Demonstrating EAP Value: Calculating Return on Investment and the Effectiveness of Employee Assistance Services Can Demonstrate the Value and Necessity of a Full-Service EAP
Jorgensen, Donald G., The Journal of Employee Assistance
The decision to establish or operate an employee assistance program for an organization is based on the premise that the prompt resolution of employee problems will yield a significant human capital benefit and a positive economic return over the cost of the program. In reality, many EAPs survive because of the goodwill they generate, the anecdotal stories of success, their visibility in a crisis, or their status as a low-cost benefit.
If, however, a realistic appraisal of their value were to be requested, far too many EAPs might well be unable to demonstrate, in business terms, either their economic benefit or the effectiveness of the services they deliver to their employer or host organization. Many reporting tools utilized by EAPs have not adequately met business reporting and communication demands.
This article describes an approach by which an EAP can communicate and market its value to client organizations. The content and format of this EAP report (known as an EAP performance analysis) have been completely redesigned to emphasize two key indicators of EAP success that matter to the organization: the return on investment (in dollars and cents) and the effectiveness of the services provided.
EAP VALUE AND BENEFIT
Let's begin by defining the term "comprehensive employee assistance program." A comprehensive or "full-service" EAP embraces the EAP Core Technology as the foundation upon which all direct and indirect EA services are established. A full-service EAP may deliver additional program components to add value, but the emphasis is on the delivery of a complete workplace assistance program, not simply a modified employee counseling benefit.
An ongoing challenge for EAPs has been to utilize a reporting and measurement system that (a) addresses the primary needs of the host organization, (b) clearly and effectively demonstrates the return on investment provided by a full-service EAP, and (c) offers competitive internal and external marketing advantages for the provider. In 2004-2005, Jorgensen/Brooks Group, a private EAP and workplace services firm based in the southwestern United States, developed a data tracking and reporting system based on the premise that how an EAP documents and communicates the value and benefit of its services is as important as what kinds of information it presents to the client organization.
While developing the new reporting format, Jorgensen/Brooks identified the following challenges:
* To provide validity for the economic benefit analysis given to each host organization, the return on investment figures must be calculated according to current and conservative EAP and business research findings.
* An accurate presentation of total EAP service usage (based on the delivery of the EAP Core Technology as well as clinical services) must be created to provide a more comprehensive view of EAP services beyond the common but limited "utilization rate."
* The annual report required a significant redesign to transform it into a business-friendly presentation, thus moving from the traditional flat recitation of numbers and graphs to a focused, readable performance analysis.
The EAP performance analysis created by Jorgensen/Brooks begins not with a presentation of data such as number of clients seen or counseling sessions provided, but with the content most desired by the client organization: the value and benefit of the services offered by the EAP. The performance analysis employs two specific measures to demonstrate the "dollars and sense value" of the EAP: the total return on investment and the total return per employee.
In sum, the report focuses on providing the answer to the organization's key question: "Are we getting our money's worth?" This focus is reflected in the report's title, "Economic Value."
CALCULATING TOTAL ROI
Developing a valid and reasonable measure of value based on the delivery of EAP services was not a simple task. …