Evaluating your employee wellbeing programme

Setting up a wellbeing programme for your staff can be expensive, but to justify the cost you need to be able to assess its effectiveness. Dr Bridget Juniper explains how.

As the interest in employee wellbeing within organisations takes more of a hold, there is a detectable rise in the desire for some sort of programme evaluation. This is to be welcomed and is long overdue.

For too long, programme holders and providers have side-stepped needing to justify their approach, which has had the unfortunate effect of maintaining the unhelpful perception that health and wellbeing initiatives are just a random collection of well-meaning but ultimately inconsequential activities. By introducing more rigorous measures into the mix, we will be able to start changing this opinion to show instead that employee wellbeing is a strategic driver to organisational performance.

When organisations start totting up what they are spending on health-related activity and what they are losing in terms of impaired health, they are always surprised at the figure they arrive at (see Making the business case for wellbeing).

By introducing more rigorous measures into the mix, we will be able to start changing this opinion to show instead that employee wellbeing is a strategic driver to organisational performance.

Conservative estimates show that the cost burden of impaired health in an organisation equates to 15% of salary costs. Despite this, fewer than 10% of employers are aware of these costs or able to determine the return they are getting from the various programmes they have in place to mitigate against them. The main reason for this is that, historically, people have just not been asked to do this; different programme components sit within different teams, so gathering a full and comprehensive picture takes time.

Even in the US, where health insurance is a huge cost burden to employers, there is little appetite to validate spend. The recently published RAND employer survey on wellness programme effectiveness indicated that of the 600 wellness programmes examined, all employers expressed confidence that their activities reduced absenteeism and health-related productivity losses, although about only half stated that they had evaluated impact, while only 2% reported actual savings estimates.

But the tide is now turning, so here is a step-by-step guide to evaluating employee wellbeing programmes, which will enable people to be ready, willing and able to carry out their duties.

Why evaluate?

Evaluation is the systematic collection, analysis and reporting of information about a programme in a way that enables organisations to learn from their experiences and to make decisions on improvements in the future.

Evaluation will reveal if activities have gone according to plan and have resulted in the changes initially planned for. Effective evaluation provides programme holders with clarity on whether or not an initiative has been successful, the impact it has had and how the success could be extended. Evaluation justifies spend.

Programme assessments can be carried out qualitatively and/or quantitatively. I find the best approach is a combination of both; some qualitative input from user groups perhaps combined with hard, empirical numbers to support the narrative.

What to evaluate?

The answer to this very much depends on what your employee wellbeing programme comprises and what your key measures of success are. Maybe your programme just focuses on health promotion activity or perhaps it is wider reaching. When we carry out evaluations, we use three basic headings to start:

  • remedial activity;
  • preventive activity; and
  • all outcomes.

By remedial activity, we mean all those activities and costs that are in place in the event that employees become unwell. These could include elements such as private medical insurance (PMI), occupational health (OH), group income protection (GIP), employee assistance plans (EAPs) and absence management systems.

While the majority of programme holders claim that their key aim from their initiative is to improve performance, they fail to select specific indicators to demonstrate effectiveness.

As the name suggests, preventive activity covers all those aspects of a programme that are designed to prevent ill health occurring. Examples include health screening, health risk appraisals (HRAs), fitness subsidies and health education initiatives.

The third heading is perhaps the most important feature of any evaluation. By outcomes, we mean organisational indicators of a successful employee wellbeing programme.

While the majority of programme holders claim that their key aim from their initiative is to improve performance, they fail to select specific indicators to demonstrate effectiveness.

Identifying outcomes is intrinsic to any credible programme. Examples of common outcomes include absence levels and engagement scores. This inclusion as a broader measure of success was heavily endorsed in the RAND study.

How to evaluate

Once you have decided what is in scope for evaluation, the nuts and bolts of how to actually carry out your review should be fairly straightforward.

For remedial activity, you can use the following measures to help detect any trends that may be linked to an employee wellbeing programme:

  • PMI and GIP costs;
  • insurance claims analyses;
  • OH referrals by case; and
  • EAP call breakdown.

For preventive activity, use the following:

  • utilisation and attendance rates (in other words, take-up among staff);
  • penetration among identified target populations;
  • any data collected from evaluation forms for particular events;
  • HRA and health screening data; and
  • hits and related traffic on any employee wellbeing portal (or equivalent).

Utilisation rates among staff are an obvious yardstick for evaluation. However, I have emphasised in the list above the importance of being able to demonstrate how successful the programme has been in penetrating your desired target population. I am reminded of a big US bank, which proudly spent a large amount of annual budget on a state-of-the-art gym. On paper, the initiative was perceived to be a success by virtue of the number of staff that signed up as active members. Unfortunately, a closer inspection revealed that the membership profile did not reflect the target population for which the facilities were originally intended, and the resulting evaluation was therefore less than favourable. Be mindful of this. There is little benefit to be gained from offering health and wellness initiatives that do not appeal to those for whom they are designed.

As mentioned earlier, it is good practice to combine these empirical metrics with qualitative findings to provide some colour and insight. Perhaps you can highlight particular case studies or include quotes from people who have been directly affected by the programme.

The most common outcome used is absence, since this links directly with people's health and is an obvious proxy for productivity levels.

Decide on outcomes

Assuming you have identified particular outcomes, your evaluation should encompass these. Some organisations use medical markers such as BMI as an outcome. I am not keen on these as they medicalise employee wellbeing too much. While biomarkers have a place in the employee wellbeing arena, it is often difficult to link them directly to organisational performance.

The most common outcome used is absence, since this links directly with people's health and is an obvious proxy for productivity levels. There are many ways to present absence data, but at a minimum, the data should consider long-term and short-term absence rates split by different categories of cause.

These findings should ideally be broken down by different departments, roles and locations. The more accurate and detailed your sickness absence records are, the more likely you will be able to find small but significant changes that may then be attributed to your employee wellbeing programme. If this task is too onerous for the whole of the organisation, then it may be worth just identifying a more manageable sample population to start with and then extending this as things progress.

Another common outcome that is used is engagement levels. This can be tracked by your annual engagement survey - assuming you run one regularly.

Attrition is another indicator that we often suggest. Employers are often surprised at this, but through our research we believe that more than 50% of voluntary attrition is owed to the impact that an individual's current role impairs his/her general wellbeing through factors such as long hours, stress and poor managers. Attrition levels are usually pretty easy to monitor against baseline over a period of time.

Sector-specific outcomes are also encouraged. So, for example, in a call centre environment, an indicator might be call-time resolution or the net promoter score. For a law firm, it might be chargeable hours. As long as you can put a number to it, the more organisationally specific the outcome can be, the better.

How to apply these outcomes to your evaluation is quite straightforward. One way is to track them before your employee wellbeing programme starts and then continue to follow their performance during the programme over say, a 12-month period. You will then be able to compare the "pre" and "post" datasets and draw inferences about the effectiveness of your initiatives.

Another option is to correlate your data to identify any direct statistical relationships between your metrics collected from your programme and your outcomes.

The chart below gives an example of work we have recently done to compare the wellbeing scores of people - divided into quartiles - with their employee commitment scores.

Chart comparing the wellbeing scores of people - divided into quartiles - with their employee commitment scores.

A clear effect is shown, with people in the lowest quartile (low wellbeing) 3.7 times less likely to show commitment to their employer compared with their colleagues in the high wellbeing quartile. This kind of analysis demonstrates strong relationships between wellness and desirable organisational outcomes, and helps to justify spend and quieten any cynics.

Deploying outcomes is to be encouraged but here is a word of caution: do be careful about over-claiming, especially when it comes to cause and effect.

It is fine to point to correlations and trends, but it is wise to moderate your language to avoid making explicit claims about the direct effect that your programme has brought about. To make such claims, you will need to have conducted a more scientific approach using a randomised control design, which, as its name suggests, involves randomly assigning employees to different intervention groups including a control (placebo) one.

For most organisations, this is too onerous, but if you can do this, then any evaluation will carry greater credibility.

This step-by-step guide should provide you with the necessary fundamentals to acquire at least a basic understanding of the paybacks you are receiving from your health and wellbeing activity.

The findings will help you to assess your existing approaches. Even if the results do not validate the improvements you were hoping for, you will be better placed to make informed changes to improve things so that next time you perform an evaluation, those improvements will be there for everyone to see.

The author: Dr Bridget Juniper is head of Work and Well-Being Ltd, which specialises in the measurement of employee wellbeing. A chartered organisational psychologist, Juniper has conducted award-winning research on employee wellbeing at Cranfield University. She publishes regularly in scholarly journals and frequently presents to academic and corporate audiences.

Box 1: Calculating return on investment

Budget holders are often asked as part of an evaluation to provide return on investment (ROI) calculations. This request is often received with mild panic, but it is a fairly simple process if some general principles are used. The basic equation for ROI is the following:

(Gain from investment - Cost of investment)/Cost of investment = ROI

Worked example

Here is a simple worked example to show how to calculate ROI for an employee wellbeing programme designed to reduce absence.

Absence costs 2012: £680,000

Absence costs 2013: £450,000

Saving gained: £230,000

The cost of the employee wellbeing programme to reduce absence was £76,000.

Therefore, the ROI calculation is:

(230,000 - 76,000)/ 76,000 = 2.02 ROI

Impact of presenteeism

If you were also interested in the impact of your employee wellbeing programme on presenteeism (attending work while unwell), then you can use a multiplier of absence costs to generate another ROI calculation.

According to Johns (2009), it is generally agreed that presenteeism accounts for more aggregate productivity loss than absenteeism. A multiplier for presenteeism can range from one to seven and we usually use a conservative multiple of two in our estimations.

Using this number, the ROI for the worked example above would be as follows:

(460,000 - 76,000)/76,000 = 5.05 ROI