More companies are using incentives to motivate employees to stay fit and healthy. The result? They’re saving money and reducing absenteeism. Here’s how you can follow their lead.

Feel the burn? No pain, no gain? Anyone who works for IBM can throw away those time-honored motivational mantras for working out. The company has an incentive program that gives merchandise and cash bonuses to employees who maintain a frequent exercise regimen or stop smoking. IBM has spent $25 million on such rewards for U.S. employees since 2003, using gifts such as pedometers, books and towels to encourage participation.

While most similar programs have participation rates around 20%, adding incentives has helped IBM achieve an 80% registration rate for the exercise program, says Dr. Joyce Young, director of well-being for IBM in the United States.

Benefits for IBM include happier workers and lower health care costs. Young says employees of IBM who exercise file about $350 less in claims annually than those who don’t.

That makes IBM’s initiative something quite rare in the world of non-sales incentives – a program with a built-in matrix to measure ROI. At the moment, it’s still somewhat unique for companies to offer incentives to employees for simply choosing a healthy lifestyle. But as health care costs continue to rise, the impact that motivating employees to stay healthy can have on the bottom line has many organizations looking into these types of incentives to keep their costs under control.

Is Health Care a Motivator?

In a 2004 survey by the Alexandria, VA-based Society of Human Resource Management (SHRM), human resources professionals ranked the rise in health care costs as their top economic concern and the most important overall workplace trend. It’s an issue that’s problematic for both employees and management. Employers don’t have the option of ceasing to offer health benefits or cutting off workers’ dependents; in multiple surveys, employees rank health care as their most important benefit. Instead, employers are offsetting costs by carefully adjusting plans, often increasing the burden on workers in the form of higher premiums, deductibles and co-pays. According to the Families and Work Institute, 40% of companies increased the employee-paid portion of health care premiums over the past two years. “We’ve found cutbacks in the kind of benefits that cost money,” says Ellen Galinsky, president of the New York-based Families and Work Institute. “Fewer are providing full coverage, and there’s been an increase in the amount that they’re asking employees to pay.”

The rising cost of health care is a leading cause of tension between workers and their employers; the AFL-CIO lists it as one of the most common key issues in union bargaining talks. As companies approach the limit of how much they can afford to contribute to an employee’s health care package, they’re also reaching the limit of how much they can ask workers to pay. The convergence of these two limits has created the environment where health care can actually become a powerful motivator. Which is why more organizations are turning toward a solution that’s much easier to put a positive spin on: company-sponsored wellness programs. “Preventive health care programs are the number-one way organizations are dealing with health care cost increases,” says Jen Schramm, SHRM’s manager of workplace trends and forecasting.

Pumping Them Up

With costs rising, communication and employee empowerment are key ways companies are enhancing benefits. According to recent research from the Arlington, VA-based consulting firm Watson Wyatt Worldwide, top-performing companies “engage employees through information and tools, and focus on health management and lifestyle behavior change.”

According to the research, companies that provide employees with the tools and information to take care of their health and manage their costs can realize financial benefits. A company with a well-executed wellness program should expect a median health cost increase of 5% the year after the program is in place, compared to an increase of 15% for companies that don’t take a proactive role in employee wellness. “A wellness program needs constant communication to be successful,” says Pryor. “Employees should be constantly reminded and rewarded so the program will always be top of mind.”

One unique form of communication took place last year among a group of companies in Ohio. More than 300 employees from 11 northeast Ohio companies found their motivation to “Weigh-In to Better Health” through a bit of friendly competition with employees outside of their own organization. In the program, co-sponsored by the Employer’s Research Council (ERC) in Mayfield Village, OH, and Oswald Companies, an insurance brokerage in Cleveland, teams from different companies competed with each other in a battle against the bulge.

At Clinical Specialty Inc. (CSI), a home health care services company in Brecksville, OH, 24 out of 90 employees are participating in the program. Team results were posted in weekly company e-mails. “They like being recognized for what they’re doing and others in the company are curious, which spurs more participation later,” says Valerie Kanzler, human relations specialist at CSI.

Companies that participate in programs like this often see single-digit or zero renewals, according to Pat Perry, president of ERC, a health insurance program underwritten by Anthem Blue Cross & Blue Shield. “It’s not so much about managing health care costs as it is reducing health risks, which will in the end manage health care costs better,” says Robert Klonk, executive vice president of Oswald Companies, ERC’s insurance brokerage partner.

Retention Booster

The rising cost of health care isn’t the only issue that has companies turning to wellness programs for their employees. Indeed, at a time of lean staffing, having the means to retain top people is vital. One way companies are trying to crank up productivity is through lower absenteeism and fewer sick days. As companies start to truly recognize the extreme costs associated with turnover, yet can’t afford huge salary and bonus increases, they’re looking for alternative tactics to keep their employees loyal.

Enter the corporate wellness program. Designed to take a preventative approach to health care and stave off potential problems before they start, these programs do much more than reduce employee insurance claims – they keep employees healthy enough to remain productive as well. In fact, 56% of firms offer them now, along with ancillary benefits like the fitness-club reimbursement now offered by 30% of companies, according to SHRM. Thanks to such health programs, the New Brunswick, NJ-headquartered Johnson & Johnson saved $225 per employee every year in hospital costs; Steelcase, the Grand Rapids, MI-based worldwide supplier of office furniture, saw employee medical claims drop by 55%; and participants at Applied Materials Inc., a Santa Clara, CA-based semiconductor manufacturer, cut back medical payments by 20%, disability costs by 33%, and workers’ comp by a full 79%. Work/life initiatives also bring down absenteeism: Johnson & Johnson found that employees who took advantage of the firm’s programs were away from the job less than half the time that other employees were.

“Some programs have a quick payback in productivity, while others, like health and wellness, are longer-term,” says Kathie Lingle, director of the Alliance for Work-Life Progress (AWLP), an association of human resource professionals based in Scottsdale, AZ. “We’re just now getting research in from experiments that have been going on for five to 10 years, showing the impact on productivity when people feel better, when they’re not taking sick time.” One large study of 24,000 Canadian users of EAPs, or employee assistance programs, found that 70% had improved concentration on the job, and more than half would have missed work if the programs hadn’t existed.

Source:  asicentral.com

By Vincent Alonzo

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