Friday, March 31, 2017
Three Questions to Maximize Your Wellness Incentive Budget
Author: Dave Hoinville
Want to maximize your wellness incentives? Ask yourself these 3 questions.
Having spent 25+ years in the wellness industry, the question I find myself asking the most about incentives isn’t whether they are inherently good or bad, but how can employers maximize their impact? I have no doubt that a meaningful incentive can play a positive role in a highly engaging and results focused program – the real problem is, many employers today are approaching incentives from the wrong angle.
Here’s an example. I was recently working with a prospect who proudly stated that they had a $1,000 incentive in place for their employees, with 90%+ compliance. When I asked what action they were asking employees to take, they replied – an annual physician visit.
In another case, a prospect shared that they were seeing a similar level of compliance with a $350 incentive in place. This time for completing an on-line HRA.
Both prospects were frustrated that they did not have “more dollars available” to encourage employees to take meaningful healthy behaviors.
In both of these cases I think a little creative thinking could significantly improve their long-term incentive program and outcomes. I encouraged these prospects to think about the three following questions:
Is the effort we are asking employees to take in line with the value of the incentive?
In both of the examples above I would argue that the employers in question are “over-paying” for the behaviors they are promoting. Is a 30-minute subjective questionnaire response really worth $350 per employee per year?
An annual preventive visit may certainly have more value than an HRA, but does it really require a $1,000 incentive? A mistake that employers often make is to place too high of an incentive on a simple initial action. They then feel “trapped” or “stuck” – how do I get employees to do more or different actions when they now expect the same dollar amount for the initial action? This next question addresses that issue…
Are our incentives static or dynamic?
If you position an initial incentive as transactional – “do X and we’ll give you $Y” – you have set a static expectation, which makes it hard to change the program year after year. Employees feel entitled to their incentive.
This is where switching to a more dynamic approach can help. By offering “points”, instead of dollars for completing an action, you gain the flexibility to change the mix of actions you associate with the points.
For instance, in the first year of a program, perhaps you offer 100 points for completing an annual preventive visit – 100 points are worth $100. In the second year, you introduce participation in a physical activity program as a second behavior. Now employees can earn a total of 150 points - 50 points for the preventive visit and 100 points for being physically active.
The total incentive employees can earn has increased based on a higher effort level required to be physically active. Some employees may be upset that the value of the preventive visit has been reduced, but the reality is that you are offering employees that are willing to engage in a more robust health risk plan an increase in value. This ultimately produces a win-win scenario.
This principle of increasing the overall incentive level when you introduce additional actions highlights why the first question above is important – don’t over pay for the first incentive, particularly if it is for a one-time behavior. Once employees are used to a mix of actions collectively equating to a points-based reward it becomes easier to make changes in the program design from year to year without necessarily having to increase the total incentive at all.
Are our incentives driving behavior change?
One of the reasons why I believe the incentive described above for the HRA is an “over-payment” is that it doesn’t motivate a population level change in healthy behavior. Perhaps a small subset of employees will do a couple of things differently for a couple of weeks, but for most it will be out of sight, out of mind.
If this is the case, then we encourage clients to use dynamic change to ultimately shift these “one-time” actions (HRA, biometrics), into gateway behaviors for the incentive program – employees have to complete the initiative to enter into the program. The remaining dollars can then be allocated to on-going healthy behaviors such as being physically active, or participating in other well-being challenges.
At the end of the day, incentives often get labeled as ineffective when they are static and transactional. So, ask yourself - are you simply “checking the box” on wellness incentives? Do you have a strategy to maximize your incentive budgets and drive meaningful healthy employee behaviors?
By not overpaying, implementing a dynamic approach and focusing on real actions your incentives could be having a bigger impact on population health risk reduction.