In the past decade, companies in India have started to take the health of their employees quite seriously. Many organisations today are investing heavily on health-benefit programmes to make sure that their employees lead a healthy lifestyle. Organisations introduce several HR interventions to achieve this.
But simply introducing interventions is not enough. It is also very important to see what companies gain from it. To measure the benefits, companies use the traditional method of return on investment (ROI), that is, medical cost savings.
Why is this called ‘traditional’ or ‘old school’? Apparently, a new term known as value on investment (VOI) is becoming relatively popular amongst HR professionals.
What is VOI?
In case of well-being programmes, ROI is measured on the basis of how much the medical cost savings are. On one hand, while ROI focuses on the monetary aspect, VOI addresses the softer aspects. Under VOI, an employee well-being programme is measured on the basis of presenteeism, employee-engagement surveys and quality of work or productivity. Organisations, such as Cognizant, also include awareness and adoption of a healthy lifestyle by their employees under VOI.
“I feel the VOI concept is better than the ROI concept to measure HR interventions. Introduction of well-being programmes adds value to the lives of our employees, but if we do get the full picture, how does it help?”
VOI vs ROI
If we compare VOI with ROI, many HR professionals around the world prefer adopting the former approach to measure a well-being programme. But why?
The ROI concept of measuring the well-being programme does not cover how each and every employee benefits from it. It only covers those who fall sick.
On the other hand, with productivity, awareness, presenteeism, and employee engagement surveys, VOI appears to be a better tool for HR professionals.
“I feel the VOI concept is better than the ROI concept to measure HR interventions. Introduction of well-being programmes adds value to the lives of our employees, but if we do get the full picture, how does it help?” questions Naresh Kumar Puritipati, CHRO, Spencer’s Retail.
But VOI may also come with some limitations. According to Balachandar N, group CHRO, Coffee Day Group, VOI may not be a suitable approach to measure short-term interventions. It can measure a long-term cycle of an HR initiative.
“Things, such as productivity or employee engagement scores do not turn around in just a few days. They take time,” explains Balachandar.
“I think ROI is still the most robust and scientific method to measure a well-being programme. The VOI concept is too dependent on the behaviour of employees whereas ROI is not”
According to HR leaders, the VOI concept is not just suitable to measure well-being programmes. It can also be used to measure other HR interventions in L&D.
On the one hand, many HR professionals see value in the VOI concept. But Debjani Roy, CHRO, Mind Your Fleet, still finds the ROI concept to be the most suitable to measure well-being programmes.
“I think ROI is still the most robust and scientific method to measure a well-being programme. The VOI concept is too dependent on the behaviour of employees whereas ROI is not,” clarifies Roy.
She shared that one of the organisations she used to work with tried to implement the VOI concept, but after some audits and observations it was found that presenteeism—which affects the productivity of the organisation— occurs not only because of health issues alone. There can be many other reasons for employees to not turn up for work, other than health issues.
“The VOI concept would be more suitable for a long term cycle. Things, such as productivity or employee engagement scores do not turn around in just a few days. They take time”
But if we talk about the adoption of VOI in India, we are still lagging behind.
The human resources departments in the country still prefer the ROI method or they would present a business case to measure the outcomes of an HR intervention.
“Organisations will begin to consider VOI as they mature,” hopes Balachandar.
Puritipati adds, “From my understanding, many companies in India do not even use the ROI method to measure their HR interventions. They may only use it in L&D. Most companies present a business case as a measurement tool.”
Maybe it is difficult to choose between the two. Human Resources may use a mixture of both to get their answers. But opting for VOI will make more sense in the long term, as all actions of HR are aimed at adding value to the employees, which in turn adds value to the organisation.