The Financial Rewards of Employee Fitness

One very interesting comment that we at Strength Tek receive during our conversations with prospective clients, about fitness and wellness programs is the cost. "It sounds like a great program, but we cannot afford it at this time." In this time of competitive recruiting between companies for talented employees, our response is "You cannot afford not to invest in your employees wellness". Many companies do not understand the long-term benefits of utilizing fitness and wellness services. Aside from the fact that it can have a positive impact on employee satisfaction, it can actually provide a very health return on their initial investment.

For many senior management executives the big question is "If I invest $500,000 in a facility and equipment what rewards will the company receive?" This is not a difficult question to answer, although the answer is not always what senior management would like to hear. Over the last 15-20 years, there have been numerous studies that have attempted to place a monetary value on the return of investment for employee fitness.

The Inherent Benefits Of Employee Fitness And Wellness Are:

• Reduced Absenteeism
• Improved Morale
• Increased Productivity
• A Decrease In The Amount Of Health Insurance Premiums Paid Out
• A Valuable Recruiting Tool
• A Healthier Workforce

Health Care

Messa Limited Partnership is an oil company located in Texas. In 1979 they opened their in-house fitness facility. In 1988, when the average US company spent $2,750 per employee on health care, Mesa was spending only $1,121 or 60% less. The difference was even greater 68% between Mesa and the average US energy company, which spent $3,650 per employee on health care in 1988.

The Harvard Business Review noted that the corporate expenses for health care are rising at such a fast rate that, if unchecked, in 8 years, they will eliminate all profits for the average Fortune 500 Company and the largest 250 non-industrials. Evidence of this trend is found at General Motors. In a 3-year period beginning in 1978, GM spent three times as much in health insurance for its employees as it did on steel to manufacture its cars.²

It is becoming increasingly apparent that prevention strategies, such as employee fitness programs, can reverse these trends. Statistics indicate that in 1985, and 1986, the estimated cost of medical care and health care in Canada was more than $38 billion dollars, over $1,000 for every Canadian, and over 9% of our gross national product. But the prevention of illness and disease amounted to an astonishingly low $50 per person.²

A study of OHIP participants revealed that if all adults aged 20-69 reached at least a modest level of aerobic fitness, the immediate annual savings in OHIP payments would be $31 million. In turn, the associated decrease of coronary factors would lower future OHIP costs by an additional $13 million per year.⁵

Absenteeism

A truly successful program corporate fitness program may take several years to start affecting the bottom line. Company records show that Mesa's absentee rate was nearly identical to the national average as recently as 1984. Three years later, however, the absentee rate had plummeted to less than half the national average.¹

In a 1978 study of employees at two Canadian insurance companies, those who exercise regularly in employee fitness programs were absent from work 22% less than those who did not. Their job satisfaction was higher, and annual employee turnover was reduced from 15% to 1.5%.²

Cost/Benefits of Programs

The overall savings more than cover the costs of fitness programs. Research conducted to date has shown that the cost of employee fitness plans ranges from $100-$350 per participant, while savings (in terms of related cost reductions and productivity increases) have been found to be $500 to $600 per participant per year. For example, in a company employing 1,000 people, program costs of $40,000 for 200 participants would yield a yearly dividend of an estimated $100,000. That fitness program would be in the black by some $60,000.²

In the results from a 10 year study, that examined 153 people at Canada Life Assurance Company, the findings were that those in a regular fitness program showed improved cardiovascular fitness, reduced absenteeism, and less risk of cardiovascular disease. John Smalley, Canada Life's vice president of human resources, says the company fitness program costs about $110,000 a year, about $73/worker in 1988 is definitely worth the price. (3)

According to the Washington Business Group, fitness programs achieve long-term savings of $3 to $6 for every dollar spent. ⁴

References

¹ P. Rosta Leading the way in corporate wellness. Rehab Mgmt Aug/Sep 1991
² B. Izso The numbers tell all. OH&S Canada Vol 5 #2
³ P. Stulberg Fitness Plans pay dividends Financial Post Nov 22/89
⁴ J. Rippe, D Groves The new executive image: A fitter breed. Physician and Sports Medicine May 1990
⁵ Fitness and lifestyle at the workplace - Fitness Canada 1988