Archive for the 'wellness programs' Category
When considering an incentive effort to drive employee wellness, one of the first decisions to make is how much to spend on each employee. There has never been any definitive analytical proof that will show you how much it will take to motivate someone to change behavior, or for that matter what award will induce the most excitement. For years the incentive industry has provided guidelines to help you decide: example: X% of the salary for the program period, but there has never been any empirical evidence to support these rules. The chart below will give you a good idea of what type of budget companies are using today.
A number of factors go into motivating behavior change. And while one is the award itself, it is by no means the only one. If you think by simply offering some type $50-$100 fitness device you are going to motivate an employee to change years of poor lifestyle choices then think again, it probably won’t. But in combination with the other pieces of the wellness program (not the least of which is well designed communications) a choice of awards can be effective.
Following is a chart published in Incentive magazine comparing Safhow much budget companies invest, on average, per employees for their wellness programs.
|$50 to $99||18.2%||26.3%||+7.8%|
|$100 to $199||10.2%||15.0%||+4.8%|
|$200 to $499||11.8%||5.1%||-6.7%|
|$500 to 999||11.2%||3.3%||-7.9%|
|$1000 and more||5.9%||9.5%||+161%|
Almost 70% of companies researched use individual awards under $100. When considering awards, don’t automatically use one in the fitness related field, not everyone wants one. They may be good for introductory or communication reasons, but if you want to get the most motivation appeal out of your award budget, don’t give them what you want them to have or what you think they want. Let them choose what they want for themselves. When they can choose their own award they will make your objectives their own.
Gift cards make terrific wellness and safety awards. They are not cash but have the best value the incentive industry can offer and they can provide for an unlimited choice in awards. The budgets for wellness or safety programs are typically small on a per person basis and gift cards are perfect for these types of budgets. Cash is often lost in the paycheck, and when your total wellness budget is about $25 per person per month, how much excitement are you going to get when combined with a bi-weekly check?
In a White House Conference on productivity several years ago, it was found that it takes $3 in cash to drive the same performance in an incentive program as $1 in non cash. Doesn’t it just make sense to maximize your program budget with gift cards? Driving wellness in an organization is extremely important and will only become more important.
Gift cards can be very instrumental in motivating employees to join in your wellness and safety efforts and improve performance.
According to First Data research, store specific gift cards are more popular than credit card-branded gift cards for incentive programs.
The “Prepaid Business Incentive Report” showed that over 37% all incentive budgets are used for some type of gift card, a large percent considering the numbers of incentive categories there are. It also mentioned many other types of incentives such as service award merchandise and travel only made up budget shares in the single digits.
This is truly surprising growth; less than twenty-five years ago gift cards didn’t even make up 1% of incentive budgets. Traditional merchandise incentive suppliers have painstakingly attempted to quash this growth of gift cards with all manners of negative selling but to no avail. For every 100 sales reps calling on American corporations trying to sell them incentives, there is only about one selling gift card systems.
The respondents of the survey were companies employing over 100 individuals and represented industries as disparate as manufacturing, government, retail and communications. Of the 37% of budgets using cards, 20% were single merchant cards and 14% were network branded open loop cards such as Visa and American Express, and 3% was paper gift certificates. The balance of the budgets was made up of 6% in merchandise, 4% to points based programs, 3% to travel, and 14% to plaques, pins and logoed apparel. Cash and cash like awards made up the rest with approx. 36%. At one time cash was in excess of 60% of all incentive budgets, maybe more.
The reason companies prefer closed loop merchant gift cards vs. bank credit cards was attributed to a variety of factors. These include employee preference (38%) followed by physical proximity and past ordering history. When purchasing large quantities of certain merchant gift cards, the company can receive a volume discount, but it is administratively and financially difficult to source several cards like this. In addition they lose the advantage of having a gift card system that offers hundreds of different cards giving the employees a great choice. One disadvantage of using open ended bank type gift cards is the fee. As most gift card denominations used in these types of incentive programs are $25 and some $50, these fees can represent as much as 15-20 additional cost over the face amount of the card.
The most common reason for using gift cards as employee awards were employee recognition (which includes safety awards) at 48%; service anniversary awards at 36%; year-end holidays 32% and employee health and wellness goals at 12%.
As the cost of wellness escalates and the uncertainties of the high costs of the Affordable Care Act abound, businesses are taking a closer look at financial disincentives when looking for ways to cut cost.
While incentives in wellness programs continue to rise, disincentives seem to be a new trend. According to a recent survey released by an Aon Hewitt only 5% of responding employers currently use disincentives, but 53% say they plan to begin using them in three to five years. So what does this mean, what works and how will this negative motivation work out?
Wellness incentives have grown quickly, from 19% of employers with 500 or more employees in 2006, to 83% of the respondents of the AON research today representing almost 800 employers and more than 7 million employees. They have quadrupled in size because they have proven results.
We in the incentive industry have always obviously been a proponent of using the carrot rather than the sticks. From a behavioral standpoint, we have seen time and again that positive consequences will produce better results than negative ones.
If you are going to use disincentives, many consultants believe that the timing of when to introduce them is critical, that it should only be used after your wellness program has been in place for at least a couple years and the employees have had a chance to become acclimated and well on their way in their wellness pursuits. At that point the disincentive can be used to nudge them along. Of course you can always find unique cases where disincentives can be helpful, but it is also a cultural issue for many companies and goes against their company philosophy. They don’t want to say “if you don’t do this we won’t pay your claim.”
Some companies have tried both incentives and disincentives and found that numbers showed that the programs with incentives outperformed the ones with disincentives.
The most prevalent types of disincentives tend to be surcharges on those who smoke or have BMI’s that are far out of the normal ranges. But those that implement the disincentive warn that you shouldn’t jump into one without a great deal of thought, research and planning. Research shows a majority of health care costs are incurred for dependents and that spouses can cost more for the employers than the employee. When you have disincentives in place one wonders just how much strife this can cause within the family.
So what will the future bring? Your guess is as good as ours, but we know through experience that employers can get a low of 6-10% and a high of 18-20% increase in engagement with incentives. We know that non-cash awards tied directly and separately implemented to the activity can be very effective. In addition having an incentive to reduce a premium increase to zero or below can also be effective. And a combination of these two types of activity, one short and the other long can be a powerful way to reduce costs.
From our perspective, we think the positive reinforcement of a properly planned incentive program will outweigh disincentives in the long run. Incentives have been successful in achieving many other corporate objectives, and we have no reason to think that will change.
In a recent newsletter, World at Work, the Total Rewards Association, discussed some interesting results of a national survey of employer views on the use of employee health incentives. The research was conducted by the Midwest Business Group on Health in April of 2013. Highlights of the findings are as follows:
- 82% of the companies had some form of incentives or disincentive s in place
- There is a growing interest in outcomes-based incentives (achieving targeted biometric goals)
- Most employers determined that incentives were necessary to get employees to participate
“Our national survey found over 80% of responding employers are using some form of incentives, with 41% using or planning to use outcomes-based incentive to increase engagement and participation in employer-sponsored programs.” Larry Bores President MBGH
- 13% of employers responded that they are currently using outcome-based incentives, 28% are planning to launch them over the next two years and 40% indicated they were studying the issue.
- Of those currently implementing programs, 54% tie incentives to both outcomes-based measures as well as incremental improvement to the outcomes
- 94% of employers used onsite screening to capture biometrics and that employee feedback was overwhelmingly positive
- Of the 18% who did not use incentives, 53% reported it was because it was not a part of their culture, and 47% were not sure it worked.
- The main incentive awards used were reduced premiums at 62%, gift cards at 38% and some type of program merchandise at 35%.
- Employers using disincentives increased the employee share of premium for non-compliance and 14% have higher plan deductibles or out of pocket fees.
- The most incented activities were biometric screenings at 70% and risk assessments at 78%
- The greatest disincentive at 78% was for tobacco use
- 71% of the employers said their incentive programs were very successful and 45% the disincentive strategy was “very successful” or “successful.”