Canadian employers may intuitively understand the benefits of investing in wellness programs for their employees, but they’re still struggling to demonstrate a clear, positive return on investment (ROI) for such initiatives, according to a recent report by the Conference Board of Canada.
According to the study, Making the Business Case for Investments in Workplace Health and Wellness, few Canadian employers systematically analyze the ROI of their prevention and health promotion programs. In fact, the study found that less than 1% of employers analyze ROI in a rigorous way.
Instead, most employers focus on factors such as a reduced number of short-term disability claims or increases in employee engagement when assessing their program performance. While these are useful indicators, measuring the exact ROI, which measures savings against program expenditures, enables organizations to present clear financial results.
“Calculating ROI is deceptively simple, but often the individual cost and savings components can be difficult to quantify,” says the report.
The study’s findings show that employers struggle to measure the ROI for many reasons, including difficulties in integrating data from a range of sources and the lack of resources or expertise.
However, given the trend toward stricter corporate governance and accountability, measures of direct financial return will become more critical for sponsors of wellness and benefits programs. Organizations need to not only determine the financial benefits of their investments, but also justify the costs of maintaining such programs in the face of competing organizational priorities.
Beyond ROI measurement, the report also highlights the fact that investing workplace prevention and health promotion programs can lead to reduced benefits costs, reduced absenteeism, reduced presenteeism (in which an employee is physically at work, but not fully productive) and higher productivity.