Doing Well by Making Well: The Impact of Corporate Wellness Programs on Employee Productivity

Timothy Gubler, Ian Larkin, Lamar Pierce, "Doing Well by Making Well: The Impact of Corporate Wellness Programs on Employee Productivity," Pubs Online Informs, December 19, 2017
https://pubsonline.informs.org/doi/10.1287/mnsc.2017.2883

The use of workplace wellness programs—a coordinated set of policies enacted by an employer designed to improve employee health—has exploded in recent years, with nearly 90% of U.S. employers now offering such programs. The evidence on the efficacy of such programs, however, is limited. A recent large-sample randomized trial of a wellness program aimed at thousands of employees in the University of Illinois system found no reduction in health care spending or employee absenteeism, leading Bloomberg News to declare in a headline that “Workplace Programs Really Don’t Work.” Reviewing the evidence on the efficacy of wellness programs, the Wall Street Journal wrote that, “employers are stymied by the difficulties of measuring the financial and health impact of wellness programs.”

The recent Management Science paper “Doing Well by Making Well: The Impact of Corporate Wellness Programs on Employee Productivity,” by Timothy Gubler, Ian Larkin and Lamar Pierce, examines a potentially overlooked benefit of wellness programs—their effect on employee productivity. Scholars of workplace health have long held that “presenteeism,” or attending work at times when an employee has reduced energy, mental acuity or motivation, dwarfs absenteeism in terms of costs to employers. Even if a wellness program does not reduce absenteeism or short-term spending on health care, it could lead to more energized, productive employees and therefore greater productivity for the firm.

The paper examined the adoption of a wellness program by four plants at a large Midwestern industrial laundry company. The company’s wellness program was ambitious; employees who consented to take part in the program were given a comprehensive panel of 47 blood tests; individualized coaching by a registered nurse on health and lifestyle based on these blood tests and employee responses to a detailed survey on sleep, health, exercise and other health habits; and, if needed, a referral to physicians for any medical issue raised. Nearly 90% of employees took part in the program, and over half of these received blood test results indicating some form of health condition, most commonly high cholesterol or diabetes.

The study was able to match each participating employee to the laundry company’s daily productivity tracking, and estimated the effect of the wellness program on productivity by comparing pre- and post-levels of daily productivity to that of employees at a separate, non-participating facility. Compared to the non-adopting plant, the wellness program led to an overall productivity increase of nearly 5%.

The paper examined heterogeneous employee response to the wellness program across two dimensions: whether an employee was found to have a health condition, and whether the employee’s blood tests improved in a subsequent blood test taken a year after the program was introduced. The paper found significant productivity gains from employees improving their health, regardless of their prior health conditions. These employees’ lifestyle surveys, as well as improvements in some blood tests in the subsequent year’s program, indicated that the wellness program helped them improve diet, sleep, exercise and other lifestyle measures.

Overall, the study suggests that wellness programs are not just about absenteeism or health care costs, but can affect an employee’s everyday on-the-job productivity. Because a worker’s day-to-day productivity has a greater influence on corporate profits than an occasional absence or the employer’s contribution to health care premiums, the benefit of wellness programs may reach further than previously thought.

Read the full article at https://doi.org/10.1287/mnsc.2017.2883.

Reference

Gubler T, Larkin I, Pierce JL (2018). Doing Well by Making Well: The Impact of Corporate Wellness Programs on Employee Productivity. Management Science 64(11): 4967-4987.