Lincoln Industries' Wellness Program - National Business Coalition ...

Lincoln Industries’ Wellness Program: ROI Through Innovative
Programs, Aligning Incentives and Recognizing Achievement
Synopsis: Lincoln Industries’ Wellness Program demonstrates how a culture of health can
become a key driver in a successful high-performance manufacturing organization. After a
decade of incremental development, the initiative has all the components of a showcase
program. Although the key factor motivating upper management support has always been
employee welfare, the Wellness Program showed a 5-to-1 return on investment in 2011, even
after most “low-hanging fruit” cost savings had already been achieved.
Background
One of the highest-rated sessions at the 2012 IBI/NBCH Health and Productivity Forum,
closing keynote, “A President’s Business Case for a Culture of Health,” related the story of
two decades of commitment to employee wellness and productivity at Lincoln Industries in
Lincoln, Nebraska.
Lincoln Industries manufactures high-value polished metal components for motorcycle,
automotive and other applications. With most employees in one plant, Lincoln Industries
requires visible, active corporate leadership, said President Hank Orme, who presented the
company’s wellness story.
“It’s ‘walking the talk’ leadership engagement,” said Orme. “If I don’t do this personally, if
my senior team doesn’t do this, employee wellness will not happen at the level it’s happening
now.” Once a month the senior management team holds a vigorous open workout, inviting
others to join. Orme flashed a happy grimace as he remembered the most recent workout
when “I had to try to keep up with those young guys.”
The organization strives to balance its attention to operating metrics, a staple of any
manufacturer, and cultural metrics like employee engagement and satisfaction, taken in
twice-annual surveys. Both metrics categories are reported in key operations meetings, and
also have personal importance. “Meeting wellness goals is a performance objective, it’s
directly tied to our merit increase program and also bonuses,” said Orme.

Every employee sets personal wellness objectives, and achieving them provides health plan
premium discounts, contributions into their personal health reimbursement account, points
toward the annual employee merit increase, and perks like contributions toward gym
membership and home health equipment. Recognition in workforce meetings also is an
important motivator.
One of many measures of success in establishing a culture of health is that when Orme joined
Lincoln Industries 13 years ago, 77% of employees used tobacco; today it’s 12% or fewer.
Other measures:
• Health care costs per person in their consumer-driven health plan (CDHP) were less
than 59% of average costs for CDHPs in the region in 2011
• 90% of employees have achieved incentives for reaching health goals, including nearly
25% at the highest “Platinum” level.
Diverse Programs
The Wellness Program is an umbrella covering all programs related to employee health,
wellness and productivity.
Although the CDHP health plan has a silo of its own, it’s closely integrated with the
Wellness Program, including the HealthyU onsite clinic providing free preventive care to all
employees and family members 12 years old and above.
Healthy U clinic, staffed by a physician assistant, is the venue to deliver many preventionoriented
services. “We’re outcome-based on our incentives, metabolic syndrome risk factors
and being tobacco-free, for example, we have premium discounts for those things through the
health reimbursement arrangement,” explains Orme.
The clinic is where many employees verify they’ve reached health measures. When
employees make an appointment for a cold or other health need, they also get a SoundLife
health coaching session to review personal health goals. Unlike the 15-minute sessions at
most HMOs, employees get a half-hour at Healthy U.
Physical exams are mandatory twice yearly, and include bloodwork for preventive health
markers, chronic disease management and flu vaccinations. The company also holds
quarterly health events with many of the same services, behavior change support coaching,
and life planning with the employee’s “significant other” to further support personal progress
toward health goals.
Onsite fitness programs include free workouts with certified trainers in several workout
formats, including P90X intensive workouts, kick-boxing, Jazzercise, Boot Camp and yoga.
To be sure that everybody is ready for every work day, each shift begins with a stretching
session for each crew.
Rewards
The Lincoln Industries Wellness Program has substantial rewards for high-performing
participants.

In addition to financial incentives, it includes powerful intrinsic motivators. The points
system has several levels, including Silver and Gold, and achieving Platinum status is like
joining an elite club. Every year the Platinum achievers travel to a 14,000 foot mountain in
Colorado and “summit” together in a group trip. “Last year more than 100 people qualified to
summit together, this year we’re aiming for 125,” said Orme—nearly 25% of the Lincoln
Industries workforce.
After the climb, the group enjoys a banquet with gifts. Participants tell personal stories about
their journey to get there. Orme goes with the group as often as he can. Stories from people
who summit with the group become part of the Lincoln Industries culture of health. Orme
may mention participants in operations meetings, or look them up on the plant floor.
He proudly told the stories of Seth and John, both athletes in high school who later fell into
unhealthy lifestyles and became obese. The Wellness Program provided tools to re-take their
lives. Seth ran his first marathon in 2010, and completed an ultra-marathon last year. The last
time Orme talked with John, he was half-way to a bachelor’s degree with a 3.8 GPA. “It’s the
stories that really matter to us,” said Orme.
Calculating ROI
Wellness efforts began more than 20 years ago with a general commitment to employee wellbeing
and productivity. “Ten or 12 years ago we started seeing links between health care and
workers’ compensation costs,” Orme said. “We tried to take even more advantage of our
existing foundations.”
A ramped-up Wellness Program effort produced an $11 to $1 return on investment (ROI) in
2006. Even with most of the “low-hanging fruit” now plucked, Lincoln Industries estimated
its Wellness ROI at $5 to $1 in 2011.
“We’re very satisfied with that. I’d like to get that kind of return when we invest in
machines,” said Orme.
Lincoln Industries has many ways to capture savings generated by its Wellness Program.
Components of Cost Savings, 2011
Savings from Health Care Cost $1,701,459
Savings from Workers’ Comp $(35,979)
Savings from smoking cessation (6 months min.) $43,200
Savings from intervention programs $315,000
Savings from improved Absenteeism $315,958
Savings from reduced Turnover $24,024
TOTAL COST SAVINGS RELATED TO WELLNESS $2,363,662
Wellness Related Costs $475,000
Net Savings/Cost Avoidance $1,888,662
The mature workers’ compensation (WC) program is operating with relatively flat costs. A
slight increase in WC claim costs occurred in 2011 (see table above), but this occurred in the

context of a self-insured plan that has steadily reduced claim costs, reaching a low mod rate
and requiring lower reserves than historically. Nearly 72% of the total savings are generated
in health care cost—but other components also produce substantial savings:
• Tobacco use in the employee population is down radically. Yet between new hires and the
expectation that all smokers are encouraged to quit, nine employees successfully used the
smoking cessation program in 2011, yielding a projected $4,800 in savings per participant.
• Other intervention programs generate substantial cost reduction by changing health
behavior, managing chronic diseases, and flu vaccination—very close in total savings to the
absenteeism component.
• Absenteeism savings are calculated in relation to the national average rate of 5%
unplanned absence, estimated by the Society of Human Resource Management. Lincoln
Industries, with a rate of 3%, saves nearly $1,200 per employee at their average hourly cost
of $19.93 in 2011.
• Reduced turnover cost is calculated as 5% of total turnover cost for the year, on the
assumption that wellness reduces turnover by 5%.
The Wellness Program correlates wellness and productivity inside the organization, and
compares its wellness culture to regional and national benchmarks. Measures of wellness and
productivity include: participation in programs (reported at supervisor level), health
outcomes as measured by prevalence of metabolic syndrome, and survey data from the Well-
Being Assessment plus Lincoln Industries’ own internal opinion survey which measures
culture components related to the company’s Beliefs and Drivers. Lincoln Industries’ average
Gallup-Healthways Well-Being Index Composite Score is 74.1, higher than the community
score of 72.8 for Lincoln, Nebraska.
Conclusion
The Lincoln Industries Wellness Program is driven by strong upper-management support for
employee wellness and satisfaction, but also has produced an ROI that can justify wellness
investments in other organizations. The virtues of incremental program development are on
full display in the Lincoln Industries story, where a culture of health has become a key driver
in a successful high-performance manufacturing organization.