Taking care of your employees has always been an important part of building and growing a healthy company. But over the past three years, corporate investments in work wellbeing have skyrocketed.
According to a recent Global Wellbeing Survey by the consulting firm Aon, 83% of firms surveyed reported having a workplace wellbeing strategy in 2022. That’s up from 55% in 2020 at the start of the pandemic. The survey also found that nearly two-thirds (63%) of respondents say worker wellbeing is more important now than it was in 2020.
This dramatic uptick may have a lot to do with how worker expectations are changing. Indeed’s own Work Wellbeing Insights Report showed that, in 2022, nearly half (46%) of the people surveyed said their expectations around happiness at work had increased in the prior year. That survey, conducted in partnership with Forrester Consulting, found that more than 80% of US adults believe it’s important to find companies that care about how you feel.
Not only that, but in a new study based on Indeed data released in May, researchers at the University of Oxford found a strong correlation between employees’ wellbeing and their employers’ financial performance.
“While leaders might intuitively know that how people feel is important, it’s hard to push this agenda if you can’t show the return on investment,” says Professor Jan-Emmanuel De Neve, the study’s lead author and the director of the Wellbeing Research Centre at the University of Oxford. “They haven’t jumped to prioritise it in part because there hasn’t been enough hard data. But now there is.”
And yet, as Indeed’s 2022 Workplace Wellbeing report showed, there’s a gap between what employers are reporting and what employees are experiencing. In that report, only 49% of people said their company is actually measuring happiness and wellbeing.
Here’s a closer look at what the data says about why workplace wellbeing matters, what strategies are most effective and what approaches could be standing in your way.
Work wellbeing boosts productivity and financial performance
It may seem counterintuitive that at a time of so much economic uncertainty, corporate leaders would choose to invest more in work wellbeing programs. But research shows there’s a direct correlation between work wellbeing and productivity. In the Oxford study, researchers analysed responses to surveys taken by employees across 1,636 publicly listed companies. They found that, between January 2021 and March 2023, the top 100 companies for wellbeing delivered 20% higher returns than the S&P 500 and 30% higher returns than the Nasdaq.
This makes sense. According to the World Health Organization, depression and anxiety among workers cost an estimated $1 trillion a year in lost productivity, globally. That’s equivalent to about 12 billion working days lost every year.
This loss of productivity is often due to employee burnout. According to Gallup research, burnout leads companies to spend 15% to 20% of their payroll budgets on turnover costs every year, adding up to about $320 billion globally.
But while poor work wellbeing can contribute to a decline in productivity, the opposite is also true. Another Gallup and Workhuman survey published this year showed that something as simple as giving employees more recognition at work, a key driver of work wellbeing, can go a long way toward improving employee outcomes. That report estimated that when organisations can double the number of workers who strongly agree that they’ve received recognition for their work, it leads to, on average, a 9% boost in productivity and a 22% decrease in absenteeism.
It also leads to a 22% reduction in workplace safety incidents because, as that report explains, “recognition affirms the importance of quality. It says excellence is better than cutting corners, a job well done is better than hiding mistakes.”
Leadership underestimates employees’ struggles – significantly
Despite the growing awareness of the importance of work wellbeing, there’s still a disconnect between how C-suite leaders feel their employees are doing and how they’re actually doing. A Deloitte survey last year found that C-suite executives underestimate how much employees are struggling in terms of their physical, mental, emotional and financial wellbeing.
While 84% of C-suite leaders said they believed their employees’ mental wellbeing was good or excellent, for example, just 59% of employees actually felt that way. The results for financial wellbeing were even more stark: 81% of C-suite leaders believed employees’ financial wellbeing was excellent or good, while the percentage of employees who agreed was less than half that (40%).
What’s more, just 56% of employees in that survey said they believe their employers care about their wellbeing. All of this suggests that if corporate leaders really are starting to prioritise wellbeing more, they may need to be more deliberate about showing it.
Surveillance and unpredictable schedules work against wellbeing
Employee wellbeing can be a highly sensitive topic, which can make it difficult to know exactly what programs are and aren’t working. But research offers some evidence as to which management mistakes to avoid.
Workplace monitoring is a big one. According to the American Psychological Association, more than half (53%) of people in a workforce survey last year said their employers use some sort of remote surveillance technology to keep tabs on them at work. But that survey also found a clear link between monitoring and stress among workers.
Six in 10 workers who reported in the survey to being monitored said they also experienced stress during the workday, while less than four in 10 of the people who said they aren’t being monitored felt the same. Employees who are being monitored were also more likely to describe their workplaces as toxic and to express concerns about the future of their industries.
Research also makes clear that unpredictable scheduling can exact a toll on workers. This is particularly true for workers in industries like retail and food service, two areas that are currently dealing with sky-high quit rates. Researchers at Harvard University, UC Berkeley and UC San Francisco recently studied service workers in Michigan and found that employees who have less predictability in their schedules are also more likely to be distressed and unhappy and to struggle with sleep.
Some cities and states have already passed laws requiring at least two weeks of advance notice for scheduling changes, but corporate leaders who are serious about work wellbeing would be smart to implement those changes, whether the law requires it or not.
Successful work wellbeing strategies
So what does work? Here are four research-backed strategies companies are trying:
- Measure wellbeing: It sounds too easy, but actually measuring wellbeing can have a significant impact. One randomised controlled trial in an Indian garment factory found that when workers were asked to complete a survey on job satisfaction, their supervisors’ performance and job condition, they were 20% less likely to leave the company within five months.
- Offer flexibility: Research has shown that work from home policies actually can improve productivity. In one study of a Chinese travel agency, researchers found that working from home boosted productivity by 13% due in large part to a decrease in breaks and sick days. Even allowing people to work from co-working spaces has its benefits. Last year, researchers with the group #WorkAnywhere surveyed hundreds of employees and discovered that the majority of them found co-working spaces to be more fulfilling than either working at home or in the office. Co-working spaces, they found, offer employees the social benefits of being in an office without the competitive pressures.
- Make compensation transparent: Company leaders looking to close the pay gap would be wise to make compensation more transparent, an intervention that research has shown can meaningfully increase salaries for female employees, because it makes them more likely to negotiate. Of course, it’s also important to let potential hires know whether salaries are negotiable. Other research has found that when companies don’t clearly state that’s the case, men are more likely than women to ask for a higher wage.
- Be vulnerable: Criticism in a corporate environment often goes one way – from leader to employee. But research has found that when leaders openly share feedback they have received about themselves, it can foster a feeling of psychological safety with employees. The research found that this approach is more effective than leaders actively seeking feedback from employees, which can sometimes trigger defensiveness and wind up having the opposite effect.
Whatever your approach, investing in work wellbeing will be worth your time and money. If there’s one thing all of this data makes clear, it’s that healthier workers build healthier businesses. De Neve puts it this way: “Knowing your company cares about you, having friends at work, feeling a sense of belonging – it all matters.”
