The demands of a changing workforce are creating increasing demand for incentive professionals to boost...
Research / Academic Research in Action: The Role of Incentives and Rewards in Promoting Workplace Wellness, Well-Being, and Employee Physical and Mental Health
by Allan Schweyer, Chief Academic Advisor, IRF
In 2019 the US Centers for Disease Control reported that almost half of US organizations offer some form of wellness program.1 A 2013 RAND Corporation study put the estimate at 80 percent for US organizations of 1,000 or more employees.2 Wellness programs vary widely; some offer on-site gyms or fitness classes while others provide access to telehealth services or mental health resources. While the level of participation often varies, incentives and rewards – both financial and non-financial – have been shown to increase employee participation in workplace wellness programs.3
A growing body of research demonstrates that promoting employee health and well-being can have a positive impact on company performance. A few examples include a study published in the Journal of Occupational Health Psychology in 2016, which found that employees who reported higher levels of well-being were more engaged in their work, had better job performance, and were less likely to miss work due to illness.4 The positive effects of well-designed workplace wellness initiatives include improvements in physical activity and smoking cessation, as well as adhering to a healthier diet, lower stress, anxiety and incidents of depression, and improvements in mental well-being. Additionally, workplace well-being programs have been shown to enhance engagement in work, decrease absenteeism, and improve overall performance.5
The Role of Incentives and Rewards in Promoting Workplace Wellness
Decades of academic research on the use of interventions, including the use of financial and non-financial rewards in the workplace to promote employee health, have often yielded mixed results, but on the balance, show positive outcomes.6,7,8 For example, a 2011 study by the Salt Lake County Government, found that offering free annual health screenings, personalized feedback on results, financial rewards for maintaining healthy behaviors, and educational programs and promotions led to a nearly 10% increase in wellness program participation over a 5-year period. The program was associated with increased physical activity and overall improved health among participants. The county avoided more than $3.5 million in prescription drug and medical expenses. For every dollar spent, it saved $3.85. The researchers concluded that incentives were the primary motivator for participation in the program.9
A 2020 meta-analysis of 22 peer-reviewed studies on links between small financial incentives and employee well-being, fund positive intervention effects in 20 of the studies, and a significant number reported continued benefits after the incentives were removed. The authors concluded that small incentives worth only about $1.50 US per day increased physical activity both in short and long durations, and, in their words, even after incentives were removed, “these findings suggest that a short-term incentive ‘dose’ may promote sustained physical activity.”10
A comprehensive 2013 study by RAND Health found that two-thirds of employers with 50 or more employees use incentives and rewards in their wellness programs, and that 80% combine non-cash rewards – t-shirts, novelty items, gift cards, coffee mugs, etc. – with financial. These incentives average about $200 per employees, rising to over $600 for smoking cessation interventions. RAND found that participants in their study who used incentives experienced, on average, twice the participation rates of those who did not, and that the combined use of incentives and sanctions (negative incentives), nearly doubled participation rates again.11
On the whole, evidence from academic studies and across interventions in organizations demonstrates that incentives and rewards can play a significant role in promoting workplace health and wellness by encouraging employees to engage in healthy behaviors and make positive lifestyle changes. Beyond physical health, smoking cessation, and diet, etc., incentives and rewards also play a role in addressing worker mental health by encouraging employees to seek help and support, and by providing them with the resources they need to maintain their mental well-being. Clearly, well-designed incentives can also help create a culture of wellness within the workplace, making it more likely that employees will prioritize their health and well-being by forming healthy habits that last even after tangible incentives are removed.
How to Use Incentives and Rewards to Promote Employee Health and Wellness
Employers may offer rewards such as flexible working hours, remote working options, or time off for mental health days, which can help employees find the time to exercise and eat well, and to manage stress and maintain a healthy work-life balance. To promote mental health directly, an employer might offer incentives for employees who seek counseling or therapy, attend mental health workshops, or participate in employee assistance programs. Such incentives can help to destigmatize mental health issues and create a culture of openness and support within the workplace.12,13 Other rewards, such as individual and group travel, and attendance at offsite meetings and conferences, can have the same restorative effects.14
Additional rewards that can lead to improvements in employee physical and mental health include:
Of course, like any other incentive and reward program, broad outreach and clear messaging from organizational leaders is vital, especially in organizations with a large and geographically dispersed workforce. Incentives should include making wellness activities convenient and accessible, and should encourage buy-in from direct supervisors to generate excitement and connect employees to resources. Randomized controlled trials have found that recognition and feedback can be effective in encouraging employees to engage in healthy behaviors and improve their well-being. Incentives that recognize encouragement and feedback from peers can accelerate the creation of a healthier workplace culture.
1. Centers For Disease Control. Half of Workplaces Offer Health/Wellness Programs CDC Newsroom, April 2022, 2019
2. S. Mattke et al. Workplace Wellness Programs. Rand Corporation, 2013.
3. Elif Demirci, Financial Incentives and Employee Health: Literature Review, Erasmus University Rotterdam | Emma Giles et al, The Effectiveness of Financial Incentives for Health Behavior Change. PLoS ONE
4. Lapierre, L. M., & Allen, T. D. (2006). Work-supportive family, family-supportive supervision, use of organizational benefits, and problem-focused coping: Implications for work-family conflict and employee well-being. Journal of Occupational Health Psychology, 11(2), 169–181.
5. An Roinne Slainte, An umbrella review of the effectiveness of workplace wellbeing programmes. Ireland Department of Health, 2018
6. Nathanael Lutz et al, Health economic evaluations of interventions to increase physical activity and decrease sedentary behavior at the workplace, Scandinavian Journal of Work, Environment & Health, 2020
7. Dianne Commissaris et al, Interventions to reduce sedentary behavior and increase physical activity during productive work: a systematic review, Scandinavian Journal of Work, Environment & Health, 2016
8. Karin Ingeborg Proper and Sandra Helena van Oostrom, The effectiveness of workplace health promotion interventions on physical and mental health outcomes – a systematic review of reviews, Scandinavian Journal of Work, Environment & Health, 2019
9. Merrill, R. M., Hyatt, B., Aldana, S. G., & Kinnersley, D, Lowering Employee Health Care Costs Through the Healthy Lifestyle Incentive Program. Journal of Public Health Management and Practice, 17(3), 225–232.
10. Marc S Mitchell, et al, Financial incentives for physical activity in adults: systematic review and meta-analysis, British Journal of Sports Medicine, 2019  Soren Mattke, et al, Workplace Wellness Programs Study, Rand Health Quarterly, June, 2013
11. Soren Mattke, et al, Workplace Wellness Programs Study, Rand Health Quarterly, June, 2013
12. Substance Abuse and Mental Health Services Administration, Addressing Burnout in the BehavioralHealth Workforce Through Organizational Strategies, SAMHS, 2022
13. Vantage Circle, Impact of Rewards and Recognition on Mental Health, Vantage, 2022  Vicoria Copans, How offsite meetings are playing a crucial role to connect teams post-pandemic, Xlibe, Jul 18, 2022
14. Vicoria Copans, How offsite meetings are playing a crucial role to connect teams post-pandemic, Xlibe, Jul 18, 2022
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