The Cost of Ignoring Mental Health

Do you need your people to make your business a success?

While the answer is as simple as, “Yes, of course,” the reality is far more complicated. People are not machines. Without proper support, they may not perform to their full potential, or may even break down.

Whether your organization is small, medium or large, building a business case for investing in employee mental health starts with marshalling the financial facts. It means obtaining senior leadership support to invest, develop and implement a mental health strategy.

Awareness

Every employee has an assigned job function. Key performance behaviours (KPBs), are the behaviours required for employees to be successful in their assigned functions. These include coping and resiliency, which affect an employees’ health, engagement and productivity. In short, KPBs influence what employees think and how they do their work. An organization’s success is dependent on the aggregate of those factors.

Accountability

If employers want to optimize their work force productivity and performance, they should promote mental health and wellness and build resiliency among employees. However, simply telling senior leaders that investing in mental health is good business may not be enough. Building a mental health business case involves providing the financial facts specific to their organization.

Action

Get the facts.

Identify your key people performance indicators — These are the metrics that are directly linked to your organization’s strategic objectives and results, such as the targeted number of sick days per employee per year. Whatever key metrics you select, it’s important to understand the why and the risk when they’re not achieved.

Determine sick time costs — Establish the average employee’s sick day cost and factor in any additional expenses for replacement staff.

• Multiply the average number of sick days by the total number of full-time equivalent employees to get the total number of days lost to illness, both mental and physical.
• Multiply this total by the average sick day cost to determine the total sick time cost to your organization.
• Beyond sick days, tabulate your total disability costs by adding the days lost over the past 12 months due to short- and long-term disability and workers’ compensation claims related to mental health issues. Add this number with the sick day costs, to get the total disability cost, not including administration and management expenditures.

Explore opportunity risks — In addition to absenteeism losses, presenteeism is a big driver of mental health costs and equates to 7.5 times the number of days absent.

Clarify your cost of doing nothing — In addition to the above, other tangible costs such as medication and insurance premiums, along with intangible costs such as unresolved conflict and management time, can be calculated. The more facts you have, the stronger you can make your business case against maintaining the status quo.

Calculate your current spending on employee mental health supports — Look beyond the typical eight to 10 per cent of payroll spent on employee benefits. Rather, determine how much your organization spends per full-time equivalent worker on prevention and in employee mental health supports. This includes all programming such as manager and employee training as well as employee and family assistance programs.

Demonstrate contrast — When presenting your business case, paint a simple picture of current risk factors and costs for each key people performance indicator. Take for example, a fictitious organization of 1,000 employees with an average of eight sick days per full-time equivalent employee:

• The average number of eight sick days per year is at a cost of $200 per day/per employee, which equals $1.6-million
• When you look at absenteeism and presenteeism together the total loss is much greater and equals $13.6- million [8,000 sick days plus 60,000 presenteeism days) times $200]
• Over five years, this is trending to be just under $70-million in losses, not including other direct and indirect costs.

Write out your mental health business case – Once you have all your facts and are ready to present the financial baseline and metrics of your business case, focus on contrasting current program spending against the risks of not acting, extrapolating this to year-over-year trends.

• Present the current risk, financial facts, metrics and program spending in a clear and simple way.
• Establish goals and targets and degree of improvement (for example, a five-per-cent decrease in short-term disability cases).
• Give a clear set of actionable recommendations. For example, adopt the Mental Health Commission of Canada’s National Standard of Canada for Psychological Health and Safety in the Workplace, or develop a mental health strategy, proposed budget and targeted value of investment.

A successful business case will gain senior leadership approval to act, with limits and direction around financial support. It will also educate your leadership regarding what mental health is and its impact on the work force and the business.

The Workplace Psychological Safety Assessment (WPSA) is an evidence-based, confidential assessment tool designed to provide employers with an understanding of their employee's current workplace experience through a psychological safety lens.

It also provides employees with personal insights on improving their experience and mental health within the workplace context.

For more information, visit: https://www.howatthr.com/workplace-psychological-safety-assessment/?