Poor mental health costs South West employers £1,674 per employee a year, says Deloitte

By Nick Batten on 4 February, 2020

New analysis by multinational professional services network, Deloitte has found that poor mental health costs employers in the South West £1,674 per employee each year.

Nationally, it costs UK employers up to £45 billion each year –  a rise of 16% since 2016 and an extra £6 billion for the UK a year.

For employers in the South West, the research reveals that the annual cost of a worker leaving their job for mental health reasons is £212 per employee.

The research also looks at how employers can take steps to negate the costs and finds that it pays to support employees’ mental health. On average, for every £1 spent on supporting their people’s mental health, employers get £5 back on their investment in reduced presenteeism, absenteeism and staff turnover.

Analysis from Deloitte’s report on ‘Mental health and employers: the case for refreshing investment’ shows that higher return on investment can be achieved by early interventions, such as organisation-wide culture change and education, than more in-depth support that may be needed at a later stage when a person is struggling.

Dave Tansley, a partner at Deloitte in the South West and one of the firm’s mental health champions, said, “As our ways of working evolve, so do expectations of employers about how we should support our people.

“This analysis shows very clearly that, in the long run, it’s more cost-effective for employers to provide mental health support at work. Early intervention is vital, for those experiencing poor mental health and employers alike.”

The latest research builds on work conducted by Deloitte in 2017 for the Stevenson-Farmer Review on workplace mental health, which calculated that poor mental health costs UK employers £33-42 billion a year.

Since then, Deloitte has found that there have been positive changes in workplaces and more provision of mental health support overall. However, research also finds that despite this progress, costs continue to climb.

Costs driven largely by ‘presenteeism’

The increase in costs to employers can be attributed largely to a significant rise in mental-health-related ‘presenteeism’, where employees work when they are not at their most productive.

The analysis puts the cost of ‘presenteeism’ for South West employers at £1,159 per employee each year. Presenteeism is part of a complex picture in which people with poor mental health continue to work when they are not at their most productive, rather than take time off.

Mental-health related absenteeism also has a cost associated with it. When staff members are off work for reasons related to mental health conditions, the cost to an employer in the South West works out to be £303 per employee per year.

When comparing the costs of someone being absent due to mental health reasons and someone in the same situation continuing to work when not at full capacity, the figures indicate that presenteeism over absenteeism costs South West employers nearly four times as much each year.

‘Always-on’ culture impacts mental health

The analysis also highlights ‘leaveism’ as a growing trend in the workplace, where employees feel they must work outside of their standard working hours, finding themselves unable to disconnect from their work. Both ‘leaveism’ and ‘presenteeism’ are characteristics of an ‘always-on’ culture that’s enabled by technology, which in turn can contribute to burnout.

Dave added, “Understanding more about the relationship between mental health and work is in all of our interests.

“Our research finds that, while an increased use of technology can enhance working practices, having the ability to work outside of normal working hours can add to the challenge of maintaining good mental health, and make it hard for some people to switch off from an ‘always-on’ culture.

“The costs of this are significant, for those with poor mental health and for employers, and we hope this analysis can help both. Many large employers are already seeing a greater openness in discussing mental health at work, which is a good thing.”

Paul Farmer, Chief Executive of Mind, said, “Smart, forward-thinking employers are investing in staff wellbeing and those who do tend to save money in the long run. This report shows the link between prioritising staff wellbeing and improved loyalty and productivity. Employers can access resources to help prevent poor mental health and promote wellbeing through the Mental Health at Work Commitment.