POSTED: October 24 2018
Wellbeing: how investing in staff delivers dividends

Wellbeing: how investing in staff delivers dividends

There are many reasons why investing in employee wellbeing is a good choice. But what are the compelling arguments for investing in wellbeing. What returns can you expect?

While the popularity of wellness has exploded in recent years, it’s not a new idea: some of the Victorian industrialists, such as William Lever, believed that investing in wellbeing was both a productivity magnifier and a moral imperative. In an article put together by Investors in People we take a closer look at several key reasons that show why investing in the wellbeing of your staff is a no-brainer.

Poor wellbeing has an incredibly high financial price

The costs of poor wellbeing in the workplace are colossal. If we isolate mental wellbeing, we find the total annual cost of mental ill health [PDF] to UK employers was £26bn – £1035 per employee – in 2007.

That’s just mental health: if you also include back, neck and muscle problems, you add another £14bn to the total. Presenteeism, which is obviously correlated with ill health, was estimated in 2012 to cost the UK economy £108bn a year.

And with evidence mental wellbeing is getting worse, not better, without direct organisational intervention some of these numbers are likely to worsen.

Positive wellbeing may reduce turnover and its associated costs

A study by Wright and Bonett (2007) found that managers with low levels of wellbeing were more likely to leave their jobs as a result of job dissatisfaction. This suggests that wellbeing investments that improve job dissatisfaction may decrease turnover.

There are many obvious costs of high turnover, such as recruitment and training, but also intangible costs, such as the loss of tacit knowledge and the loss of critical nodes in interpersonal networks (with the knock-on effects of processes like collaboration).

There’s evidence of a clear return on investment

A study from London Business School suggests companies with high levels of wellbeing outperform the stock market by 2-3% a year.

Earlier studies, such as from Wright and Staw (1999), suggest significant correlations between employee wellbeing and performance.

And the evidence is not just theoretical: Anglian Water reckon that for every £1 they’ve invested in employee wellbeing, they’ve received £8 back.

Good wellbeing is critical to effective interpersonal relationships

Poor wellbeing influences the way we view ourselves, others and the world around us. How? Because it negatively impacts our emotions and we look at everything through the lens of our emotions. This is detrimental to our overall effectiveness, but we should be particularly concerned about the impact on our relationships with others.

When we feel bad about ourselves, we are quick to irritate and judge. We are less tolerant of worldviews that diverge from our own. These are not good foundations for building and maintaining strong interpersonal relationships, which are essential to the smooth operation of critical processes like cross-functional team working, innovation and creativity.

And there are knock-on effects too, with studies pointing to the correlation between positive relationships at work and job satisfaction. Investing in wellbeing, therefore, can improve not only the individual employee’s interpersonal relationships but wider organisational health.

Poor wellbeing makes time and energy our master

Poor wellbeing uses up energy: physical energy coping with illness or health-related problems and mental energy ruminating about the issue, planning coping mechanisms or generally worrying about the future. It also takes up time: we find it harder to do things, so they take longer.

At a time when energy management and time management are critical to success in the workplace, as employees are expected to do more with less, poor wellbeing is a particular problem because we need to work harder than ever to generate the energy and time needed to perform well at work.

Positive mental wellbeing encourages creative outperformance

Improvements that create genuine step change in organisational abilities and differentiation from competitors are often driven by creativity and innovation. Contrary to popular belief that these happen in meeting rooms, the true driving force behind these processes is mental incubation.

To experience the results of creative incubation, we must be open to new experiences and sensitive to insights, which are felt by the body as epiphanies. If we are ruminating and worn down by poor wellbeing, it’s much less likely that we will have the openness and focus necessary to identify and exploit innovative and creative urges.

Investing in wellbeing positively impacts your brand

In the age of transparency, poor wellbeing and job dissatisfaction eventually filter out to sites like Glassdoor, which increasing numbers of job seekers are checking before they apply for open positions. Not investing in wellbeing may therefore impact your overall employer brand and the quantity/quality of future job applications.

It may also increase your regrettable job turnover if your employer brand is seen as less attractive than others in your marketplace. Research put out in 2012 found that 84% of employees would consider leaving their current jobs if offered another role with a company that had a strong corporate reputation [PDF].

And your employer brand is only half the equation: investing in wellbeing can increase consumer trust too. There’s increasing evidence that consumers judge a brand on how ethically it goes about its business: this includes everything from supply chain management to how diverse its board is to the way it treats and invests in its employees.


Take a look at Investors in People’s first ‘Managing Mental Health’ report, which tells organisations exactly what they need to know about the state of mental health in UK workers.


You can view this story in full and others like it at the Investors in People Knowledge Hub.