Psychological Health and Well-Being

It is evident that a healthy, flexible work environment that facilitates work-life balance is increasingly valued by employees, especially among younger generations. However, implementing measures to promote psychological health and well-being can be perceived by managers as merely an additional cost without significant benefits for the business. But is this really the case?

Research consistently shows that actions to prevent psychosocial risks, promote psychological health and well-being, and implement effective management and leadership practices can not only reduce costs but also yield benefits for companies and employees, such as:

  • Increased employee motivation, satisfaction, and commitment to work.
  • Enhanced productivity.
  • Reduced physical problems (e.g., muscle and joint pain, headaches, cardiovascular issues, hypertension) and psychological problems (e.g., stress, anxiety, depression, burnout) and their associated costs.
  • Decreased workplace conflicts and improved organizational climate.
  • Reduced absenteeism and presenteeism.

The Costs of Productivity Loss

Scientific evidence is abundant, but we highlight a study involving 45 American companies, which found that those where employees reported higher levels of well-being had financial performance twice as good as companies with lower levels of well-being (Deloitte, 2021).

According to a report by the Portuguese Psychologists’ Association, productivity loss can cost Portuguese companies up to 1.4% of their turnover. Prevention and promotion of psychological health and well-being in Portuguese companies can reduce productivity losses by at least 30%, resulting in savings of about 1.6 billion euros per year.

Given the evident economic (and social) impact of employees’ psychological health and well-being, managers who do not incorporate these into their business KPIs are missing a valuable opportunity. More than the implementation of isolated and ad hoc measures, it is urgent to build healthy workplaces that promote safety, health, and well-being. This is one of the best investments for organizations that want to remain sustainable, productive, and competitive.

Raquel Reis
Investment and Strategy Consultant

Sources:

Ordem dos Psicólogos Portugueses (2023). Prosperidade e Sustentabilidade das Organizações – Relatório do Custo do Stresse e dos Problemas de Saúde Psicológica no Trabalho, em Portugal. Lisboa.

Deloitte (2021). Well-being: A new cornerstone strategy for ESG strategy and reporting. Ontario: Deloitte.