June 10, 2021
How to budget and calculate the ROI for wellness benefits
People Teams seeking to budget for and invest in wellness benefits must know how to make a compelling case internally. Fortunately, there’s now overwhelming evidence for the ROI of wellness benefits along with a number of other initiatives that can be safely scaled back for cost-savings due to remote work.
Salary isn’t enough anymore
For top talent in competitive markets, you’ll need to offer more than a generous salary. Consider the following:
- There is only a modest correlation between job satisfaction and compensation. Doing meaningful work is more important. Read in Harvard Business Review →
- An organization that “cares about employees’ wellbeing” is the #1 demand for Millennial and Gen Z workers. Read in Gallup →
- More than half of employees would take a pay cut in exchange for a more “empathic organization.” Read in Inc. →
The workplace of the future is one that offers more flexibility and a culture of wellness.
ROI of wellness benefits
There are a variety of meaningful metrics that can showcase the impact of wellness benefits. The most easily demonstrable improvements will show up in your workforce surveys for topics around employee engagement and appreciation.
For example, if you use Culture Amp’s Engagement survey template, answers to the following questions will be positively impacted by a successful wellness benefits program:
- I would recommend ACME as a great place to work
- I see myself still working at ACME in two years’ time
- The leaders at ACME demonstrate that people are important to the company’s success
- My manager genuinely cares about my wellbeing
- I believe my total compensation (base salary+any bonuses+benefits+equity) is fair, relative to similar roles at other companies
From a monetary perspective, there are several metrics that top employers consider when measuring the performance of wellness benefits programs. Typically we see some combination of the following:
- Productivity boost measured by revenue per employee. This metric is commonly used for wellness benefits programs that include categories such as Learning & Development and Work From Home.
- Retention boost measured by turnover per quarter. This metric is commonly used for programs that include generous allowances along with categories such as Health & Wellness and Family Care.
- Accelerated time-to-hire measured by average number of days to fill open positions. This metric is commonly used for companies that are active on Glassdoor and/or reward employee referrals.
If you’re considering JOON for administering flexible wellness benefits, speak with your sales representative about creating a custom ROI forecast for any of the metrics above. It’s often possible to create a high-impact wellness benefits program with an equivalent investment of as little as 1% of existing payroll!
Opportunities for cost-savings
For People Teams already administering wellness benefits programs manually via receipts and spreadsheets, the time-savings for administrative automation with a wellness benefits solution can be significant.
But even for People Teams that aren’t yet administering wellness benefits, there are a number of either low-impact or irrelevant expenses that can be redirected toward wellness, in particular with the advent of remote work:
- Office perks and events: With many in-office meals, amenities, and events on hold anyway, there are significant cost-savings that can be redirected toward higher-impact benefits that employees across all geographies and demographics will appreciate.
- Swag and gifts: As much as your leadership team wants everyone to rep the brand, it’s often a waste of money and a logistical nightmare for sizing and shipping. If you want brand exposure, buy billboards not pajamas. Your employees don’t need your wardrobe advice – what they need is to prioritize their mental and physical wellbeing.
- Health insurance: As much as rich health insurance plans with little to no premiums are a generous offering, the reality is that for companies with younger workforces, many employees don’t engage with the healthcare system that frequently. What certain employees frequently need is preventative care from mental to physical health which often isn’t covered in traditional health benefits packages. Consider how you might be able to adjust your health plans to free up budget to better meet your workforce’s needs.
Once you’ve made the case to budget for wellness benefits, it’s time to start thinking about program design and optimization. Read our tips for optimizing your program →