Introduction

The topic of whether burnout and poor mental health is an individual or organizational problem has been highly discussed. Even though most people believe it's a shared problem, one thing is for sure… The economic impact of poor mental health on employees and companies is getting worse. It’s estimated to be 16 Trillion USD by 2030, which is 5x more than it is today.

In this blog post, we will discuss the cost breakdown of poor mental health in the workplace. We will explore the various ways in which poor mental health can impact a company's bottom line and provide statistics and data to support our claims.

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What are the biggest costs associated with poor mental health?

It’s no secret that poor mental health impacts our lives, but many people don’t realize how it can also affect our businesses.

The impact of poor mental health in the workplace may be evident with symptoms such as:

• High turnover rate
• Employees who frequently call out sick
• Reduced productivity
• Increased healthcare costs.

For the purposes of this blog post and in order to better understand the economic impact of poor mental health, we are doing the following calculations based on a company with 20k employees with an average yearly salary of $50k.

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Turnover and Recruitment Costs

Poor mental health can lead to high turnover rates, as employees may leave the company to seek better working conditions. According to Steve Peck Psychotherapy, 35% of employee turnover is due to poor mental health. Assuming a conservative turnover rate of 10% among employees with poor mental health, this would result in a total of 1750 employees leaving the company each year. According to Apollo Technical, the average cost per employee for recruitment and training is $16,500, this would result in a cost of more than $28 million per year.

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Increased Absenteeism

One of the most apparent ways that poor mental health can impact a workplace is through increased absenteeism. Employees who struggle with mental health issues may need to take more sick days than their peers, resulting in a higher rate of absenteeism.

According to a study done by Gallup, 20% of employees have fair or poor mental health and take on average 12 work days for this reason. This translates into 48 000 lost days and a cost of $9M (based on the previously mentioned salary).

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Reduced Productivity

Poor mental health can also lead to decreased productivity in employees. Assuming that 20% of the employees are struggling with poor mental health, and according to the American Psychiatric Association they are only 35% as productive as their peers, this could lead to a productivity loss of approximately 1,400 employees (20% of 20,000) x 35% = 1,400 FTE (full-time equivalent) employees. This results in a productivity loss of $70 million per year.

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Increased healthcare costs

If the company provides health insurance for its employees, poor mental health can lead to increased healthcare costs. According to NSC, employees experiencing mental distress use, on average, nearly $3,000 more in healthcare services per year than their peers. According to the CDC, 20% of people with poor mental health seek mental health treatment, and the average cost of treatment is $3,000 per person per year, this would result in a cost of $2,4 million per year.

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Breakdown of the costs

Based on the explanation and data given previously, here are the assumptions and yearly costs for poor mental health in the workplace.

Assuming a company of 20k employees with an average yearly salary of $50k, with 20% of employees struggling with their mental health, the total cost for the company is a whopping $81M.

In comparison, providing mental health resources, which can help mitigate many of the costs associated with poor mental health, can cost around $20M yearly ($1000 per employee).

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Conclusion

The cost breakdown of poor mental health in the workplace is rather concerning and is getting worse every year it passes if individuals and companies don’t take action. Increased absenteeism, high turnover rates, reduced productivity, and increased healthcare costs are just a few of the ways in which poor mental health can impact a company.

It is essential for employers to prioritize employee mental health by providing resources and support to address mental health concerns in the workplace.

Even though poor mental health is a well-reported problem, there is still a long way to go to be able to help to rising number of people that need mental health support. In fact, according to a study done by PWC, there are currently only 2,58 psychiatrists per 100,000 population across the GCC countries12. This means there is a big need for fast, reliable, and clinically proven solutions in order to support the high demand for mental health services.

This is where EMOTAI comes in! EMOTAI provides a fast, scientifically-validated, anonymous and reliable solution to fight stress, anxiety and burnout in the workplace. In less than 2 months EMOTAI reduces anxiety by 30%, reduces the risk of burnout by 20% and 77% of its participants improve. Learn more about how EMOTAI can help your company by requesting a demo here.

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