How much is Mental Health in the workplace costing?

 In Mental Health, Self-Care, Work Stress, Workplace Culture

According to the National Survey of Mental Health and Wellbeing by the Australian Bureau of Statistics,
it’s estimated that 45 percent of Australians had experienced a mental disorder in their lifetime, with 20
per cent experiencing a mental disorder in the previous year.

Mental Illness contributes to around $11 Billion in loss to Australian businesses each year, through sick
days, reduced productivity and work performance and compensation claims, not to mention the utter
emotional devastation it can have on the individual experiencing it and their families and workplaces.
Businesses that fail to address the existence of mental health problems and look at proactive strategies are
putting themselves at significant risk.

Research by PricewaterhouseCoopers has shown that for every dollar you spend creating a mentally
healthy workplace can, on average, result in a positive return on investment (ROI) of 2.3.

Employees are the organisation’s most important asset. You need to maintain your assets’ Heads Up

We have previously discussed in prior blogs the benefits of managing Mental Health in the workplace,
including:

  •  Staff being more engaged and motivated when they know they are supported
  • The positive impact on your recruitment processes/employer brand as you will be seen as an
    employer that people want to work for and
  • Retention of staff when they see how the organisation treat their people

However, it is also important to understand the big costs of not managing mental health.

The 3 big costs

1. Absenteeism $4.7 billion
A report carried out by PwC estimates that absenteeism from employee mental health conditions costs
Australian businesses $4.7 billion per annum, equivalent to 1.1 million days’ sick leave.

2. Presenteeism $6.1 billion
Presenteeism occurs when ongoing physical and/or mental health conditions prevent employees from
being fully productive at work, therefore being less productive when at work. Team members attending
work with a mental health condition is estimated to cost Australian business $6.1 billion a year. This cost is
based on the assumption that workers are 50% less productive (however the more acute the mental health
condition the greater the impact). Mild conditions are estimated to be approximately 30 hours of
presenteeism whereas moderate mental health could cause 150 hours.

3. Compensation claims $146 million
Mental Health compensation claims are estimated to cost Australian businesses $146 million a year with
some industries being harder hitting than others.

While the above are certainly big costs, it is also important to understand what the other business costs
such as turnover of team members and potential negative brand impact of not managing mental health
properly in your workplace could cost (as well as the time involved in this). These type of issues can be
extremely difficult to address and rectify.

Promoting health workplaces does not just make sense for the individual involved, their family and their
peer groups but also potentially for your bottom line.

More Information:

The PwC report covers more information on the research https://www.headsup.org.au/docs/default-source/resources/bl1269-brochure—pwc-roi-analysis.pdf?sfvrsn=ace47a4d_6

To work out your individual ROI by industry – click on another heads up awesome tool
https://www.headsup.org.au/healthy-workplaces/why-it-matters/return-on-investment-tool that helps
you calculate the potential cost savings of taking action to create a mentally healthy workplace, based on
your business size and industry.

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Paulette Kolarz

Customer Support

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