The Impact of Employees’ Health on The Employer

How can employers create a wellness program that improves employees’ health?

“Americans don’t leave their increasing waistlines at home; they bring them to work.  And those extra pounds are having serious ramifications relating to health care costs, productivity and morale.” – Robert J. Grossman, HR Magazine, March 2004

The number of people in the American workforce may be shrinking but the size of the average American certainly is not.  According to a 2005 study by Trust in America’s Health, almost 65% – or 119 million Americans – are either overweight or obese.  This startling statistic, combined with the exponential increase in medical costs, means employers must find ways to address their employees’ health issues – or face some expensive consequences.

The Real Costs of Obesity

In the past, helping an overweight worker slim down was probably not an employer’s top-priority.  However, recent research is beginning to change that mindset by showing the economic impact that obesity has on employee performance.  The healthcare costs for obese employees, which includes medical insurance, hospitalization costs and physician visits are about 36% higher on average than those for their average-weight counterparts.  For medication, costs are 77% higher.

Employers are all too aware of the escalating direct costs of healthcare.  Yet, it’s the indirect costs that quietly but pervasively decrease company profit.  Reduced productivity and increased absenteeism are not represented on the company balance sheet but financially impact revenue.  In 2004, HR Magazine reported that obese individuals are twice as likely to be absent 14 or more times a year.  When obese workers are not absent, they are not working to their full potential.  Researchers estimate about 25% of obese employees under-perform due to obesity-related infirmities or conditions.

The good news is that employers are taking note of this phenomenon and consequently, taking action.  About 80% of workplaces with over 50 employees provide some type of health-related initiatives and many are starting to address the issue of obesity.  In addition, about 40-50% of large employers offer weight control assistance, often through a “Weight Watchers at Work”-type program.  Some companies even offer to pay for gastric bypass surgery, for those employees who are at least 100 pounds overweight. Overall the approach is to improve employee loyalty by increasing overall quality of life for the workforce.

Unfortunately, most employee’s health programs are well-meaning but poorly planned and executed.  According to a June 2006 report from the University of Minnesota, the results of these programs have not been as positive as studies documenting their impact suggest they should be.  Perhaps the main reason for this is that employers do not market their health initiatives to the people who could benefit the most from them.  For example, about 27% of employers offer discounted membership to local health clubs.  This would be immensely valuable but is historically used most by employees who already exercise regularly.

Additionally, organizations continually make the mistake of incorporating initiatives that only address one specific health risk, such as high blood pressure.  Providing free blood pressure screenings to employees may enhance their awareness of a possible problem.  However, the risk assessment should be one small part of a comprehensive plan to reduce the employee’s health risks.  Even a comprehensive plan will be unsuccessful if it is only implemented for a short-term period.

Below we have highlighted some Best Practices for designing and executing a successful employee’s health program.

Boosting Employees’ Health with Company Wellness Programs

  1. Make Workers’ Health a Priority: Many employers establish employee’s health programs without really considering what it can mean for their workers and half-hearted initiatives send the wrong message to employees.  Buy-in from management is crucial to planning a program that can produce tangible, meaningful results.  Making health a priority includes providing your employees with the most comprehensive, long-term plan possible and creating a health-conscious company culture at all levels.
  2. Provide Incentives: In order to make an employee’s health program work, the right incentives must be awarded for the right behaviors.  For example, high-risk employees can receive a reduction in co-payments by participating in the company wellness program.  Low-risk employees would automatically receive the discounted rate in order to ensure fairness.  As healthcare costs continue to rise, reduced medical payments are likely to remain a powerful motivator to employees.Incentives related to medical costs also increase the likelihood that the target populations will participate – and that equals significant savings on healthcare for employers.  A study of 23,500 General Motors employees showed that just encouraging obese employees to engage in physical activity as little as little as once or twice a week reduced health care by an average of $400 to $500 per year per employee.  How much money could your company save by successfully targeting these populations?
  3. Concentrate on Many Aspects of Employee’s Health: Weight management classes and nutritional consultations are certainly beneficial but they constitute only a part of an employee’s health and overall well-being.  For optimal employee performance, a plan should attend to stress and mental health barriers as well.  Stanford’s Health Improvement Program (HIP), one of the oldest employer-sponsored health programs in the programs, is an excellent example of a well-rounded initiative.  In addition to physical fitness classes, Stanford offers smoking cessation programs, “wisdom therapy” for managing stress, behavior modification support groups and even a class for cancer patients.
  4. Determine What You Can Afford: Small to mid-size companies may shy away from employer-funded wellness programs, usually because they don’t think they can spend money on programs with somewhat inconclusive success rates.  In reality, though, companies are already unnecessarily spending money in the form of higher absenteeism, increased employee turnover, and skyrocketing healthcare costs.Experts suggest that employers contact their health plans for possible collaboration.  Even if your business is low on funds, consider implementing useful low or no-cost programs, such as providing nutritional information for cafeteria foods or establishing a smoke-free workplace.
  5. Offer Web-Based Options: Obviously, surfing the Internet is no substitute for running at the gym.  However, companies can likely increase employee participation by offering services like nutritional counseling, healthy recipes, workout schedules and risk assessments online.  Web-based options also allow employees to easily track both their personal progress and their incentives.  Workers are more apt to get involved in a program that has as many private and simple options as possible.

Wellness programs that promote employee’s health are a critical part of talent retention. For more information about how to improving your workforce wellness and employee productivity, email

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