In 2012, about half of U.S. employers with 50-plus employees offered a workplace health and wellness program, according to the Centers for Disease Control and Prevention. The most common reasons for offering these programs include improving health, reducing health care costs, increasing productivity and reducing absenteeism, all of which are measurable factors that have monetary value in terms of ROI.

Controlling Health Care Spending

Thirty-four percent of large employers use cost analysis as a way to define and measure their ROI, according to a survey from Spring Consulting Group. You may consider cutting back on benefits or shifting more costs to employees, but that can be detrimental to morale. Instead, a focus on wellness can lead to healthier employees who need less nonpreventive care and fewer sick days.

Voluntary Benefits & Ancillary Benefits

The most common voluntary or employee-paid benefits are life insurance, vision insurance and long-term disability. The availability of voluntary benefits can have a direct effect on the health of the workforce, as well as the reputation of the company in the labor market. In additiona, many people are unaware of just how many health benefits that ancillary benefits coverage can bring. For example, eye doctors can screen for diseases such as glaucoma and hypertension, and dental health can have a direct effect on overall health. Although cutting these benefits may seem like a good way to cut costs, you’ll need to examine the numbers more closely. By providing and encouraging employees to use these benefits, you could be improving their health and preventing expensive care down the road.

Integrated Programs

Of large employers with integrated supplemental benefits, only about 23 percent have a method of defining and measuring ROI as it applies to their integrated programs. Half of large employers indicate that the costs of productivity loss account for between 1 and 10 percent of payroll, but many others do not have a method of measuring ROI, as Spring’s data shows. Companies that have integrated programs report higher employee engagement, reduced costs, and improved illness and absence outcomes compared to other companies.

Absenteeism/Presenteeism

When employees are ill, they have two choices: Miss work or come to work sick. With either option, there are costs, including missed sales opportunities. Additional costs may include overtime for employees who must cover the absence and stresses on your workforce. Even unpaid sick leave carries costs for substitute workers who may not have the training needed to maximize business opportunities. Tracking absenteeism and associated costs against the costs of wellness programs is one component of measuring ROI.

Employee-Turnover Costs

A solid benefits package is a great tool for attracting and retaining talent in your company. Recruitment and hiring involves substantial costs and time investments, including advertising, time spent on reviewing applications and conducting interviews, and the cost of pre-employment clearances. Depending on your industry, training and replacement costs can be anywhere from $5,500 to over $125,000 per new employee, according to the Houston Chronicle. Those figures don’t even fully address the lost knowledge and experience that departing employees can take with them. The costs of a great benefits package might seem small in comparison.

ROI can be measured through analysis of the performance of the workforce as it compares to the actual cost of providing the benefits. Establishing a health and wellness program at your workplace has the benefit of improved health and well-being for your employees, which yields economic benefits as part of a company’s business goals.

Mary Parsons is retired from a 30-year career in the insurance industry. She worked in the claims department of a major insurance carrier as a claims adjuster, manager and a member of a catastrophe team. Since her retirement, she has developed a career as a freelance writer. As an insurance professional, she has been a contributor to several insurance websites.