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Analysing the Return on Investment of Health and
Wellbeing Programs
Danni Hocking
Principal Safety & Wellness
Aon People Risk
July 2014
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Emerging Risks – What is People Risk
Legislative Changes - Compliance
New Safety
Legislation:
For these purposes
‘health’ includes
“psychological”
health as well as
“physical” health.
3
People Health Risks
Modifiable lifestyle diseases are affecting revenue – even if they are not caused by work.
Diabetes
$4.3 b
Sedentary Work
$13 b
Fatigue
51%
All Aust.
Mental Health &
Stress
$8 b
Obesity
$6.4 b
Absenteeism & Productivity
Consider the emerging risks
Ageing Workforce
The Cost of Not Managing People Risk
…
- Culture
- Health
- Foreign laws
- Mergers and acquisitions
- Country profiles
- Environment
- Benefits design
- Political stability
- Cumulative risk
- Hazards
- New locations
- Inductions
- Overseas locations
- New risks
- Work systems
- Work practices
- Policy and procedures
- Human resources framework
- Work design
- Health and safety
- Regulations
- Workers compensation
- Standards
- Industrial requirements
Compliance
The risk comes from within business
Systems of work
New contracts Locations People
Risks:
• Compliance
• Workplace practices
• Labor relations
• Rewards
• Safety, health and absence
Risks:
• Talent and skills shortage
The risk comes from people…
Risks:
• Talent shortage
• Talent development
• Productivity
• Employee engagement
Risks:
• Ability to attract talent
• Poor talent selection
• Talent retention
Risks:
• Leadership shortage
• Leadership skills
• Management capacity
Risks:
• Leadership shortage
• Aging workforce
• Compliance
• Attrition
Workforce planning
Talent acquisition
Employment practices
Talent management
Leadership
Exiting
Impact on:
• Revenue
• Expenses
• Execution of strategy
Compensation
And the risk comes from how organisations manage it…
HR department
Payroll
Risk department
Safety
FinanceHealth and wellness
Operations
Legal and compliance
The organisation
…a fragmented approach
Invest / Mitigates but in what?Analytics – Understand the Risk and CostTotal cost of people risk
At work & productive
Healthy and well
Safe & secure
Engaged
paid appropriately
Well led
LTIFR Insurance cost
Average 1.5 – 5xOur Study shows this is
up to 20x
Absent At Risk
- Determines return on investment
- Determines where to target
Managing People Risk – The Goal
Risk management Risk investment
CostRisk transfer
Risk has a tangible cost… clients need to manage this cost
Cost of traditional
general risks
1%-3.5% of revenue
Cost of
people risks
3%-6% of revenue
Cost to organisation
4%-10% of revenue
The organisation
An integrated people risk approach…
Safety Compensation
HR department
PayrollRisk department
Finance
Health and wellness
OperationsLegal and
compliance
Compensation
HR department
Health and wellness
Tangible Return on Investment
How do you currently measure the cost of people in your business?
Understanding the Economics of Human Performance
► A Total Cost of People Risk assessment will quantify your current people risk exposure, assist in identifying your desired future state
position, articulate the required mitigation strategies needed to reduce risk impact and then work with you to execute, monitor and review
the positive changes
Peo
ple
ris
k ex
po
sure
(%
)
100%
20%
20%
25%
5%
10%
20%
"Direct" &"Indirect" Costs
Workers' Comp& Safety
SalaryContinuance,
Accident &Health
Absense Divestment &Acquisition
Staff Turnover Wellness &Aging Workforce
Total Cost Of People Risk = Direct & Indirect Costs
Direct Costs
Indirect Costs
Other indirect costs include:• recruitment• employee engagement• mental health & stress• leadership
Cost of ill health – direct and indirect impact
Mental Health
$10.9b pa
– $4.7 b absence
– $6.1 b presenteeism
– $146m compensation claims
Stress Sick Leave
3.2 days per worker pa = $1155
per employee (just for stress
related absence)
Workplace Injury
The cost of workplace injury in
Australia exceeds $60b
Understand the
health risk profile of
your workforce – use
this data as your ROI
Don’t forget the
hidden costs and
costs which are
transferred.
Clear Definition of Success
• Behaviour Change
• Culture of Health
Participation Change
• Improved health status
• Reduced healthcare utilisation
• Reduced disease
Direct Health Impact • Absenteeism
• Productivity
• Turnover
• Job Satisfaction
• Engagement
Indirect Outcomes
Best Practice Health and Wellbeing Programs
Best practice Wellness Programs
“We believe that the health of employees is inextricably linked to the health and performance
of an organization, so we offer solutions that empower people to be well and perform at their
best,” says Calvin Schmidt, President, Wellness & Prevention, Inc
– Digital health coaching solution – personalised action plans
• Weight loss, stress management, sleep quality, physical activity, smoking & chronic condition
management
– Energy training to maximise performance
• Unique energy management training system, personalised & multi-disciplinary approach from
performance psychology, exercise physiology & nutrition
• On line HRA
• Lifestyle & disease
management counselling
• Mental wellbeing
services
• Mobile fitness devices
• Environmental changes
– lighting, wellness
spaces / rooms
• Healthy food options
• Financial incentives
• Financial planning etc
• On site fitness classes
• Discounted
memberships
• Smoking cessation
programs
• Reward & recognition
Example of Best in Practice HWB Initiatives
Best practice most strongly associated with successful wellness programs:
– Including spouses / family in key components of the program.
– Promoting all wellness activities under a single brand name.
– Having a formal, written strategic plan with financial objectives.
– Active participation by senior leadership in wellness programs.
– Part of your organisational culture
In addition HWB program should include:
– Biometric screenings to alert employees to possible health risks.
– Personal coaching—by telephone, online or face-to-face—has become one of the fastest-growing
elements in health management programs.
– Financial incentives to drive employee participation in these programs is growing rapidly and
employers that use them are significantly more likely to report cost savings
Build the WIIFM from employees
to gain buy in & success
The Pillars of Best Practice HWB Programs
Financial Physical EmotionalGiving Back
Medical management
Integrated, tailored & measured to each workplace
Collaborative Approach – Vendors & Partners
Government Schemes
State Regulators
Work Cover Insurers
Health Insurers
An Integrated Approach
Managing
Risk Transfer
Keeping
People
Healthy
and Well
Keeping People
Safe and Secure
Managing
Absence
Managing
Risk
FinancingIntegrated
People Risk
Strategy
Contacts
Robyn PerkinsPhone: (02) 9253 7887
Email: [email protected]
Danni HockingPhone: (03) 9211 3080
Email: [email protected]
