How to measure the ROI of employee mental health
The results are in: ignoring your employees’ mental health is an expensive mistake. In 2021, researchers at the University of Chicago found that companies spend over $15,000 annually on each employee experiencing mental health issues. Still, some industry leaders are wary about taking the leap to proactively invest in workplace wellbeing.
The available data on the ROI of employee mental health makes it clear that workplace wellness is a worthwhile investment. But treating mental health as a box-ticking exercise won’t boost your revenue or effectively cut costs. Your teams deserve digital tools that offer meaningful support, a frictionless user experience and opportunities for real engagement.
Working with a diverse network of over 1,000 therapists, Frankie Health collects unique insights about clinical anxiety and burnout across 70 countries worldwide. We keep a finger on the pulse of today’s mental health trends so you can think about what matters most – your employees’ wellbeing.
With remote work on the rise and burnout looming across the globe, today’s leaders need to pay attention to the role of job-related stress on their company’s bottom line more than ever before. Let’s go over what we know about the ROI of mental health in the workplace – the good, the great and what you might still be missing.
The cost of ignoring employee mental health
Think employee mental health programs will trim your budget? Think again. Poor workplace mental health actually comes with a hefty price tag for your company. According to wellness advocate Rob Cooke, the U.S. economy loses 30 billion dollars a year to poor workplace mental health. Fewer productive hours, lower morale and sky-high healthcare costs make ignoring burnout a costly choice.
The World Health Organization (WHO) reports that the global economy loses a startling USD$1 trillion each year to the effects of untreated anxiety and depression on workers’ productivity. Meanwhile, the Mental Health Foundation estimates that investing in employee mental health programs could save UK employers £8 billion annually on average.
While estimates of the exact cost vary, it’s clear that failing to invest in employee mental health drains your company’s valuable resources at every level. Let’s zoom in and get a clearer picture of the many ways that employees’ mental distress can hurt your bottom line.
Absenteeism and presenteeism
It’s a simple truth: employees wrestling with stress show up for work less often. As the Harvard Business Review reports, mental health-related absenteeism costs companies around USD$27 billion per year.
But presenteeism – which refers to employees who are technically “present” but not performing optimally due to chronic stress and burnout – may pose an even bigger problem.
Presenteeism is sneakier and more subtle than absenteeism, but it’s far more deadly. Over time, it can steal productivity, blunt creativity and decrease problem-solving skills. One WHO study found that presenteeism costs employers around 10 times more than absenteeism in a given year.
When they’re stressed, depressed or under duress, employees don’t just stay home from work – they’re also more likely to stop showing up.
One of the best things you can do to boost the ROI of your recruitment and HR efforts is to keep the employees you’ve already hired and trained. The costs of onboarding new team members due to job stress add up to an estimated USD$5,733 per year per employee. What’s more, high turnover can lower morale and sap your company of its best talent.
Increased healthcare costs
Workplace stress also causes healthcare costs to add up – but not just in the way you may think. Poor mental health takes a toll on our thoughts and emotions, as well as our relationships and physical wellbeing.
Still skeptical? Sixty percent of the costs of treating depression actually go towards managing related physical conditions, such as heart problems and diabetes.
Stressed-out employees visit emergency rooms more often, seek out more medical specialists and are more likely to struggle with chronic pain – leading to $USD3,000 more in healthcare costs per employee each year.
Chronic stress can leave some employees struggling to maintain their health and take others out of the workforce entirely. When burnout sets in, disability claims skyrocket.
Deloitte estimates that 30-40% of short-term disability claims and 30% of long-term disability claims in Canada are related to mental health concerns – and that percentage is growing every year.
Loss of valued team members
Recruiting and maintaining a diverse workforce comes with many benefits, including positive ROI. Companies with diverse executive teams are 33% more likely to lead their industries in terms of profitability. A study by Mckinsey reveals a direct correlation between a culturally and ethnically diverse leadership team and increased profits.
The ROI of employee mental health programs
Looking for proof that investing in mental health yields a positive ROI? Look no further. A 2021 study from the National Safety Council and NORC from the University of Chicago found that companies that invested in mental health programs saw an average ROI of $USD4 for every $USD1 spent. A similar ROI is reported in a recent Deloitte and Bell Canada study.
These estimates are valuable, but they’re most likely underestimating the real potential ROI of employee mental health platforms. Mental health impacts every aspect of our daily lives. Employee turnover and productivity rates alone don’t offer a comprehensive picture of how investing in mental health programs can increase your revenue.
To calculate the ROI of investing in workplace mental health, you’ll need to consider both quantitative and qualitative benefits. You can compare quantitative benefits to measurable, quantifiable “hard skills” and qualitative benefits to “soft skills” like empathy, communication and company culture.
"Mental fitness is a spectrum, not a destination. That’s why Frankie’s comprehensive suite of digital tools was designed with both diversity and accessibility in mind (we created native Microsoft Teams and Slack apps). We provide frictionless, evidence-based employee mental health support to your team members, no matter where they are on their mental health journey" - James McGann, Frankie Health Co-Founder.
Still not sure if employee mental health is a worthwhile investment? Let’s break down some of the ways that investing in workplace wellness can cut costs and boost profits – from the most obvious to the least well-known.
ROI of employee mental health: quantitative benefits
First, let’s crunch some numbers and look at the money (and productivity) you’ll save by investing in high-impact areas of employee mental health.
Employee mental fitness increases productivity
Feel good, work better: companies that invest in mental health programs see improvements in both the quantity and quality of employees’ work.
One UK study found that a company with 500 employees would see a net return of £347,722 in savings after an initial investment of £40,000 into workplace mental health interventions due to decreased absenteeism and presenteeism.
Mental health programs improve performance
No one performs at their best when they’re not in tip-top physical shape – so why do we expect the same when people are struggling with their mental health? Research shows that employees who participate in a company-provided mental health program miss an average of 0.32 fewer days of work each week and are unproductive for 0.64 fewer days per week.
The early signs of burnout can be easy to miss. Frankie’s employee mental health platform can help you keep an eye on your team’s wellbeing over time and address any problems before they get worse.
Effective mental health solutions improve employee retention
Just as in any relationship, happy employees are less likely to stray. Help your team manage their stress, and they’ll be more apt to return the favor. Recent studies have found that employees who participate in workplace mental health programs are 1.6 times more likely to stay with their current company.
Comprehensive mental health programs reduce healthcare costs
Investing in mental health care can prevent more expensive interventions, from prescription drugs to costly procedures. Economic models suggest that investing £20,676 in a cognitive-behavioral therapy (CBT) program for employees could yield a net profit of £83,278 over the course of 2 years.
ROI of employee mental health: qualitative benefits
The qualitative benefits that contribute to the ROI of employee mental health are less easily measured, but no less important. In today’s global, remote-first economy, top talent has a wide variety of companies to choose from. Improving your approach to mental health can make your firm stand head and shoulders above the rest.
Below are just a few of the qualitative benefits you’ll notice after you begin to invest more proactively in your team’s mental health.
Positive mental health solutions increase employee engagement
Employee engagement is one of the most influential KPIs in the modern workplace. Greater engagement decreases turnover, boosts productivity and improves performance. But only 9% of UK employees say they currently feel engaged and satisfied at work – partly due to high stress and poor mental health.
> You may be interested in our article “How does mental health drive employee engagement”
While digital tools like WorkHuman, Lattice or CultureAmp can help you massively to track and boost engagement, it isn’t enough. You need holistic solutions like Frankie to help your diverse workforce feel valued, cared about and motivated to stay tuned in.
At Frankie, we’ve discovered that employee engagement is deeply linked to the emotion of feeling valued. On a daily basis, our HR and Wellbeing managers receive feedback like this:
Mental health programs can help your employees stay plugged in and present at work. Frankie’s weekly check-ins help employees monitor their mental health, while HR leaders are able to check your organizational pulse with your company’s “Anxiety Rate”.
Mental health resources attract fresh talent
Comprehensive, user-friendly employee mental health programs like Frankie don’t just help your current employees. They can also serve as recruitment tools to attract top talent. The American Psychological Association (APA) reports that 81% of workers are looking for a company that proactively works to support their mental health in their next job.
Mental health care decreases stigma
When was the last time you felt uncomfortable bringing up mental health at work? Too often, employees don’t speak up about stress due to fear of judgment.
Research conducted by the Mental Health Commission of Canada found that company mental health initiatives decreased employees’ perceived workplace stigma by 38%. Showing your employees how much you value their wellbeing can open up the conversation and improve company culture.
Reliable mental health tools increase trust
Earning your team’s trust is in your best interest: employees who trust you are less likely to disengage, leave their job or slack off at work. But according to Gallup research, just 27% of British employees strongly agree that they can trust their company leadership to protect their wellbeing.
Prioritizing your employees’ mental health in a new way is a great way to show them that you can be trusted. By investing in their health and wellness, you can show your employees that you have their back – and earn their loyalty in return.
The bottom line: investing in mental fitness pays back
Investing in mental health is key to your company’s success. Still, just ticking the box with an EAP isn’t enough. Companies have historically turned to traditional employee assistance programs (EAPs) to address common mental health problems at work. But outdated technology and limited, cookie-cutter programs aren’t cutting it – or cutting your costs – anymore.
> You may be interested in our article “Why EAPs don’t work.”
Your employees deserve support that works where and when they need it.
Frankie Health offers clinically-backed employee mental health resources through a frictionless user experience (just two clicks to book a session) that integrates easily into your existing tools, like Slack and Microsoft Teams.
To learn more about how Frankie can help you improve company culture, save money and boost employee engagement, contact a member of our team.
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