Originally posted September 6, 2013 by Vlad Gyster on https://ebn.benefitnews.com

The debate over whether wellness programs “work” is becoming increasingly heated. Many question the validity of research demonstrating that wellness programs reduce health care costs. At the same time, others swear by their wellness provider. So, who’s the liar?

As with most things, the truth is in the eye of the beholder. Wellness is a business, and it would serve us well – no pun intended – to consider this business formula as we attempt to determine where the truth lies and understand why this debate is so heated: Value = Benefits/Cost.

To begin with, we don’t truly know the value of a wellness program. This formula helps quantify the importance of knowing value. When making a purchase, all of us have some understanding of a product’s benefits, and in return we pay a cost. Together, those two factors create a value. If the benefits and costs are generally understood, then value is pretty predictable. But if there’s a lack of agreement about the benefits, it’s tough to come to consensus on value and cost. The result is very different calculations and a big debate about whether something is really worth it. This is what we’re experiencing with wellness programs. The reality is that we don’t really know all the benefits a wellness program provides, and, as a result, their value is up for debate.

This debate will eventually be resolved in one of two ways:

1. We come to a consensus that wellness programs deliver the stated benefits and continue to pay the current cost; or

2. We conclude the benefits are lower than initially thought, and adjust the cost accordingly.

I’ve got my money on option 2. Here’s why:

Gartner – a research advisory firm that’s been evaluating technology for more than 30 years – discovered a funny pattern: Every few years, a new technology emerges that gets a lot of people really excited. There’s a lot of enthusiasm and promises, but, given limited use, no real data about the technology’s actual benefits. This is the “peak of inflated expectations”; i.e., when we make statements like “This is going to change the world.”

After a while, though, people realize that their perception of the technology’s benefits are unrealistic; they feel they received bad value, get disgruntled and criticize the technology as worthless. This is the “trough of disillusionment.” It occurs when the benefits are lower than originally assumed, and the cost is experienced as too high relative to the perceived lesser value.

It’s reasonable to assume we are in the midst of a sober re-evaluation of the benefits of wellness programs, somewhere in the “trough of disillusionment.” The good news is, as history has proven, that over time, the market comes to understand the technology’s actual benefits, accepts them and broad adoption can occur. For this to happen, there needs to be a consensus about the benefits (aka ROI) and the price adjusted accordingly. This doesn’t mean wellness programs are worthless, just that they may be worth less than the benefits declared during the “peak of inflated expectations.”

Minimize cost

In a scenario where the value of something is unclear, it’s wise to minimize – rather than wait for the market to drive down – cost, as cost is the variable you have control over. Traditional approaches to launching wellness initiatives come with huge overhead – strategy, vendor selection, implementation and vendor fees can easily run into the hundreds of thousands of dollars – and can take years before having any real impact on even a single employee. Cut as much of this overhead as possible. Vendor selections should come in the form of free trials with groups of employees. Vendor fees should be contract-free and have monthly options for easy exit. Strategy work should turn into small experiments with employees to identify what works and what doesn’t.

In other words, spend less. But how do you drive a high level of engagement in wellness with limited resources? We suggest using the Lean Startup methodology used by startups to drive engagement in new products using limited resources. This approach advocates using small, inexpensive steps that lead to quick wins and continuous improvement. Its use could help HR quickly and cheaply differentiate what works from what doesn’t, so HR can focus time and dollars on what’s actually effective.

Four steps

Here’s our version of the Lean Startup methodology adapted for HR:

Step 1: Think in terms of a “Minimum Viable Product”. MVP is the smallest thing you can do to learn how to make progress toward your objective. For most employers, the objective of their wellness programs will be somehow tied to employee participation. Instead of spending limited resources on building business cases and other costly activities, pick something to do that is small and will help you learn what works to gain employee participation.

Step 2: Build something that’s “good enough”. Start with something easy, like an employee video testimonial about a benefit that’s already available (but likely underappreciated), such as gym reimbursement. Upload the video to a video hosting tool for businesses so you can track how many people click the link and view your video. Send an email to employees inviting them to watch the video. Explain that this is a “beta” and you’re testing concepts for a potential wellness initiative. Distribute it to a small group first to ensure everything is working.

Step 3: Measure. Measuring is essential. If you don’t measure results you can’t test your assumption about how a particular strategy will work or learn from it. Once the email is sent, you’ll know how many people clicked the link and how many people viewed the video and for how long. These key performance indicators – KPIs – provide a baseline for identifying progress and future improvements.

Step 4: Learn. This is the most important step. By this point, you should have gained some idea of what’s working well and what’s not, and the data necessary to improve key metrics. These are the types of tangible outcomes necessary to propel any wellness initiative forward. What can you do to increase those numbers? The faster you can repeat this process and improve your KPIs, the more momentum you’ll gain – and the sooner you can determine the potential effectiveness of wellness initiatives without a huge expenditure of scarce resources.

Debate will continue

Whether the results achieved with wellness programs are worth their cost is a debate that will likely continue. That said, there’s little doubt that a key ingredient to achieving ROI on wellness programs – or any HR initiative – is employee participation. The HR-adapted Lean Startup approach lets you know whether you’ve got this key ingredient – before you’ve spent a lot of time and money hoping to get it.