Data gathering: how to establish and measure appropriate KPIs for wellbeing take-up

The global employee landscape is changing, with worker wellbeing now a bigger priority for HR practitioners than it has ever been.

This should come as little surprise, with strategic employee wellbeing initiatives having been widely proven to help promote workforce productivity, engagement and satisfaction.

However, for some boardroom executives, sustained investments will still call for demonstration rather than proclamation – compelling evidence of their worth. And the greater the investment, the greater the need to prove the business case.

The roll out of programmes on a global scale is still at an embryonic stage. While regional differences may call for the delivery of solutions at a local level, opportunities exist for centralised strategies, investment and monitoring.

Often it will make sense to evidence a wellbeing programme in the country where a company has its headquarters, before it is rolled out across international operations. It should be remembered however that there is rarely a one size fits all, and businesses operating in different countries may face differing local challenges that require focussed support.

The burden of non-communicable diseases (NCDs) for example, such as cardiovascular disease, mental illness, cancer, respiratory disease, and obesity and diabetes, is more acute in high-income countries.

With the appropriate HR and reporting structure in place, however, a global view of outcomes can be realised.

Whether introducing wellbeing programmes on a national or international level, at the outset, businesses should look to clearly establish their objectives. Invariably, these will be based upon the prevailing employee health risks, coupled with an understanding of workforce attitudes and behaviours.

With this foundation stone in place, underpinning the direction of a company’s wellbeing strategy, meaningful metrics can then be set to evaluate whether a programme has had the desired effect.

The value of wellness

Historically, evaluating success would mean demonstrating a return on investment (ROI), but progressive businesses are now increasingly looking to incorporate a new measure – the value on investment (VOI).

This takes account of more abstract and often less quantifiable benefits – but encompasses important indicators that still affect business outcomes, and which in many cases can be considered of equal value.

Such variables might include talent retention, employee sentiment, morale and engagement rates – and all are measurable in one form or another.

Employee retention rates can be easily calculated and further business intelligence in this area may include financial metrics, such as comparative overtime payments and recruitment costs for replacement staff.

Engagement can be measured with analysis of data that details participation in wellbeing schemes and use of benefits.

Workforce satisfaction, meanwhile, might be measured through employee surveys, with Net Promoter Scores calculated to track trends over time.

With such benchmarks clearly set at the outset, attention can then move to setting key performance indicators (KPIs) for improvement.

A spotlight on the bottom line

Despite the welcome move towards the VOI of wellbeing programmes, the financial impact of a healthier and more engaged workforce will invariably emerge relatively quickly, and this should remain integral to evidencing the business case.

Minimising sickness absence

Significant savings can be realised, for example, through a reduction in sickness absence rates.

The business cost of sickness absence can be considerable – from paying salaries or sick pay, to replacement staffing costs, which can damage customer satisfaction and workforce morale.

This business cost can be calculated if robust processes for measuring absence are in place, such as automated recording systems that offer consistency in data capture.

If possible, employers should look to measure sickness absence before wellbeing initiatives are introduced, and again when they have had the chance to evaluate business performance.

A simple way to calculate the cost (for comparative purposes) is to multiply the average daily salary bill by the total number of days a workforce is absent for each year.

Useful additional calculations, which can be done automatically by absence software programmes, include ‘lost time rate’ measuring the percentage of total time lost to absence, ‘frequency rate’ measuring the average percentage number of absences per employee and the ‘Bradford factor’ measuring the number of spells of absence.

By drilling down into these types of statistics, companies can identify patterns such as the prevalence of absence caused by mental or musculoskeletal illnesses, for example. They can also demonstrate improvements that have been brought about by preventative initiatives, or those designed to facilitate early intervention.

Boosting productivity

Quantifying a cause-and-effect improvement in productivity from wellbeing programmes can be difficult, as numerous factors can influence the metrics.

However, an analysis of performance improvements across a range of operational activities, before and after implementation of health benefit strategies, can help in adding weight to the business case.

While the basic formula for calculating productivity is output divided by input, comparing units of work against units of time, methodologies will vary depending upon the industry in which a company operates.

Controlling claim costs

An effective wellbeing programme should have a direct impact on claim costs over the medium to long term – and analysis of claims patterns or trends should help highlight where initiatives are best targeted.

If a high rate of medical insurance claims is associated with lifestyle-related conditions, for example, the introduction of online health risk assessments and healthy living workshops may help highlight future health issues and tackle them in advance, before they develop into more serious problems.

By identifying the KPIs that align to a company’s objectives, and by ensuring a robust reporting structure is in place that enables these to be consistently monitored across national or international operations, a clear correlation between wellbeing and business outcomes should be established.

Moreover, this will help shape future wellbeing strategies to ensure healthy workforces deliver healthier business performance.

The author is Mike Blake, Willis Towers Watson’s wellbeing lead.

This article is provided by Willis Towers Watson.