Rx for productivity: employee wellness programs

Prof. Lamar Pierce will present significant new findings on the impact of employee wellness programs on employee productivity at 8 a.m., Sept. 12, in Bauer Hall as part of the Research Impacts Business breakfast series.*

The Wall Street Journal featured the research conducted by Pierce and former Olin PhD student Tim Gubler, in its Aug. 9 edition. UCLA Anderson School of Management’s Prof. Ian Larkin is the third author of the paper, “Doing Well by Making Well: The Impact of Corporate Wellness Programs on Employee Productivity,” forthcoming in the journal Management Science.

The WSJ noted that it has been challenging for researchers to link daily employee productivity data to comprehensive measures of employee health, and whether and how these measures changed after introduction of a wellness program.

The study empirically tested how wellness programs affect worker productivity. The research paired individual medical data from employees taking part in a work-based wellness program to their productivity rates over time.

“When you give people the tools and the opportunity to be physically and mentally healthier, it’s not just that they’re more likely to be at work,” said Lamar Pierce, professor of organization and strategy at Olin Business School. “Those employees are also more likely to be productive.”

Pierce and co-authors Timothy Gubler, assistant professor of management at the University of California-Riverside, and Ian Larkin, assistant professor of strategy at UCLA Anderson School of Management, used data from an industrial laundry company that provides a free, voluntary wellness program each year to its employees.

They matched a three-year panel of medical data for 111 employees with their work performances, which were accurately measurable by the number of pieces or tasks completed in a factory setting. The researchers also used self-reported data from the employees, as well as evaluations from physicians who examined each employee’s medical progress as the program continued. All information was kept confidential and anonymous.

“We were able to compile comprehensive data on employee health, spanning 42 separate blood tests and a detailed survey of health and lifestyle habits,” Gubler said. “Then we were able to link this data, and how it changed after the wellness program, to daily productivity records for the employees. The ability to link such detailed health data to records of employee productivity was unprecedented.”

The researchers compared data for employees that participated in the health plan to employees at a different plant from the same company who weren’t offered the wellness program.

The results were striking and significant: The researchers found wellness programs boosted health and productivity. Participating employees’ productivity jumped by between six and 11 percent compared to those who didn’t participate in the program, with the largest gains for those who improved their health. When further quantified, that figure equaled a 76 percent return on investment for the company after introducing its wellness program.

“Companies have traditionally focused on the reduction in absenteeism and insurance rates when calculating the ROI of these programs,” Larkin said. “Our research suggests that a reduction in ‘presenteeism’ – showing up to work with low energy and therefore lower levels of productivity – may be the primary benefit of these programs.”

“The longest-lasting productivity gains came from employees who improved their lifestyle habits,” he added. “In fact, even healthy employees who were spurred to adopt a healthier diet, exercise more or reduce stress via the wellness program exhibited strong growth in daily productivity.”

The authors offer a caveat to companies that might be interested in putting an employee wellness program into place and practice. There are definite factors that can make or break the program, and the resulting ROI. Employee buy-in is a must.

“The company we studied didn’t try to force people into doing this, they respected their privacy and they have a long relationship and tradition of treating their employees with respect and maintaining that trust,” Pierce said.

*To attend, contact CorporateRelations@olin.wustl.edu