Healthy Returns from Wellness Programs

Keeping employees in the pink can help smaller companies stay in the black.

Many CFOs are asked to move mountains. Andy Hunziger, CFO of Lincoln Industries, is asked to climb them — once, sometimes twice a year.

The mountain-climbing expeditions, part of the $100 million company’s wellness program, are just one of the ways Lincoln CEO Marc LeBaron makes his direct reports sweat — literally. “At least once a month, the senior team does some sort of rigorous physical exercise,” says Hunziger, ranging from group exercise classes to brisk 12-mile walks. Meanwhile, participation in quarterly weight, blood pressure, and other health checks is expected of all 400 employees at the Lincoln, Nebraska-based metal-finishing company.

The sweating and the checkups pay off: indeed, Hunziger can quantify the benefits. Lincoln’s wellness program saves the company some $2 million a year, he estimates, with about half of that coming from lower-than-average health-insurance costs. (Lincoln is consistently about $3,000 below the national per-employee average.) A big part of the balance comes from the reductions in workers’ comp insurance rates that have occurred as the program has taken off over the past seven years, and from an estimated $4,000 savings per year per employee who quits smoking. Below-average absenteeism and turnover also contribute to the savings.

All told, Lincoln reaps “a 5-to-1 ROI” on its wellness program, says Hunziger. That includes the costs of employing a wellness staff, various incentives, and activities like the mountain climb with the CEO, which is a reward for employees who achieve a certain level of fitness.

These days, it’s rare for a small or midsize company to have such a robust wellness program, and rarer still for a CFO of one to be able to track the returns from it. In general, “the smaller the company, the less likely it is to have wellness programs,” says Laurel Pickering, executive director of the Northeast Business Group on Health, a network of employers and insurers. In large part that’s because most companies in that range don’t self-insure, so “at some level, it doesn’t matter how healthy their employees are, the insurance costs stay the same,” notes Pickering. Also, many smaller companies don’t have the space or the personnel to offer such programs. But that could change as more evidence of the monetary value of wellness efforts emerges.

The Case for Wellness

For the most part, smaller companies that get into the wellness game have a long history of cultivating a work-hard, play-hard culture — a culture often driven by the CEO, and not for monetary reasons. Industries in which the work is physically taxing, such as manufacturing, have an additional impetus to keep their employees healthy.

“We really believe in [wellness], and it’s who we are,” says Hunziger, who has been at Lincoln for seven years. The company’s program began with the hiring of a wellness manager in 2000 and has evolved to include a tobacco-free campus, regular physicals and key health-metrics checks, and on-site physical therapy and massage. The mountain climbing started in 2005. Next up: an on-site, full-service clinic, which will be free to employees.

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