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Employee wellness and Return of investment (ROI)

Employee wellness and Return of investment (ROI)

Thu Aug 8 2019

Research conducted by the International Labour Organisation (ILO) in (2005) shows Poor health and safety practices result in an estimated death of 2.2 million people, worldwide, due to work-related ill health, disease, and injuries. The human cost of these deaths and injuries is immense. However, these deaths and injuries also huge social and economic costs. Some estimates place it at 4% of annual global gross domestic product or £1.5 trillion. This monetary cost is principally borne by companies and society.

The cost of ill health

Organisations often want to have good health and safety measures in place, but fear it would be too expensive. According to the British Safety Council, if employers knew the benefits of well-managed health and safety programmes. More employers would invest in sensible, proportionate and targeted employee wellness and safety programmes.

Great Britain

The total cost of injuries and ill-health to Great Britain was estimated to be £13.4bn in 2011/2012 (HSE, 2012a), with ill health alone accounting for £8bn of this total. Assessing thof e cost and impact of poor workplace wellness protocols and ill health are clearly dependent on a robust and consistent data collection and analysis regime. To this end, the Health and Safety Executive (HSE) provides annual reports about the occurrence of occupational injuries and ill-health as well as an analysis of the impact.

The cost of Ill health is a major issue in Great Britain. A Study on the cost of ill health conducted by Dame Carol Black on behalf of the British government suggests that annual economic costs of sickness absence and worklessness associated with working-age ill health are estimated to be over £100 billion (DWP, 2008).

Europe

In 2000, there were 5,237 fatal injuries in the so-called European Union 15 (EU-15) countries, which were estimated to result in a cost of€3.8 billion (c£3 billion), (Eurostat, 2004). indications are that every year, 1 out of 10 workers are affected by an accident at work or a work-related ill-health issue in Europe.

Cost to organisations

For large businesses, the average absenteeism rate is 2.34% or 5.4 days whereas in businesses with less than 50 employees the rate is 2.06% or 4.7 days ((SFA), 2015). The direct cost to small businesses with sick pay schemes is over €490 million. When you include additional direct costs, such as replacing staff, paying overtime and medical referrals, and indirect costs, such as loss of productivity and the time spent managing absence, the overall cost is close to €1 billion. a new report from the Integrated Benefits Institute, which finds that illness-related productivity losses are pretty pricey too. Not only do employees covered by sick time, workers’ compensation, disability and family and medical leave benefits miss about 893 million days a year due to illness, they also rack up an estimated 527 million lost workdays due to impaired performance.

That adds up to a whopping total of nearly 1.4 billion days annually and amounts to 60 cents for every dollar employers spend on health care benefits.

Since investing in health care is supposed to have a major impact on companies’ bottom lines, it’s obvious that more needs to be done to improve the health of workers.

Benefits of employee wellness initiatives

A study by PriceWaterhouseCoopers (2008) sheds light on the financial benefits of implementing employee wellness programmes. The study looked at 55 organisations in the UK. A summary of the results can be seen in the table below

Table 2: Summary of financial  benefits of 55 case studies implementing wellness programmes

The most noteworthy facts from these case studies are the impact of actual reduction in various indicators of cost i.e. absenteeism, sickness absence, staff turnover and the money savings they led to. A simple return on investment calculation for these figures show that(if we assume all services would have been provided off-site in the same way that they were on site) for every one pound invested, the return was £3.46 in reduced wages and £5.96 in reduced production costs.

Another study conducted by Business in the Community (2009), investigated the introduction of various programmes to improve employees’ health and wellbeing. The financial benefits, along with the innovative practices established, are presented in the table below.

employee wellness initiatives

employee wellness programmes

References

British Safety Council, (2012), Working Well. Five steps for healthier and safer work activities, London.

Business in the Community, (2009), Healthy People = Healthy Profits, London

DWP (Department of Work and Pensions) (2008), ‘Working for a healthier tomorrow’ (Dame Carol Black)

DWP, (2011), ‘Reclaiming health and safety for all’, http://www.official-documents.gov.uk/document/cm82/8219/8219.pdf (Professor RagnarE Löfstedt)

Eurostat (2004), Work and health in the European Union, Statistical  Analysis of socio-economic costs of accidents in the European Union, Luxemburg

HSE, (2012a), Costs to Britain of workplace injuries and work-related ill  health: 2010/11 update, HSE, http://www.hse.gov.uk/statistics/pdf/cost-to-britain.pdf

HSE, (2012d), Keep your reputation, HSE, http://www.hse.gov.uk/ business/costs-damage.htm

ILO, (2005), Introductory report: decent work-safe work , Geneva

(SFA), s. f. a., 2015. Small firm association. [Online]
Available at: https://www.sfa.ie/Sectors/SFA/SFA.nsf/vPages/News~absence-costs-small-business-over-%E2%82%AC490-million-per-annum-17-02-2015?

 

Read the Entire Report here

Maniati, M., 2013. The business benefits of health and safety. A literature review. [Online]
Available at: https://www.academia.edu/4364434/The_business_benefits_of_health_and_safety._A_literature_review

 

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