ 74 820 + $ 145 899 + $ 213 425 + $ 277 573] = $ 711 717 … Total Savings Calculations

37. 37 ROI= ( Net savings / Total cost of program ) = ( $ 1 491 861 - $ 422 550 ) / $ 422 550 = 2.5 ROI Calculation 102,144 1,491,861

38. 38 The method presented here is simple and can be used to demonstrate the impact of wellness programs. It is not a rigorous or exhaustive study of the effects of wellness programs. Many external factors, outside of the wellness programs, can lead to changes in employee behaviour. This example supposes that all organizational programs and practices have stayed the same. No overhead or administration costs, other than the salaries of the wellness team, have been considered. Caveats

39. 39 Questions? Contact Us… Karla Thorpe Director Leadership and Human Resources Research thorpe@conferenceboard.ca thorpe@conferenceboard.ca (613) 526-3090, ext. 408

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