How to Quantify Productivity Cost Savings from Wellbeing Programs? (Part II)

In my previous blog, I not only explained how to quantify productivity cost savings, but also that gains in productivity from reductions in absenteeism and presenteeism far outshine, and are more predictable, than gains from premium and medical cost reductions. 

In addition, we also discussed how productivity is measured. Finally, I mentioned that we need to have available a single number, the contribution in productivity of a typical employee in your company, to calculate productivity gains from presenteeism and absenteeism that are specific to your employer.

This blog will provide simple examples of how we use this number to calculate the productivity cost savings, which includes both absenteeism and presenteeism, from a wellbeing program. 

Productivity cost savings is not rocket science

Let´s suppose you accessed our productivity contribution database to obtain the daily productivity contribution of your employees, and that this value is $450 per day.

Moreover, let´s assume that one of your employees is absent with a condition, say back pain. Let´s also assume that the employee will be out for 10 days.  The absenteeism productivity loss to your employer would be 10 days X $450 per day = $4,500.

In addition, let´s assume that you have an exercise or weight reduction, or stress reduction program that reduces the severity of back pain, such that the number of days the employee is absent is 5 days. That means that the productivity savings would be $2,250 (you can do the math). 

Now let´s look at an example of presenteeism savings. Let´s assume again that the daily productivity contribution of an employee is $450. Let´s suppose that the employee is worried about a relationship issue, such that the employee is distracted for 25% of a typical day.

Since these types of issues do not go away quickly, let´s assume that the issue persists for 30 days. In conclusion, the loss of productivity due to presenteeism would be $450 X 25% X 30 days = $3,375. 

Now let´s say you have an EAP program, which the employee can access for advice, and because of the advice, the issue is resolved in 15 days. Altogether, the savings would be $1,688 (again, you can do the math).

The above are very simple examples that show that productivity savings calculations are not rocket science. However, without the $450 productivity contribution, you would be dead in the water.

Please access our website, if you are interested in how we calculate customized productivity contributions by employer: www.wellcastroi.com

A little more about our ROI calculation software

Let me describe some of the additional complexities that our ROI calculation software considers. Wellbeing programs, such as exercise, nutrition, stress reduction, digital wellbeing platforms, sleep improvement, etc. impact several conditions simultaneously.

Exercise, for example, impacts CHD, pre-diabetes, muscular-skeletal conditions, and even behavioral conditions such as stress.

Several of the improvements occur slowly (you can´t reduce your high cholesterol in a day), while there is a very quick impact on stress and muscular-skeletal conditions.

To summarize what I am getting at is that the cost savings from a single program, exercise, must be calculated for each condition impacted and that we should consider that savings generated in the future are not worth as much as savings generated quickly because of inflation. 

All of this will be discussed in future blogs.  If you find my blogs informative, please invite other benefits, HR, medical directors, procurement, and financial administrators to read my blogs.