The Impacts of Wellbeing on Organisational Success
- Changing Edge
- Jul 15, 2021
- 4 min read
Updated: Jul 19, 2021
The wellbeing of employees and effective leadership are critical to the sustained success of organisations. There are so many aspects of work which these critical factors impact, from organisational success, team effectiveness and the achievement of KPIs, through to HR costs. With the majority of emphasis in organisations being placed on achieving KPIs, the HR costs associated with ineffective leadership or unhealthy employees are often overlooked.
It can be difficult to navigate through the vast amount of information out there, to really understand why investing in employee wellbeing and leadership skills is important. There are many relevant statistics that support organisational action in improving leadership skills and employee wellbeing. Here are some key examples which demonstrate why organisations need to invest in their people in order to reduce their costs:
1. Absenteeism
According to the 2019 Absence Management & Wellbeing Survey (1) absenteeism increased by 1.5 days to 11.2 days per employee per annum compared to 2017 and is estimated to cost the Australian economy over $35 billion in wages and lost productivity. This analysis is based on the results provided by 104 organisations across Australia, who collectively employ over 255,000 employees. According to Beyond Blue, in workplaces that employees consider to be mentally healthy, self-reported absenteeism as a result of experiencing mental ill-health almost halves (13%) (2). The impacts of the physical health of staff are also significant, with rates of health issues resulting from being overweight or obese or living a sedentary lifestyle increasing. According to the Australian Institute of Health and Welfare, in 2017–18, an estimated 67% of Australian adults were overweight or obese (3).
2. Presenteeism
According to the Australian HR Institute presenteeism is both a prevalent and costly problem that needs to be tackled (4). It is likely a result of staff feeling pressured to be there, a fear of falling behind in their work and the financial pressures and concerns about job security associated with current times. Staff who attend work when they aren’t well (mentally or physically) are less effective, exhibit weaker communication skills, struggle with creativity and perform to a reduced capacity. The risk of accidents and HR related claims also increases. A 2016 report commissioned by Pathology Awareness Australia says presenteeism costs the Australian economy in excess of $34 billion annually (5).
3. Burnout
Burn-out is included in the 11th Revision of the International Classification of Diseases (ICD-11) as an occupational phenomenon, a syndrome conceptualized as resulting from chronic workplace stress that has not been successfully managed. The WHO outlines three dimensions of job burnout - feelings of energy depletion or exhaustion; increased mental distance from one’s job, or feelings of negativism or cynicism related to one's job; and reduced professional efficacy (6). Burnout is a product of our “always on” culture and results in symptoms such as frequent headaches, gastrointestinal problems, sleeplessness, depression, resentment, irritability & cynicism.
Deloitte’s marketplace survey on burnout found that 77% of respondents say they have experienced burnout at their current job, with more than half citing more than one occurrence. 91% say having an unmanageable amount of stress or frustration negatively impacts the quality of their work, 83% say burnout from work can negatively impact their personal relationships & nearly 70% of professionals feel their employers are not doing enough to prevent or alleviate burnout within their organization (7).
4. Cost To Retain Underperformers
Underperforming staff cost organisations in many ways such as the quality and quantity of the work they complete, the additional support & management they require, the alienation of clients who may then take their business elsewhere, errors made, theft, the impacts of reduced morale, the loss of reputation and the reduction of trust in the organisation both internally and externally. There is also the cost of lost productivity and what could have been achieved if an engaged and capable person were in that role. The costs of retaining underperformers increase exponentially over time.
5. Employee Turnover
The Australian HR Institute share facts relating to employee turnover such as (8):
The Australian Bureau of Statistics estimated that over 1 million Australian employees changed employers or the businesses they ran in the year leading up to February 2018, and two thirds of those employees left voluntarily.
Recruitment company Hays found that 33% of companies in Australia had reported an increase in turnover rates over the last 12 months and that 44% of Australian employees are planning to look for a new job in the next 12 months.
There are many costs associated with employee turnover, including the costs of losing good people, the costs of recruiting, onboarding, and training new staff, lost productivity & engagement, errors, lost investments in the departing staff during their tenure, and the impacts on others in the organisation both in relation to increased workload resulting from the change and also in morale.
6. Leadership
Effective leadership has a huge range of benefits to organisations, however in relation to the context of this article, Beyond Blue has found that “when mental health is valued by leaders, and appropriate resources are available in the workplace, there are real benefits to business” and that “organisational leaders who focus on mental health in the workplace inspire respect among employees (65% agreement among employees) (9).
To summarise just how important it is for organisations to recognise the importance of valuing the wellbeing of their people, Upskilled share that “Australian statistics reveal that 92% of serious mental health concerns in the workplace are attributed to work-related stressors and poor psychological conditions”, costing businesses approximately $10.9 billion per year, including $4.7 billion in absenteeism and $146 million in compensation claims (10). The employment of effective wellbeing programs and leadership training will go a long way towards reducing this significant waste of financial resources. Savings will provide opportunities to invest funds and resources elsewhere, which will in turn increase the overall success of organisations.
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