Learn how equitable mental health benefits are vital in hiring talent, employee retention, and employee productivity and efficiency.
Despite predictions of a recession on the horizon, employees are leaving their jobs at record rates. Retaining employees within any organization is more challenging in a competitive hiring environment. However, meeting the unique needs of your employees is likely the answer. As employees face increased stress outside and inside the workplace, mental health care is a critical need. Yet, many individuals still face significant barriers.
Research shows that although 1 in three adults experience anxiety or depression, over 115 million Americans live in an area with a shortage of licensed clinical therapists. And only 55% of psychiatrists accept insurance compared to 89% of other health professionals. Research shows that 79% of employees are likely to stay at a company that provides high-quality mental health resources.
As employees seek companies that better meet their needs, equitable mental health benefits will be vital in attracting and hiring talent, essential for employee retention, and helpful in generating increased workforce productivity and efficiency.
As organizations struggle to recover from pandemic losses and the effects of The Great Resignation, retaining top talent is critical. Increased turnover is costly for organizations as it costs an average of six to nine months' salary to replace an employee who leaves. Yet, many companies approach retention with the expensive approach of providing financial incentives to senior executives.
McKinsey research shows that this money is rarely well spent since it targets employees who were likely to stay put. Further research shows that a mix of financial and non-financial incentives targeted toward employees of all levels at risk of leaving requires only a quarter of the budget previously needed and is more likely to improve organization-wide employee retention.
Workplace demands have changed dramatically in the past few years, placing increased stress on employees. Over 50% of the US workforce is experiencing some form of workplace burnout. Alongside daily workplace stressors, employees of color also face microaggressions that lead to increased burnout. Yet, many company leaders fail to understand the impact of burnout on employees. Our recent study of workplace burnout revealed that 67% of executive leaders and 54% of HR leaders say they intend to return to their pre-pandemic mental health strategy in the next year. In contrast, 73% of employees and 81% of managers indicated they would be more likely to stay at a company that offered high-quality mental health resources. Perhaps more importantly, 73% of non-managerial employees and 76% of managers said they valued mental health benefits over other employer-sponsored perks.
Research from McKinsey & Company shows a similar disconnect.
The bottom line is employees are seeking quality mental health benefits and are willing to leave if their employer isn't prepared to meet those needs.
It's no secret that hiring new employees costs more than retaining existing talent, but many employers don't recognize all the hard and soft costs that come with high employee turnover. US businesses lose $1 trillion every year due to voluntary employee turnover. Costs begin adding up when an employee's production diminishes and absences increase due to burnout or frustration with the company. When an employee leaves, the replacement cost can range from one and a half to two times the employee's annual salary.
Unfortunately, these figures only account for hard costs like recruitment and training. The cost of losing an employee continues to make an impact due to the loss of institutional knowledge and the potential revenue the experienced employee could have earned the company in the future. High turnover also adds to that cost due to the impact on the remaining team members. Lowered morale further impacts overall productivity, and heavier workloads on short-staffed teams lead to increased burnout.
As companies look toward the future, it's time to recognize that there is no going back to the way things were before. Mental health support is essential to the way employees work. As a result, offering robust mental health is likely to be a competitive advantage in recruiting and retaining talent. In Calm's 2021 survey on workplace mental health, 76 percent of respondents said they consider mental health benefits critical when evaluating new jobs. Instead of viewing mental health as an isolated incident or illness, effective mental health care should offer a targeted approach that meets the needs of each employee.
Every employee should have access to mental health care that best fits their needs. With an increasingly distributed workforce, seeking mental health benefits that support global teams is essential. While some individuals require medication management and in-person therapy, many employees have needs that are best supported by self-paced programs or coaching. By expanding mental health care to support wellness and provide culturally centered care, employees can potentially access the level of care that will best meet their current needs and changing needs. Such offerings might include a combination of changes to the workplace and mental health care that broadens the standard of care beyond traditional therapy.
For instance, to support mental health in the workplace in a way that reduces anxiety and increases performance, a company might offer distraction-free workspaces and wellness options like on-site yoga, meditation, and exercise classes. Flexible schedules are also increasingly recognized as a catalyst for improved work/life balance and stress relief that contributes to mental health. This benefit meets the needs of employees with varied demands and engagement programs for virtual employees are also increasingly sought-after benefits. Research reveals that over half of employees prefer a different mode of care than one-on-one therapy, so it's important to offer options that are more likely to be used. For example, an internal therapist and counselor coaching can improve self-awareness and help people evolve past harmful thinking patterns. Employee support groups are another option that can foster a sense of belonging while connecting employees who are facing similar challenges.
Employees expect quality mental health benefits from their employers. Still, further investigation was required to link the provision of mental health services and employee retention. To clarify this link, we analyzed records of 149,451 unique employees across 104 Modern Health customers and calculated the total percentage of employees retained on eligibility files relative to the percent removed from eligibility files over one year. Our findings revealed that retention was 5.5% higher among employees across all years of tenure who engaged with Modern Health versus those who did not. On average, 23.56% of employees who never used Modern Health were (voluntarily or involuntarily) terminated. Yet, only 18.03% of employees who engaged with Modern Health were no longer with the company.
So, if a distinct link between equitable mental health benefits and employee retention exists, does it offer a beneficial return on investment? When we consider the difference of 5.5% in a specific example, we can see the potential ROI. For an employer with 10,000 employees, 5.5% would result in an additional 137 employees retained. If the replacement cost ranges from $28,155 to $42,233 per employee, employers would save $3,857,235 to $5,785,921.
You can determine your organization's estimated turnover savings by implementing a mental health solution like Modern Health with a simple calculation. All you need is your total number of employees and average salary.
Step 1: Calculate additional employees retained. Multiply the estimated employees using mental health benefits by 5.5%.
Step 2: Calculate estimated employer savings. Multiply the additional employees retained from step 1 by the 6-month and 9-month replacement costs.
Our recent webinar on Employee Retention During the Great Resignation featuring Modern Health's Sr. Director of Clinical Research, Cyntia Castro Sweet, and Senior VP of Sales, Hannah Wilson, provides further context around current struggles with employee retention and offers more insight into our methodology and results. Download our Employee Retention research report to learn more about how your organization can positively impact turnover by investing in mental health support.
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