July 3, 2022

Article 5.16


Corporate Wellness Programs (CWPs) have ebbed in and out of fashion since the late ‘70’s, but the general trend has been for more companies – at least larger ones – to have them. Surveys unanimously conclude that CWPs yield good to great economic returns and that a steadily increasing number of them have offered incentives to employees to stop smoking, loose weight, etc. in order to reduce health insurance premiums, although most such "cessation incentives" don’t work.  (From a Hewitt Associates survey. See Support Note #1 for this article at the hotlink at the end.)

Small business America has, however, lagged big businesses in CWP activity, perhaps because managers assume that a CWP might take too much administrative time, structure and money. These myths aren’t true. Managers of all size businesses now have three big reasons to take another look at their assumptions about the necessity and purpose of CWPs. Consider:

  • Health insurance costs have gotten critically high while American health statistics have continued to deteriorate for both children and middle-age workers.
  • Federal legislation has created high-deductible, low-premium, health savings accounts (HSAs) that will have huge direct and indirect impacts on how companies hire and retain healthy, energetic workers and avoid hiring – if they want to – heavy, health-benefit users. This opportunistic cherry-picking of the "insurance pool" will in turn threaten the business models of large healthcare providers and be a catalyst for "consumer-driven health care" reform, which is the unspoken objective of the Bush administration (Support Note #2). Regardless of personal political opinions on Bush’s health initiatives, the first-mover, cherry-pickers will also threaten their competitors who don’t switch to personnel practices under-girded by HSAs.
  • And, HSAs’ deductible/savings economics will give all employees huge new incentives to be preventatively well and shop carefully for medical solutions; two skill sets that many are lacking. How will companies meet these educational needs?


CWPs should not be focused on just reducing or slowing down the increase of health insurance costs. If employees get healthier on average, then other hard and soft cost savings should follow. Sick days and absenteeism will drop. General productivity will increase because of fewer errors, accidents and injuries due to inexperienced substitutes. And, worker compensation claims will eventually decrease. Some soft economic benefits are: improved attitude of employees towards the employer for caring about their well being; increased stamina and self-esteem for many. These improvements will in turn allow a company to:

  • Retain existing business better by out hustling the competition for jump balls and the delivery of more heroic services and recoveries.
  • Invent new streams of profit growth through better innovative execution due to a greater bottom-up, "can do" commitment and energy from a critical mass of employees.
  • Retain and recruit better employees to a better long-term growth story that rewards all company stakeholders.

No wonder big companies conclude that their total return on investments in CWPs can range from 2 to 12 times the investment.

A second big assumption is that CWPs should not be designed for "the average" employee because there are two extreme sub-groups. The top 10% of the heavy benefit users in an insurance pool will, on average, chew up 69% of the health cost spend (the "10/69" group), while the bottom 50% use only 3% ("50/3") (Support Note #3). Many companies that offer cessation incentives to change the habits of the least healthy 10% get poor results. If these people could change they would, good health is, after all, its own great reward. Poor health and health habits are often outward symptoms of inner problems not curable by monetary bribes or even threats of firing (Support Note #4). CWPs should be aimed, instead, at the 50/3 group who are most likely to respond, get even fitter and stay that way. The company’s ROI from the best getting better will be huge, and some of these folks will become the can-do, spirited department leaders and testimonial promoters of a new company wellness culture. Given the right – wellness initiatives, time, degree of anonymity, and nibble-what-you-like flexibility – even some of the 10/69 group might try some changes. Anyone can participate in a "healthy hydration" program or decide that they will try to walk a few more minutes a day with a company loaned pedometer (Support Note #5).

Another assumption to revisit is that CWPs don’t have to require significant up-front resource investments, especially at small firms. There are documented cases in which small companies started simple, informal programs that have then evolved in to bigger, sustainable ones that still are only costing $5 to $10 per employee per year (Support Note #6). Only small firms can start simple, informal programs that can change cultures quickly, and the practical payback is also much greater. If you have six employees in a service business in which your employees are delivering the service product every day, what happens when two are out with health problems and all of the phones light up?

Because most work places are totally designed for output efficiency, they are not necessarily conducive to getting exercise. Should we assume, going forward, that consistent exercise for the masses should be workplace centered? Unlike our forefathers who had many more hours of manual activity involved in both their work and "play", many of us get only a little walking in a life that is organized around our job. After doing errands to and from work in addition to a long commute – especially for the lowest paid who usually must drive the furthest for affordable housing – there is no more time or energy left to exercise. How tough is it, for example, to lend pedometers to employees who start walking in buddy groups between the time cracks of the workday around the building’s neighborhood? In our current or next workspace, do the cost/benefit math for having some spartan lockers and showers and being near some decent walking, biking and/or jogging routes, especially with on-going wellness programs and incentives?

A final catalytic assumption is that all companies will have to figure out how to offer HSAs to some or all of their employees. Big companies will have to figure out how to "stack" health reimbursement accounts (HRAs) and flexible savings accounts (FSAs) with HSAs. Many small firms, at the other extreme, that previously didn’t provide health insurance can now start promoting HSAs with perhaps some small company contributions. Some companies will figure out how to offer and fund HSAs so that they become a powerful recruiting tool for young, healthy, self-responsible employees and a detractor for employees who know that they have big health cost needs. The companies that don’t rethink their recruiting, hiring and retaining practices in light of the strategic application of HSAs will loose the talent hunt for the healthy, self-responsible employees to those who do (Support Note #7).


Although your new or revised CWP should start out simple and fun in the eyes of "all" employees, management should have a more comprehensive program with competent leadership sketched out. A good checklist tool for designing a successful change program is the "kinetic chain" which has seven sequential steps. (For more on the kinetic chain and many specific, cheap, but effective CWP ideas see Support Notes # 8 and #9.)

For now, some important implementation guidelines are:

  • Make sure top management is supporting and ideally participating in any "challenge.
  • Choose the best wellness enthusiasts from each department to be on a committee. We would ideally like both a top-down and a bottom-up energy commitment for the CWP.
  • Do some survey work of all employees and look for perhaps subtle differences between the "50/3’ and "10/69" groups. The latter will tell you what you want to hear, but their internal problems will keep them initially on the sidelines. From the survey work create some form of aggregate data and identify some simple goals and spreadsheet measurement system.
  • Develop a schedule of low-key, intervention contests, offerings and/or educational sessions. Introduce all programs as experimental prototypes and ask for everyone’s on-going ideas on how to continually revise them to make them more effective for all. (Support Note #10)
  • Rethink company policies and practices to be more supportive for getting more exercise in during the elapsed work day as well as better on-premise snacks and water.

In closing, be prepared for some frustrations and failed experiments, but remember, wellness is noble work. Helping people to help themselves to better health, to save money through their HSA accounts and be more energetic contributors to the company’s continuous improvement efforts are grand objectives!


Ó Merrifield Consulting Group, Inc. Article 5.16

D. Bruce Merrifield, Jr.

Hotlink to Support Notes for Article 5.16:    http://www.merrifield.com/articles/5_16SupportNotes.asp".