The emotional and economic costs of overlooking wellbeing in the workplace

Daniela Pleiner

We live in a paradoxical time where wellbeing is talked about more than ever, yet sick leave rates are soaring. 

The emotional and economic costs of overlooking wellbeing in the workplace 

Stress-related illnesses are now a daily reality, impacting not just personal health but also racking up days away from work. More than just a health issue, this trend is a pressing economic problem for businesses and communities alike. 

So, what’s driving this increase in workplace stress, and more importantly, how can we tackle it in our organizations? 

What is wellbeing at work? 

Wellbeing is the state of being comfortable, healthy, and happy. It is a complex, layered topic that encompasses five key elements: 

  • Physical health: Being fit and energetic,  
  • Emotional health: Maintaining a positive mental state,  
  • Social wellbeing: Having genuine relationships at work,  
  • Financial wellbeing: Not stressing over finances, 
  • Environmental wellbeing: Experiencing a safe and comfortable workplace. 

Many organizations, well-intentioned, tend to see employee mental health, wellbeing, and burnout as mainly personal challenges. As a result, they typically respond with wellness programs and perks such as gym memberships or free massages at the office. While these initiatives are helpful, they usually reflect a reactive stance towards mental health issues instead of an active strategy for workplace wellbeing. Importantly, they often overlook a key aspect: although mental challenges are personally experienced by individuals, they often stem from wider organizational issues1. Heavy workloads, unsupportive environments, negative workplace culture, and difficulty balancing work with personal life can all harm mental health2.

In recent years, it’s not just the frequency of sick leave that’s notable, but also its duration. In the Netherlands, the average length of sick leave for psychological reasons has increased by 10 days compared to five years ago. This trend is particularly concerning for Dutch employers who are legally required to pay a portion of an employee’s wages for up to two years during sick leave3.  

Certain groups, including young people up to 25, adults <45 years with a young child (<11) living at home, those with disabilities, and people in challenging circumstances, face higher risks. Among these, women are more likely to experience depression and anxiety4

The cost of mental health 

The impact of mental health on the workplace is both profound and costly. Globally, each year, approximately 12 billion workdays are lost to depression and anxiety, translating into an estimated $1 trillion loss in productivity5. A staggering figure that underscores the urgent need to address this issue in the workplace. 

The mental health crisis, already significant before COVID-19, worsened during the pandemic, leading to increased stress levels, especially among young people and those with pre-existing mental health conditions. Work-related stress factors, like understaffing, alongside broader issues such as limited access to mental health care, have further contributed to this decline in wellbeing6,7

Zooming into the Netherlands, the situation mirrors this global crisis. One in five workers here battles burnout symptoms. In the first quarter of 2023, more than 26% of the total number of absenteeism days were due to psychological reasons. This alarming rate suggests a potential escalation; by 2030, stress-related absences could incapacitate more than a third of the workforce8,9.  

These trends are not isolated to the Netherlands but are part of a broader, global concern. Poor mental health is projected to cost the global economy approximately $6 trillion per year by 203010

More than just statistics, these numbers reflect the real challenges faced by people in their jobs, and highlight the need for organizations to create healthier, more supportive work environments. 

Read also: Allyship Uncovered: How Your Actions Shape a Better Workplace – Effectory 

Why should employers care about employee wellbeing?

Understanding the importance of employee wellbeing is not just the right thing to do, but also a strategic business advantage. 

In today’s competitive labor market, prioritizing mental wellness is key to attracting and retaining talent. A McKinsey survey emphasizes this, revealing that 60% of Gen Z workers consider mental health resources vital when choosing an employer. Similarly, these initiatives play a significant role in their decision to stay with a company11.  

Read also: Retention Reality Check: What Makes Employees Stay or Leave Your Organization?   – Effectory 

Focusing on employee wellbeing comes with additional benefits. A study by the University of California, Riverside, observed a 5% productivity increase in companies that focus on wellbeing. Impressively, for every dollar spent on wellness programs, there’s was a return of $3.27 in healthcare savings and $2.73 in reduced absenteeism costs

Programs aimed at helping employees balance their work and life responsibilities have also shown a positive return on investment. Every dollar invested in this area resulted in organizational cost savings of $1.68, factoring in reduced turnover, presenteeism (where employees are at work but not fully productive), and healthcare usage12.  

However, wellness programs alone aren’t enough. Real change comes from a long-term commitment to a workplace culture that listens and responds to its people. Understanding directly from employees what they need to feel supported at work is crucial. It’s about turning feedback into action, which in turn boosts engagement and productivity. 

The relationship between engagement and wellbeing 

We know more about mental health now, yet we still mainly measure workplace wellbeing by looking at absent rates. But cases of presenteeism prove that people can be at work and still be completely disengaged and unhappy.

When we start considering factors like employee engagement as part of the wellbeing equation, things start to change. That is because wellbeing directly affects employee engagement13.  

Together, engagement and wellbeing set the stage for a high-performance work environment, where each element supports and strengthens the other14.  

In his study ‘From Stress to Engagement,’ Professor Willem van Rhenen from Nyenrode Business University highlights a simple yet powerful truth: workplaces that channel their efforts into building engagement among employees see remarkable results. Engaged employees are up to 25% more productive and make 50% fewer mistakes. Not just that, they are also significantly less likely to call in sick, with rates dropping by 30-40%15. 

How can HR teams spot and prevent stress and burnout? 

The process starts with the basics: ensuring fair salaries for everyone and fostering a supportive and inclusive company culture. These elements, combined with small changes in our daily interactions and genuine listening to one another, lay the groundwork for a healthier workplace. 

Additionally, by actively monitoring employee engagement, HR teams can better identify and address potential issues early on. This proactive approach helps prevent situations from escalating into burnout or extended stress leaves, maintaining a positive work environment.

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