Cost to employers of poor mental health increases, Deloitte

The cost of poor mental health to businesses has increased 25%, as more employees leave jobs citing burnout and exhaustion, reveals new Deloitte study

Poor employee mental health is costing UK businesses more than ever, with costs up 25%, to £56bn in 2020-21 compared to £45bn in 2019, reports Deloitte.

In a new report, Deloitte’s analysis shows how the pandemic has had a major impact on employee mental health leading to higher staff turnover for businesses.

Pandemic accelerated mental health issues

Research shows that the pandemic has taken a huge toll on the mental health of the nation. A 2021 survey by Mind of over 40,000 staff working across 114 organisations taking part in our Workplace Wellbeing Index revealed that two in five (41%) employees said their mental health had worsened during the pandemic.

The lockdowns and restrictions also gave many people more time to think about what they wanted from their lives and their careers, and as a result more decided to leave or move jobs. And that data backs this up.

The great resignation

Deloitte’s recent research has found that 28% of employees have either left in 2021 or are planning to leave their jobs in 2022, with 61% citing poor mental health as the reason for leaving.

Young people (18-29 years old) were found to be most likely to have moved jobs or be considering a job move with one in five saying they were planning to leave and one in four that they had intentionally left their job in the past 12 months. Of those who had intentionally left or planned to leave their job, two in three said this decision was driven by poor mental health.

“Mental health issues are a strong driver for the ‘Great resignation’,” says Elizabeth Hampson, Deloitte director and author of ‘Mental health and employers: the case for investment - pandemic and beyond’.

“Long hours, increased stress and job insecurity have had a detrimental impact on quality of life during the pandemic. People are leaving their jobs, re-evaluating their careers, and changing occupations in large numbers.”

Burnout among employees, such as feelings of exhaustion, mental distance from the job and reduced job performance, have been more evident during the pandemic. And as such, employers should take action, both to ensure employees are supported and to themselves save costs.

And while there has been some improvement in the level of mental health since the start of 2021, overall wellbeing is lower than before the pandemic.

Covid-19 has given employers an opportunity to tackle stigma and improve awareness.

“Measures by employers to improve mental wellbeing should not only benefit employees themselves but should also reduce employment costs such as recruitment costs and provide broader societal benefits.”

Win-win situation – supporting employee mental health

Expectations on employers are changing, with one-third of employees surveyed indicating they would like to see more support to their mental health and wellbeing from employers.

This will mean greater investment in screening and adequate training measures, including mental health awareness and personal therapy options, as well as intervention techniques like education programmes that help identify individuals who may be experiencing mental health issues.

“Wellbeing must become a strategic priority for organisations of every size – not only to support employees experiencing anxiety and stress, but also to prevent people from becoming overwhelmed and overworked in the first place,” says Jackie Henry, managing partner for people and purpose at Deloitte UK.

“Leadership should set the tone at the top: whether continuing to invest in training to help managers and employees spot signs of poor mental health and understand how to reach their employees and help.”

And the case for investing in employees’ mental health is clear. Evidence suggests that employers who invest in staff wellbeing are more likely to report having staff who are happy, productive, and less likely to leave.

As costs of presenteeism and turnover are much greater than the costs of absence from work, organisations could consider how to practically better support employees to have effective work-life balance and reduce risk of burnout.

Deloitte research suggests employers see a return of £5.30 on average for every £1 invested in staff wellbeing.

Actions organisations should consider to tackle mental health

So, what can employers do? Deloitte recommends a number of actions for leaders to consider for monitoring and raising awareness and changing the culture and increasing support:

1.     UK organisations should sign The Mental Health at Work Commitment, a public declaration of a business’ prioritisation of workplace mental health. Where an organisation has a global footprint, sign the Global Business Collaboration for Better Workplace Mental Health Leadership Pledge.

2.     Set the tone of the organisation and keep mental health concerns high on the leadership agenda.

3.     Commit to learning from the pandemic, especially regarding the causes and implications of stress and burnout among employees.

4.     Establish and monitor metrics including for happiness or wellbeing in the workforce mental health issues and anxiety levels within the business.

5.     Be alert to the specific difficulties for higher-risk groups, who may have greater exposure to mental health issues, such as young people, those with caring responsibilities, key workers, and minority employees. This may also require investment in financial literacy training.

6.     Support employees where possible with flexible working and an effective work-life balance to reduce risk of burnout.

7.     Provide greater support for employees with their mental health calls for a shift in organisational culture and changing culture can take time. The culture should give employees the time and space to take care of their mental health and feel able to express concerns.

8.     Rather than a one-off exercise, organisations should continue to educate all employees, and managers specifically, to spot signs of poor mental health in others.

9.     Employers should recognise the growing use of apps to support mental health and regularly review their use of these tools to support employees.

READ Deloitte research on mental health


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