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Why Every Business Needs a Mental Health Program

Thursday, February 16, 2017
In recent years there has been a shifting emphasis in health care towards proactive, preventative initiatives. Workplace health programs - typically encouraging staff to eat well, move more and maintain a healthy weight - have become more or less ubiquitous in large companies, as decision-makers have recognised their value in enhancing employee health, safety, engagement and productivity. Yet, for many businesses, there is a still a deafening silence when discussions inevitably turn to mental health. 

Mental Health is a Serious Issue for Workplaces

The new millennium ushered in a wave of research into mental health at work. A 2014 paper by beyondblue titled “State of Workplace Mental Health in Australia” emphasised the significant need for workplace mental health programs. Among the critical findings were:
 
• 45% of Australians will experience a mental health condition within their lifetime

• Only 52% believe their workplace is mentally healthy, while 91% believe mental health in the workplace is important.

• One-fifth (21%) of Australians have taken time off work in the past year due to feeling stressed, anxious, depressed or otherwise mentally unwell. This figure more than doubles to 46% among employees who consider their workplace to be mentally unhealthy.

Why Aren’t Businesses Addressing Mental Health?

Despite these statistics, many businesses have been slow to adopt mental health programs for their employees. Some of the cited reasons include: 

• Misperceptions about how cost-effective interventions can be.

• Lack of understanding about the direct and indirect costs of mental illness.

• A tendency to avoid the topic due to social stigma.  

However, there are a multitude of reasons why these programs should be implemented, as they can significantly benefit both employees and employers. 

Understanding Mental Health Costs

When considering the financial case for implementing workplace mental health programs, it is easier to measure certain metrics than others. There are direct costs (such as the cost of compensation claims), which can be assigned a firm number, and indirect costs (such as reduced productivity) which are more difficult to measure. While the direct cost are considerable, multiple studies have concluded that the indirect costs greatly exceed the direct.  

Compensation Claims

Few realise that mental illness is the largest single cause of disability in Australia, accounting for 24% of the burden of non-fatal disease. From a business standpoint, preventative strategies are essential, as mental health compensation claims tend to result in longer periods off work and significantly greater costs than physical claims. Furthermore, mental illness often impacts younger workers - those in their prime working years. The total annual compensation cost to business owners in Australia is estimated to be around $146 million; however, given that mental health is also a contributing factor in many physical injury claims, this figure could actually be much higher. 

Absenteeism

Absenteeism attributable to mental health costs Australian employers approximately $4.7 billion per year, equivalent to 1.2 million working days. It’s an astonishing figure, yet the link between absenteeism and mental illness is undeniable. Importantly, employees who consider their workplace to be mentally healthy are far less likely to take time away from work. The Health and Productivity Institute found that the implementation of a workplace health program typically results in an approximately 25% decrease in the rate of absenteeism. 

Productivity

While absenteeism skyrockets in response to mental illness, it still doesn't account for the true cost. It is common for employees with mental health issues to continue to show up for work, especially if they are concerned with being stigmatised. However, there can be a large decrease in productivity, due to an inability to concentrate. For example, individuals with depression report that they lose on average approximately 5.6 hours of productive time every week. This is termed 'presenteeism' and the estimated annual cost to business owners for this lost productivity is $6.1 billion. Fortunately, with treatment and a supportive environment, presenteeism can be drastically reduced. 

Other Mental Health Considerations

The total cost of absenteeism, compensation claims and lost productivity is around $11 billion, but there are still other factors that businesses should consider, such as:

• Turnover costs

• Effects on other employees

• Management costs

While the costs are difficult to quantify, few would deny that these issues are all real and significant concerns. 

The ROI on Mental Health Programs

While it is clear that there are benefits to offering workplace mental health programs, every business wants to know ultimate impact on the bottom line. A 2014 report demonstrated that for every dollar invested in creating a mentally healthy working environment, approximately $2.30 is generated in benefits for the company. So, while implementing a mental health initiative is obviously the right thing to do for employees, the data confirms that it is also a savvy financial decision. 


-- Laith Cunneen is Chief Operations Officer at Actevate Pty Ltd


Resources & References

beyondblue. (2014). State of Workplace Mental Health in Australia. Retrieved December 19, 2016 from https://www.headsup.org.au/docs/default-source/resources/bl1270-report---tns-the-state-of-mental-health-in-australian-workplaces-hr.pdf?sfvrsn=8 

American Psychiatric Foundation. (2006). A Mentally Healthy Workforce-It’s Good for Business. Retrieved December 19, 2016 from http://www.workplacementalhealth.org/Business-Case/The-Business-Case-Brochure.aspx?FT=.pdf 

The National Alliance on Mental Illness of Massachusetts. (2015). Bad for Business: The Business Case for Overcoming Mental Illness Stigma in the Workplace. Retrieved December 19, 2016 from  http://ceos.namimass.org/wp-content/uploads/2015/03/BAD-FOR-BUSINESS.pdf 

Heads up. (2015, January 23). The financial cost of ignoring mental health in the workplace. Retrieved December 20 from https://www.headsup.org.au/news/2015/01/23/the-financial-cost-of-ignoring-mental-health-in-the-workplace 

Kirkright, S. (n.d.). Invest in workplace mental health and wellbeing programs. Business First Magazine. Retrieved December 20, 2016 from http://www.businessfirstmagazine.com.au/mental-health-awareness-month/2504/ 

The National Alliance on Mental Illness of Massachusetts. (2015). Bad for Business: The Business Case for Overcoming Mental Illness Stigma in the Workplace. Retrieved December 19, 2016 from  http://ceos.namimass.org/wp-content/uploads/2015/03/BAD-FOR-BUSINESS.pdf


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