Why cash reimbursements for employee wellness could end up costing more
Like the tip of an iceberg, cash reimbursement schemes may seem straightforward on the surface, but below is a massive set of complexities that can do more harm than good.
These schemes are designed to provide employees with a set amount of money to cover wellness-related expenses, such as gym memberships, fitness classes, and other wellness activities.
Companies are often sold the idea that cash reimbursement schemes are an easy, hands-off way to integrate wellness into a business, boosting morale and job satisfaction across the company.
However, this approach can fall short of increasing productivity, minimising absenteeism, and creating an engaged, thriving workplace in more ways than one.
4 reasons why cash reimbursement schemes fall short
1. Cost inefficiency in the long run
Cash reimbursement schemes lack economies of scale, which can be costly over time. Failing to leverage the benefits of cooperation-wide discounts can lead to higher overall expenses.
A cash reimbursement plan means the cost per employee can quickly add up, particularly when a company starts to grow.
For instance, wellness platforms like Wellhub can cost up to 50% less than traditional memberships due to their bulk purchasing power.
This cost-effectiveness is crucial for maximising ROI in wellness initiatives, as financial returns scale with participation rates. Wellhub's Return on Wellbeing report found that companies with 71% or higher engagement typically see at least a $2 return for every $1 spent.
When opting for a subsidy, the costs rise with each new participant, making budgeting increasingly challenging - particularly in a climate where CFOs scrutinise such expenditure closely.
2. Lack of long-term success
Wellness needs to be woven into the company culture, and cash reimbursement schemes often fail to provide the necessary support or foster a culture prioritising wellbeing, leading to limited engagement and short-term results.
Companies with integrated wellness cultures achieve higher engagement and participation, while a fragmented approach only benefits those already inclined towards wellness.
According to The Return on Wellbeing Study, a variety of wellness offerings enhances ROI. While cash reimbursements may make wellness seem cheaper, they don’t address other barriers, such as limited provider options or lack of personalised advice.
While companies believe that financial constraints alone may be the leading culprit for a lack of wellness, we know this is not true. If that were the case, wealthy individuals wouldn’t face such wellness challenges.
3. Administrative burden
While cash reimbursement schemes appear straightforward, they require substantial administrative effort.
Managing reimbursement claims involves policing eligible expenses, addressing potential misuse, and navigating disputes over what qualifies for reimbursement.
Approving expenses like gym equipment or mental health services may be straightforward. But, complex debates can arise about whether an employee claims a game console for stress relief or if a new BBQ contributes to their overall wellbeing.
This highlights how wellness expenses can vary significantly among individuals. Finding where to draw the line can quickly become overwhelming and time-consuming.
4. Challenges in tracking effectiveness
Data is crucial for evaluating the success of wellness programmes, but cash reimbursements complicate the collection and analysis of this data.
Without integrated tracking and reporting tools, assessing the ROI, measuring employee engagement, or adapting strategies based on real-time data becomes difficult.
The lack of comprehensive analytics means companies miss out on valuable insights that could drive improvements and demonstrate the true success of their wellness initiatives.
In summary, cash reimbursement schemes for employee wellness may appear simple but often lead to high costs and administrative burdens without ensuring lasting engagement or wellbeing.
They fail to integrate wellness into company culture, resulting in limited and fragmented benefits. For maximum impact, companies should adopt holistic wellness strategies rather than relying solely on cash reimbursements.
