Why Company Health and Wellness Plans Fall Short - Ideas for Leaders
Idea #786

Why Company Health and Wellness Plans Fall Short

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Self-imposed constraints undermine employers’ resolve to promote employee health and wellness. When employers fully accept the link between healthy employees and long-term profitability, the once insurmountable constraints can be quickly resolved.  


All employers in all nations are in the health care business. The work environment they create, including the expected number of working hours and numerous other potential stressors, have a significant impact on the health and well-being of employees and their families. In addition, in the United States, the health care coverage of most workers depends in large part on the health benefits their companies offer.

A new study, based on in-depth interviews with executives in 20 companies of various sizes and from various industries, reveals the attitudes and assumptions of employers that often undermine their good-faith efforts to promote employee health. Specifically, the study reveals a disconnect between, on the one hand, the growing consensus that encouraging and enabling employee health and wellness leads to economic benefits for the company, and, on the other hand, the investment companies are willing to make in health-promoting programs and initiatives.

The employers interviewed for the study recognized their responsibility in ensuring the health of their employees, and defined health broadly in terms of physical, emotional and mental health. They launched initiatives to promote employee health, such as convening managers to communicate the importance of employee health and offering financial incentives to employees to encourage participation in health care initiatives.

However, despite their stated commitment to the health and well-being of their employees, many of these employers, the study shows, failed to sufficiently invest in employee health care because of perceived internal and external barriers. Internally, for example: 

  • Employers were reluctant to redesign jobs in an effort to reduce job demands or the number of working hours a job requires. The stress of these jobs, the employers felt, was unavoidable. 
  • Employers offered insurance benefits with high deductibles because these plans were more affordable. Such plans significantly increase the cost of health care for the employee, which not only adds stress but also pushes employees to forego seeking health care in a timely manner. 
  • Many employers believed they had to balance an inherent trade-off between employee health and profitability: in other words, there was a limit to how much profitability employers were willing to ‘sacrifice’ to support employee health.

The authors of the study contend, however, that these internal barriers are self-imposed. Nothing prevents employers from changing the design of their jobs, for example, nor are they required to shift health care costs to their employees through high deductible plans. The perceived trade-off between health and profitability is also a chimera since in the long term health and well-being increases the profitability of a company.

The external constraints cited by the respondents in the study—which included a lack of innovative offerings from health care vendors, too many offerings that discouraged employees from accessing care, and lack of federal or state guidelines that could level the playing field for companies—were also self-imposed. The research showed that many companies only brought from large, well-established vendors, thus missing the innovative, health-promoting offerings from the less dominant vendors in the marketplace, for example. And those companies who complained about the uneven playing field were at the same time battling new health care regulations. 

In contrast to the companies who feel their hands are tied, other companies are able to overcome these constraints. Solutions cited in the study included:

  • Using a portfolio approach to find more innovative offerings 
  • Automating some tasks to avoid burnout 
  • Offering guarantees of support in economic downturns to lessen the economic stress of their employees
  • Collecting data to measure the effectiveness of health programs 

In sum, it is the philosophy of a company, not any internal or external constraints, which shape how employers promote the health of their employees. If employers believe that in the long-term, the health and well-being of their employees lead to higher productivity and higher profits, they will overcome any perceived barriers and choose to invest in better health care options—even if in the short-term they are more expensive. 


Policy makers and regulatory agencies inevitably have a role to play in ensuring healthy workplaces. However, many companies can accept more responsibility employee health and well-being. To better own this responsibility, companies can:

  • Measure and fully understand the negative financial consequences of poor employee health (an important first step).
  • Reduce employee stress (and increase employee engagement and loyalty) by guaranteeing continued benefits during economic downturns.
  • Offer first dollar insurance plans rather than high-deductible plans to ensure that employees and their families receive the care they need—notably preventive care that can reduce overall health care costs.
  • Provide health care plans that offer disease prevention and health promotion programs.
  • Offer paid sick leave.

The more companies view their financial commitment to employee health and well-being as an investment for the future rather than as current HR costs, the more they will achieve the economic benefits of a healthy workplace.



  Jeffrey Pfeffer’s profile at Stanford Graduate School of Business
  Sara Singer’s profile at Stanford Graduate School of Business
  Stacie Vilendrer’s profile at Stanford University School of Medicine
  Grace Joseph’s profile at Stanford University School of Medicine


Employers’ Role in Employee Health: Why They Do What They Do. Jeffrey Pfeffer, Stacie Vilendrer, Grace Joseph, BS, Jason Kim & Sara J. Singer. Journal of Occupational and Environmental Medicine (November 2020).

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Idea conceived

November 3, 2020

Idea posted

Mar 2021
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