What is Employee Well-being? A Definitive Guide

Learn about employee well-being and tips to create a successful employee well-being program that supports your team.

By Amy Spurling


Back in the day, the accepted norm involved employees going to work at 9 a.m. and clocking out at 5. There was no talk of work-life balance or finding happiness and satisfaction in the workplace. A career was seen as utilitarian, a means to an end to pay the bills.

Now, everything has shifted. Work seeps into our personal lives and vice versa. Many of us work at night and on the weekends, and some of us never go a day without at least answering a work email or Slack message. At the same time, since work and our personal lives have become so intertwined, employee well-being has come to the forefront as five generations of workforce grapple with what matters most to them. 

Employee well-being, or the overall health of employees, is also top of mind for HR leaders. If you haven’t created an employee well-being program yet, now is the time.

In this guide, we will cover:

  1. What is employee well-being?
  2. Why does employee well-being matter for HR leaders?
  3. Advantages and benefits of employee well-being
  4. Components of a successful employee well-being program
  5. Why do employee well-being efforts fail?
  6. Frequently asked questions about employee well-being

By learning more about employee wellbeing and emphasizing it in your hiring and retention plans, you will positively contribute to overall employee productivity and happiness — as well as your bottom line.


What is employee well-being?

5 elements of wellbeing

Decades of Gallup research reveal 5 universal elements of well-being.

Employee well-being is the overall physical, emotional, mental, social, and financial health of your employees. It is also referred to as employee wellness and it is a way employers attract talented workers and retain the ones that already work for them. It’s about preventing burnout and instead ensuring employees are healthy, happy, and have everything they need to thrive in the workplace. 

Interestingly, workplace wellness is not a new concept; Bernardini Ramazzini, an Italian doctor who lived from 1633-1714, studied preventative measures that could be taken to improve workers’ well-being. However, with the Industrial Revolution starting soon over, productivity was more important than employees’ health. It wasn’t until the 1950s when Employee Assistance Programs focused on wellness interventions, and then in the 1970s, the worksite health promotion movement promoted employee fitness. 

More recently, like in the past 15 years, employee well-being programs have become more and more important. They are increasingly holistic and incentivize employees to stay healthy while having a work-life balance.


Why does employee well-being matter for HR leaders?

According to the Future Workplace 2021 HR Sentiment survey, 68% of senior HR leaders rated employee mental health and well-being as their top priority. But why is it so critical?

From both a business and personal standpoint, there are many advantages of putting an employee well-being program into place. 

A Gallup poll showed that poor employee well-being can result in a number of negative events, including: 

  • 15% to 20% average of total payroll in voluntary turnover costs due to burnout
  • $20 million of additional lost opportunity for every 10,000 workers because of suffering or struggling employees

Gallup also reveals that there is a difference between engaged and thriving employees; while an employee may be engaged, but they aren’t thriving in their well-being, they are 66% more likely to experience daily worry and 61% more likely to experience burnout often or always. 

Essentially, if HR leaders are not investing in employee well-being, employees, as well as the company, will suffer. On a personal note, workplaces should be concerned about their employees’ health – not just about how much revenue they can generate. 

With a shift in attitude, HR leaders and companies on the whole can provide a better workplace for their employees and ensure they are as healthy, and satisfied, as possible at work and beyond. 

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Advantages and benefits of employee well-being

There are a number of advantages and benefits of employee well-being to take into consideration. The following advantages are not only beneficial to employees but to HR teams, as well. Some even contribute to a healthier and better-functioning society as a whole. The impact that a strong employee well-being program can have is truly limitless. 

Lower healthcare costs

75% of medical costs accrued mostly due to preventable conditions is one of the costs of poor employee well-being, according to the Gallup poll.

On the other hand, when employers emphasize taking time to go to the on-site gym, stock the kitchen with healthy snacks, offer comprehensive healthcare, or provide fitness classes like yoga or pilates to employees, healthcare costs are going to be lower.

One CDC study showed that well-implemented employee health programs can result in “25% savings each on absenteeism, health care costs, and workers’ compensation and disability management claims costs.”

Higher employee engagement

When employers put their workers’ health at the forefront, workers are much more likely to be engaged. This means they care about their work, they participate in meetings, they come in excited about what they’re doing, and they perform at a higher level. According to Engagement Multiplier: 

Employees who are engaged and have high well-being are:

  • 59% less likely to look for a job with a different organization in the next year 
  • 27% more likely to report “excellent” performance at work
  • 30% more likely not to miss any days of work because of poor health in a given month

Less burnout

Burnout can lead to employees not being engaged with their work, suffering from mental, physical, and emotional ailments, and, ultimately, missing days of work or quitting a job. A well-rounded employee well-being program can combat burnout by providing employees with the right amount of time off and opportunities for relaxation. Instead of being 'go, go, go' and feeling like they’re on a perpetual hamster wheel, employees can take a healthier approach to work and get the space they need to breathe. 

Reduced absenteeism

Mental, physical, and emotional ailments can cause employees to call out of work. Or, they may simply be bitter or upset that they are not getting the time off they need, and they’re going to take it on their own. Employee well-being programs can reduce absenteeism – which costs about $2,650 each year for salaried employees, according to DailyPay. Workplaces with higher stress levels tend to experience more absenteeism. Employee well-being programs decrease absenteeism and, in turn, decrease expenses. 

Better recruiting

When candidates are looking for a new job, they don’t just care about the hours and salary. They also care about the benefits, including employee well-being programs. According to Glassdoor, 48% of U.S. workers said one of the top things they looked for in a new job was attractive benefits. If you and your competitors are looking to fill similar roles with similar pay, an employee well-being program could be the reason one candidate chooses your company over another. This is incredibly beneficial during the post-Great Resignation stage, where it became harder and harder to find quality employees since the job market was so competitive. 

Higher retention

Along with attracting candidates, employee well-being programs can lead to higher retention among workers as well. According to Forbes, 67% of employees who work for companies with wellness programs enjoy their jobs more and are “extremely or very likely to recommend their employer to others.” It costs an average of about $4,000 to hire a new employee, plus, companies suffer from a loss of productivity when trying to find someone to fill a role. If a company has a high turnover rate, it can have a negative impact on morale. When employee well-being is a priority, workers are more likely to stay in their positions for longer. 

Better employer brand

When searching for a job, people care deeply about an employer’s brand and culture. If a company has a strong employee well-being program, it shows that they care about its workers, which makes it easier to find candidates. It can also make current employees proud to work there and increase retention.

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Components of a successful employee well-being program

When creating your employee well-being program, look at other employers and HR leaders who have been successful with their own. Typically, you’ll want to include a range of benefits, like the following. 

Social wellness

When it comes to social wellness, emphasize and encourage charitable giving. For example, you could run a company-sponsored program where employees can give to a charity of their choice through payroll. These donations will be tax-deductible, so there is a benefit to the employee. This kind of program would likely be popular around the holiday season, but you could do it all year round. 

Personal and professional development 

Give your employees the chance to engage in both personal and professional development. Your employee well-being program could consist of sessions with a mentor or career coach, access to free courses, company-sponsored classes, and sponsored conferences that workers can attend. 

Team events

Team-building is critical. Employees can come together, bond while participating in fun activities, increase their trust in one another, and improve their communication. Your company could hold company-wide retreats, take employees out for happy hour, or bring in outside consultants and entertainers for a day. For instance, you could bring an improv teacher to teach your workers the principles of improv comedy, which teaches them how to work together and say “yes” to one another’s ideas. 

Health and wellness

Health and wellness include both physical and mental health. From sponsoring gym memberships to holding weekly yoga classes and paying for therapy for your workers, these programs will help them avoid burnout and feel centered. Make sure that you have strong health insurance benefits in place as well. 

Financial well-being

A financial well-being program will help employees learn about and better manage their money. For instance, you could pay for them to meet with a financial advisor, bring in a 401(k) specialist to help them choose a plan, and pay for them to have access to apps like Mint or You Need A Budget. 

Occupational wellbeing

You want your employees to be happy at work, which is something you can accomplish through an occupational well-being program. Perhaps you could offer unlimited vacation days or give employees the chance to pick up their kids from school or go to their own doctors’ appointments when they need to. This one is all about work-life balance.

Why do employee well-being efforts fail? 

Some companies want the best for their employees, but they don’t always know how to set up an employee well-being program that is actually going to be successful. When creating your own program, make sure you avoid these common pitfalls. 

Lack of leadership buy-in

You will need not only the HR team on board but the managers and C-suite executives, as well. Make sure that when presenting to your leadership team, you include the benefits of an employee well-being program with key metrics and proof to back up your findings. Also, tie your program to business objectives, like addressing high turnover or not finding adequate candidates to fill important roles. 

Poor alignment of incentives 

Your employee well-being program has to make sense for your company culture and demographics. For example, if your workers are typically younger, they may enjoy happy hours, but if your workers are older and have children, they’re going to value their time off more. You need to incorporate employees in the process, surveying them to understand what they really want before introducing your new program. 

Myopic focus on one aspect of the program

Your employee well-being program has to be well-rounded and appeal to your entire workforce. There should be something in it for everyone. Don’t just focus on one area, like physical health. Instead, zoom out and see what is really going to make an impact in the workplace. 

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Frequently asked questions about employee well-being

You may have questions about employee well-being. Here are some key answers that will help you get started. 

How can you impact employee well-being in a hybrid or remote environment?

If your workplace is still partially or fully remote, you can still offer inclusive benefits that your employees can access remotely, like a Lifestyle Spending Account your team can use toward the unique perks they want and need. Some examples include using a stipend for health and wellness so employees can buy new sneakers to go for a run in their local park or a food stipend so nobody has to miss out on an in-office lunch; instead, they can purchase healthy groceries for themselves and their families. You can look at what other employers are doing in your industry to get some ideas. 

What tools do I need to manage an employee well-being practice?

You will need a people operations platform to manage your employee well-being program and assign stakeholders in your HR department to utilize it. With this platform, you can create, monitor, and make revisions to your program at any time with the click of a button. 

What's the difference between wellness and well-being?

Wellness and well-being are often used interchangeably. Technically, wellness encompasses the behaviors and habits you engage in (like going to the doctor, exercising, and eating healthy), while well-being is more of a state of mind. They work hand-in-hand when it comes to your health, happiness, and overall satisfaction with work and life. 

How do you measure well-being?

This is subjective for everyone. One person’s way of measuring their well-being is different from the next. However, you can always give surveys to your employees and measure things like satisfaction in the workplace, whether or not they’re burnt out, and how they feel at work on a day-to-day basis to get a more accurate picture.

How much will an employee well-being program cost?

The cost of an employee well-being program is going to vary based on the benefits you offer and your operating expenses. One statistic shows that employers pay an average of $150 to $2,000 per year for a program. However, costs can be lower or higher depending on your budget and your employees’ needs. 

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Employee well-being programs can have a hugely positive impact on your employees – and your bottom line. But before implementing a program, you’ll need to take crucial steps, like deciding on your budget for it, including employees in the process, and getting leadership buy-in. It’s also critical to review your program on a regular basis and survey employees to see what’s working and what needs improvement. 

With an easy-to-use employee well-being tool on your side, you can be well on the way to creating your program, improving employee happiness and productivity, and doing your part to make your company successful.

Find out how Compt can help you offer personalized perks that support your employees' well-being. Check out the most popular employee perks by downloading the free benchmark report.

Amy Spurling

Founder and CEO

Amy founded Compt, employee stipend software that enables companies to offer truly personalized employee perks while being fully tax-compliant and inclusive for global teams. Amy's experience as a former three-time CFO and two-time COO managing Finance and HR drives her belief that companies and employees can achieve much more together when employees are fully supported. Her favorite Compt stipend category is Charitable Giving.


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