{"id":745,"date":"2023-11-08T09:00:00","date_gmt":"2023-11-08T12:00:00","guid":{"rendered":"https:\/\/wellcastroi.com\/?p=745"},"modified":"2023-11-13T15:29:17","modified_gmt":"2023-11-13T18:29:17","slug":"approve-benefits-and-hr-investment-requests","status":"publish","type":"post","link":"https:\/\/wellcastroi.com\/en\/approve-benefits-and-hr-investment-requests\/","title":{"rendered":"Why financial decision makers are reluctant to approve benefits and HR investment requests?"},"content":{"rendered":"\n

Based on my 30+ years\u00b4 experience of calculating the ROI of prevention programs, I sometimes stop and think that Donaldson Brown, who is largely regarded as the \u201cfather of ROI\u201d for developing the standard ROI formula in 1915, would be turning in his grave if he saw the various calculations of ROI presented by Benefits, HR and Program Vendors<\/strong>.<\/p>\n\n\n\n

I admit that the calculation of ROI for prevention programs<\/a> is not the easiest of calculations. It involves several complicated steps and this point become financial decision makers reluctant to approve HR investment requests<\/strong>. Read more about 3 basics steps:<\/p>\n\n\n\n

The first step<\/strong><\/h2>\n\n\n\n

In the ROI calculation process is measuring outcomes in reducing physical and behavioral conditions (which the healthcare industry has done quite well in some areas). However, I have seen many cases where utilization is confused with positive outcomes (e.g., did signing up for a digital platform really do anything? Or taking a thousand steps really reduce CHD?).<\/p>\n\n\n\n

The second step<\/h2>\n\n\n\n

The second and far more difficult step is converting those outcomes into expense reductions.<\/strong> I have seen several very scarry attempts at doing so. Let\u00b4s take a simple example, reduction of absenteeism: if a prevention program reduces the number of employees absent, is the savings really salary savings or productivity savings? (Answer: productivity). I know salary savings are quite simple to calculate, but will the financial decision maker be sold on this? The savings in salary must be converted into savings in productivity, which is not quite as simple, unless one is familiar with economic theory and the calculations and data required to do so.<\/p>\n\n\n\n

Now let\u2019s take a look at a separate issue for financial decision makers. ROI calculation consistency. Why does every calculation have to be home grown, and not follow the standard formula and include all the standard variables? Examples:<\/strong><\/p>\n\n\n\n