10/17/07 6:45 AM

Wellness Programs Are Growing Global Phenomenon, Report Finds

By Kathy Gurchiek

Whether they are a tool to reduce health care costs and disability- and illness-related absences, or they are a tactic to attract talent, employer-sponsored wellness programs are a “growing global phenomenon,” according to a worldwide survey of employers that represent about 7 million employees.

Wellness programs are most prevalent in the United States—86 percent of U.S. employers surveyed offer them—where they’re seen as a way to reduce health care costs by making workers more aware of healthy behaviors and encouraging them and their families to adopt healthier lifestyles.

Outside the United States, about one in five employers offer wellness programs, although their objectives for doing so vary by geographic region, according to the report, Working Well: A Global Survey of Health Promotion and Workplace Wellness Strategies, released in October 2007.

The report is based on findings from a survey conducted in April and May 2007 by Buck Consultants, which provides human resources and benefits consulting. The survey was offered online in English and French, and participants were senior- or mid-level professionals with responsibility for corporate wellness strategy, execution and measurement.

Employers in Canada like wellness programs primarily as a way to attract and retain talent, while in Europe the primary objective for using them is to reduce sickness- and disability-related absences. Elsewhere, employer-sponsored wellness programs are seen as a way to improve workplace morale and productivity.

“This broad range of objectives is a good indication of why wellness initiatives are becoming popular around the world,” Barry Hall, a Buck Consultants principal who directed the survey, said in a press release.

“Employers recognize that improving their employees’ health and reducing the risk of disease also returns real value to the company in multiple ways,” he added.

The prevalence of wellness offerings by geography among all respondents, whether or not they were multinational employers:

• North America, 86 percent.

• Europe, 25 percent.

• Asia, 21 percent.

• Australia, 20 percent.

• Central and South America, 19 percent.

• Africa/Middle East, 18 percent.

The prevalence of wellness offerings by geography among multinational employers:

• North America, 79 percent.

• Europe, 38 percent.

• Asia, 33 percent.

• Australia, 33 percent.

• Central and South America, 32 percent.

• Africa/Middle East, 17 percent.

What They Look Like, and Cost

The components of wellness programs also vary by region. Although they’ve been around for years, employee assistance programs are enjoying increased interest, thanks to a retooling by vendors to promote wellness.

And health risk assessments have been gaining ground as many employers and health vendors use them to identify risks related to preventable chronic diseases and for “targeting interventions to maximize return on investment,” according to the report. They are especially popular in Europe, where 70 percent of employers offer or plan to offer them in 2008.

The study predicts a strong growth in workplace health competitions—wellness-focused team activities in areas such as weight loss, smoking cessation, nutrition and physical activity. Motivation comes from group competition and teamwork.

However, some employers—more so in the United States than Europe—are relying on other types of incentives to promote wellness among employees.

Completing a health risk assessment and participating in workplace health challenges are the activities for which U.S. employers generally offer incentives. The incentives can take many forms.

The most widely used incentives are discounts or subsidies for gym membership, prizes or points, wellness class reimbursement, and cash.

There’s a growing trend, though, to align the rewards with the cost of the underlying health care benefits, such as reduced health care premiums or making cash contributions to health care-related spending accounts, the survey found.

Among U.S. employers, 55 percent offer at least one type of wellness incentive, and about one-third plan to expand the type of rewards in the next three years.

Such incentives are in addition to an average expenditure of $135 per employee per year on wellness, although some employers spend more than $500 per employee per year.

The expenditure usually includes educational resources, programming, health services, screening, coaching, technology and employee communications.

Only 16 percent of employers, though, said their incentive programs were extremely or significantly effective in changing employee behavior.

That may be because formal incentive systems are somewhat new in workplace wellness programs, Hall said. The report suggests that employers might find that it takes many years before the effects of health and behavioral changes “manifest themselves as measurable savings.”

“Despite these challenges, employers indicate significant plans to expand their incentive programs in the next one to three years,” he said.

Are the Programs Working?

Although about half of the 555 employers surveyed have a wellness strategy, more than two-thirds have not fully implemented their strategy.

A limited budget, limited staffing and difficulty in measuring or justifying the investment were their top major barriers to implementation, employers said.

Among U.S. employers, where the top strategic objective for offering wellness programs is to drive down their health care costs, 33 percent attributed a cost reduction to their initiatives. And about half of those (49 percent) reported a reduction of two to five percentage points per year.

That’s a “significant financial return,” Hall said, but he pointed to the remaining 67 percent who saw no cost reduction.

“Their lack of measurable success in this area is likely due to a combination of factors,” such as wellness initiatives that have not had time to generate a measurable impact, and employers that don’t have the capability to measure such results, he said.

Among U.S. employers surveyed, 36 percent have been measuring the impact of their wellness initiatives for two years, 24 percent for one year, 15 percent for three years, 15 percent for more than five years, and 6 percent for four years.

Also, not all employers have found the most effective tools and programs to achieve the desired or expected result, Hall added.

“Clearly, many employers still have work to do to demonstrate the return on investment necessary to ensure senior management’s continued support of their programs,” he said, acknowledging that demonstrating wellness programs’ return on investment has been difficult.

However, he stated, “the fact that employers indicate significant expansion plans suggests that even if program effectiveness proves difficult to quantify at this point, the intuitive value of offering these programs remains a major motivator for employers around the world.”

A 2008 version of this study is planned; the goal is broader participation across geographies.

Kathy Gurchiek is associate editor for HR News. She can be reached at kgurchiek@shrm.org.

Related Articles:

Designing an Effective Wellness Program, Step by Step, SHRM Online Compensation & Benefits Focus Area, January 2007

The ROI of Wellness Programs: From ‘Perk’ to Priority Investment, SHRM Online Compensation & Benefits Focus Area, January 2007

Related Resources:

Wellness Programs: The New Health Value-Add, SHRM white paper, February 2007

Wellness Toolkit, SHRM Knowledge Center

For the latest HR-related business and government news, go daily to www.shrm.org/hrnews.