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The real maths behind wellness in the workplace

Jul 28, 2019
Wellness in the workplace programmes get a lot of hype, but are they getting the real attention they need from organisations? Susan HayesCulleton helps you make a business case for wellness initiatives and has the maths to back it up.

Wellness in the workplace initiatives have gained a lot of attention, and many large companies are now participating in such initiatives… aren’t they?

For example, take activity trackers. According to Bloomberg, “Corporate services are one of Fitbit’s fastest growing market” with American retail giant Target offering the activity trackers to its 350,000 employees. However, according to the Global Wellness Institute, only “9% of the world’s 3.2 billion workers potentially have access to any kind of workplace wellness program or services.”

So, while the trend is gathering momentum, others are not sure employers should intervene in the private lives of their employees and monitor behaviours that are, ultimately, personal. However, the impact of wellness on productivity and sick days is such that employers would do well to accept they have a serious stake in their employees' wellbeing.

I could quote many studies that make an effort to correlate the benefits of a wellness initiative with every dollar invested (the American Heart Association puts the figure at $3 return for every $1 invested), but I think it is far more fruitful to give you some real mathematical equations to compute the impact at your organisation. These equations are a clear, stark way of making the case for wellness in the workplace to obtain support from finance or buy-in from senior management.

Number of days saved * average daily employee salary

If the company could decrease the number of days spent out of the office by just one, how much would that save the company in terms of lost payroll? People are out of the office for a number of reasons relating to sickness, from the common cold when the seasons change, to burnout and exhaustion, anxiety-related diseases, workplace accidents among others.

% reduction in turnover * costs of turnover

According to Eremedia, the cost of turnover averages at 40% of an employee’s salary, when considering the cost of redundancy, advertising the position, interviewing, training, opportunity cost of the work that is left undone and the induction period while the new recruit learns to navigate the job and environment. A wellness initiative that can reduce turnover by some percentage can translate into a very significant saving.

Cost of injury + cost of claim

According to a recent Health and Safety Executive (UK) report, there are over 600,000 workers injured in workplace accidents annually in Britain. The cost of workplace injury in 2013/14 was £4.9 billion and equivalent to £7500 per non-fatal injury. If a company can prevent this from happening, then it doesn’t save just money, it avoids the negative impact on the life and lifestyle of the employee, the disruption to the workplace contribution of that employee, the reputational damage for a court case and the tension arising from all of the above.

% increase in productivity * total cost of payroll

Let’s say that, as a result of a wellness initiative in your workplace, staff improve their productivity by 2%. What impact would that have on the company? There are a number of ways to compute this. The assumption in every company is that staff generate more return to the company than the cost of their collective payroll. You can compare the actual cost of payroll now, and the increased value of that payroll if the same number of employees were more productive by 2%, giving your business a more impressive return than expected.

External reputational benefit + internal morale

In a detailed study, MIT identified that for employees with an MBA, the reputation of the company recruiting them accounts for 16.3% of the value of the contract; for non-MBA employees, reputation in total represents 11.1% of the value of the contract; and for the under/unemployed workers, reputation has a total importance of 11.4% of the value of the contract.

External reputation can have a huge bearing on the recruitment and retention of talent. If the company can improve its reputation as a good employer (particularly now with workplace peer reviews on Glassdoor.com), through engaging staff in meaningful CSR initiatives or by taking an active role in improving employees’ health, for example, then this long-term investment can yield dividends year after year.

Naturally, improving internal morale achieves every single one of these benefits and underscores all efforts.

These equations can help you make the case on paper, with facts-led arguments. However, convincing the head is one thing, but convincing the heart is another. Large-scale change is difficult in any organisation, but leading by example and showing others how caring for the wellness of staff can lead to better results for the company will make a big impact on all stakeholders.

Susan HayesCulleton is Managing Director of HayesCulleton Group and Founder of The Positive Economist.