Worksite Wellness Programs

When it comes to wellness programs, it could be tough to get past all the hype. Here’s how to avoid the three most common traps employers fall into.

Trap #1. the “one-size-fits-all” approach

For good reason, your organization doesn’t simply copy other firms’ 401(k) plans or compensation designs. Yet, all too often, firms adopt ill-fitting wellness programs based on things that have worked elsewhere.

Your CFO might have seen data on the cost savings other businesss have achieved via certain wellness incentives. Or an old coworker of your CEO swears by the program at his or her own firm.

In response, the top brass pushes for a copycat program - for example, offering tobacco use cessation incentives.

That might  be a good idea, if tobacco use-related illnesses are a key driver of your company’s health costs. But how can you be sure? is it good enough to have your employees undergo a health risk (assessment|appraisal}?

Typically, the answer is no.

Health risk (assessment|appraisal}s are a excellent starting place, but it’s often a mistake to stop there. the assessments help you get a feel for what your employees’ baseline physical problems are before you try to design a program around them.

This creates rough outlines of what your program goals must be and where to target employee initiatives. When you want the maximum bang for your wellness buck, you’ll have to dig a little deeper for information. Key places to look -

• your organization’s medical-claims breakdown for the last three years

• prescription-drug claims

• worker absence information

• employee assistance program use

• disability claims, and

• employee demographics (workers’ ethnic, gender, age and dependent coverage status points to greater - and lesser - health risks associated with each category).

Trap #2. Leaving the program on autopilot

A lot of wellness programs often get off to a good start and then fizzle out. Employers are left wondering what went wrong. Their mistake -  They failed to revisit the program on an ongoing basis - at least every other year.

Why it’s crucial -  Your cost-drivers can easily shift as employees come and go from the corporation.

Example -  This year, emphysema and other smoking illnesses may  be your biggest cost driver. But two years from now, it may be obesity and diabetes.

Unless you continuously track the program and adjust your objectives as necessary, you may not be prepared to meet those new challenges.

Trap #3. Unrealistic expectations

Typically, it takes at least a year and a half for businesss to break even on the cost of a wellness program. as a rule of thumb, the average program cost per staff member per month to the business is about $3 to $5.

When, after three years, you still aren’t seeing results, something went wrong. Currently, the benchmark ROI after the third year of a wellness program is $4 to $5 saved for every dollar spent.

How can you manage the cost in the short-term? In many cases, employers pass the cost of the wellness program on to the workers. for example, let’s say you want to roll out a wellness program effective January 1 (or no matter what your first day is of the new plan year).

You can roll that $3 to $5 per staff member per month cost directly into the employee’s monthly share of their healthcare premium. That makes the wellness program a budget-neutral expense for your organization.

But remember -  You get what you pay for - both in time and money invested. the less guesswork that’s involved in the planning and execution, the better the chance for success.

Variable compensation may be a great way to satisfy demand for higher pay while addressing  senior level management’s need to increase productivity and keep base salaries under control.

But there are some major pitfalls.  Here are two proven ways to avoid the most common legal and return on investment risks.

Non-exempt employees

Beware when you use variable comp as a pay-for-performance strategy for hourly staff members. Reason -  It’s easy to inadvertently run afoul of the Fair Labor Standards Act (FLSA) overtime rules.

Under FLSA, you must recalculate employees’ hourly wages to include all variable pay (such as individual or departmental bonuses) when figuring overtime compensation.

Failure to do so could cost your organization more in penalties and back-wage payments than the variable comp plan saved on the front end.

So it’s a good idea to double-check with Payroll to make sure the department knows to make OT adjustments after hourly employees receive bonuses.

Reward the right things

In order to make the criteria for bonuses easier for employees to understand and management to measure, many firms prefer using strictly objective measurements. Example -  the plan may pay out based on how much money employees save their department in a year.

But what happens if workers cut corners - on safety, service, quality, etc. - to reach the goal?

At some firms, staff members are still rewarded with extra pay, even though their actions potentially did more harm than good to the bottom line. for best results -

• set behavioral criteria for bonuses as well as economic ones, and

• consider using a mix of firm-wide, departmental and individual economic performance measures.

Shopping for health plans through a broker is a fact of life for the vast majority of businesses. But how well is your broker meeting your needs?

And how can you work together better to minimize costs while getting maximum bang for your organization’s benefits buck?

What’s New in Benefits and Compensation conducted an exclusive survey of 195 subscribers to find out how they view their company’s relationship with their brokers. Here’s what they said -

Half see room for improvement

The good news -  Nearly half of your colleagues rate their relationship with their current broker as “excellent.” But that means the other half see some room for improvement.

Thirty-nine% of respondents rated their broker relationship as satisfactory and said they were at least “reasonably happy.” the remaining 11% noted “unpleasant surprises” while 4% are actively considering a switch.

Tools for making buying decisions

Of course, the No. 1 reason any organization works through a broker is to find the best deals on health benefits. But many of your coworkers pointed to a few areas where their brokers could help make their lives a little easier.

First and foremost, your peers say they’d love for their brokers to provide user-friendly - but thorough - return on investment data they can use to benchmark different plans.

It’s worth discussing with your broker how much arm-twisting the broker can do with health plan carriers to get key data in your hands. Two specific areas of data benefits pros say they’d like help from brokers -

• obtaining and sharing claims cost data to compare to premiums, and

• benchmarking your typical plan costs against those of similar-sized firms in the region.

Regretfully, claims cost data is often hard to pry loose from insurers, at least for smaller companys’ plans.

Reason -  Without this data, it’s tougher to judge if your premium rate adjustment at renewal time is fair. Fewer than half of respondents (46.3%) say they’ve ever discussed such information with their brokers.

Obtaining benchmarking data on similar-sized plans assists you see how comparably your costs and plan designs stack up in your area. Roughly 43 percent of respondents say they’re armed with at least some of this info when it comes time to decide whether to stay with the existing plan.

Earlier renewals

It’s worth talking with your broker about ways to push for the earliest possible renewals - and strategies for making sure your carrier doesn’t hit you with any unpleasant surprises.

One notorious game insurance businesses play with employers’ plans is to wait until the last moment to reveal the new premiums at renewal. That way, there’s less time for negotiation - or to shop around with the insurer’s competitors.

About 28 percent of respondents report getting their renewals about 30 days before the rate kicks in. Different brokers use different benchmarks for securing renewals. A minority of respondents (19.5%) have seen them as early as 90 days ahead.

Taking work off HR/Benefits’ plate

The benefits brokerage marketplace is highly competitive. Some brokers try to set themselves apart by offering clients so-called value-added services.

Among your coworkers, the most well-liked services are those which relieve the company’s HR/ benefits manager of time-consuming tasks. Some examples -

• reviewing  plan documents

• auditing (and, when needed, reconciling) carrier bills for errors

• monitoring plans for compliance (HIPAA, COBRA, etc.)

• offering tech support for a benefits intranet and/or worker self-service software, and/or

• helping with employee education.

Which costs your organization more -  staff members who miss work or ones who show up physically but take a mental PTO day?

For most businesss, it’s the latter. So why do even savvy senior managers and finance directors (we’re not just talking about the bean-counters) worry about absenteeism while downplaying so-called presenteeism as a drain on company productivity, not to mention the compensation and benefits budget?

In some cases, C-levels and supervisors seem to think that admitting that presenteeism even exists at the firm is akin to saying, “We’re a poorly run organization.” In reality, presenteeism exists in every workplace.

Virtually every employee, manager, supervisor and executive who has ever tried to “tough it out” at work when he or she has been sick has been a presentee on those days.

So has whoever who’s ever been distracted at work by non-work issues - whether it’s spending the day attempting to resolve an individual financial matter, checking on a sick child at home or constantly checking for scoring updates from a sporting event.

In short, unless we’re to believe that every worker is productive every single day, no business in the world is immune from presenteeism.

Some organizations that don’t bury their heads in the sand about presenteeism still don’t track it. Why? Normally, there’s a belief that chronic presentees eventually get rooted out of the company.

And short of watching over every other employee’s shoulder throughout the workday, it’s too difficult (and even counterproductive) to try to estimate the cost to the organization.

Here are some strategies that firms have used to not only measure the cost but also reduce the problem.

Creating a cost estimate

If your organization is like most,  executive management worries endlessly about health benefit costs without realizing undetected presenteeism is just as costly, but easier to control.

Consider these facts from a recent CSG study -  Nearly 10% of the average annually pay and benefits

budget is spent on non-productive (but treatable) workers.

Add in staff members who call out at the last second and the percentage rises to 17 percent, as reported by SHRM.

But how do you estimate the actual dollars-and-cents cost to your firm?

Let’s assume you have 50 staff members, who make an average $40,000 a year. Over the in the year, the average worker is non-productive 2.5  percent of the time, due to assorted personal issues or minor diseases that serve as distractions.

In this instance, presenteeism costs your organization $50,000 a year. When you’ve a 5% presenteeism rate, the figure shoots up to $100,000.

While it’s impossible to entirely stamp out presenteeism, even small reductions in presenteeism add up to big bucks in controlling compensation and benefit costs.

The next step, of course, is doing something about the issue. Broadly speaking, the process generally works in three phases -

• review current policies and procedures for things that accidentally increase presenteeism

• get supervisors and workers involved on the front end, and

• stress the importance of work-life programs to  upper management and supervisors.

Let’s look at each area to see how they work in real-life practice.

Unintentional effects

Three common ways many firms try to cut absenteeism often increase presenteeism -

1. Over-stressing attendance in employee’s annual reviews

2. Having supervisors check up on workers who take sick days to verify they’re really ill, and/or

3. Disciplining workers for last-moment sick callouts.

From a practical and cost standpoint, the best solution may  be to switch from separate vacation and sick-day benefits to a single paid time off (PTO) bank.

When folks have no-questions-asked control over their off days, they’re sometimes more likely to use a PTO day if they’re sick.  Of course, you know that PTO carries some risks of its own.

Early detection

Fewer than one organization in 10 gets both managers and staff members involved in the process of spotting and eliminating presenteeism.

That’s too bad, says consultant Mary Beth Chalk, because it can been done pretty easily.

Ask a sampling of workers to rate how energetic and productive they usually feel at work, on a percentage scale. Have supervisors estimate their staff as well. Then split the difference.

The result is a pretty good barometer of your organization’s current and future presenteeism risk.

Work-life balance

Anything you are able to do to promote work-life programs at your firm can have a positive effect on the bottom line. Proven ideas include -

• rewarding supervisors who support flexible work arrangements

• sending sick staff members home

• cover on-site flu shots, and

• actively promote your existing Worker Assistance Program.

Any benefits HR/manager can adopt these ways to make staff members feel more appreciated.

The common thread -  using your own communication skills as a powerful tool for boosting morale.

1. Put in face time

When time permits, managers may want to put in some “face time” with staff members. This in and of itself is a kind of worker recognition. Example -  There’s a lot of value in simply walking around the building, chatting with staff members.  Ask staff members about the personal items they display at their workstations.

In the short-term, folks will notice and appreciate your interest.  Long-term, this may inspire ideas for rewards and incentive programs. the same technique works at  firms with multiple locations.  Make a site visit to get a feel for the morale. This is much cheaper - and often more effective - than designing a formal benefits survey.

2. Send ‘em personalized stuff

Looking for a simple way to show staff members that HR/Benefits cares? Create a template from which you are able to send customized “Welcome” letters to new hires or “Happy Anniversary” notes for employees’ company anniversaries.

3. Target overlooked employees

Most firms have staff members (e.g. part-timers) who aren’t eligible for the 401(k), medical plan and other company-sponsored benefits.  Small gifts help firms connect with these often-overlooked staff members.

Example -  on the first day of spring, send them a packet of flower seeds and attached a note from Benefits. Burston-Marsteller Worldwide has used this simple, low-cost idea and gotten good results.

Looking for recognition ideas that get results?  Here are two keys to success -

The most common characteristics of high-ROI recognition programs - regardless of their monentary value - are their spontaneity and perceived value by workers themselves.

In reality, the cost of some of most effective spot awards and bonuses often amount to less than 1% of base pay - and the awards don’t even have to be given in cash.

Less sense of entitlement

Part of the problem with traditional end-of-year or quarterly bonuses (apart from the fact that they cost corporations an average of 10% of base pay) is that employees expect to receive them for reaching certain goals.

Sometimes workers simply expect it no matter what. for example, at many firms, an annual holiday bonus is viewed as an entitlement and individuals  inevitably grumble that it’s not high enough. on the flip side, with spontaneous awards and bonuses, workers are often pleasantly surprised.

Benefits consultant Ken Stahlmann spells out four keys to making the latter kind of awards work, even when they’re lower in cost -

1. Creativity is crucial

The most effective programs typically give out awards weekly or monthly. to avoid over-stretching the budget - and avoid a ho-hum attitude establishing in - creativity is a must.

One way that never gets old -  combining time off with a second, non-cash award. Example -  One firm gives a half-day off in combo with movie passes once a month.

Another, at weekly staff meetings, holds a random drawing for a dinner gift certificate, plus permission to leave work early once.

2. Make it personal

Rewards have more lasting impact when they’re geared to people ’s personal needs or interests. Two examples -

• one firm with many foreign-born, low-wage workers awards a $20 pre-paid phone card after 90 days of service, and a $100 card for outstanding work, and

• another company with a lot of sports nuts took several top-performers to a ball game. Managers said it was the best $200 they’ve ever spent respecting creating ongoing enthusiasm.

3. Add structure

The awards may seem spur of the moment, but top programs have a fixed budget and structure set before anything is handed out. Example -  One retail firm awards “points” for good work. Folks can then trade in their points for store merchandise.

By letting people  bank points for additional valuable rewards, the business saw a solid jump in retention.

Other organizations prefer to let employees reward each other. for  instance, a small health care provider keeps a “goodies box” on-site - paid for in petty cash and stocked by employees themselves.

When someone spots a colleague going the extra mile, he or she pulls out a prize and awards it.

The program is a immense hit -  It’s immediate and personal, yet structured.

4. Don’t let good intentions backfire

Most spot awards go over well. But keep these four issues in mind -

• for most cash or cash-value awards, there are tax implications (just as with traditional bonuses)

• Awards need to be spread around or else resentment can creep in

• Make certain honorees don’t mind being the center of attention (some firms have accidentally alienated people  they tried to reward), and

• Make certain the reward is something people  actually want. One firm that awarded a VIP parking space next to the Chief Executive Officer (CEO) found no one used it. No one wanted the Chief Executive Officer (CEO) knowing what time he or she came and left.

Looking for ways to improve morale, productivity and retention? Spot awards might  be the way to go.

They’re the most popular recognition incentives among employees, a recent published study  shows. the best part -  the incentives normally amount to less than 1 percent of base pay. That also can makes this choice attractive to C-levels. and the awards don’t even have to be given in cash.

Spontaneity grabs ‘em

Traditional end-of-year or quarterly bonuses cost companys an typical of 10% of base pay yet often have a lower payoff in morale and retention.

Reason -  Workers appreciate them less because they expect to receive them for reaching certain objectives. By their nature spot awards are spontaneous and compensated out immediately. Honorees are pleasantly surprised and see the organization values their work.

Here are four keys to successful spot bonus programs, according to benefits advisor Ken Stahlmann -

1. Creativity is crucial

The most effective programs normally give out awards weekly or monthly. to avoid over-stretching the budget - and avoid a ho-hum attitude establishing in - creativity is a must.

One way that never gets old -  combining time off with a second, non-cash award.

Example -  One firm gives a half-day off in combo with movie passes once a month. Another, at weekly staff meetings, holds a random drawing for a dinner gift certificate, plus permission to leave work early once.

2. Make it personal

Rewards have more lasting impact when they’re geared to people ’s personal needs or interests. Two examples -

• one firm with many foreign-born, low-wage employees awards a $20 pre-paid phone card after 90 days of service, and a $100 card for outstanding work, and

• another firm with a lot of sports nuts took a few top-performers to a ball game. Managers said it was the best $200 they’ve ever spent respecting creating ongoing enthusiasm.

3. Add structure

The awards may seem spur of the moment, but the most effective programs have a fixed budget and structure set before anything is handed out.

Example -  One retail firm awards “points” for good work. Folks can then trade in their points for store merchandise. By letting people  bank points for more valuable rewards, the corporation saw a solid jump in retention.

Other organizations prefer to let staff members reward each other. for example, a small healthcare provider keeps a “goodies box” on-site - compensated for in petty cash and stocked by staff members themselves.

When someone spots a peer going the extra mile, he or she pulls out a prize and awards it.

The program is a gigantic hit -  It’s immediate and personal, yet structured.

4. Don’t let good intentions backfire

Most spot awards go over well. But keep these issues in mind -

• for most cash or cash-value awards, there are tax implications (just as with traditional bonuses)

• Awards need to be spread around or else resentment can creep in

• Be sure honorees don’t mind being the center of attention (some firms have accidentally alienated individuals  they tried to reward), and

• Make sure the reward is something individuals  actually want. One firm that awarded a VIP parking space next to the CEO found no one used it. No one wanted the CEO knowing what time he or she came and left.

In the last few years, there’s been a lot of publicity about the fast-growing crime of identity theft. More than half happen in the workplace. Benefits and compensation files are the most vulnerable targets.

The scariest part -  Victims of benefits-related ID theft often make out worse than those who fall prey to the more common variety. the bad guys are ahead of investigators after such thefts occur, and are often very good at covering their tracks.

Additionally, because benefits ID-theft is a relatively new type of crime, there’s no well-established system for victims, plan sponsors and vendors to set things straight after the fact.

401(k) accounts a prime target

Not surprisingly, employees’ 401(k) accounts have become the primary target for benefits thieves. an alarming MSNBC news report showed just how easy it may be for thieves to tap into an employee’s 401(k) accounts -  When an online account gets hacked into or account paperwork falls into the wrong hands, it takes only a few mouse clicks to wipe out the victim’s retirement savings.

With typical credit-card or bank account fraud, victims need only call their card issuer or bank, report the crime and refuse to pay for an item. But 401(k) theft is much, much harder to resolve.

Three huge obstacles -

1. Money in 401(k) accounts isn’t federally insured, like a bank account.

2. 401(k) accounts rarely - when ever - come with automatic identity theft protection from the vendor, like credit cards.

3. Even when the theft is successfully resolved, the situation becomes an ERISA nightmare for plan sponsors, because your business also has to account for the way the theft affected the growth of the employee’s account before the money was restored.

A lot of EAPS fall into a common - and perilous - category -  Management thinks the program is great, but staff members think it’s a waste. But it doesn’t have to be that way when you’ve an employee assistance program (EAP) or are considering one.

Seventy-three percent of all firms (59 percent of small companys) have an EAP. But how well does the typical employee assistance program (EAP) work? Not in addition to we’d hope. A Mid America Coalition on Healthcare study found -

• just 50 percent of 6,400 workers surveyed said they’d use the employee assistance program (EAP) when they felt overwhelmed by personal issues, and

• one-third said they didn’t even know how to access its resources.

The good news -  Firms like yours have seen dramatic improvements in three relatively simple steps

1. Worker attitude surveys

The best beginning place -  Take the pulse of your workers with a short, confidential attitude survey.

Goals -  Ask staff members if they know how to use the EAP’s resources. Then test workers’ knowledge and opinions of depression and other personal issues that might affect their workplace performance and/or safety. In the final section, find out how staff members would handle a serious personal issue.

In other words, find out where your people  would likely turn for help. Would employees seek out the EAP? Would they prefer to discuss the issue with their family doctor? A mental health expert?

The Mid America Coalition’s survey remains an great design model from which to craft a recent survey for your own workers.

2. Promote employee assistance program through education

Your survey data ought to help you pinpoint areas where employees need more education about your EAP. Some awareness-boosting techniques that have gotten results -

• Lunch-and-learn sessions. Possible topics include dealing with personal-finance stress, caring for elderly parents, understanding depression or dealing with a dependent who has potential mental health issues.

• Employee newsletter. If you have a benefits newsletter, spotlight the employee assistance program from time to time. Some corporations without newsletters have done e-mail campaigns or targeted mailings instead.

• Workplace posters spotlighting EAP. the ones that work best are often posters designed around a specific theme (e.g., anxiety about personal debt) rather than a general “need help?” message. In addition to posters, you could want to distribute wallet cards with employee assistance program (EAP) contact info.

Need help locating educational material? There’s lots of free EAP-related  flyers and FAQs here. Don’t forget -  When doing employee assistance program education, constantly remind employees that the program is strictly confidential.

3. Make certain to work with supervisors

For legal reasons, supervisors need to tread carefully when they suspect an worker has a mental health issue.

What you don’t want -  supervisors taking disciplinary actions without consulting HR or playing amateur psychologist and “diagnosing” the employee’s problems. Here’s a PDF of some proven tips and talking points for doing supervisor-specific EAP education.

Health Insurance Portability and Accountability Act (HIPAA) compliance -  Beware non-discrimination issues

HIPAA’s non-discrimination rules impact both mental health benefits and general health plans. Under current interpretations, health plans can no longer have benefits exclusions that deny benefits for injuries resulting directly or indirectly from pre-existing mental health issues.

That’s true even if the psychological condition wasn’t diagnosed until after the injury and even if the injury was self-inflicted. Example -  Suppose an employee gets hurt in a workplace accident he or she caused. After the fact, the employee is diagnosed with a mood disorder that previously escaped detection by the employee’s doctor.

Under current regs, HIPAA-covered plans can’t deny benefits. This puts companys in a bind. Mental health issues like depression, anxiety or bipolar disorder are among the health conditions that’re most likely to go undiagnosed or underdiagnosed.

That’s why, in most organizations, having a strong EAP is one of your best compliance tools.

For many employees, telecommuting and flex-time are highly desired work-life benefits. But a growing number of organizations are reluctant to offer these programs.

Demand for these benefits remains high.  One study found that 87% of job applicants are familiar with the idea behind telecommuting and flex-time, and the majority express a desire to have at least periodic access to such programs.

Environmental interest groups have pushed the feds for years to develop incentives for companys to encourage telecommuting. the pressure has risen as gas prices have continued to soar.

However, flex-time programs have leveled off in some sectors, and there’s been a decrease in telecommuting.

Today, about half of all organizations where telecommuting is feasible permit employees to work from home on a case-by-case basis. But the percentage of corporations offering full-time telecommuting has dropped in recent years.  Nowadays, only about 20 percent to 25 percent of corporations offer the benefit year-round.

Even some national businesss that are well-known for their telecommuting programs have scaled back. AT&T, for example, recently asked a few thousand home-based workers to come back into the office.

Hewlett-Packard and Intel have done the same thing.  and the federal government recently noted a 7.3 percent drop in telecommuting employees. Why the cutbacks?

Employee Assistance Program - Pros and cons

Offering staff members telecommuting or flex-time can be a good recruiting and morale-increaseing tool, in addition to a way to retain staff members who need to relocate, would otherwise have a need to quit or take leave or commute long distances to work.

But the programs aren’t without their drawbacks. Some of the main reasons businesss give for scaling back or eliminating them -

• Company culture - It’s easier to build a sense of organizational stability and a personal connection between staff members, colleagues and supervisors when people  interact face-to-face on a daily basis.

• Security - Among the hidden costs of authorizing staff members to telecommute (or else come in early or stay late) is keeping sensistive information safe. Some the cutbacks are being driven by companies’ IT departments.

Especially, managers have raised concerns about stolen laptops, identity theft or other crimes driven by hackers gaining access to information via workers’ home Internet connections.

• Productivity - Many supervisors find it easier to ensure high productivity when everybody is working under one roof at the same time.  There’s also a widespread view that most staff members get things done faster and more accurately when they’re not distracted by things at home.

The bottom line on the bottom line

Work-life programs like flex-time and telecommuting remain a useful benefit to offer employees, and a lot of corporations still provide these benefits for economic reasons.

But once the potential hidden costs are weighed, it’s often better for the bottom line to limit the scope of these programs.

Organizations that are thinking about starting a telecommuting program ought to look closely at job descriptions and telecommuting candidates. Some positions are poorly suited for remote work, and some employees are more up to the challenge than others.

But unless the organization creates objective criteria for permitting or denying flex/telecommuting requests, such programs can actually damage morale.

The last thing any employer wants is to open supervisors(and the company) up to accustations of favoritism or discrimination because of seemingly random decisions on which employees in their department can and can’t flex their schedules or work from home.