In the mental health and wellness community, it is common to hear the advice: “If you don’t make time for your wellness, you’ll be forced to make time for your illness.” Though the saying is geared toward the individual, the point can be broadened to organizations. If your organization does not set aside resources for employee wellbeing, it will be forced to set aside resources for employee illness.
This is especially true of mental health, as the costs are truly staggering. Research suggests that by the year 2030, mental health conditions will cost the global economy $16 trillion (Carter Center, 2018). No company is immune from bearing these costs. Organizations in the United States spend an average of $15,000 per year for each individual employee experiencing a mental health issue (National Safety Council, 2021). The costs are likely growing as we enter the post-pandemic era. 31% of working adults reported that their mental health declined between 2021-2022 (Lyra, 2022), and mental health issues are on the rise, even among those with no prior history of mental health difficulties (One Mind at Work & SHRM, 2020).
Many erroneously believe the financial burden of mental health is due to the costs of treatment, but the reality is that the vast majority of this financial burden comes from diminished productivity and negative impacts on business growth (Trautmann, Rehm, & Wittchen, 2016). The good news is that investing in employee mental health has direct financial benefits, with research showing that every $1 invested in mental health returns around $4 for organizations (Chisholm, et al., 2016).
If you are a mental health advocate within your workplace, you are probably already convinced of the moral case for workplace mental health. Taking care of your employees and offering them the resources they need to live happy, fulfilling lives is simply the right thing to do. But if you are pushing for organizational change, you need to be prepared to make the business case for workplace mental health. At the end of the day, financial consideration are the primary driver for most organizations, and leaders are not going to invest in workplace mental health initiatives if they do not understand the costs of untreated mental health issues and how addressing these issues can yield a financial return. You have to speak to their concerns, and that means coming prepared with the facts on how poor mental health will affect the organization’s performance – especially as we move into an era where mental health is becoming a bigger part of the cultural conversation.
Improved Hiring
In the past, employees did not seem to expect as much in terms of mental health benefits from their employers. To be sure, they expected a workplace free of harassment and abuse, and they expected access to mental health care through their Employee Assistance Program and their health insurance – but not much beyond that.
Today, expectations are changing. The modern workforce expects employers to make mental health a central aspect of their business operations. 84% of workers indicated that mental health benefits are a factor in deciding where they want to work, and 59% indicated that they would stay at a job if it provided strong mental health benefits (Lyra, 2022).
Whether they intend to or not, companies that do not take workplace mental health seriously are violating the psychological contract. This problem is only likely to compound as Gen Z enters the workforce. A recent survey (Casic, Panselina, Lionatos, & Fay, 2022) indicated that the feeling burnt out and the absence of work-life balance are two of the primary reasons Gen Z employees would consider leaving a job – falling just behind inadequate salary. The same survey indicated that 50% of Gen Z employees want mental health training to be a part of their job and 82% want their benefits to include mental health days.
Many employers recognized the increased need for mental health services during the COVID-19 pandemic, but they mistakenly believe that demand will diminish as we move into the future. This is simply not true. Research has shown that mental health issues have been on the rise for many years, and the isolation and stress brought on by the pandemic did not cause many of these problems, but merely accelerated them (World Health Organization, 2022).
Given that context, it should not be surprising to learn that 64% of employees say they want the increased mental health benefits offered during the pandemic to continue; even so, 50% of senior leaders indicate that they plan to cut mental health benefits to pre-pandemic levels in the near future (Modern Health & Forrester Consulting, 2021). Many millennials and Gen Z employees believe that their employers are insincere in their discussions of mental health (Leonhardt, 2022) – and with senior leadership so eager to cut mental health benefits, can you blame them? Countering this justified cynicism will require companies to make an authentic, sustained commitment to workplace mental health, and in doing so, they are likely to have a competitive advantage when it comes to attracting talent.
Higher Productivity
In a recent survey conducted by Modern Health and Forrester Consulting (2021), C-Suite and HR Leaders indicated that improving productivity was the top benefit they saw from addressing workplace mental health. They are right to identify this as an area of focus. In a 2021 survey, 77% of workers indicated that their productivity decreased due to their mental health struggles (Mind Share Partners, 2021).
One of the obvious impacts on productivity comes in the form of absences. Employees with mental health conditions are more likely to take time away from work than their colleagues. In fact, mental health conditions account for 62.2% of all absentee days (National Alliance on Mental Illness, 2015). The costs of this time out of office add up. Depressed employees often take around 2.5 days off per month due to their condition, and depending on the severity of their depression, this can cost organizations anywhere from $3,500-12,000 per year (National Alliance on Mental Illness, 2015).
And while the costs of absenteeism are considerable, the costs of “presenteeism” are even higher. Presenteeism refers to employees forcing themselves to go to work, but feeling distracted and being disengaged. When employees struggling with their mental health are in office, they report having a harder time concentrating, thinking clearly, making effective decisions, engaging in creative problem solving, completing tasks in a timely manner, and responding to communication from colleagues (Mind Share Partners, 2021; One Mind at Work & SHRM, 2020). All of this translates to decreased job effectiveness.
Mental health related productivity loss due to presenteeism was found to be 5.1 times higher than loss due to absenteeism (National Alliance on Mental Illness, 2015). This same research shows that depressed employees report losing 4-5.6 hours per week due to presenteeism. Using the average hourly compensation in the United States – $33.03 as of the time I wrote this article (Bureau of Labor Statistics, 2023), this translates to a loss of approximately $6,340-8,880 per year for businesses.
Adding together the costs of absenteeism and presenteeism, we see that a depressed employee can cost a business anywhere from $9,840-22,880 (notice that this is in line with the $15,000 estimate given earlier). Keep in mind that this is the cost only for depression. While depression is the most common issue workers struggle with, many other mental health issues are brought to the workplace. Fortunately, most of the return on investment organizations experience from workplace mental health initiatives is likely to come from improved productivity (Trautmann, Rehm, & Wittchen, 2016).
These initiatives need to focus no only on improving mental health benefits, but changing the organizational culture. Employees need to feel that their health is supported for their productivity to improve (Chen, et al., 2015). And the goal of these initiatives should not only to make employees feel less stressed on the job, but to find meaning satisfaction in their work. Research has shown that providing employees with a safe work environment, supportive management, and job autonomy increases their satisfaction with work and positively impacts productivity (Shobe, 2019)
Increased Retention
As we saw earlier, companies with a strong wellness culture and quality mental health benefits have an easier time attracting talent. It should not surprise you to learn that these same companies also have an easier time retaining talent.
In the post-pandemic world, workers are increasingly saying they plan to leave their jobs in order to prioritize their mental health and wellbeing (Liu, 2021). In fact, 44% of Gen Z employees and 43% of Millennial employees reported knowing multiple people who have left jobs recently due to overwork and stress. When asked why they left their jobs in the last two years, Gen Z and Millennial employees cited inadequate pay, a work environment that negatively impacts their mental health, and burnout (Deloitte, 2022).
And it isn’t just young employees making these kinds of career moves. In a survey conducted in 2021, 32% of respondents across all age groups indicated that they voluntarily left a previous role due entirely or in part to mental health concerns. (Mind Share Partners, 2021). A similar survey found that 25-30% of employees of all ages indicated changing jobs because they wanted a work environment more conducive to their mental health and because they wanted better quality mental health benefits for themselves and their family members (Modern Health & Forrester Consulting, 2021).
Employers can stem the tide of resignations by taking mental health more seriously. Around 80% of employees are more likely to stay at a company that provides quality mental health resources (Modern Health & Forrester Consulting, 2021). According to a recent report, employees who felt that their mental health was supported by their employer were twice as likely to say they intended to stay at their job for the next 2+ years (Mind Share Partners, 2021).
Improving job retention requires more than just offering good benefits, like an EAP and insurance with strong mental health coverage. When organizations take a preventative approach to addressing occupational stress and adopt evidence-based policies to reduce burnout, they can decrease job turnover (O’Keefe, Brown, & Christian, 2014). Having a supportive work environment with caring colleagues and flexible work arrangements is associated with greater job retention (George, 2014). Providing resources to employees so they can learn to cope better with stress has been shown to increase job retention (Andrews & Wan, 2009; Woodall, Southby, Trigwell, Lendzionowski, & Rategh, 2017).
Citations
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