Why Looking After Employees Psychological Health is Good Business

In the bad old days of archaic twentieth century management practices, it was always assumed that a power over style of management was the most effective way to get maintain employee concentration and focus. Stress and pressure on employees was assumed to be necessary to drive productivity, to make workers perform faster, better and longer.

But in the 21st century a growing body of organizational psychological research and literature has turned this style of thinking on it’s head. This new way of thinking has developed with the evolution of the modern enterprise and looks at the costs of high pressure environments on a modern business, where sophisticated production processes and a more highly skilled and trained workplace means workers cannot be simply viewed as disposable labour.

This modern research suggests that valuing, nurturing and developing employees through workplace education and training, and creating a happier workplace culture where people feel safe and able to contribute to innovation and improvement, creates a responsive, knowledgeable and experienced workforce, which can provide greater tangible benefits to a company, including increased productivity and innovation as well as reduced operational expenditure.

Here are some of the ways that 21st century thinking about workplace culture are transforming the way leaders think about relationships between leadership, management and productivity.

Healthcare & Absenteeism

A study in the Journal of Occupational and Environmental Medicine. 1998, 40 (10): 843-854. 10.1097/00043764-199810000-00003found that the health care expenditures of workers who report high levels of stress are 46 percent greater than workers with low levels of stress.
A Canadian study in 2011 looked further into this relationship between Psychosocial working conditions and the utilization of health care services and found a direct correlation between high job stress and higher utilization of health care services. It suggests that improving stressful working conditions and educating workers on stress-coping mechanisms can help in reducing health care costs attributable to psychosocially stressful working conditions and lead to a reduction in absenteeism and employee turnover.

Engagement V’s Disengagement

While an old world management style based on a culture of fear can ensure engagement in the short term, research suggests that the inevitable stress it creates will likely lead to disengagement over the long term. And disengagement is costly. In studies by the Queens School of Business and by the Gallup Organization, disengaged workers had 37% higher absenteeism, 49% more accidents, and 60% more errors and defects. In organizations with low employee engagement scores, they experienced 18% lower productivity, 16% lower profitability, 37% lower job growth, and 65% lower share price over time…


High Staff Turnover

Disengagement also leads to greater staff turnover as employees look for better, less stressful opportunities Research shows that workplace stress leads to an increase of almost 50% in voluntary turnover. People go on the job market, decline promotions, or resign. And the turnover costs associated with recruiting, training, lowered productivity, lost expertise, and so forth, are significant. The Center for American Progress estimates that replacing a single employee costs approximately 20% of that employee’s salary.


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