Has your CEO or CFO ever asked you, “What is the ROI for investing in wellness programs?" Most attempts to quantify ROI have focused on estimates of health care costs avoided and/or improved worker productivity, which are sometimes hard to determine. But there is evidence of both for well-designed and well-implemented health and well-being programs.
There’s also evidence that the ROI equation might be expanded to include improved corporate stock value. A study conducted by the Health Enhancement Research Organization (HERO) and published in the January 2016 edition of the Journal of Occupational and Environmental Medicine reported the stock value of a portfolio of companies that scored highly on the HERO Scorecard for Employee Health and Well-Being Best Practices in Collaboration with Mercer® — indicating they had substantial health and well-being programs in place — outperformed the Standard & Poor’s 500 stock market index over a six-year time period (235% appreciation compared to 159% for the S&P 500).
The HERO portfolio companies came from a variety of business segments, and annual re-balancing was used to minimize the influence of individual companies that might have had extraordinary annual stock performance (see infographic below).
Two related studies, published in the same issue of JOEM, reported that portfolios of companies with high-performing health and well-being programs substantially outperformed the S&P 500 Index: C. Everett Koop Award-winning companies (325% over 14 years compared to 105% for S&P 500) and American College of Occupational and Environmental Medicine Corporate Health Achievement Award winners, with high scores in the “health and wellness” category (333% compared to 105% for S&P 500 over 14 years).
To be clear, the authors of these studies point out that their study designs couldn’t determine if having an effective health and well-being program was the cause of stock market outperformance. As the authors of the HERO study suggested, having an exceptional well-being program may be a “proxy for other types of highly-effective business practices.” In either case, the consistent and substantial associations observed across the studies between high-performing health and well-being programs and highly-appreciated company stock price is sure to gain the attention of senior business leaders.
While many of the desirable benefits of a successful health and well-being program (e.g., potential health care cost avoidance, improved employee health and productivity, better employee engagement, attraction and retention of top talent) are of interest to business leaders, stock value appreciation that outpaces competitors is something they can literally take to the bank.
So if your business leaders have ROI on their minds, show them these studies. There are few things more compelling to your C-suite and Board of Directors than the value of the company’s stock! Even if your company’s stock isn’t publicly traded, its commitment to, and investment in, employee health and well-being could well provide a competitive edge.
Check out a related post by StayWell's Chief Health Officer, David Anderson, PhD, a co-author of the study.