Employee Wellness Incentive Programs: The Perfect Mix of Carrots and Sticks

HUGH DEVLYN
HNI Benefits Director

Many employers use lifestyle management and employee wellness incentive programs to influence employee behavior. Their prize is slashed health care costs and increased productivity, thanks to improved employee health.

But what happens when your people don't bite on your employee wellness incentive programs? What happens when the motivation to play along just isn't there?

Why Employee Wellness Incentive Programs Go Unused

Chances are, when you wellness program participation is weak, your people are failing to see value in your offerings. Your answer to their question — What's in it for me? — is less appealing than their current (less healthy) path.

How do you get your employees on the right path? You need to offer the perfect mix of carrots and sticks — that is, incentives and disincentives that persuade your people to become better health care consumers and to lead healthier lifestyles.

Let's belly up to the salad bar and dig into carrots and sticks for employee wellness.

Carrots are Incentives

Carrots are incentives. They're a perk that's earned for completing an action.

Carrots matter because they reward healthy behavior. They help set a pattern for what a healthy lifestyle looks like.

Some frequently offered carrots include:

• Health club membership discounts, with full reimbursement for employees who hit a predetermined number of visits
• Monthly premium discounts or contributions to health savings accounts (HSAs) or health reimbursement accounts (HRAs) for non-smoking employees
• Wellness discounts for employees who pass biometric standards for blood pressure, cholesterol, glucose, or body mass index (BMI)
• Cash, gift cards, HSA/HRA contributions, or lower out-of-pocket maximums for employees who complete an initial health assessment focused on eating habits, exercise, alcohol consumption, etc.
• Awards for employees who participate in coaching programs designed to improve health assessment scores (mentioned above)

Sticks are Disincentives

Sticks are disincentives. They're negative, unwanted, or unappealing outcomes that will occur if action doesn't change.

Sticks sometimes are called "frozen carrots." They're designed to nudge employees in the direction of improved health.

Some frequently offered sticks include:

• Higher premiums or lower contributions to HSAs/HRAs for smoking employees
• Requiring that employees cover additional costs above typical median costs for lab work
• Charging employees who decline optional health assessments higher premiums or lowering contributions to their health accounts
• Increased premiums or decreased contributions to health accounts for employees who earn mid- to high-risk scores on health assessments who decline coaching from a health care professional
• Financially penalizing employees with chronic conditions who fail to fill scheduled prescriptions or get necessary periodic tests

Carrots vs. Sticks: Which Delivers Results?

Success is more about how you frame carrots and sticks than whether you're using incentives or disincentives. They're two sides of the same coin. You win the toss, heads or tails, with reduced health care costs for all because of improved wellness.

Sometimes, carrots dressed as sticks will have the most impact. For instance, in your employee wellness incentive programs, consider offering employees a "provisional" incentive that will be lost should they fail to meet a health standard. Fear of loss can be more motivating than the promise of gain.

Timing and distribution of the incentives and disincentives also are factors. It's human nature to desire immediate benefits and delayed costs. (Hello, zero-money-down deals!)

The culture of your organization is huge, too. Employees who work in highly regulated or bottom-line-focused industries (e.g., finance, retail) might be used to strong management directives. Employees who work in environments where creativity is valued over conformity, on the other hand, might respond better to carrots and sticks that are framed as being "good for them" (vs. "do this or else").

It's best practice to test a mix of carrots and sticks. See what work with your people, and change up your delivery and message.

Now that you've mastered "carrots" and "sticks," what are you using at your organization? What's working for you? What's not working? Please share in comments!

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