Less than half of businesses recognize positive returns on their health and wellness investments. While employee health and well-being have become increasingly important, employers are often unaware of the direct link between their financial investment in wellness initiatives and employee work performance.
The Cost of Doing Nothing
An unhealthy workforce results in a significant loss of revenue due to health-related absenteeism, presenteeism, and distracted employees. Absenteeism reduces employee contribution to business production and profits and can be measured by analyzing wages and replacement costs for absent workers. Presenteeism occurs in employees attending work whose performance is compromised by an existing health condition such as depression, anxiety, migraines, or low back pain. Presenteeism results in increased task errors and health-related labor costs. Both absenteeism and presenteeism generate a substantial burden by:
Working less productively
Producing poor-quality work
Making more mistakes
Taking longer to complete tasks
Creating safety issues leading to accidents or injuries
Although widely accepted, quantifying the financial impact of employee well-being on productivity and quality performance can be challenging. In 2020, Avidon Health released a special report outlining economic issues in employee wellness. Using consolidated, peer-reviewed data related to lifestyle factors, the report highlights per-capita costs as shown in the table below:
Health Plan Cost | Productivity Losses | |
Excess stress | $413 | $301 |
Smoking or tobacco use | $2,000 | $1,807 |
Physical inactivity | $1,429 | $482 |
Depression | $2,184 | $649 |
Hypertension | $2,000 | $392 |
Obesity | $11,481 | $16,840 |
Poor sleep habits and insomnia | $1,400 | $3,156 |
Binge drinking and alcoholism | $89 | $581 |
Up to total annual costs* | $20,996 | $24,208 |
The report estimates the cost impact of eight leading modifiable risk behaviors and associated health risks averages over $3,600 per employee per year. Nearly $3,000 of that cost is from productivity loss. These findings further suggest that investing in targeted wellness programs that assist employees with the prevention and management of key risk behaviors can alleviate a significant proportion of costs associated with lost productivity.
Lower Risks = Decreased Costs
Employers can reduce these costs and boost productivity by helping to restore and sustain the physical and mental well-being of their employees. Companies that invest in health improvement strategies appear to experience significant returns on their investment. These savings may translate into any of the following:
Increased employee productivity, loyalty, and attraction and retainment of talent
Improved competitive advantage in the marketplace
Decreased absenteeism and presenteeism
Decreased overtime pay to cover absent employees
Decreased training costs for employee replacements
Carryover effect of healthier families leading to fewer missed workdays for family care
The Antidote: Developing a Culture of Health
A growing body of evidence supports that building cultures of health and well-being creates economic benefits for employers. To fully realize these benefits, employers must shift from an incidental risk and illness focus to helping employees achieve optimal health through behavior change. Employers will benefit from having a better understanding of the conditions that have the greatest impact on employee productivity to implement a customized wellness approach that meets their employees' needs. As employees move along a continuum of health over time and draw upon workplace wellness resources like biometric screenings, health risk assessments, wellness webinars, and health coaching, they can build on their health literacy, improve their use of preventative healthcare services, and minimize the development of chronic health conditions impacting their work performance.
The logic of investing in worksite wellness is straightforward. Many conditions can be averted by lowering common health risks that can be improved through tailored workplace wellness programs. The return on investment develops from a healthy workforce that generates less healthcare costs and improved productivity. Contact us to learn more about helping your organization develop a tailored workplace wellness program to help your employees thrive.