Leaders who understand that poor mental health is as much of a risk as other catastrophic exposures will help set up their employees — and their company — for success. Here are three ways you can quantify and mitigate your company’s wellbeing risk.
Stresses compounded by workplace and social pressures have moved employee wellbeing from being a “nice to have” to a business essential. As a result, risk managers looking to take control of their risk are encouraged to recognize the need to accurately assess the risk of inadequate employee wellbeing within their organizations and take steps to build workplace resilience.
Nearly three in four employers say mental health is the most important wellbeing issue of the moment, with 52% saying work-life balance is the second priority, particularly as many employees have become accustomed to working where they live.
Meanwhile, on the risk side, studies have also shown mental health issues can lead to higher absenteeism and attrition rates, lower productivity, and overall morale issues for companies—not to mention lower company performance. At the same time, having a robust employee wellbeing program can help attract and retain talent and show a company’s environmental, social and governance (ESG) values, which are becoming increasingly important to employees. Indeed, employees who feel a sense of satisfaction are more productive.
Companies can use the same risk assessment process to assess workforce mental health and wellbeing resilience as they would for many other traditional exposures. Here’s how to go about quantifying and mitigating your company’s employee wellbeing risk.
Identify Impact and Indicators
The first step in quantifying the risk of an organization’s employee wellbeing is to understand its impact and potential losses that may occur. Perhaps the loss of key staff in one department, such as marketing, wouldn’t affect business performance as much as losses in a customer-facing team. Understanding what and who are essential can help organize thoughts around the potential risk.
The other part of quantifying mental health risk is to look at the availability of trackable metrics that can serve as leading and lagging indicators. Perhaps data shows there is attrition in worker productivity during the summer. Is that an indicator of people being on vacation or, conversely, is it a sign of burnout if the summer is your busiest season? Similarly, if your company just unveiled a new mental-health employee assistance program, a review of how many employees signed up could reveal a leading indicator of employee wellbeing. Other metrics to keep an eye on include absenteeism rates, employee health costs, employee engagement surveys and injury rates.
Model a Credible Scenario
Once you’ve identified broad possible exposures and have a way to track indicators, it’s time to map out potential scenarios. While it may seem a bit different than profiling the probable losses of an event such as a gas leak, it’s quite similar. For example, if you’re a large retailer and you can quantify that poor employee wellbeing leads to 30% turnover, you can then model what that 30% would cost in terms of the hiring of replacements, onboarding, productivity lags and revenue losses. The key to modeling a plausible scenario is to make connections among the various types of risk factors on individual and organizational levels. One company may see higher turnover, while another firm may see poor employee wellbeing surface in something such as employee fraud.
Make Necessary Trade-offs
Where your organization is in its risk maturity scale — and the nature of your business — will determine how you prioritize risk mitigation for employee wellbeing. A strong broker may help companies understand what employees want out of their careers and how to go about changing company culture to improve employee wellbeing and productivity. The broker also can help identify gaps in specific offerings that may trip employees up.
Building workforce resilience around the risk of employee wellbeing must begin with a mindset shift. Leaders who understand that poor mental health is as much of a risk as other catastrophic exposures will help set up their employees — and their company — for success. Employee wellbeing is no longer simply a cost center; it’s imperative for a successful business strategy going forward.
Last year, when the pandemic was affecting the mental health of the employees of a large national water treatment company, the firm amplified its wellbeing program by offering — at no cost to employees — resources such as one-on-one coaching for employees and their spouses, live meditation sessions and stress-management activities. In addition, the company’s owners offered their own personal mental-health tips in an all-employee video to empower employees to take care of their own mental health. These efforts helped the company empower employees, which in turn allowed the firm to become more resilient.
 “6 Strategies to Improve Employee Wellbeing,” Aon
 “2021 Global Wellbeing Survey,” Aon
 “Five ways that ESG creates value,” McKinsey & Company