Health-Care Reform for Employee Wellness
Corporate wellness programs are popular, though not yet among restaurant chains. Here's why.
By David Farkas, Senior Editor -- Chain Leader, 9/1/2009 12:00:00 AM
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| Employee wellness programs often include a fitness component in the form of discounted gym memberships. |
On the face of it, employee wellness programs sound great. After all, what kind of company doesn't want a culture in which workers believe management proactively cares about their health and well-being? For that matter, what kind of company doesn't want to trim absenteeism, boost productivity and engender loyalty?
A restaurant company, maybe?
This summer a survey of 50 restaurant chains by People Report, a Dallas-based human resources consultancy, showed less than half offered an employee-wellness program. The 22 that did made them available mainly to full-time salaried employees and corporate staffers.
Challenges for Chains
It isn't surprising given the nature of a largely young and transient workforce. “Restaurant companies would argue it isn't wise to offer wellness programs to part-timers because of the high turnover,” says Paul Fronstin, director of health research at the Employee Benefit Research Institute, a Washington, D.C.-based policy group that studies private-sector benefit packages. “They don't want to make the investment.”
Hard-and-fast ROI data are not hard to come by. The Centers for Disease Control, for example, offers several calculators on its Web site that demonstrate the cost of alcoholism, drug use and physical inactivity in the workplace.
Employee wellness providers claim that health-promotion plans increase worker morale and productivity, and help attract and retain key workers.
Jim Lynde, chief people officer of Sagittarius Brands, which operates the Captain D's and Del Taco restaurant chains, won't argue with that. But, he adds, it's hard to get wellness services like health screenings, vaccinations and fitness programs to employees. “One big challenge we face as an industry is that unlike manufacturing or even hotels, which may have 400 to 500 people in one place, we tend to have small groups of people scattered all over, working all kinds of hours,” he says.
An Ounce of Prevention
Yet it would seem imperative to make wellness services part of a benefits package if employers are serious about reducing health-care costs. “Smoking, inactivity and obesity. Those three things drive chronic conditions, and chronic conditions account for 75 percent of the cost of health care in the United States,” Cleveland Clinic Chief Executive and President Dr. Delos “Toby” Cosgrove declared in an August 13 interview in the Cleveland Plain Dealer.
EBRI notes that health-care's portion of the $1.5 trillion employers spend annually on benefits is growing. While retirement payouts remain the biggest share (48 percent in 2007, the last year for which information is available), health benefits now account for 43 percent of total benefits costs.
There are indications that chain participation in employee wellness is inching up. A 2008 industry benefits survey from the Chain Restaurants Compensation Association says more companies are offering incentives for quitting smoking, exercising and managing disease. “These efforts reflect an interest in providing individuals with the right help at the right time, thereby reducing costs and improving the overall health status of the [employee] population,” the survey notes.
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| Perkins plans to extend a program to hourly workers once it completes a pilot with multiunit managers. |
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| A human resources executive at Del Taco says it is a challenge to make services available to unit-level workers. |
Introducing Wellness
Consider Memphis-based restaurant company Perkins & Marie Callender's, which launched a program in February. “Employee wellness has been a focus for us this year,” says Barbara Anderson, senior director of compensation and benefits, who designed the pilot program for Perkins' multiunit managers, hoping their buy-in would make it easier to gain the eventual participation of unit managers and hourly workers.
Anderson introduced the program cautiously, toning down the pervasiveness of smoking, obesity and substance abuse among industry workers. “The first thing you'd probably hear from our managers is, 'Whew, I'm not sure I'm on the right side of that one,'” she says.
Instead, her initial presentation included data about the burden of such behaviors on the country's health-care system. Anderson described how chronic diseases like hypertension and early-onset diabetes can be avoided by taking care of yourself. “I also talked about the costs associated with an employee population that is not well,” she recalls.
Components of a Plan
Wellness programs are designed to stem rising costs via preventive measures while altering high-risk behavior. A typical program might include on-site health assessments, weight management, cholesterol screenings, smoking-cessation classes, fitness-center discounts and online educational programs.
At a recent gathering of McDonald's company-store general managers, the hamburger giant offered free blood-pressure screenings and advice from fitness and nutrition experts.
The Oak Brook, Ill.-based chain's employee-wellness program, available to full-time management and corporate staff, covers health assessments, physicals, vaccinations and various screenings. The chain also provides discounts at health clubs.
“McDonald's is probably best in class for a restaurant company,” says Lou Kaucic, who retired as Applebee's chief people officer in 2005 after a 25-year career in human resources. “I'd say [its] program is low cost to the employer because discounts at gyms don't really cost the company anything, and the physicals are covered by their health-care insurance carriers. But it has a high impact for employees who look for these kinds of progressive approaches.”
Kaucic should know. A few years ago, he struck a deal with a gym chain that provided managers and hourlies annual membership for $18. The arrangement, which cost Applebee's about $5 a head, was part of a larger wellness effort he spearheaded after conducting an informal survey of managers that showed half of them smoked.
Membership Has its Benefits
“[Gym membership] was huge, especially for hourlies, because many couldn't afford it,” he recalls. (The memberships ended after district managers complained they added to overhead.) Kaucic's wellness effort also included free Weight Watcher's meetings, smoking-cessation classes and stress-reduction workshops. He incented managers to stop smoking and lose weight with cash incentives.
“There should be a sweetener so employees will know they are getting something back, like a discount on their health insurance,” says human resources consultant Kevin Sheridan, CEO of HR Solutions, a Chicago consultancy.
A “sweetener” or incentive was the second most popular way to prompt participation according to a 2008 survey of 1,179 adults working for firms of 10 to 1,000 employees. Des Moines, Iowa-based Principal Financial Group, which conducted the research, reports 38 percent said reducing personal health-care costs would get them involved in a wellness program. The No. 1 reason to participate was better overall physical health (53 percent).
Mistrust of Motives
Yet shouldn't lower health-care costs—to say nothing of better health—encourage more employees to take advantage of wellness programs? A 2007 EBRI health-confidence survey shows that while 82 percent of full- and part-time workers feel positive about company wellness programs, just six in 10 are “extremely” or “very comfortable” with lower-cost opportunities for health screenings and weight-loss, stress-reduction or smoking-cessation programs.
It seems many workers mistrust their employers. The survey showed two-thirds believed their bosses were only concerned with the bottom line, and nearly half griped about companies intruding on their privacy.
Frostin says employees shouldn't worry about privacy: “Employers outsource [health assessments] to a third party and do not get specific information. They would know, say, that eight people have undiagnosed diabetes but not who it was.”
Sheridan acknowledges that introducing a wellness program can be a delicate process. “But it is perfectly legal, and there's nothing wrong with inviting employees to do something that is better for them,” he declares.
Lynde, who is planning to introduce one at Nashville, Tenn.-based Captain D's, agrees. “I don't think there's any negative about at taking a stab at employee wellness, except how long it might take to get a return,” he says. “And can you build the value of it?”
Anderson thinks so. Encouraged by 90 percent participation at Perkins, this fall the company will extend the wellness program to headquarters employees and later to multiunit managers at Marie Callender's.
As for ROI, she says, “The amount of money we spend on one or two high-dollar claims for a serous illness, you can easily pay for a year or two of wellness programs.”
Still, comparative cost data can be hard to come by. “Not a lot of places have years of data that show a where a wellness programs started and how our claims dollars declined,” she adds.
Kaucic admits he had only anecdotal evidence of measurable progress before retiring. “However,” he adds, “these kinds of programs speak volumes to employees about the kind of company and culture they've joined.”
| Employee Wellness Programs in Restaurant Chains | ||
| In a People Report compensation and health benefits survey of 50 restaurant chains, 22 (24 percent) said they offer an employee-wellness program. While each one makes it available to top management and corporate staff, 17 chains offer employee-wellness programs to restaurant managers, and 13 to hourly employees. | ||
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% of companies who offer a wellness program |
Average % the companies pay |
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| *Non-exempt employees; Source: “People Report 2009 Corporate Compensation and Benefits Survey” | ||
| Corporate executives | 100% | 85% |
| Corporate directors | 100 | 85 |
| Corporate managers | 100 | 85 |
| Corporate staff* | 100 | 85 |
| Restaurant management | 81 | 85 |
| Restaurant hourlies* | 57 | 72 |
