The Directors View – The data behind why health and wellbeing programmes deliver profits.

In today’s competitive business landscape, the companies thriving most aren’t just investing in technology or strategy, they’re investing in their people. More than ever, data shows that Health and Wellbeing programmes are not just a “nice to have”, they’re a measurable driver of business performance. In this blog, we explore the evidence that links employee wellbeing with profitability, and how SME’s can calculate the impact of Health and Wellbeing programmes to their business.

What is the relevance to Health and Wellbeing programmes in the workplace?

The data evidence into the relevance of health and wellbeing programmes in corporations is clear. According to the Institute of Public Policy Research in 2023, the annual costs to workplace sickness to UK Businesses was £103bn. The same article also found the businesses lost 49.7 days per employee due to absence and underperformance. In conjunction with this, The Chartered Institute of Personnel and Development in 2023 delivered statistics that stated that stress related underperformance now outweighs absenteeism in relation to business productivity.

Taking the data into account, how does Health and Wellbeing programmes help counter absenteeism and underperformance. Regular physical activity is one of the most effective tools for managing stress. Exercise helps regulate cortisol (the body’s stress hormone) and boosts endorphins, serotonin, and dopamine chemicals that elevate mood and support emotional balance. A study published in The Lancet Psychiatry found that people who exercise regularly experience 43% fewer days of poor mental health compared to those who don’t. 

The direct link between performance and healthier employees was analysed by the Office of National Statistics and Forbes in 2022, and found the following:

·         Reduced absenteeism: Work-related stress, depression, and anxiety accounted for 51% of all work-related ill health in 2022.

·         Improved engagement: According to a 2022 Forbes report, companies with wellness programmes see a 66% increase in employee productivity and lower turnover rates.

·         Better focus and problem-solving: Physically active employees show improved cognitive function, memory, and decision-making skills.

In one Harvard Business Review study, employers saw a $6 return for every $1 invested in wellness programmes, largely through reduced healthcare costs and improved productivity.

There is now a heightened expectation from employees on businesses to provide wellbeing. In another survey, 70% of employees say wellness programmes improve morale, retention and productivity (Gallup 2023). Wellness programmes are becoming an expected perk when it comes to looking at being recruited for a company and to retain the best talent at your company.

How can a business measure the effectiveness of a wellbeing programme on company finances?

McKinsey Health Institute (MHI) produced a report into the thriving workplaces of 2025 from the perspective of Health and Wellbeing programmes and categorised their metrics based on what constitutes employee output and talent management optimisation. MHI decided to measure employee output by looking into statistics surrounding productivity, presenteeism and absenteeism. Whilst to measure Talent Management Optimisation they measured retention, attraction and unwanted attrition. I will define the 6 performance indicators and state the metrics that business owners should be following to gauge the effectiveness of their wellbeing programmes.

Productivity is defined as the efficiency with which tasks and goals are accomplished, driven by creativity and innovation and can be measured by the following metrics:

- Increase in hours worked / revenue or profit- Increase in revenue or profit per FTE- % of employees meeting targets- Value of productivity (e.g. avg. daily pay x number of employees)

Presenteeism is defined as working while sick or longer than usual to appear productive. This can be calculated by days lost per employee x total number of employees. Any increase in this number will show how much money is wasted on paying staff to not produce work.

Absenteeism is missing work due to illness or other reasons. The following two metrics are utilized to measure absenteeism:

- number of unhealthy absenteeism days- Long-term vs short-term absences

Retention is defined as the ability to prevent turnover via a strong employee value proposition. There are many metrics to determine staff retention, however, to single out the effectiveness of a health and wellbeing programme, you take your % of unwanted turnover due to ill health and use it as a year one benchmark. You should see a reduction in this percentage as you accumulate more data through time if your health plans are working and your staff turnover is lower.

Attraction of new candidates can generate a good metric for how well your health programmes perform. It is good practice for companies to put in place an employee satisfaction survey for both new and existing employees and to promote the health programmes on job advertisement. You can then measure the popularity of the programme through higher scores on the programme and any increase in percentage through application.

Unwanted Attrition is defined as employees leaving for any reason voluntary or not. You can break down the reasons for attrition and look into health-related issues being the primary reason for departure. Once you have the percentage of total attrition from health-related departures, you can then calculate that from the Total Turnover Cost to calculate how much money was spent due to low health of the team.

If you use the above six points, you can create a health profile for your company. From that profile, you can get a fair overview of costs relating to poor health in the company and subsequently get the total cost to the business in relation to bottom line costs and profitability for your business.

For small businesses, every hour, every person, and every penny counts. That’s why investing in employee health and wellbeing isn’t a “nice to have”, it’s a smart move that pays off. By tracking simple metrics in relation to employee output and talent management optimisation, you can clearly see how wellbeing programmes contribute to your bottom line. A happier, healthier team means better work, less stress, and stronger business growth and that’s something no small business can afford to ignore.

If you would like have an effective health and wellbeing programme in your business then talk to us today to help create your own health profile and see what bespoke measures we can introduce into your company culture for the benefit of your employee, your team, and your company.

References

·         Gallup (2023). State of the Global Workplace Report.

·         The Lancet Psychiatry (2018). Association between physical exercise and mental health in over 1.2 million individuals in the USA.

·         Harvard Business Review (2020). What’s the Hard Return on Employee Wellness Programs?

·         UK Office for National Statistics (ONS). Labour Market Overview, UK: 2022.

·         Forbes (2022). The ROI of Employee Wellness Programs.

·         Institute of Public Policy Research (2023) - Revealed: The hidden personal cost of UK long-term sickness that cries out for a new national health mission