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Plan your ROI
5 ways employee benefits plans can deliver a real Return on Investment

There is a price tag attached to every employee benefit. Ask any company owner or manager who reviews budgets or profit-and-loss statements. But employers and researchers who have taken the time to establish benchmarks and measure changes have found that investments in benefits plans also deliver real financial returns.

Telus, for example, discovered that employees cost the telecommunications giant an extra $2,000 per year for each personal risk factor including heart disease, low activity, high blood pressure, or high Body Mass Index. Every dollar invested to attack these issues delivered a $3.80 return. It is hardly the only successful case study. Pillsbury saved $3.63 for every dollar invested in its wellness program; Canada Life Insurance (now Great-West Life) realized a $3.43 financial return on every dollar invested in a fitness program; and, Coors Brewing Company saved $6.15 for every dollar spent on its fitness program.

Researchers may focus on larger companies like these to find statistically relevant sample sizes, but even the smallest employers can reap similar rewards. 

Ever wonder where the financial returns from employee benefits can be found? Consider these 5 ways that benefits plans can support your bottom line.
  1. Lower recruiting costs -- Few tools are more effective at attracting and retaining employees than comprehensive benefits programs – and employee turnover represents a real cost in any workplace.

    Trucking HR Canada, for example, estimates that it costs between $6,000 and $10,000 to recruit and train a new truck driver. If a small fleet loses one of these employees a month, this adds up to at least $60,000 a year on top of the business opportunities lost when a truck is parked without a driver.

    As steep as the cost may sound, it is one of the lower estimates. The Jack Phillips Center for Research calculates turnover as a percentage of base salaries, ranging from a low of 30 to 50% for an entry-level, non-skilled worker to between 200 and 400% for an IT specialist.

    And a small business can be crippled by the loss of just one employee.

    Benefits programs can help reduce these costs. MDS Nordion, a health sciences business, saw its employee turnover rates drop in half after introducing a comprehensive workplace health program. Compared to the high-tech industry’s average turnover of 10%, this company’s turnover rate dropped to 6%. BC Hydro, meanwhile, found that employees enrolled in a fitness program had a turnover rate of 3.5% compared to a company average of 10.3%.

  2. Fewer lost work days –The average full-time Canadian worker lost 7.7 work days because of personal illness or disabilities in 2011, according to Statistics Canada. The losses were even steeper in workplaces with older workers. Youth aged 15 to 19 missed an average of 5.1 days, but employees from 55 to 64 missed 11.5 days.

    To compound matters, the Centre for Addiction and Mental Health says workers who are sedentary, overweight, smoke, or drink to excess miss work 50% more often than their healthier counterparts.

    Benefits plans offset the cost of treatments for speedy recoveries, and related wellness programs can help to avoid illnesses in the first place.

  3. Increased productivity – Of course, showing up to work is just the beginning. Health-related employee benefits can also help workers stay focused on their tasks.

    A U.S. financial services company found that Customer Service Representatives who suffered from allergies were 10% less productive during peak pollen season, equating to $52 per employee per week.

    Those who enjoy prescription drug plans are more likely to take the medication that will keep them focused on their jobs.

  4. Lower benefits premiums – Existing benefits premiums paid for everything from life insurance to prescription drug plans are all influenced by the health of covered employees.

    Obese employees alone spend 35% more on healthcare services and 77% more on medications than their healthier counterparts, according to Obesity and Workers Compensation, published in the Archives of Internal Medicine. This is over and above the recognized increase in compensation claims, lost work days and indemnity claims.

    Programs designed to help workers lose weight will make a lasting difference on all of these costs.

  5. Fewer smokers – The Conference Board of Canada calculates that every smoking employee costs $3,396 in lost productivity, higher absenteeism, and steeper benefits premiums.

    The good news is that fewer Canadian workers are smoking, but 17% of the workforce was still puffing away in 2010.

    Smoking cessation programs offered through an employee wellness program can lessen their burden on productivity and benefits plans alike.

There is no question that these returns are all realized over time. An employee’s health does not improve the first day they begin to use a gym membership, and it is tougher to calculate the money you save than the money you spend. But researchers and case studies have proved time and again that investments in employee benefits will deliver tangible results.

Think of them as many happy returns.

Is there a topic that you would like me to address in a future edition of the Buzz? A burning question about benefits plans that has always been hanging over your head? Let me know. Drop a quick email to billz@callerygroup.com.

Top Tips:

  • Establish benchmarks for employee turnover, sick days and benefits premiums when introducing a new benefits plan, and track the differences over time.
  • Maximize the financial returns by designing a wellness program for your company’s unique needs and demographic profile. A high number of smokers, for example, could be supported with smoking cessation support in a wellness program.

Copyright Notice

All rights reserved. All of the content herein is the sole property of the Callery Group, and may not be reproduced, transmitted, or stored in a retrieval system - in whole or in part - without the written permission of the Callery Group. Links to the originating article at www.callerygroup.com are permitted.

The Buzz Bits
Miscellaneous links to interesting benefits information

The Business Case for a Healthy Workplace: Industrial Accident Prevention Association

Company Benefits for Employee Retention: monster

Business Case for Active Living at Work: Public Health Agency of Canada

Smokers need not apply: Benefits Canada

Employee Q&A -- Drug Claims: smallbizadvisor

A psychologically healthy workplace: Benefits Canada

Community Ethics, Big City Expertise

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