Why does it seem so hard to measure return on investment (ROI) for wellness or benefits initiatives? It isn't as if we are trying to monitor images of the radioactivity used in microwaves.
We track our weight, count calories, and scores for Fantasy Football, but why does it remain such a challenge to demonstrate positive ROI for employee benefits programs?
In the study, Making the Business Case for Investments in Workplace Health and Wellness, less than 1 percent of employers measure ROI consistently. The concept of analyzing return on investment can be broken down as measuring savings less expenses in order to determine if positive financial results have been gained.
In a recent report published by The International Foundation of Employee Benefit Plans titled A Closer Look: Wellness ROI, organizations that analyzed ROI of their wellness programs saved $1 to $3 for every dollar spent. Only 19 percent of the plan sponsors measured the data, but the results provided important insights that should motivate other employers to follow suit.
It appears obvious and intuitive that employee benefits and integrated wellness programs should garner positive results not only in ROI, but employee engagement, productivity and talent retention. Yet, there are many reasons why it seems hard to track ROI. Predominant reasons for the absence of ROI analysis include: lack of resources, more urgent priorities and existing programs that don't start with a baseline to monitor performance outcomes and success measures.
By planning ahead and finding ways to aggregate data from different sources, plan sponsors can find ways to more rigorously measure more than the intrinsic value a benefits plan. Calculating the cost of benefits has become more quantifiable through the advanced development of technology and web-based resources. Increasingly, it is easier to track and analyze non-traditional benefits including flexible work arrangements.
A valued benefits plan is also one that provides an important form of compensation without incurring additional payroll taxes. Understanding how to maximize tax effectiveness as part of the benefits plan design is key. Designing plans that factor in the multigenerational element is another. Understanding that a one-size-fits-all benefits plan may no longer meet the needs of a diverse employee group has been a challenging variable for many employers.
These days, demonstrating the tangible value of dollars saved due to increased productivity, reduced turnover and lower absence rates is critical. Increasingly, belt-tightening measures are sought-after and human resource practitioners search to find ways to show that benefits are more than just 'nice to have' employee perks. For help in optimizing the value delivered through your benefits plan, please contact us. We're here to help so that you can focus on what you do best.
Dave Dickinson, B.Comm, CFP, CLU, CHFC
Experienced Benefits Specialist ready to optimize your group benefits and pension plans.