The Economic Cost and Threat of Poor Psychological Wellbeing

The organisational cost of poor psychological wellbeing varies across sector, industry, and organisation size, but an independent review estimated the annual cost of poor mental health to UK business to be £33 – £42 billion (Stevenson & Farmer, 2017).

Overall, this costing is likely to be an underestimate, whilst the Chartered Institute of Personnel and Development (CIPD, 2018) state the ‘wellbeing vacuum’ as a main threat to UK business. Why?

In 2017:

The Hidden Costs of Poor Psychological Wellbeing
The actual influence of poor mental health on sickness absence and costs are however, likely to be underestimates for at least four reasons.
1. The Stress/Physical Health Relationship. Long-term stress is a causal factor for cardiovascular, respiratory, musculoskeletal, gastro-intestinal, endocrine and reproductive problems, and increased susceptibility to infection. Further, acute and long-term stress increase the likelihood of physical injury. Stress is therefore likely to play some role in a proportion of the remaining 3 million days of sickness absence.
2. Presenteeism. In 2018, the CIPD survey HR professionals from 1,021 UK organisations accounting for 4.6 million employees. 86% observed presenteeism over the previous 12 months (CIPD, 2018). Generally presenteeism is proposed to have greater costs than sickness absence. This is due to presentees; taking longer to recover from illnesses, being less effective at work, being more likely to make costly mistakes and have accidents, transmitting illness to colleagues, and the lowering of workplace morale (CIPD, 2018). Estimated presenteeism costs vary however, for example the above cited Stevenson & Farmer Review (2017) estimated half of the annual £33 – £42 billion cost of poor mental health to be due to presenteeism, whilst the ERS estimate presenteeism to cost an additional £2.50 to business for every £1 cost of absenteeism (ERS, 2016).
3. Under-Reporting: Despite recent programmes to reduce stigma, perceived and real, negative workplace implications continue to reduce the likelihood of employees reporting poor mental health being as a reason for sickness absence.
4. Other Forms of Reduced Psychological Wellbeing. In surveys across the western world, only 17% typically self-report as; making the most of their abilities, coping with the normal stresses of life, working productively and effectively, and being able to contribute to their community: The UK is no exception. Although rarely considered or costed within mental health reports, it is logical that any individuals without full psychological wellbeing will be underperforming with consequential cost to business.

The Future Cost of Poor Mental Health
Despite the recent decline in sickness-related absence, the CIPD (2018) provide evidence of two trends that suggest the cost of poor mental health to business might yet rise.
1. Increases in Poor Mental Health-Related Sickness Absence. Comparing 2016 to 2017:

2. Increases in Presenteeism and Leavism

These statistics are of particular future concern as those organisations that report an increase in presenteeism in one year, are more likely to report a rise in stress-related absence and mental health issues the following year (CIPD, 2018). This concurs with our knowledge of the physical effects of long-term stress, as presenteeism and leavism reduce to the time available to replenish personal resources or to gain the other life-enriching experiences that promote psychological wellbeing.

The Solution: Take Control
At 44%, stress, depression and anxiety are the most common work-related risks to health (CIPD, 2018). Further, the causes of this, and indeed those factors that promote psychological wellbeing, are well known and typically within an organisation’s control. Consequently, with appropriate wellbeing consideration and change management, the reduction of sickness absence, presenteeism and leavism, and the promotion of performance are within an organisation’s control.

For more details, please see L&M Blogs:
– The cost of general ill-health.
– The specific cost of stress and mental ill-health.

Chartered Institute of Personnel and Development (2018). Health and Well-being at Work: Survey Report May 2018.
Health and Safety Executive (2018). Work Related Stress Depression or Anxiety Statistics in Great Britain, 2018.
Stevenson, D., & Farmer, P. (2017). Thriving at Work: The Independent Review of Mental Health and Employers.

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L&M are based in London and SE England, but can provide support face-to-face and remotely across the UK and beyond.