In this post, you’re going to find out why happy employees are good for business and discover the business case for wellbeing.
Almost every area of health affects our daily performance levels. The same is true for mental health; if your employees are struggling and unhappy, they’re going to be less productive. But anecdotal evidence isn’t enough; let’s take a look at some of the facts.
1. The financial impact of poor mental health
The report focused on mental health, with the average cost of poor health adding up to £1,652 per employee per year in the private sector. That increased to £1,716 per employee in the public sector.
It can be even worse, depending on the area of work. Deloitte showed that, for a financial services business with 1,000 staff, the average cost of poor employee mental health works out at £3,245. Across the year, this will cost that organisation £3.2 million.
Even if your business isn’t that large, the mental health impact of unhappy employees is significant and it’s a cost that’s increasing every year (our latest analysis showed January 2021 to be wellbeing’s worst on record).
Unsurprisingly, workplace health initiatives that tackle this provide a significant return on investment for an organisation. The average return on investment for workplace mental health initiatives has risen from 400% in 2017 to 500% in 2020.
2. The mostly unknown cost of staff absence
A third of organisations report mental ill health among their top three causes of short-term absence – according to the CIPD Health and Wellbeing at Work report. What’s more, XpertHR’s14th annual survey found that the average cost of sickness absence in 2019 was a massive £568 per employee.
The same report also admitted that this figure is unlikely to show the true scale of absence; 42% of employers said they did not know if their absence cost data was accurate or not.
This doesn’t take the full impact of Covid-19 on sickness absence rates into account – information which is currently unknown. It remains striking how much HR and employers may be underestimating the total cost of their staff absence.
3. Higher staff turnover
Put simply: if your employees are unhappy with the business and do not feel supported, they are more likely to leave.
As you’ll already know, staff turnover is costly, particularly when taking recruitment fees, onboarding and training into account. Oxford Economics estimate the average cost to train and replace an employee that’s earning over £25,000 per year is just over £30,000.
If you replace three employees on this wage over one year, you’ll cost your business more than £90,000. The hard truth is you sometimes have to let staff go, but by ensuring your employees are happy, you’ll reduce the level of turnover and make huge savings. And, of course, supporting your employees is the right thing to do.
If your employees are unhappy, they’re not going to work at their best. To make matters worse, many of your employees won’t take the time away from work they need. This is known as presenteeism: employees that need a break but do not take one.
Presenteeism is extremely hard to detect, measure and act upon, making it extremely costly for businesses. In the long term this can have a higher cost on your business than absence. Employees reporting to work with poor health are costing you four times as much as employee absence, found Deloitte.
And there’s more
We all know there are other intangible costs associated with unhappy staff – from the cost of a damaged brand image to poor culture and low morale. It’s clear that helping your employees to be happy and feel supported is integral to the performance of your business.