Steps to Calculate ROI: Quantifying the costs of physical and behavioral conditions

Why are the costs of physical and behavioral conditions called indirect when they are quite direct? From now on, I’ll bring some insights to help you understand why this is a misconception.

Have you ever had to deal with getting work done when some of your staff is missing, and you run the danger of not delivering work? Most likely yes. So, you think that lack of output is an indirect cost?

Another example: if an employee who has been drinking causes an accident, is the cost indirect? Are the costs of hiring a new employee to replace someone who leaves the company because of stress or back pain indirect? Yet we call these costs indirect and medical costs direct. Give me a break!

Also read: Common Doubts when Converting Wellbeing Benefits into Investments

What do “economic costs” encompass?

Let´s re-define indirect costs. Instead of calling the costs associated with physical and behavioral conditions indirect, let´s call them economic costs (to differentiate them from medical costs or health plan premiums).

Economic costs include:

• Presenteeism;
• Absenteeism;
• Employee replacement costs (training and relocation);
• Accident costs;
• Disability.

Note that wellbeing programs also impact things like fulfillment, happiness, satisfaction, etc.  But since I cannot quantify them in financial terms (at least without financial personnel snickering) let´s just call them benefits. No problem, I do not need to quantify benefits because 100% of the ROI will be generated from the economic savings. If employees are also happier and fulfilled it is gravy.

Learn how to quantify savings in my next blog

In my next blog, I will explain how we quantify the savings in presenteeism and absenteeism. Additional blogs will quantify the other economic costs. For more, see our website: www.wellcastroi.com.

Of course, please invite other benefits, HR, medical directors, procurement, and financial administrators to read my blogs.