The Financial Impact Of Employee Wellbeing Programs On Workforce Productivity

• People are the most valuable asset of any company. 
• Wellbeing programs are increasingly being implemented to improve the workplace experience and business outcomes. 
• A new study found that wellbeing programs increase productivity gains and reduce costs associated with sick days and employee turnover. 

People are the most valuable asset of any company. Leaders have already realized this, which is why most companies are increasingly investing in wellbeing programs. Unfortunately, most companies create wellbeing programs without having a clear ROI or a clear way to measure impact. 

Human Capital Management Institute (HCMI) in conjunction with Virgin Pulse Institute carried out a study to measure the impact of Virgin Pulse’s programs on overall business performance. 

There has been increased interest on how employee wellbeing programs can drive business performance through increased productivity. However, and even though there’s ample research on the subject, previous research has had mixed and incomplete results; large literature reviews have failed to find a consensus on how and why employee wellbeing programs affect business outcomes. 

The HCMI and Virgin Pulse Institute study argues that “despite previous efforts, studies have yet to address the total business impact of wellness initiatives.”

This recent study, “The Financial Impact of Employee Wellbeing Programs on Workforce Productivity”, analyzed whether Virgin Pulse’s program — which features a gamified web and mobile application  with daily interactions in a variety of holistic wellbeing areas such as activity, sleep, nutrition, biometrics, challenges, friendship, and social features — was meeting its goal of building and reinforcing positive behavior that lead to improved health, happiness, and productivity. 

To do this, HCIM used the Human Capital ROI Ratio, “a metric measuring workforce productivity impact on revenue, profit, and labor costs.”

The study found that employee wellbeing programs were associated with improved workforce productivity in the companies using Virgin Pulse’s programs. 

“The Virgin Pulse employee wellbeing program is correlated with improved productivity over time, and this relationship has shown to be stronger as more employees get involved in the program.”

If people are a company’s most valuable asset, then company leaders need to make and prioritize workforce spending decisions that are based on data and that have a clear return on investment. 

Key Findings from the Study

The study  found that “companies saw an average of 11.7% in productivity gain, or $0.22 for every dollar invested in the workforce. This added value could come in the form of increased revenue or reduced costs, or more likely a combination of the two, but either way the result was an increased production to cost ratio.”

In fact, the average Virgin Pulse client was, on average, at 94% productivity in comparison to their industry in the years before adopting the wellbeing program. This percentage jumped to 105% of industry productivity in the years after the wellbeing program implementation. 

The study found that even though client productivity started below industry, it “outpaced industry productivity” after employees started participating in wellbeing programs. 

Interestingly, the study also found that the more people that participate in employee wellbeing programs, the better the return on investment is for the company. “Higher program utilization was associated with larger gains.”

Companies whose programs had 31% or more active usage saw higher productivity gains (16%) than companies with less than 30% of active usage. 

Furthermore, the study found that there was a positive relationship between program activation percentage and productivity improvement even when taking into account variability in the data (and removing two outliers from the study). This is important because it demonstrates that the findings are statistically relevant rather than just due to chance. 

Increased gains can be experienced through higher employee participation, but also the longer a wellbeing program has been in place. 

The study found that companies using employee wellbeing programs “saw on average 01.% growth in the 2 years preceding the program, but an average 4.5% yearly productivity growth in the  year of the program launch and the year following.” 

In other words, companies “who activated more employees achieved a higher average productivity over time with higher productivity gains year by year.”

Two key ways in which productivity gains were observed was through reduced absenteeism and turnover. 

“Employees who enrolled and used the program reported fewer days lost to illness on average each year.” The study estimates that total savings for companies due to less sick days, per 1,000 employees, sit between $150K and $950K annually. 

Companies with effective wellbeing programs also had a lower average employee turnover rate. “The average client organization avoided 122 terminations, saving between $370,000 and $2,330,000 in turnover costs.”

This study found a positive relationship between the use of a specific employee wellbeing program and corporate productivity. People make all the difference, and companies are taking an increasingly active role in shaping their people’s experiences at work. Wellbeing programs play a key role in improving not only workplace experiences, but life experiences as well.