There has been increasing attention lately given to employee engagement and mental health—and with good reason. Employee well-being can impact just about every aspect of a business, from your workplace culture to your reputation with customers and your overall productivity and revenue.
Significant data exists showing the financial impact of mental health. Data from the National Safety Council show the mental health ROI for businesses, with organizations that invest in workplace mental health resources for employees seeing an average return of $4 for every dollar they spend.
On the other side, poor employee mental wellness can be very costly. According to data from the Canadian Mental Health Association, poor mental health costs the Canadian economy at least $50 billion per year, or roughly 2.9% of the national GDP—and that figure doesn’t even include lost revenue due to reduced productivity or employee absenteeism.
Despite the evidence that investment in corporate wellness programs is money well spent, getting buy-in on new mental health initiatives can be challenging for HR leaders who want to offer more employee mental health support. Demonstrating the bottom line benefits of improving the workplace mental health culture can help to get support for these critical initiatives.
Direct business benefits of investing in employee mental health
One of the challenges with demonstrating the value of mental health support for employees is that metrics like employee engagement, job satisfaction, and workplace wellness are intangible and difficult to quantify. The good news is, there are real, trackable benefits of workplace wellness programs. Let’s take a closer look at the economic impact of workplace mental health.
Increased productivity
If you’re wondering how mental health impacts workplace performance, consider these statistics. In the 2021 Mental Health at Work Report, workers reported performing at only 72% of their full capacity because of their occupational mental health. Not only are workers less productive when they’re burned out or struggling with issues like anxiety or depression, but they’ll be at work less often. In a Gallup survey, workers who rated their mental health as fair or poor missed an average of 11.8 days per year, while those who rated it good, very good, or excellent missed only 2.5 on average.
Employee productivity and mental health are inextricably linked. Reducing workplace stress and burnout gives you a workforce that’s more alert, able to focus and concentrate, more resilient, and better prepared to handle the new stressors or challenges that come up during their work day.
Reduced healthcare costs
We think of mental health as separate from physical health, but the truth is that they’re interrelated. Many mental health issues have physical as well as psychological symptoms. The most common of these include insomnia, headaches, body aches, gastrointestinal issues, and a weakened immune system. Because of this, investing in corporate mental health initiatives can reduce your workforce healthcare costs in multiple ways.
The improvements to employees’ focus and alertness you’ll get from investing in organizational mental health can make a difference here, too. Employees who are mentally healthy are less likely to make mistakes or cause accidents that can lead to injuries for themselves or their colleagues. The increased safety awareness and reduced rate of errors translates to a safer work environment overall, further reducing your potential expenses for employee injuries or accidents.
Higher customer satisfaction
It’s difficult to greet customers with a smile when you’re struggling just to make it through your day. Conditions like burnout and depression can also cause emotional volatility and make it more difficult for employees to manage their emotions and reactions to stressful situations.
This is another way that implementing effective mental health policies can improve your bottom line. When your workers are in a good mental place, they’ll have a happier, more positive demeanor in all of their workplace interactions, including those with customers as well as their coworkers. As a result, they’ll provide a better customer experience and stronger customer service, which makes it more likely you’ll build customer relationships that keep generating revenue for your business in the long term.
Improved retention
While turnover rates have dropped slightly since 2022, employee retention strategies are still at the forefront of many employers’ minds. This is especially true in industries like retail, where the average turnover rate is almost 25%, or sectors like education where the turnover rate continues to rise despite shifting trends in other industries. It is no coincidence that these industries also have the highest reports from employees that they struggle with stress management at work.
In a survey by CV Library, 89% of individuals who report issues with their mental health say that it affects their working life, and roughly half of those say they’ve considered quitting as a result. Given those numbers, it’s clear that investing in corporate mental health programs is among the best ways to improve your retention. Considering the high cost of recruiting and training new employees, this can be one of the areas where you see the most significant savings and long-term benefits of workplace wellness.
Better recruiting
Nobody wants to deal with stress and anxiety. It’s no surprise, then, that the workplace mental health benefits offered by an employer are a major concern for job seekers. In the American Psychological Association’s 2023 Work in America Survey, 92% of workers said it’s important to them that their employer values their emotional well-being.
Psychological safety in the workplace is important for today’s workers. When you prioritize workplace mental health best practices, you’ll not only be more likely to keep your current team intact, but will be more likely to attract the top talent to fill any future openings you do have. This results in a more effective overall workforce that will drive better results for your business.
The hidden cost of poor mental health in the workplace
It was mentioned earlier just how much poor mental health costs the economy every year. The costs to individual businesses can be equally significant, though the wide-range impact of employee wellness and the close link between employee engagement and mental health can make it a challenge to quantify the full extent of those costs.
One of the common signs of poor workplace mental wellness is an elevated rate of absenteeism. That alone can drive significant costs for businesses. According to one report from the workforce solutions provider Circadian, unscheduled absences costs businesses around $3,600 a year for each hourly worker, and $2,650 a year for each salaried employee. This includes direct costs from wages paid to the absent employee and their replacement, as well as administrative costs from managing those absences and the reduced productivity and service quality that can result from understaffing or overtime-related fatigue.
When struggling employees do show up, they may not be fully present. This is what is known as presenteeism, and it can also impact businesses’ bottom line—in fact, some estimates put the costs up to 10 times those of absenteeism.
Then there are the employees who leave their job due to burnout or poor mental health. The financial burden of losing an employee varies depending on their role and seniority level, but can be anywhere from 50% to 213% of that position’s salary.
Even this may not be the full picture. There are other hidden costs that can accrue when you lack workplace mental health strategies. These can include mistakes employees make because of poor rest, lack of focus, or overwork from putting in overtime to pick up the slack for struggling or absent coworkers. It also includes lost revenue from work turned down because your understaffed, or customers lost due to poor service or product quality. Reputation damage is another intangible cost that is no less significant for being difficult to calculate.
The takeaway from all of this: ignoring your employees’ mental health can be expensive, while investing in it can yield dividends and bring long-term benefits for your company’s growth.
Tips to improve mental health in the workplace
Workplace culture and mental health are closely related. The first step a business leader can take to safeguard the mental wellness of their employees is to improve your own mental health awareness and that of other leaders in your organization. Provide mental health training for managers so that they know how to spot the signs of employees who are struggling and what strategies they can use to help and support them.
One major challenge that many workers face is overcoming the mental health stigma at work. Even if your organization offers mental health support, this stigma can prevent them from taking full advantage of these resources. Leaders can help to break this down by starting the conversation. If you’ve dealt with your own mental health challenges, sharing your story can make employees feel more comfortable opening up about their struggles, and seeking out help with them.
Along with this increased training and awareness, closely examine your current culture to identify ways it can be made more conducive to the long-term mental health of your team. Traditionally, many workplaces have glorified overwork and viewed breaks or rest as a sign of weakness. To safeguard your team’s mental health, you need to reverse this perception.
Break free from “always on” cultures by setting boundaries on workplace communications that let employees fully enjoy their free time. Leaders can set the example by working breaks into their daily schedule and encouraging managers to do the same. Giving employees the option of taking mental health days, or even shutting down the office periodically to give everyone a chance to rest, can reinforce the message that you respect employees’ work-life balance and want to help them manage it effectively.
Along with these culture and mindset shifts, there are some specific initiatives you can implement that are effective at reducing burnout in the workplace and improving the mental wellness of your team. These include:
- Employee Assistance Programs (EAPs) – These programs provide free, confidential resources to support employees through personal or professional challenges. They provide services like counseling services, substance abuse treatment, legal guidance, financial planning advice, and assistance with child care or elder care. While larger organizations may develop an in-house EAP, third-party providers are often a better choice for small or mid-sized organizations, providing a cost-effective way to create a more supportive workplace culture.
- Access to mental health services – A holistic employee benefits package that includes coverage of mental health care gives your team the resources to attend to their mental wellness. This encourages your team to be proactive with regards to their mental health and seek out preventative care that can address issues like burnout or anxiety in early stages, before they can affect the individual’s life and work.
- Flexible work – Granted, remote work is not a cure-all, and it’s still important to provide mental health support for remote workers. That said, giving employees control over when and where they work can make it easier for them to balance their career with personal responsibilities and interests, leading to a healthier overall team.
As a final piece of advice, remember that every individual and team has unique needs when it comes to mental health. Talk to your team when you’re deciding which initiatives will have the most impact. Once you’ve put these plans in place, conduct regular employee surveys to assess whether your initiatives are working as intended, or identify further ways you can support your team’s mental wellness. By doing so, you won’t only build a happier, healthier workforce, but can also help you to maximize your company’s revenue potential.
