Article Summary
- The link between employee wellbeing and organisational performance is crucial for gaining leadership buy-in.
- HR leaders can build a compelling business case for a wellbeing strategy through data and communication.
- Organisations can move from intuition to data-driven change by presenting the evidence and championing the need for a thriving work environment .
HR leaders are uniquely positioned to champion the critical link between employee wellbeing and organisational success.
With their understanding of the pulse of the workforce, expertise in people management, access to people data and analytics and comprehensive understanding of organisational dynamics, they know that a well-thought-out and structured approach to health and wellbeing can significantly impact an organisation’s ability to attract, engage and retain talent.
However, proving this connection to a leadership team focused solely on commercial outcomes at all costs can be challenging.
Why ‘feeling’ it’s right isn’t enough
While many HR professionals instinctively understand that a healthy workforce drives better performance, leadership teams and boards require more than gut feelings. In a challenging business context, where every investment is scrutinised for its return on investment, concrete data becomes indispensable. Leaders and investors need to see the tangible benefits that wellbeing initiatives bring to the table, especially when financial resources are under pressure.
The good news is that numerous studies have demonstrated the positive correlation between employee wellbeing and organisational success. Here are a few compelling pieces of evidence:
However, proving this connection to a leadership team focused solely on commercial outcomes at all costs can be challenging.
- The latest Deloitte research finds that for every £1 spent on supporting the mental health and wellbeing of their workforce employers get (on average) about £4.70 back in increased productivity. According to the consultancy: “Demonstrating 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.”1
- A landmark study by Oswald, Proto, and Sgroi (2015) in the Journal of Labor Economics found a significant positive correlation between employee happiness and productivity. Their experiments showed that happier individuals were 12% more productive than their less happy counterparts, providing solid quantitative evidence that emotional wellbeing is a key driver of workplace productivity.2
- Furthermore, a comprehensive review by Krekel, Ward, and De Neve (2019) in Lancet Psychiatry of 339 independent research studies, including the wellbeing of 1,882,131 employees and the performance of 82,248 business units, found a significant, strong positive correlation between employees’ satisfaction with their company and employee productivity and customer loyalty, and a strong negative correlation with staff turnover. The authors conclude that: “Ultimately, higher wellbeing at work is positively correlated with more business-unit level profitability.”3
Moving from ad hoc wellness to a wellbeing culture
It is tempting for organisations to operate on an ad hoc basis, running sporadic wellness activities or offering services like gym memberships and fitness apps. However, employers have limited influence over whether employees utilise these wellness initiatives. As the saying goes, you can lead a horse to water but you can’t make it drink. Instead, employers can exert significant influence over the work environment itself, creating conditions that help employees thrive. By focusing on fostering a supportive and engaging workplace, organisations can have a more meaningful impact on employee wellbeing.
Wellbeing is a broader concept than wellness, encompassing not only physical and psychological health but also employee engagement and satisfaction. Recognising the distinction between wellness and wellbeing can lead to transformative improvements in growth, performance and engagement.
To create a lasting impact it’s therefore essential to adopt a strategic wellbeing culture that supports high performance in a healthy and sustainable way. This involves supportive management, leadership role-modelling, effective communication, involvement in wellbeing policies, reduced workplace stress, growth and development opportunities, and job-specific wellbeing initiatives among others. At Investors in People we have developed the We Invest in Wellbeing framework based on three indicators: leading a culture of wellbeing, supporting a culture of wellbeing and improving a culture of wellbeing. This framework helps organisations cultivate a health and wellbeing-focused culture tailored to their unique needs.
Developing a comprehensive wellbeing strategy that aligns with the organisation’s broader priorities will embed wellbeing into the company culture and daily practices. Wellbeing should be integrated into business plans and policies, making it a core part of business strategy rather than a separate initiative.
We invest in wellbeing
3-YEAR WELLBEING ACCREDITATION
Practical tips for proving the link
Building a robust internal case for wellbeing requires methodical data gathering and analysis. Here’s a structured approach to demonstrating the link between wellbeing and performance within your organisation:
Collect comprehensive data: Use management reports, staff surveys, performance reviews and occupational health reports to gather data on employee health and wellbeing. Identify trends and focus attention on key areas such as sickness absence, employee engagement, and productivity metrics.
Engage with senior leaders: Present the gathered evidence to senior managers, highlighting the potential ROI and benefits of wellbeing initiatives. Use case studies and external research to bolster your argument and demonstrate how other organisations have benefitted.
Employee feedback: Conduct regular surveys and focus groups to understand employees’ wellbeing needs and perceptions. Use this feedback to tailor wellbeing strategies that address specific issues within your organisation.
Baseline measurement: Establish baseline data before implementing any new wellbeing initiatives. This will help in measuring the impact accurately. Track key performance indicators (KPIs) such as absenteeism rates, employee turnover, engagement scores and productivity levels.
Continuous improvement: Regularly review and analyse the data to assess the effectiveness of wellbeing initiatives. Adjust strategies based on feedback and emerging trends to ensure they remain relevant and effective.
Communication and transparency: Keep employees informed about wellbeing initiatives and progress. Transparency builds trust and encourages participation. Share success stories and improvements to motivate and engage the workforce further.
Proving the link between employee wellbeing and organisational performance is crucial for gaining leadership buy-in and making informed investments in wellbeing initiatives. By presenting concrete data, engaging with senior leaders and implementing structured wellbeing strategies, HR leaders can build a compelling business case that highlights the significant benefits of a thriving work environment. By presenting external evidence, offering practical tips for internal evaluation and emphasising the importance of a thriving work environment organisations can move from intuition to concrete data and strategic implementation.
Sources
1 Mental health and employers: the case for investment, Deloitte 2024 https://www.deloitte.com/uk/en/about/press-room/poor-mental-health-costs-uk-employers-51-billion-a-year-for-employees.html
2 Oswald, Andrew J. , Proto, Eugenio and Sgroi, Daniel. (2015) Happiness and productivity. Journal of Labor Economics, 33 (4). pp. 789-822.
https://wrap.warwick.ac.uk/id/eprint/63228/7/WRAP_Oswald_681096.pdf
3 Krekel, Christian and Ward, George and De Neve, Jan-Emmanuel, Employee Wellbeing, Productivity, and Firm Performance (March 3, 2019). Saïd Business School WP 2019-04, Available at SSRN: https://ssrn.com/abstract=3356581 or http://dx.doi.org/10.2139/ssrn.3356581
