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Pick Your Prize

The return on wellness programs is worth the investment, but organizations still have a hard time getting people fully engaged. New BYU Marriott research digs into which incentives are tied to the best wellness outcomes.

A little past noon on a weekday in late June, a few dozen BYU employees gathered on the campus tennis courts to play pickleball. Scheduled by BYU Wellness, the university’s wellness program, the gathering was intended to convince individuals to get out of the office and do something active.

On this hot summer day, employees in T-shirts and gym shorts tried to master using a wooden paddle to hit a wiffle ball over a net. Some were dedicated participants in the wellness program, while others were first-timers who wanted to socialize more with coworkers. The hope is, says BYU Wellness manager Marie Harris, that employees discover a physical activity they enjoy and make it a permanent part of their lives.

“The response has been good, but our goal is a lot bigger than pickleball,” Harris says. “We’re trying to change a culture, and that doesn’t happen overnight.”

The challenge of properly changing a culture and motivating employees to take advantage of wellness programs is not unique to BYU. As mounting research shows the potential positive return on investment in wellness programs, organizations across the country are throwing money into company wellness programs in hopes of boosting enrollment and increasing the overall health of employees. And while rising cash incentives certainly increase program uptake, not many companies are moving the needle on actual healthy outcomes.

That may change now, thanks to new research out of BYU Marriott’s School of Accountancy. Professors Bill Heninger, Steve Smith, and David Wood looked closely at incentives offered in wellness programs and uncovered a significant fact: one incentive in particular stands above others when it comes to getting people to stick with programs, lose weight, and improve critical health measurements.

Why Wellness Programs?

The two main reasons companies invest in wellness programs are to reduce insurance costs and to cut down on employee absenteeism. That focus has evolved some since the wellness movement first sprung up in the mid-1970s, when American culture saw a shift toward healthier lifestyles and federal policy changes transferred the burden of healthcare from government to employers.

Today 82 percent of US employers with more than 200 employees offer some sort of wellness program, according to a comprehensive study of wellness programs by the Kaiser Family Foundation.1 Of the companies with wellness programs in 2018, more than 86 percent of them offered incentives—mostly monetary—to encourage participation; that’s up 12 percent from the previous year.2 And these incentives have unsurprisingly contributed to an $8 billion industry in the United States.3

According to recent figures, major companies now offer an average of more than $750 per employee in annual cash incentives for wellness participation.4 And that number doesn’t include the added perks offered by some major organizations, including on-site healthcare services, fitness centers, regular wellness and health classes, and insurance-premium kickbacks.

The good news is that financial incentives are increasing enrollment in wellness programs across the board. The bad news is that while enrollment is increasing, actual health results are underwhelming. A series of recent studies,5 including one that appeared in the Journal of the American Medical Association in April 2019,6 have found that there is still a disconnect between many financial incentives and employees losing weight, improving clinical health markers, and decreasing absenteeism.

And this is where the trio of BYU Marriott professors comes in.

A Better Way to Get Results

According to the study by Heninger, Smith, and Wood, which was published online earlier this year in Management Accounting Research, the problem could be tied to the cash incentive that people are choosing.7

For the study, the professors tracked employees in BYU’s wellness program, wherein participants aim to complete six-week wellness challenges and upon completion choose one of three rewards. About 60 percent of the participants chose a cash bonus added to their paycheck, 30 percent selected a gift card, and 10 percent chose a material good of equal value (in this case, a small grill).

What the professors discovered is that though cash was chosen more frequently, people who selected gift cards were approximately 25 percent more likely to complete a wellness challenge than the other participants. This also means that those same individuals were more likely to improve their health than those who chose cash or the tangible prize.

Our goal is to create healthy work environments and healthy departments. If you have a healthy work culture, you’re going to be happier and healthier yourself.

“You would presume that when people pick the reward type that is the most appealing to them, it would have the most motivational power,” Smith says. “But that wasn’t the case. In our study, employees choosing to be rewarded with gift cards actually reaped the greatest health benefits. So the way you are choosing to incentivize yourself may not hold the strongest motivational power.”

The professors theorize that gift cards may be more motivational because they represent the optimal balance between hedonic value (think fun and enjoyment) and flexibility. “Cash is fungible—it can be used for anything,” Smith explains. “A George Foreman grill is not fungible, [and] a gift card is not fungible, so from an economic perspective, it makes the most sense to choose cash.”

On the other hand, a small cash bonus does not hold as much hedonic value as a tangible item. Previous research also finds that individuals being rewarded with tangible rewards choose easier goals and perform worse in wellness challenges.8 This puts the gift card in a sweet spot between the other two rewards.

“People keep mental accounts,” Wood says. “If you work and make ten dollars, that’s your work money. If you find ten bucks on the ground, that’s free money. You might go out to lunch with the free money when you normally wouldn’t with your work money.”

While the findings are significant, the professors are clear that the study does not yet suggest that organizations should exclude other incentives and only offer gift cards. There could be other incentives that are equally as effective at motivating people to complete wellness challenges, but this line of research is relatively untouched.

Timothy Gubler, a new assistant professor of strategy at BYU Marriott, published two papers on wellness programs while at Washington University in St. Louis and the University of California, Riverside. While his work examines different aspects of wellness programs—their link with employee health and productivity as well as the connection between employee financial health and their willingness to participate—he hopes to see more research built on what Heninger, Smith, and Wood have done.

“Companies don’t know how to effectively motivate people to engage in these programs and improve their health and diet,” says Gubler. “Finding out how to get workers to engage [with wellness programs] is an important piece, and there hasn’t been much work on this.”

Insight into BYU Wellness

At BYU, roughly two thousand employees and spouses regularly participate in the six-week wellness challenges, wherein employees track their progress in either a preprogrammed or self-selected health challenge. For each challenge that employees complete, they receive either a $30 campus gift card, $30 deposited directly to their next paycheck, or a prize of similar value. In a recent challenge, nearly half of participants opted for the paycheck bump, 40 percent chose the gift card, and 10 percent went for a hammock, says Harris.

Providing three separate incentives is actually fairly innovative among large organizations, but the paycheck option has consistently stayed the top choice. As someone who has seen a number of incentives come and go over her sixteen years directing BYU Wellness, Harris believes that the gift card, which can be used anywhere on BYU campus, is the perfect enticement.

“It’s a real incentive to employees since they can eat anywhere on campus for free or get something at the bookstore for free,” she explains. “It’s kind of like your personal slush fund that you can use for anything you want—no budgeting or accounting necessary.”

But for Harris, the hope is that employees truly get involved for the intrinsic reward rather than just the gift card, cash, or prize. “Our goal is to create healthy work environments and healthy departments,” she says. “If you have a healthy work culture, you’re going to be happier and healthier yourself. We’re trying to provide just enough of an incentive to get people into the game.”

New Incentives

Of course, it’s impossible to create a system that perfectly motivates every employee. Each person values different things, and incentives that create changes in behavior are bound to differ from person to person.

To that end, companies are continuing to look into new incentives. Former BYU professor and wellness expert Steven Aldana, now the CEO of wellness company WellSteps, recently blogged about some of the incentives growing in popularity today.9

Listed incentives include pricier gift cards (think $500) raffled off biweekly, a drawing for a full day of paid time off, bonuses and merit pay, and significant discounts for off-site fitness club memberships. Some companies are already trying out high-value incentive options, such as raffles for TVs, all-expenses-paid trips, or contributions up to $1,000 toward a health reimbursement account.

“Tangible rewards at that level may have a different motivational impact than the more modest ones that we studied,” Smith says. “But tangible rewards seem to be a trend.”

Just what that motivational impact is remains to be seen. As such, the professors hope others will continue to study the effectiveness of different types of incentives. “There’s enough evidence out there that says doing a wellness program is beneficial,” Wood says. “But exactly how to do it? That’s where we need more work and tinkering and understanding to design programs that really motivate change.”

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Article written by Todd Hollingshead
Illustrations by Gabriel Corbera

About the Author
Todd Hollingshead is a media relations manager in BYU’s University Communications office. A former journalist, Hollingshead holds a bachelor’s degree in journalism and a master’s degree in mass communications from BYU. He lives in Springville, Utah, with his wife, Natalie; their four children; and a dog and a cat. The jury is still out on how long the cat stays.


Notes

  1. Kaiser Family Foundation, Employer Health Benefits 2018 Annual Survey, October 2018, files.kff.org/attachment/Report-Employer-Health-Benefits-Annual-Survey-2018.
  2. National Business Group on Health, “Employers Continue to Expand Well-Being Programs and Increase Financial Incentives for Employers,” 3 May 2018, businessgrouphealth.org/news/nbgh-news/press-releases/press-release-details/?ID=343.
  3. Julie Appleby, “How Well Do Workplace Wellness Programs Work?” NPR, 16 April 2019, npr.org/sections/health-shots/2019/04/16/713902890/how-well-do-workplace-wellness-programs-work.
  4. National Business Group on Health, “Employers Continue to Expand Well-Being Programs.”
  5. See Damon Jones, David Molitor, and Julian Reif, “What Do Workplace Wellness Programs Do? Evidence from the Illinois Workplace Wellness Study,” NBER Working Paper No. 24229, January 2018, nber.org/papers/w24229; see also William S. Yancy Jr. et al., “Financial Incentive Strategies for Maintenance of Weight Loss: Results from an Internet-Based Randomized Controlled Trial,” Nutrition & Diabetes 8 (2018): 33, doi.org/10.1038/s41387-018-0036-y.
  6. Zirui Song and Katherine Baicker, “Effect of a Workplace Wellness Program on Employee Health and Economic Outcomes,” Journal of the American Medical Association 321, no. 15 (2019): 1491–1501, doi.org/10.1001/jama.2019.3307.
  7. William G. Heninger, Steven D. Smith, and David A. Wood, “Reward Type and Performance: An Examination of Organizational Wellness Programs,” Management Accounting Research, doi.org/10.1016/j.mar.2019.02.001.
  8. Adam Presslee, Thomas W. Vance, and R. Alan Webb, “The Effects of Reward Type on Employee Goal Setting, Goal Commitment, and Performance,” Incentive Research Foundation, 17 November 2015, theirf.org/research/the-effects-of-reward-type-on-employee-goal-setting-goal-commitment-and-performance/1627.
  9. Steve Aldana, “18 Wellness Program Incentive Ideas from the Best Corporate Wellness Programs,” WellSteps (blog), updated 7 May 2019, wellsteps.com/blog/2018/01/02/wellness-program-incentive-ideas.

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