The importance of employee well-being
09 Dec 2022

The importance of employee well-being

Written by: Frankie Health

Employee well-being, or employee wellness, refers to the overall psychological, emotional and physical health of a company’s most valuable asset: its employees. Dozens of studies have demonstrated a strong correlation between employee well-being and the success of their organisation, reinforcing its importance for businesses of all sizes.

There are a variety of ways to both measure and promote employee well-being, including and especially through programs that support employee mental health. Mental health is critical to overall employee well-being because good mental health helps ensure one can confidently and comfortably deal with the everyday stressors of the workplace. When mental health is not sufficiently supported, especially over long periods of time, this can have a lasting negative impact on both employees and organisations.

In this article, we look at how exactly you can define and measure employee well-being in your workplace, and the essential role it plays in business success and positive outcomes.

What is employee well-being?

Employee well-being can be broken down into two main elements: mental health, which we’ll separate into psychological well-being and emotional well-being, and physical health.

Psychological well-being can broadly be defined as one’s ability to make rational, appropriate and goal-oriented decisions when confronted with social, professional or personal situations. Emotional well-being means being able to maintain a positive, balanced emotional outlook when confronted with stressful experiences, and having the strength to mentally separate these situations from other ongoing challenges in life.

Most people are able to do these things thanks to coping mechanisms they have either learned or discovered on their own, and teaching such mechanisms to employees is an excellent way to promote and improve both psychological and emotional well-being.

Physical health, well-being or fitness means being able to meet the physical demands of personal and professional life without injury, significant or lasting pain or discomfort, and being generally free of disease or illness.

It’s important to note that all types of well-being are connected and interdependent. For example, the relationship between physical fitness and psychological and emotional well-being has been confirmed by hundreds of studies and should not be overlooked by employers.

Taken together, this means that employee well-being refers to workers’ ability to perform happily, effectively and safely.

The impact of employee well-being on business outcomes

Employee well-being has a significant impact on many critical business outcomes, which is one of the major reasons more and more businesses are investing in mental health platforms that focus on mental health and overall well-being. Some of the most important outcomes affected by employee well-being include:

Productivity and efficacy:

Studies highlighted in the Harvard Business Review’s Global Happiness and Wellbeing Policy Report show that “a meaningful increase in well-being yields, on average, an increase in productivity of about 10%”, and that a strong correlation exists between employee satisfaction and productivity as well as overall company performance. Employees are also 18% more likely to “go the extra mile” when they feel their employer cares about their well-being.

Customer satisfaction and loyalty:

The same HBR report also highlights the connection between employee well-being and customer satisfaction and brand loyalty. In fact, this was shown to account for nearly 30% of variability in customer satisfaction on average. Employees serve as the face of your company, so it follows that their well-being determines the quality of the interactions they have with customers.

Absenteeism, tardiness and presenteeism:

These outcomes have all been linked to burnout, stress, low morale, depression, disengagement, illness and injury. The total costs due to absenteeism alone were estimated in 2013 at $84 billion in the US, and between $2,600 and $3,600 annually per worker for individual companies. This is one of the main ways poor employee well-being negatively impacts the financial outcomes of companies.


The Great Resignation in the US shone a harsh spotlight on the link between employee well-being and turnover, making it a hot-button issue in boardrooms, breakrooms, and Twitter feeds across the world. Today’s workforce places greater emphasis on work-life balance, mental health in the workplace, sense of community, and cultivating a supportive, inclusive company culture.

How to measure and support well-being in the workplace

There are many ways to measure employee well-being, both directly and indirectly.

Employee surveys, polls and interviews, for example, can provide companies with qualitative data on day-to-day experiences, overall levels of satisfaction or stress, and alignment with company goals and core values.

An employee mental health platform goes one important step further by gauging employee well-being in a more sophisticated and granular way, while still protecting individuals’ privacy and anonymity.

It is a good idea to combine these two approaches to help you better understand your employees’ well-being and provide insights into how to improve it.

Measuring employee well-being indirectly by tracking the known outcomes of positive and negative well-being is also important. Such outcomes include:

- Overall levels of productivity, efficiency and efficacy

- Number of sick days taken

- Total overtime hours per week or month

- Trends in attendance, absenteeism and presenteeism

- Turnover

- Customer satisfaction

- Financial performance

Combining direct and indirect measurements will give you the fullest picture of your employees’ overall well-being and how it can be improved.

>You may be interested in our related article"How to measure the ROI of employee mental health"

Of course, everyone has different wellness needs, and those needs change and evolve over time. This is why it’s so important for companies to measure employee well-being in the long run, and to offer support services to cover the wide range of mental health issues employees may encounter. Providing access to preventive, proactive mental health services will help avert many issues in the first place.

Wellness programs should therefore focus on offering highly personalised, data-driven, evidence-based support for individual employees. You can then use the anonymous data collected from these efforts to make corresponding changes to company policy and practices.

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Maintaining employee well-being – psychological, emotional and physical – should be a top priority for businesses of all sizes. The negative implications of poor employee well-being and mental health can be serious, while the returns on investments that support employee well-being are significant. Greater well-being brings lower turnover, higher job and customer satisfaction, and greater productivity.

Well-being can be measured both directly and indirectly, and companies need to engage in both to get a full picture of their employees’ well-being and its relation to specific business outcomes. It’s also important that wellness services be individualised and prioritise evidence-based approaches to therapy and self-support.

Companies that invest in a contemporary mental health platform can reap the many benefits of a more stable, motivated and passionate workforce, and, just as importantly, contribute to the well-being of employees whose time and efforts make it possible for the business to succeed.