Financial Incentives for Physical Activity: What Works?

Increasing the Physical Activity of Your Employees

How can organizations help keep their employees healthy? This is a question that has dogged company executives for decades, particularly since the 1980s when researchers first started tying workplace wellness programs to lower healthcare costs and higher employee productivity.

Do financial incentives for employee wellness programs work?

Most wellness programs consist of some or all of the following:

  • Biometric screening
  • Nutrition counseling
  • Weight management assistance
  • Stress reduction programs
  • Step challenges, either self-reported or using a pedometer
  • Awareness-raising campaigns, including posters, newsletters, and wellness events

That wellness programs have the potential to make employees healthier is undeniable. However, just having the program is not enough; employees need to participate, and they need to change their behaviors in order for the program to work. This is where the rubber meets the road, and it’s where many wellness programs fail to provide the hoped-for outcomes.

A recent Rand Health and Gallup study found that in companies that provide wellness programs, only 24 percent of employees choose to participate. This can severely reduce the ROI of the program, no matter how well-designed it is! And a study from the Employee Benefit Research Institute (ERBI) found that late adopters of wellness programs were likely to be less healthy than their early-adoption counterparts, with more people at risk of diabetes, high cholesterol, and high blood pressure, as well as worse biometric readings and more expensive medical insurance usage.

So, with a wellness program in place, how do human resources departments encourage participation, especially from those who need it most? Several recent studies indicate that financial incentives might hold the key: but with a caveat. A 2016 study from the University of Pennsylvania called “Framing Financial Incentives to Increase Physical Activity Among Overweight and Obese Adults” found that offering a positive financial incentive—i.e., giving additional money for participation—did not increase activity. However, offering a negative financial incentive—taking away money for lack of participation—resulted in a 50 percent increase in participation.

The ERBI study cited above offers hope as well; although unhealthy and overweight people were less likely to join wellness programs without incentives, financial incentives did increase participation and encourage a favorable response. It’s important to note that wellness programs cannot be mandatory, and the U.S. Equal Employment Opportunity Commission (EEOC) forbids discriminating against employees based on their health or genetic makeup.


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