Value on Investment – An Important Metric in Health and Wellbeing
December 5, 2018 / Workplace wellbeing
Traditionally, the success of health and wellbeing has been measured solely in dollars, and whether or not wellbeing programs can provide return on investment (ROI).
But as the industry shifts into an era of strategic wellbeing – where ambitions move beyond dollars and cents, to building sustainable habits aligned to business values – organisations can benefit from a new set of performance indicators; ones that help them understand the many ways employee wellbeing can interact with business outcomes.
So recently, there’s been movement towards value on investment (VOI) as a way to measure program performance.
What value does VOI add?
VOI models allow businesses to analyse the relationship between a wider range of metrics, including but not limited to: engagement, productivity, resilience, and the ability to attract and retain talent.
Dr Ron Goetzel, Member of the Virgin Pulse Science Advisory Board, and Director of the Institute for Health and Productivity, conducts leading research in support of the VOI approach.
He firmly believes that organisations need to embrace VOI as an effective way of evaluating wellbeing programs.
“The industry set high expectations that health promotion, otherwise known as wellness or wellbeing programs, would produce a positive ROI,” Dr Goetzel says. “And they can; there’s published literature showing that when done right, these programs do produce a positive ROI.
“But that should not be the main metric for success. You wouldn’t ask a traditional healthcare provider, like a hospital, to send you three dollars for every dollar you spend on health improvement or treatment of illnesses. Only Wall Street can promise huge ROI returns, and often those investors miss the mark.
“In the (corporate) health environment, where you want people to lead a healthier and purposeful life, free of debilitating disease, it’s better to ask: what’s the most cost-effective way of achieving this goal?”
So how can you measure VOI?
Dr Goetzel outlines the key ways businesses can measure value on investment: “The first is to focus on population health improvement; to what extent are you able to improve the health and wellbeing of all your employees by getting them engaged and committed to improving their health – not because the employer wants them to do that, but because they have a personal reason for leading a healthy lifestyle.
“Second is focusing on productivity and on-the-job performance. This is tricky because it’s difficult to measure performance for some knowledge-based professions like a software engineer, marketing head, or lawyer. But there are now instruments that measure engagement, presenteeism, and the extent to which health and wellbeing may affect performance at work.
“Finally, think about your reputation. Where you are on the list of business that prospective employees most admire? In a knowledge economy, that may affect the type of talent you attract and the people you recruit and retain. One way to do that is to create a healthy company culture.”
What’s the future of ROI?
Dr Goetzel acknowledges that ROI isn’t going anywhere fast, and as a final thought says: “ROI and VOI are inseparable and equally important. My research shows that, if done right, wellbeing programs can achieve a positive ROI, but let’s not forget other non-financial metrics of success important to businesses.
“Let’s expand our view of what’s important and measurable. My new rule of thumb is that an ROI of 1:1 is good enough if you can demonstrate significant improvements in VOI measures important to the business.”
For more industry trends, watch our webinar – Wellbeing Predictions for 2017.