Mental Wellbeing and Employee Retention: The Challenge and the Opportunity

A confident, happy, and engaged workforce often helps drive productivity. Employees who feel well are more likely to stay with their employer, reducing both recruitment costs and the inevitable dip in productivity that comes with onboarding new staff. Better wellbeing also reduces absenteeism and presenteeism (where employees attend work when they are feeling unwell (physically, mentally, or both) and, as a result, operate at reduced productivity), while boosting creativity, collaboration, performance, and long-term retention. Furthermore, employers with a reputation for supporting staff, find it far easier to attract high-quality candidates.

The Productivity Opportunity

While few companies would argue with the benefits of looking after employee wellbeing, it’s hard to ignore the sense that we are living through a mental health epidemic. Three studies published in 2024 estimated that poor mental health costs UK employers between £51 billion and £102 billion per year (that’s around £1,200 - £2,400 per employee annually!). According to the Office for National Statistics, 8% of all work absences in 2022 were related to mental health, and in 2023 the Health and Safety Executive reported 17.1 million working days lost to work-related depression, stress, and anxiety.

While the impact on productivity is unmistakable, it’s less clear whether employee mental health is worsening. Increased awareness, reduced stigma around mental health, and improved reporting may simply be bringing an existing issue into the spotlight, or creating a sense of a deepening crisis.

The Challenge of Supporting Mental Health at Work

For both employers and employees, improving mental wellbeing can be difficult. Mental health challenges often have multiple causes (for example, social, systemic, personal, or workplace-related) and different mental health conditions may require different approaches. There is rarely a quick fix.

The Opportunity for Employers

Given the scale of the challenge, the opportunity is equally significant. Deloitte (2024) estimates that every £1 invested in employee mental health yields an average return of £4.70 through increased productivity and reduced turnover. So, how can employers make meaningful progress?

1. Measure and monitor employee wellbeing –begin by benchmarking and tracking simple indicators such as absenteeism, presenteeism, eNPS (employee Net Promoter Score), engagement scores, and job satisfaction. Established tools like the WHO-5 Well-Being Index (https://www.who.int/publications/m/item/WHO-UCN-MSD-MHE-2024.01) can be adopted at little or no cost and provide valuable insight into overall wellbeing trends.

• Align the employee value proposition with wellbeing –every organisation has its own culture and level of pressure, for example investment banking workplaces might be considered brutal with high expectations (and salaries) compared with the commercial and procurement teams of construction companies. Problems arise when expectations and reality don’t match. When working with recruiters, hiring managers should be transparent about the demands, pace, and support available to employees, while job hunters should be realistic about the sorts of culture that suit them. Clear expectations lead to better alignment and better retention.

• Empower employees to shape wellbeing improvements – while well-chosen metrics may give a good indication of employee wellbeing levels, the employees themselves can often explain why they feel that way and what would help them perform better. Simple, safe mechanisms for employees to share feedback or suggest improvements will reap dividends. While some suggestions may not be practical, others may improve productivity and, in any case, feeling heard is itself a contributor to wellbeing.

• Build trust around mental health – even though stigma around mental illness has reduced, it hasn’t disappeared. Employees must feel safe raising concerns, especially when wellbeing challenges stem from interpersonal dynamics or workload issues. Clear processes, good communication, and an embedded commitment to confidentiality all help create a secure environment that, for example can see employees addressing issues around stress before they burnout.

• Model healthy behaviour from the top – when senior staff model healthy habits (such as taking breaks, managing workload realistically, using wellbeing resources, and speaking openly about mental wellbeing) it normalises positive behaviours across the organisation and builds a more resilient culture.

The speed of change

While a minority of initiatives and changes can transform a team or company overnight (for example, changing a poor manager) more often the process is gradual. Organisational cultures take time to change, so setting realistic short-term targets is crucial to maintaining progress towards the long-term goal.

The good news is that there’s the opportunity for a virtuous circle… as employee wellbeing improves, staff retention should too and so less time will be spent recruiting and covering employees who have resigned… which should reduce employee workloads, reducing their stress, improving wellbeing...