Workplace health and wellness program cost and effectiveness analysis

Wellness Program at Work

Wellness programs at work

Healthy workforce is a productive workforce (Bray & Bray, 2009). Healthy employees can give more attention to their job responsibilities, work more dedicatedly, and devote themselves whole heartedly to their organization (Duncan, 2008). On the other hand, unhealthy employees are not able to give their best at the workplace due to the negative impacts on their health caused by their unhealthy living habits and lifestyles (Cooper, 1994).

To encounter this issue, organizations arrange different types of Workplace Health Care and Wellness Program at the workplace (Healey & Walker, 2009). These wellness programs bring a significant change in the lives of employees by communicating them the benefits of a healthy life style and the negative impacts of the unhealthy habits (Cooper, 1994). They convince the unhealthy employees to adopt the healthy living habits that ultimately contribute towards an increased organizational productivity (Duncan, 2008).

These Workplace Health Care and Wellness Programs need heavy investments by the Organizations; therefore it has been under practice in the business world that the employer charges the costs of these investments from their employees (Bray & Bray, 2009). For the last few years, an issue relating to these Workplace Health Care and Wellness Programs has been a topic of debate in the business community of the world which have strained the managers to think whether all the healthy and unhealthy people should pay an equal premium for health insurance and be subject to an equal deduction for health care services or not (Cooper, 1994)?

This paper critically analyses the different aspect of Workplace Health Care and Wellness Programs and give explanation to the various issues relating to the costs and effectiveness of these programs for the organizations.

Workplace Health Care and Wellness Programs

What is a Workplace Health and Welfare Program?

A workplace health and welfare or wellness program promotes a safe and risk free working environment for the employees of an organization (Duncan, 2008). It aims to provide them the best working conditions that can enhance their performance capabilities and improve the organizational productivity (Bray & Bray, 2009). The program is run by highly experienced organizational members that perform the functions of risk assessment, training and workshops on the health and safety issues, and the provision of health care and wellness allowances to every worker (Cooper, 1994).

A workplace health and welfare program not only aims to protect the workers from hazardous working conditions, but also intends to bequeath a healthier social circle and a better future for their family members (Duncan, 2008). Keeping in view the benefits of these programs, both profit and non-profit organizations have started implementing them at their workplace (Bray & Bray, 2009).

What constitutes a Workplace Health and Welfare Program?

Every organization designs a suitable health and wellness program that fits the needs and requirements of its workers (Healey & Walker, 2009). However there are some essential components that a workplace welfare program must constitute. Before highlighting these components, it is worth mentioning that the success of a welfare program essentially requires a blend of the Management's consciousness towards employee welfare, presence of a long-term objective of this program, and the employees' own interest in instituting such a system in their working environment (Cooper, 1994).

A well-formulated workplace welfare program constitutes the following components;

1. Objectives of the Workplace Welfare Program

2. Health Risks Assessment

3. Assessment of the need for Financial Resources required for the Program

4. Allocation of Financial resources to different areas of the Program (Cooper, 1994)

5. Training sessions, workshops, and classes to develop understanding of the Health, Safety, and Welfare issues, etc. (Bray & Bray, 2009).

Should healthy people have to pay Medicare and other health costs for the health problems of unhealthy people?

The lifestyles, habits, personal traits, and characteristics of every employee are different from all his colleagues, subordinates, and supervisors within the workplace (Healey & Walker, 2009). Some organizations distribute their budget for workplace health and welfare programs according to the composition of their healthy and unhealthy people in the total workforce (Duncan, 2008). Converse to this, some organizations charge an equal health and life insurance premium from all their employees irrespective of whether they have unhealthy habits or not (Cooper, 1994).

The following sections explain why organizations need to charge a higher premium from those employees who are obese, smokers, or alcoholic than the others with no such unhealthy habit.

Major Costs of Welfare Programs for Healthy and Unhealthy People for an Organization:

Although every employee is paid a good amount as medical allowance which is mostly according to their designation and basic salary, but health insurance is paid according to their lifestyles and habits (Healey & Walker, 2009). For instance smokers, alcoholic, obese, and the people with unhealthy habits cost more to their employers as compared to healthy people in the form of higher insurance premiums, Medicare services, surgeries, welfare programs costs, and the like.

From this perspective, the costs of Workplace welfare programs can be explained for both types of employees individually. The major costs involved in the process of workplace welfare programs for the healthy people include;

1. Medication expenditures born by the employer for the seasonal health and infectious diseases to their healthy employees (Bray & Bray, 2009),

2. The costs incurred on training sessions, awareness programs, and knowledge building classes on different safety, health, and self-protection issues for the healthy employees (Cooper, 1994),

3. The costs of Health insurance (premiums) for all the employees of the organization as the monetary benefits other than salary, etc. (Duncan, 2008).

These aforementioned expenditures and costs are incurred for every healthy employee of the organization. But there is also a big percentage of employees who are either ailing, suffering from some under the weather disease, or have unhealthy habits and lifestyles (Duncan, 2008). Their enduring diseases and unhealthy habits, like smoking, drinking, etc. cause extra costs for the employers in the form of higher health insurance premiums, more medication expenditures, expensive surgeries, etc. (Bray & Bray, 2009; Healey & Walker, 2009).

The costs of Medicare and health services for unhealthy, obese, smokers, and alcoholic employees are much higher than those incurred on the healthy employees (Hitt, Ireland, & Hoskisson, 2007). The biggest reason for this big difference in medication, health services, and welfare program costs is the negative impacts of unhealthy habits on the lives of their addicts (Healey & Walker, 2009).

Why Organizations have to expend more on their unhealthy employees than on healthier employees?

There are two main reasons for why unhealthy employees with some kind of disparate habit cost higher than healthier employees having smart habits (Hitt, Ireland, & Hoskisson, 2007). First; smokers, alcoholic, obese, and unhealthy people are more exposed to diseases, from a common seasonal infection to a serious health problem, and second; organizational productivity slows down when such employees are not able to continue job, or take long medical leave from their office due to sickness or some serious health problem (Bray & Bray, 2009).

Should alcoholics, smokers, obese and unhealthy people have higher premiums than healthier and physically fit employees?

Recent studies show that a considerable percentage of big companies have initiated welfare and health care promotion programs at their workplace by which they educate and train their employees on these health care issues (Duncan, 2008). But not all employees take it seriously and do not quit their unhealthy habits, like alcohol, smoking, unhealthy and spicy foods, etc. As companies have to incur more expenses on unhealthy people's training, development, and knowledge building, and have to face the consequences due to their absenteeism and poor working abilities, they now charge a higher premium and more deductibles from all those employees who have unhealthy habits (Hitt, Ireland, & Hoskisson, 2007).

Keeping in view the costs that are incurred by employers on unhealthy employees and the consequences that they have to face due to their unhealthy habits, it is strictly argued that unhealthy employees should pay more premiums to their employers for Medicare and health services than healthy employees (Bray & Bray, 2009). Smokers, alcoholics, fat, and unhealthy employees take more leaves from work, show lower level of performance than healthier and physically fit employees, and increase the organization's expenses on arranging wellness and health care programs (Healey & Walker, 2009). It is quite fair to charge a higher premium from these employees so that they realize that they are just wasting their own money on such unhealthy habits and lifestyles (Hitt, Ireland, & Hoskisson, 2007). The major costs that an organization bears for its employees with unhealthy habits include;

Health insurance premiums and claims

Life insurance premiums and claims

(Krueger, 2007)

Reduced organizational performance due to decline in individual employee performance

Absenteeism from work due to poor health conditions

(Healey & Walker, 2009)

Costs of awareness programs

Medical treatment costs if the employees are reimbursed for their medical expenditures by the company (Bray & Bray, 2009).

The costs of recruitment and training of new employees in case the unhealthy employee dies or becomes permanently disable due to his poor health conditions, etc. (Healey & Walker, 2009).

Should healthy people have to pay Medicare and other health services costs for the health problems of unhealthy people?

If organizations charge an equal premium and deductibles for health services from all their employees including both healthy and unhealthy workers, it will be an unfair thing for all the healthy employees (Hitt, Ireland, & Hoskisson, 2007). Reason being, healthy employees can not be made liable for the expenses that organizations incur on awareness programs related to negative effects of smoking, drinking, and unhealthy foods (Krueger, 2007).

Moreover, organizations do not basically arrange health care awareness programs for healthy employees; the target audience or the main cause of arranging such awareness programs is the unhealthy employees who do not leave their habits and cost much higher to their organization than a healthy employee (Bray & Bray, 2009).

As smokers, alcoholics, obese and unhealthy employees avail more services from their employers; therefore they must pay higher premiums for health & medical insurance and workplace health care programs (Healey & Walker, 2009). For instance; a regular smoker who consumes eight cigarettes a day taking five minutes for each cigarette is more exposed to the risks of mouth cancer, lungs cancer, chest cancer, etc.

This increases the health insurance costs for the organization as he is to take medical treatment for his day by day decline health sooner or later (Hitt, Ireland, & Hoskisson, 2007). Moreover, such employees waste the precious time of the organization when they smoke at the workplace. Researches reveal that an employee who consumes 3-4 cigarettes during his job wastes almost half an hour daily or 15 hours a month. On the other hand, a non-smoking and physically fit employee can complete a big working assignment in these 15 hours.

Similarly, an employee who daily takes exercise and does not possess any unhealthy habit will not need to avail any type of medical facility from his employer. Such an employee will not be exposed to any type of risks related to mouth or lungs cancer, fatal diseases, or any serious health care issues. It means the organization will have to pay a lower premium to the insurance company for such healthy employee. It will significantly reduce the administrative costs of the business (Hitt, Ireland, & Hoskisson, 2007).

After discussing the various drawbacks of unhealthy habits and the consequences which an organization may face due to these unhealthy habits of its employees, it can be said that healthy and physically fit employees should not pay for the health care costs for the unhealthy people (Hitt, Ireland, & Hoskisson, 2007). That is, every organization should charge the premiums and deductibles according to the livings habits of its employees. Those who are healthy, fit, and do not possess any unhealthy habit, should be charges much lesser than the unhealthy employees who are more exposed to the risks of serious health problems and issues (Krueger, 2007).

Organizations must realize that it would be quite unfair to charge higher premiums from those employees who are at less risk to earlier death, serious health problem, or any fatal diseases (Krueger, 2007). These healthy employees should not be obligated to pay for the health costs of those who are unhealthy and do not care for their health (Hitt, Ireland, & Hoskisson, 2007).

Do Workplace Health Care and Wellness programs work?

The success of workplace health care and wellness programs mainly depends upon two things. First; formulation of the program on the basis of a careful analysis of the organizational situation, consciousness of the Management, and the commitment of employees towards bringing a change in their life style and living habits, and second; execution of the program in an effective, efficient, and a well-organized manner so that the Management achieves the desired results (Pronk, 2009; Hitt, Ireland, & Hoskisson, 2007).

As far as the question of the effectiveness of these programs is concerned, it is totally up to the employees' interest in attending these programs and following what is advised and transmitted through them. However, to make a workplace welfare program work effectively and give the desired outcomes, it is essential to focus on the following points and act accordingly:

1. Have enough financial resources to support the program:

In the business world, the most important thing in the success of a strategy is the assessment, acquisition, and allocation of financial resources so that the implementation phase is completed within the allocated time frame and achieves the set targets and objectives of the strategy (Hitt, Ireland, & Hoskisson, 2007).

As the workplace health care and wellness program is implemented at the organizational level, therefore it needs a heavy investment in the form of training and development costs, workshop sessions fees, expenses on health care promotional campaigns, and the like. A workplace health care and wellness program also causes a slowdown in organizational productivity as the employees have to leave their work to attend the lectures, seminars, workshops, and training sessions.

2. Management's Consciousness towards Workplace Health Care and Wellness Program:

Management's consciousness is also important in the effective implementation and success of workplace health care and wellness programs. It must have a positive attitude towards bringing a change in its employees' lives that will ultimately contribute towards its organization's productivity. The Management must be persuaded to approve these programs on regular basis by enlightening it the benefits that can be realized from a successful implementation. The Management must approve a continuous allocation of funds for these programs.

3. Establishing a Health Care and Wellness Program Committee:

After the Management's approval and the acquisition of necessary financial resources, the Human Resource Department should establish a team or committee which will be responsible to implement the Workplace health care and wellness programs in an effective and efficient manner. The Committee should arrange training and development sessions keeping in view the office timings, convenience of the organizational members, and the availability of instructors for these sessions. The Committee should also monitor and evaluate the performance of these programs and take corrective actions that are essential to achieve the strategic objectives (Hitt, Ireland, & Hoskisson, 2007).

4. Continuity and Consistency in the Workplace health care and wellness programs:

Long-term objectives are only achieved if the concerned stakeholders show a consistency and dedication in those objectives. To make the Workplace health care and wellness programs successful, it is essential that employees remain committed towards a Change and the Management always approve the allocation of finance to these programs.

Now whether Health care and wellness programs really work or not can be answered by evaluating each of the aforementioned components of these programs:

1. Objectives of the Workplace Welfare Program:

The first component of a workplace welfare program is the desired goal behind implementing these programs at the workplace. Every company, whether it is a profit motive or social-welfare organization, always wish to achieve an Excellency in its business operations. This Excellency can only be achieved if all the organizational members are working dedicatedly and with full active mind and body.

The objective of a workplace health care and wellness program is to motivate the employees within an organizational setup to adopt a healthy life style and leave all the unhealthy food, refreshment, and living habits (Healey & Zimmerman, 2009). Therefore, a workplace health care and wellness program works effectively if the organizational members are committed towards its goals and really act upon according to the advices and health care tips given in the training sessions, seminars, and workshops.

2. Assessment of the Health Risks and conveying them to the Unhealthy employees:

The effectiveness of workplace health care and wellness program heavily depends upon the tasks which this program has to accomplish within the set time span (O'Donnell, 2001). A major task is the assessment of health risks associated with an unhealthy life style and habits like smoking, drinking, eating oily and spicy food, giving the least preference to daily exercise, taking meals at irregular timings, etc. (Donovan & Millman, 2006).

Some of the health risks associated with the unhealthy life styles include; heart diseases, stress, depression, illness, laziness, lost appetite, cancer, the risk of death in younger age, and many other health problems (Healey & Zimmerman, 2009). By conveying these health risks to the unhealthy employees, the workplace health care and wellness program Committee can persuade them to leave all their unhealthy living routines and live a vivacious and active life; both at workplace and at their home (O'Donnell, 2001).

3. Investment required for the implementation of Workplace Health Care and Wellness Program:

Even a well-formulated workplace health care and wellness program can fail if it is not funded. These programs work effectively only if they are funded on continuous and regular basis so that employees take them seriously and follow their guidelines and principles in their lives (Donovan & Millman, 2006).

Consequences of not arranging the Health Care and Wellness Programs on regular basis:

If a Workplace Health Care and Wellness Program are only run for a short period of time, or at unequal intervals, they will not bring any benefits to the organization (O'Donnell, 2001). Reason being, the employees will lose their interest in these wellness programs. It will waste all the invested money on these programs (Healey & Zimmerman, 2009).

4. Training, Workshops, and Knowledge Building Classes for the Healthy and Unhealthy employees:

Most of the organizations arrange Workplace Health Care and Wellness Programs for every type of employees irrespective of looking at whether they are smokers, alcoholic, obese, or unhealthy in any aspect. It is because these training sessions provide guidelines on general principles of health care and self-protection that are also useful in personal lives in addition to professional lives (O'Donnell, 2001).

Workplace health care and wellness programs really work if both these types of employees act upon these health care principles and guidelines by showing a deep interest in them (Healey & Zimmerman, 2009). The willpower to bring a change in their professional and personal life enables the workplace health care and wellness program achieve the set objectives (Donovan & Millman, 2006).

Services that make a Workplace Health Care and Wellness Programs effective and successful:

Different types of services contribute in the success of a Workplace health care and wellness programs (Healey & Zimmerman, 2009). These are essential to persuade the unhealthy people towards bringing a change in their lives (Donovan & Millman, 2006). These services include; medical and clinical services, health care promotional campaigns within and outside the organizational workplace, coping with the health care issues and problems by an employee himself, and following the health and safety standards that are included in the Company's own Environmental policy report or manual published for its employees (Chenoweth, 2011).

a. Medical and Clinical services recommended to the employees:

The first thing that makes a Workplace health care and wellness programs effective is the medical and clinical services provided to the employees (Healey & Zimmerman, 2009). It is widely observed that employees who smoke, drink alcohol, and eat oilier and spicy foods need more clinical services than those who have a healthy diet plan with no unhealthy habits (Chenoweth, 2011). In a good Workplace health care and wellness programs, a set of clinical services are recommended to unhealthy employees during the training and development sessions and in the health care promotional campaigns (Bray & Bray, 2009).

b. Health Care Promotional Campaigns:

Secondly, health care promotional campaigns are designed and structured in such a fashion so as they are effective enough to persuade and convince the employees to leave all their unhealthy living habits (Donovan & Millman, 2006). These health care promotional campaigns include; broachers, manuals, and other publications that communicate the benefits of the Workplace health care and wellness programs and the consequences that they will have to face in case of non-compliance with the health and safety principles (Chenoweth, 2011).

Concluding Thoughts

After a critical analysis of the costs and benefits of Workplace Health Care and Wellness Programs for an organization and its employees, it can be concluded that these programs work effectively only if the employees take interest in them, management shows an encouraging behavior to the Wellness program committee and approves necessary financial resources for the funding of these programs (Donovan & Millman, 2006).

In most of the organizations in the world, healthy and unhealthy employees both have to pay an equal amount for the costs of these wellness programs (Healey & Zimmerman, 2009). It seems quite unfair for the healthy employees that they pay for the health costs of the unhealthy employees because unhealthy employees are more likely to avail the medical treatment benefits at the expenditures borne by the organization (Donovan & Millman, 2006).

The health and life insurance premiums are equally deducted from the salary of every employee but the life expectancy of unhealthy employees is far shorter than the healthy employees (Healey & Zimmerman, 2009). This is why it is argued that healthy employees should be subject to a smaller amount of deductions than unhealthy employees (Chenoweth, 2011).