Investment in employee wellbeing during times of instability

Corporate Change

Investment in employee wellbeing during times of instability

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There’s an old Chinese proverb that says:

“The best time to plant a tree was 20 years ago. The second-best time is now.”

What it doesn’t say is:

“Lucky we planted that tree 20 years ago. Let’s chop it down just before we really need it.”

Yet this is what it feels like for many HR professionals going into budget discussions with their finance teams, when their company is kicking off redundancy programmes or applying broad cost-cutting measures.

It’s easy to see the thinking of business leaders during these times; if the company is trying to save money, shouldn’t every expense be up for discussion? What this doesn’t take into account is the impact that redundancies and cost-cutting measures can have on employees’ mental health – for both those that are staying and those that are leaving.

What might seem like a prudent cost-saving measure now could have long-term detrimental effects on both employees and the company itself.

The cost of neglecting employee wellbeing

Too many companies see employee wellbeing as a perk, when it’s in fact an essential investment in a company’s success – both when times are good and bad. Neglecting employee wellbeing during restructuring or budget-cutting can have significant financial, operational, and reputational consequences:

  • Reduced employee engagement: When employees perceive that their wellbeing is not a priority for their employer, their engagement and motivation levels plummet. This leads to lower productivity and increased absenteeism, which can have a detrimental effect on the bottom line.
  • Increased turnover of staff: A lack of wellbeing support during challenging times can result in higher employee turnover. While a cynical view would be that this could aid the redundancy programme, even the most hardened cynics acknowledge that the very best staff are just as likely (if not more likely) to be the ones walking out the door. Then the cost of recruiting, hiring, and training new employees often outweighs the expense of simply maintaining a robust wellbeing program.
  • Decreased productivity: Employee wellbeing programs, when properly structured, can boost productivity. Neglecting these programs can lead to decreased performance, lower output, and impaired decision-making, just when these things can have the most detrimental impact.
  • Negative impact on mental health: Times of shock, such as redundancy programs, business crises, or even unexpected workplace deaths, can be incredibly challenging for employees. The absence of mental health support can exacerbate stress, anxiety, and depression, leading to more prolonged absences and decreased productivity.
  • Reputation damage: Companies that appear to prioritise profit over employee wellbeing risk damaging their reputation, both internally and externally. This can affect their ability to attract top talent, as well as customer trust.

The cumulative power of investing in wellbeing

Rather than reducing budgets for wellbeing initiatives during tough times, companies can benefit from increasing or maintaining their investments in employee wellbeing:

  • Improved employee resilience: According to a report by the Health and Safety Executive (HSE) in the UK, during the height of the pandemic in 2020/21, work-related stress, depression, or anxiety accounted for 44% of all work-related ill-health cases and 54% of all working days lost due to ill health. Meanwhile, companies like Unilever have increased their investment in mental health support for employees and helped develop resilience and adaptability, leading to continued productivity and increased retention.
  • Enhanced employee engagement: A Gallup study found that engaged employees are 17% more productive and 21% more profitable. During the financial crisis of 2008, PwC increased its investment in employee wellbeing, offering professional development and mental health support. This led to higher employee engagement, which played a crucial role in the company’s resilience and recovery.
  • Attraction and retention of top talent: A LinkedIn survey found that 96% of professionals believe that wellbeing initiatives positively impact retention rates. Microsoft has consistently invested in wellbeing initiatives, even during tough times, allowing them to attract and retain the best talent in the industry.
  • Positive impact on mental health: According to Mental Health UK, a mental health condition in just one employee can cost UK businesses an average of £1,035 annually in sickness absence, reduced productivity, and staff turnover. Barclays has been proactive in providing mental health support to employees, and their efforts have yielded positive results, including improved employee mental health, lower absenteeism, and reduced costs.
  • Long-term cost savings: A report from Deloitte estimated that for every £1 invested in employee wellbeing, organisations can expect an average return of £5 in reduced absence, presenteeism, and employee turnover costs. Lloyds Banking Group cites its wellbeing initiatives as having been instrumental in reducing absenteeism and the associated costs, making it a financially sound investment.

When companies are faced with the need to reduce costs and make tough decisions, employee wellbeing programs often become vulnerable targets for budget cuts. However, this approach is short-sighted and can have serious negative consequences. Employee wellbeing is an investment that pays dividends in numerous ways, from increased employee engagement and retention to improved mental health and long-term cost savings.

Take-away: How can HR professionals convince business leaders and FDs to maintain or increase employee wellbeing spending?

  1. Share statistics that highlight the financial and operational benefits of robust wellbeing programs.
  2. Provide examples of companies that successfully invested in wellbeing during difficult times, showcasing their resilience and recovery.
  3. Emphasise the importance of employee wellbeing for attracting and retaining top talent and safeguarding a company’s reputation.
  4. Highlight the long-term cost savings and the potential return on investment that wellbeing initiatives can offer.

By shifting the perspective on wellbeing investments from costs to assets, HR and Finance teams can together make decisions that not only benefit the bottom line but also create a supportive and resilient work environment for their employees. In the end, investing in employee wellbeing is not just about the welfare of the workforce; it’s about ensuring the long-term success and sustainability of the organisation itself.

If you’ve already been smart enough to ‘plant a tree 20 years ago’ and implement a wellness programme, then now is the time to benefit from that forethought. In fact, it’s a fantastic vehicle to directly address the challenges that come with redundancies and cost-cutting, and it sends a vital signal to the employees that remain (and even those that do not) that even in times of shock your company has strong ethics and genuinely cares about its people.