What is the cost of mental health in the workplace?

Megan Thompson · December 22, 2021

Poor mental health and wellbeing at work can cost organisations a significant amount of lost time, money and resources. Employees who feel unhappy or unsupported cannot work to their full potential because there is a gap between what they need and what they’re getting. So what is the cost of mental health in the workplace?

The cost of mental health in the workplace: the financial impact

The average cost of mental health in the workplace is £1,684 per employee every year. This figure takes into account money lost because of factors such as absence, presenteeism and turnover. This figure changes according to your sector, with public sector employees facing a higher cost of mental health per employee than those in the private sector.

The impact of the pandemic has been significant, with mental health problems soon projected to surpass other work related illnesses such as musculoskeletal disorders, respiratory diseases, cancer, skin issues, and hearing damage.

Employees are refusing to tolerate workplaces that don’t support wellbeing and this has contributed to a talent shortage, as increasing numbers of unhappy employees join the great resignation. Turnover and the loss of key players can be a huge expense, at an average cost of £25,000 to replace an employee.

But it isn’t just the employees who are leaving that you need to worry about. Those that remain, but also experience poor mental health in the workplace are far more likely to experience higher levels of absence and sickness. In 2020/21 work-related stress, depression or anxiety accounted for 50% of all work-related ill health with an estimated 822,000 workers affected by stress, depression or anxiety in the UK.

Disengaged, demotivated and unhappy employees are also more likely to display signs of presenteeism, resulting in lower levels of productivity at work. So what is the cost of this?

The cost of mental health in the workplace: the impact on productivity

The impact that poor mental health has on our productivity is clear. When people feel stressed or anxious at work, their brains go into a fight or flight mode and release hormones like cortisol and adrenaline.

This causes people to become siloed, selfish and reduces our capacity to think clearly and be effective at work. Our attention is wrapped up in the problems causing us stress and individuals struggle to identify the solutions.

Prior to the pandemic, research by American Psychiatric Association showed that employees with unresolved depression suffer a 35% reduction in productivity, contributing to a loss to the U.S. economy of $210.5 billion a year.

And the cost of mental health in the workplace isn’t getting better with remote and hybrid working. 91% of employees working from home have reportedly experienced moderate to extreme stress since the start of the pandemic. Combined with an ability to avoid face-to-face interactions, often managers and HR are unable to identify those who are struggling the most.

When it comes to performance, 62% of workers reported losing at least one hour a day in productivity due to COVID-19 related stress, with 32% losing more than two hours per day. This has a very real impact on employee morale, and the wider organisation.

Improving mental health in the workplace

What is the cost of mental health in the workplace?Better mental health support in the workplace can save UK businesses up to £8 billion per year. But it is critical to choose the right mental health support for your people.

Well meaning organisations often consider benefits, EAPs, gym memberships and yoga sessions as a solution to manage the cost of mental health in the workplace. But unless these have been specifically selected based on your people’s needs they may not be the right fit.

Why? Because we all have different needs, and different stressors. It’s unlikely that you experience stress, anxiety or unhappiness in the same way as your colleagues. Because despite all humans having the same innate human needs, we all tend to experience them differently. We seek to get them met differently and they can have a different meaning to each of us.

Improve mental health with WeThrive for free

That’s where WeThrive’s mental health and wellbeing tool can help to realistically manage the cost of mental health in the workplace by providing a solution that works for everyone.

Employees can access WeThrive any time to take an individual mental health and wellbeing survey to identify and resolve their personal mental health problems. Your people instantly receive a personalized report and set of recommendations. This means they can immediately see what works well and where they could make changes to boost their mental health & wellbeing.

Sign up today and get 10 free accounts for you and your colleagues.