For Employers, Wellness Programs are a Question of carrot vs. Stick


They count steps and calories, offer nicotine patches and aerobics classes.

Employee wellness programs are becoming the norm in the American workplace, implemented in hopes of leveling health costs and improving overall employee health. Research shows the programs are popular with employers — but largely unused, or at least under-utilized, by employees.

“Nine out of 10 people want to be healthier, but it has to be convenient and ideally on-site,” said Aubrey Worek, owner of Wellness Solutions at Work, a corporate wellness company based in Pittsburgh. Ms. Worek and her team work with clients to implement programs and incentives.


Monetary benefits work, too. And a little praise can go a long way.


“People love recognition,” she said. “To be member of the month, to be in the newsletter, you made their day.”


Recognition for lost weight or improved blood-pressure levels come after the fact, though. The trick is getting employees to participate in wellness programs to begin with. While about 40 percent of small companies and more than 90 percent of large companies offer employee wellness guidance, certain types of programs perform better than others.


According to a 2013 Rand Corp. study, sponsored by the Department of Labor and the Department of Health and Human Services, participation rates for completion-based programs, such as clinical screenings or signing up for a health reimbursement account are much higher than intervention programs, which include lifestyle and disease management.


Around 50 percent of employees in the Rand survey completed wellness screenings, while lifestyle and disease management program participation hovered around 20 percent.


Cost- and health-effectiveness of those programs is mixed. Employees whose companies offered a wellness program lost only 1 pound per year on average, were not associated with significant reductions in total cholesterol level — and the companies’ financial savings were negligible. The Rand study found any benefits health or financial benefits “statistically insignificant,” yet said employers with wellness programs overwhelmingly view them as positive.


So employers continue turning to incentives, and sometimes penalties, to motivate employers to complete assessments or reach lifestyle goals.


Of the companies providing wellness programs, 69 percent offer financial incentives to promote healthy behaviors.


But in order to get the most out of these programs, should employers be wielding carrots or sticks?


George Loewenstein, professor of economics and psychology at Carnegie Mellon University, has spent years studying how to make wellness programs more effective. He said employers need to avoid what he calls the most “basic mistakes” when putting together a plan.


People are motivated by short-term rewards rather than larger prizes at the end of the year, he said. They also are more motivated by monetary prizes that are separate from their health premium costs.


“Reduction in premiums is not good,” he said. “People barely notice” that their premiums have been reduced.


Of the “incentivizing” companies, 47 percent offered merchandise and gift cards, while 37 percent offered discounted premiums on health benefits.


Positive incentives are more effective than premium hikes or other penalties, although people are motivated to not lose money they’ve already put down. Deposit contracts work well, he said, when employers pledge to match funds employees contribute. Employees don’t want to lose that money if they don’t hold up their end of the bargain.


The Rand study found employers overwhelmingly choose positive incentives as a motivation tool over penalties: 84 percent offered only incentives, while 11 percent used a combination of incentives and penalties. Only 2 percent implemented solely penalties. Programs for smoking cessation, weight management and fitness are most common.


Working to navigate which combination of incentives will work best are workplace wellness companies, which serve as an “in-between” for employers and policy makers to manage programs and benefits for wellness programs.


According to the authors of the Rand study, 27 percent of employers use an outside vendor to manage their wellness programs, a number that looks to grow in the coming years.


These companies not only manage the programs, but can help keep employees in the loop. After all, “you can have a great incentive structure but if no one knows about it, it does no good,” said Francois Millard, chief actuarial officer and senior vice president for the Vitality Group, an international wellness corporation with U.S. offices in Chicago.


Like Mr. Loewenstein, Mr. Millard said short-term rewards outpace long-term goals for motivating people.


He said consistent, even daily, incentives work better to keep employees motivated, rather than a promised prize further down the road.


Ask people what they plan to eat in a week and they say they will make healthy choices. Put food in front of them today and that decision gets significantly harder. Often people know which behaviors promote better health, but it takes the extra push to get from knowing to doing.

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