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Wellbeing: The financial cost to your business of ignoring it.

Peter Drucker once proclaimed, “Culture eats strategy for breakfast.” Our experience at Kaya – and our clients’ experience – confirms his notion. And crucially, the cost of ignoring this fact far outweighs the cost of creating a performance culture where employees are engaged and thrive.
Strategy is important, but…

While a vision and strategy are vital, a culture where everyone pulls towards the common strategic goal and where discretionary effort is simply ‘the way we work around here’ is equally important. The key however to sustainable success is when this culture also promotes, encourages and builds wellbeing and mental health.

Our unsustainable reality

Research tells us that employee wellbeing has a significant influence on employee engagement and, in turn, individual and organisational performance[1]. It also paints a damning picture of the human and financial cost when, as is often the case, wellbeing and mental health are ignored.

  • Worldwide, only 13{be38fd1e2c946a347db4d7316b241dce4b842100e7b38236661610f0dce6def9} of employees are engaged in their work[2].
  • In the UK, 91 million work days are lost every year due to the symptoms of mental illness.
  • Depression is thought to cause 400 million lost work days annually in the USA[3].
  • Poor engagement leads to higher absenteeism and presenteeism[4].
  • Poor engagement also leads to lower performance and productivity[5].
  • Disengaged employees are more likely to leave[6].
  • Replacing an employee can cost up to 150{be38fd1e2c946a347db4d7316b241dce4b842100e7b38236661610f0dce6def9} of a departing employee’s salary when recruitment costs, lost productive time, training and onboarding are considered[7].

And don’t assume that Australia, widely heralded for its happy-go-lucky national psyche and enviable lifestyle, is exempt.

  • It’s estimated that the cost of mental illness to Australia’s overall wellbeing is $200 billion a year (that’s about 12 per cent of the economy’s annual output[8]).
  • According to statistics calculated by the Harvard School of Public Health, the World Economic Forum and Australia’s Mentally Healthy Workplace Alliance, poor mental health is costing Australian businesses nearly $11 million per year[9].
  • Safe Work Australia found that productivity losses associated with low levels of management commitment to psychological health and safety in the workplace costs employers around $6 billion per annum[10].
Your mental health and wellbeing obligations as a business leader

Despite the groundswell of research and knowledge around the human and financial cost of ignoring mental health and wellbeing (or filing it under ‘Too hard’), many leaders are ignorant of the cost to the bottom line.

Moreover, they are often oblivious to their own obligations to support mental health and wellbeing.

“The harmonised Work Health and Safety (WHS) laws require organisations to take all reasonably practicable steps to protect the physical and mental health and safety of their workers.”

Harriet Eager, Employment Legal Team Partner, MinterEllison[11]

Results from the 2016 MinterEllison ‘Managing Mental Health in the Workplace’[12] survey found that:

  • Only 38 per cent of respondents had discussed staff mental health issues at board level
  •  A majority of organisations are making little or no investment in mental health and wellbeing programs, even though these can have a dramatic effect on the bottom line.
Wellbeing isn’t just about mindfulness and fruit bowls

Of course, many businesses are making efforts in the mental health and wellbeing space, but many business leaders take an over-optimistic view of the work they’re doing.

Pleasant working environments, fitness facilities, mental health talks, mindfulness workshops, flexi-time and fruit bowls are all good things. However, unless they’re part of a broader strategic program, they are simply a list of unconnected initiatives. They may help create a sense of wellbeing for a few employees, but they will rarely improve the wider culture.

Whilst they create the feeling of action and may be in fact a useful promotion exercise unless they are part of a more holistic plan then the benefits will be short-lived.

In short, unless these piecemeal efforts and investments are part of an integrated culture of wellbeing, there is the risk that nothing is achieved and that they are a a waste of money. As a friend of mine observed:

“While a focus on individual wellbeing is vital, it strikes me that all most organisations are doing is teaching people how to be healthy within a sick environment.”

In truth, while some organisations and leaders talk a good game when it comes to promoting employee wellbeing and resilience, most are guilty of cutting corners in pursuit of profit, even though, when funds for wellbeing and mental health are cut, there is a real financial cost.

So, how do we create a sustainable performance culture?

How do we create a culture of wellbeing that’s sustainable, promotes performance and engagement, and allows an organisation’s strategic direction to be achieved? Well (spoiler alert), the answer isn’t simply more fruit bowls, mindfulness sessions, flexi-time and cheery, collaborative work spaces.

The evidence is clear: an organisational lens is needed if we truly want to create a culture where our people both flourish and perform. This organisational lens enables us to develop a holistic approach where we have a clear view of what is needed, why our workplace needs to implement it, and what activities will have the biggest ROI. A culture where our employees are empowered and enabled to look after their own wellbeing and mental health.

Significantly, the evidence tells us that organisations with mentally healthy workplaces spend resources on certain key factors to promote the desired culture[13]. These factors include:

  • a deliberate and sustained focus on building an organisational culture of wellbeing and mental health developing team-based interventions and alignment opportunities
  • promoting and actively facilitating help-seeking
  • providing training for all levels of the organisation on wellbeing, resilience and mental health
  • focusing on developing executive and managerial competence
  • boards focusing on the culture of wellbeing and recruiting CEOs with the capability to lead in a way that demonstrates a focus on mental health[14].

InfoGraphic_WellbeingResearch05.pdf

At Kaya, we have developed a robust framework for organisations that wish to implement a sustained focus on employee wellbeing and productivity. This framework pulls together the key business drivers and cultural influences that lead to a thriving high-performance organisation. If you’d like to find out more about our approach and how it would work for your organisation and people, please get in touch via www.thekayagroup.com

Byline:

Drawing on his post graduate research background, Stephen Macdonald develops and delivers a range of leadership enhancement, work performance, team effectiveness, workplace wellbeing and organisational alignment solutions across an equally diverse range of industries. In addition to a strong focus on effective leadership and management practices, with an emphasis on improving the alignment of organisational culture, team effectiveness and the enhancement of employee mental health and wellbeing, he has a specialist interest in the professional services, public, not-for-profit and education sectors.

[1] https://www.robertsoncooper.com/gooddayatwork
[2] http://news.gallup.com/businessjournal/188033/worldwide-employee-engagement-crisis.aspx
[3] Mental health and business The cost of mental health and ways to reduce the impact on business – The Shaw Mind Foundation
[4] Purcell, J., Kinnie, N., Swart, J., Rayton, B., & Hutchinson, S. (2008). People management and performance. Routledge.
[5] Purcell, J., Kinnie, N., Swart, J., Rayton, B., & Hutchinson, S. (2008). People management and performance. Routledge.
[6] Corporate Leadership Council (2008). “Improving Employee Performance in the Economic Downturn.” Corporate Executive Board.
[7] Corporate Leadership Council (2008). “Improving Employee Performance in the Economic Downturn.” Corporate Executive Board.
[8] https://lateraleconomics.com.au/
[9] December – January 2016/2017 edition of COMPANY DIRECTOR, www.companydirectors.com.au
[10] https://www.safeworkaustralia.gov.au/news-and-events/news/new-research-reports-released-workplace-mental-health-australia
[11] December – January 2016/2017 edition of COMPANY DIRECTOR, www.companydirectors.com.au
[12] https://www.minterellison.com/articles/survey-managing-mental-health-in-the-workplace
[13] Developing a Mentally Healthy Workplace: A review of the literature, was produced by the University of New South Wales and the Black Dog Institute for the Mentally Healthy Workplace Alliance
[14] December – January 2016/2017 edition of COMPANY DIRECTOR, www.companydirectors.com.au