Cost Benefit of Employee Assistance Programs

As a business owner or human resource director, if you have not already done so, make sure to look into the cost benefit of Employee Assistance Programs.

Employee Assistance Programs (EAP) are growing in popularity as a benefit companies offer to employees. Businesses report significant savings when the program is fully utilized among their employees and human relations department.

Similar to health benefits, an EAP can help take care of your employee’s well-being. They offer free and voluntary consultations and assist in numerous areas including:

• Counseling for stress, depression, or anxiety
• Problem assessment
• Substance and alcohol abuse
• Family
• Bereavement counseling
• Legal counseling
• Aid in Elder care giving
• Financial and housing assistance and counseling
• Child care
• Referrals when needed

These services can make a difference in the lives of your employees. Employee Assistance Report (2001) reported that substance abuse and mental illness cost U.S. companies over $100 billion per year, or $3,000 per employee.

As a business, your cost benefit of using an EAP will depend on how you utilize the program. Employee Assistance Program savings can be substantial.

Studies show that many companies have saved thousands of dollars on their bottom line by taking advantage of their Employee Assistance Program. Across the board, for every $1 you spend, employees generally save from $5 to $16 per employee.

In fact, CCH, Inc. reported that 68 percent of companies utilize an employee assistance program. Of those companies, approximately 90 percent are Fortune 500 companies. Smaller companies are less likely to offer this program.

According to Claremont Behavior, savings can be considerable:

• Philadelphia Police Department employees who underwent treatment reduced their sick days by an average of 38 percent and their injured days by 62 percent (Ibid)

• Oldsmobile's Lansing, Michigan plant saw the following results in the year after its alcoholic employees underwent treatment:
  • Lost man-hours declined by 49 percent
  • Health care benefits by 29 percent
  • Leaves by 56 percent
  • Grievances by 78 percent
  • Disciplinary problems by 63 percent
  • Accidents by 82 percent (Ibid)

• United Airlines estimates that it has a $16.95 return for every dollar invested in employee assistance (Ibid)

As the above examples show, cost benefits of EAPs are worth integrating into your company.

Studies show that 15 percent of the workforce account for the majority of absenteeism, which can cost an employer in lost wages that add up quickly. According to statistics from EAPA Facts in a study done in 2000, an EAP can help reduce up to:

• 30 percent in lost time
• 60 percent in accident and sick pay
• 50 percent in grievances filed
• 70 percent in accidents

The Employee Assistance Report, 2001, reported if 5 percent of employees used EAPs, the potential monetary savings would be 3.45 percent of payroll for absenteeism and improved productivity.

Not only do Employee Assistance Programs save your company in other areas, they can also help with your healthcare plans. Companies have reported a savings of $116.00 per employee in healthcare related costs as a result of EAP utilization (EAPA Facts, 2000)

One of the strongest reasons to utilize employee assistance programs is the increase in productivity among your employees. When feeling their best, less stressed, and not abusing alcohol or drugs, your employees work harder.

Nearly $44 billion is lost by businesses and corporations across America each year due to the effects of depression in the workplace (Counseling Today, 1999).

Another benefit of EAPs involves employee retention. When employees are happier with their lives, they are happier in their jobs, and want to stay. Plus, fewer employees need to be fired if they are working their job to their full ability.

• 65-80 percent of all terminations are due to personal and interpersonal factors, an EAP can help resolve these issues before termination is necessary (Employee Assistance Report, 2001)

• Benefits.org
• Claremont EAP
• Avera Health Plans

The cost benefit of Employee Assistance Programs can make a difference in both your company’s bottom line and the welfare of your employees. If you are looking at employee retention projects, EAP’s are a smart place to start. Use the training available to help you utilize the program to its fullest.

• Memo Layout
• 10 Best Home Based Businesses
• Business Thank You Notes
• The Myths Of Entrepreneurship
• Unethical Business Practices

• Sample Resume Objective
• Memo Examples
• Resume Objective Examples
• Resume Objective Statements
• Sample of Letter of Request

• Rewarding Employee Seniority
• Employee Motivation
• Employee Retention
• Cost Accounting
• Employee Assistance Program Savings