Research from NZIER and Xero recently found that for every dollar invested in organisational well-being, the financial return average was between five and twelve times within a year. Meanwhile, the ROI on Employee Assistance Programmes (EAPs)—which offer counselling and mental health advice—was between three and five times every dollar spent.
The lesson: it pays to prioritise well-being.
Even on a grand scale, prioritising well-being can have a profound effect. Take Bhutan for example. With its Gross National Happiness Index guiding its economic and social policies, Bhutan’s has one of the fastest growing economies in the world and has cut poverty by two-thirds in the last decade.[1]
The European Union has also embraced the transformative power of well-being, recently adopting the economy of well-being that will focus on social protection, gender equality, health and education, to drive economic growth into the 2030s.
People’s wellbeing and economic growth are interdependent and mutually reinforcing.
—Council of the European Union.
While a business is obviously not a country, many of the financial benefits touted in the Economy of Well-being also apply on a small scale. Here are the top three benefits.
Improved productivity
Historically, well-being and employee engagement have a strong correlation. Moreover, employees who report high levels of well-being are more likely to go the extra mile.[2]
In particular, improved mental well-being in the form of reduced stress and better work-life balance can help curb presenteeism and lead to dramatic upticks in employee and productivity.
More and more, we’re seeing organisations and nations adopting shorter work weeks to boost productivity and help employees find a better work-life balance. And all the evidence suggests that it works. New Zealand company Perpetual Guardian saw stress levels drop (from 45 per cent to 38 per cent) and work-life balance improve (from 54 per cent to 78 per cent) after a six-month 4-day-week trial[3]. Meanwhile, a two-year trial saw Iceland reduce the hours of its working week from 40 to 35 or 36 hours, which saw participants gain “greater well-being, improved work-life balance and better cooperative spirit in the workplace—all while maintaining existing standards of performance and productivity”.[4]
Read more: The Manager's Guide to Workplace Well-being
Better health for fewer days lost
According to Gallup, 75 per cent of medical costs accrued are mostly due to preventable conditions. Improved physical, mental and nutritional health can lead to fewer sick days and presenteeism as well as accidents caused by fatigue.
In 2018, absenteeism cost New Zealand $1.79 billion—between $600 and $1000 per person a year.[5] Meanwhile, a 2015 survey in Australia estimated absenteeism cost organisations an estimated AU$578 per employee per day of absence, with Australian employees taking around 10 sick days a year, bringing the annual cost up to $5,780 per employee. The cost of the economy was over $44 billion per year.[6]
Moreover, evidence suggests healthy workers work almost three times as effectively as unhealthy workers.[7] The benefits of addressing employee mental health are particularly noteworthy, with research finding a 500 per cent return from improved work output and reduced leave for every dollar spent on identifying, supporting and case-managing workers with mental health issues[8].
If you want to reduce the cost of absenteeism and crank up employee productivity, take care of their health.
Improved retention
Providing ongoing education/training and upskilling opportunities for your staff is one of the key pillars of employee experience. It also has a significant impact on staff retention, with the 2020 Global Talent Trends Report, finding that companies that rated high on employee training saw 53 per cent lower staff attrition.
Lower attrition means less funds spent to recruit and train up a new staff member, not to mention the productivity gains of not having to wait for the new staff member to get up to speed
Workplace training and upskilling also helps your employees feel both career and financially secure. As their skills grow they grow more confident in their ability to find work in the event they suddenly find themselves unemployed.
Career well-being is the most important form of well-being there is. According to Gallup, people with high career well-being are more than twice as likely to be thriving in their lives overall. More notable still is that unemployment can really knock a person sideways. A decades-long study of 130,000 people found workers took over five years to recover from a prolonged period of unemployment. For comparison: people recover their well-being quicker from the death of a spouse (usually within a couple of years).[9]
By offering education and upskilling, you’re improving your workers’ employability and reducing their likelihood of long-term unemployment, which could affect them for years to come.
Conclusion
Well-being plays a significant role in boosting employee productivity, reducing absenteeism and presenteeism, and retaining talent—all of which can have a significant financial impact on your business. If you want to remain in the positive—both financially and morale-wise—investing in well-being is a sound business strategy.
Help your staff bounce back from challenges and set backs with The Manager's Guide to Workplace Well-being.
[1] The World Bank, 2019. The Work Bank in Bhutan, worldbank.org.
[2] Wellplace.nz, 2018. Workplace Wellbeing Evidence Review, wellplace.co.nz.
[3] 4 Day Week, 2019. White Paper – The Four-Day Week, 4dayweek.com
[4] Guðmundur D. Haraldsson and Jack Kellam, 2021. Going Public: Iceland’s Journey To a Shorter Working Week, autonomy.work
[5] BusinessNZ, 2019. 2019 Workplace Wellness Report, business.co.nz
[6] Aifric Boylan, 2017. ‘How to reduce absenteeism in your workforce’, hrmonline.com.au
[7] Wellplace.nz, The business benefits of investing in wellbeing, wellplace.nz
[8] Australian Human Rights Commission, 2010. Mental health in the workplace, humanrights.gov.au
[9] Tom Rath and Jim Harter, 2010. ‘Your Career Well-being and Your identity’, news.gallup.com
