Mental Health Benefits for Employee Retention – Attract and Retain Talent

employee retention and mental health benefits

Employee turnover is at an all-time high despite forecasts of a coming recession. Any organisation will find it more difficult to retain employees in a competitive hiring market. Meeting each employee’s specific demands, however, is probably the best course of action. Mental health care is a crucial need as employees experience more stress both inside and outside of the workplace. However, many people still encounter considerable obstacles.

Over 115 million Americans live in a region where there is a shortage of clinically licenced therapists, despite the fact that one in three adults suffer from anxiety or depression, according to research. In addition, only 55% of psychiatrists accept insurance, compared to 89% for all other medical specialists. According to research, 79% of employees are more likely to stick with a company that offers top-notch mental health resources.

Equitable mental health benefits will be critical in attracting and hiring talent, essential for employee retention, and helpful in producing increased workforce productivity and efficiency as workers look for employers that better meet their needs.

Employee Retention is Critical

Retaining top personnel is essential as firms work to recover from pandemic losses and The Great Resignation’s consequences. Increased turnover is expensive for businesses since it takes an average of six to nine months’ compensation to find a replacement for a departing employee. However, many businesses use the costly strategy of offering top executives cash incentives as a retention strategy.

According to a McKinsey study, this money is seldom efficiently spent since it goes to workers who are expected to remain in their current positions. Further study reveals that a combination of financial and non-financial incentives targeted at staff members at risk of leaving at all levels only needs a fourth of the funding previously required and is more likely to increase employee retention across the board.

Employee stress has grown as a result of the significant changes in workplace requirements over the last several years. Burnout at work is a problem for more than 50% of US workers. Employees of colour experience microaggressions in addition to regular workplace pressures, which increases burnout. However, a lot of business executives are ignorant of how burnout affects workers. According to a recent survey we conducted on workplace burnout, 67% of senior executives and 54% of HR leaders want to resume their pre-pandemic mental health strategies in the next year. As opposed to this, 81% of managers and 73% of workers said they would be more inclined to remain with a firm that provided top-notch mental health facilities. The fact that 73% of non-managerial workers and 76% of managers stated they prioritised mental health benefits above other employer-sponsored benefits may be more significant.

McKinsey & Company research shows a comparable disparity.

  • Only 51% of workers think that their mental health is supported well or very well by their workplace, according to 65% of employers.
    While just 27% of frontline employee respondents agree, 71% of employers employing frontline staff say they support mental health well or very well.
  • While 84% of employees with drug use disorders say it is difficult to receive care, 20% of employers say expanding access to substance use disorder treatment and recovery services is a priority.
  • While 67% of workers with a mental illness say it is difficult to receive care, 31% of companies say enhancing access to mental disease treatment is a priority.
  • While 79% of all workers believe an anti-stigma/awareness campaign would be helpful, just 23% of employers report having adopted one in the previous year.

The bottom line is that if their company is unable to provide them with appropriate mental health benefits, people are inclined to quit.

Cost of Losing Employees

It goes without saying that keeping current talent costs less than employing new staff, yet many businesses are unaware of all the hard and indirect expenses associated with excessive employee turnover. Employee turnover is a $1 trillion annual loss for US enterprises. When an employee’s output declines and their absences rise as a result of burnout or dissatisfaction with the organisation, costs start to mount. The cost of replacing a departing employee might be between 1.5 and 2 times that person’s yearly compensation.

Unfortunately, these numbers only take into account direct expenses like hiring and training. Due to the loss of institutional knowledge and the potential income the experienced individual may have brought the organisation in the future, the cost of losing an employee keeps having an effect. High turnover also raises that expense since it affects the team’s surviving members. Reduced morale further reduces productivity, and higher burnout is brought on by larger workloads on understaffed teams.

Growing Employee Retention Through Mental Health Benefits

It’s time for businesses to accept that there is no turning back as they move toward the future. Support for mental health is crucial for how people do their jobs. Offering strong mental health is thus probably going to be a competitive advantage in attracting and keeping talent. 76 percent of participants in Calm’s 2021 poll on workplace mental health said that they give mental health perks a high priority when assessing new employment opportunities. Effective mental health treatment should provide a customised strategy that caters to the requirements of each employee rather than considering mental health as an isolated occurrence or sickness.

Every employee should have access to the greatest possible mental health treatment. It is crucial to look for mental health advantages that help global teams as the workforce becomes more spread. While some people need in-person counselling and medication management, many workers have demands that are better met via coaching or self-paced training. Employees may have access to the degree of treatment that will best meet their present requirements and developing needs by extending mental health care to encourage wellbeing and provide culturally focused care. Such offers may combine adjustments to the workplace with improved mental health services that go beyond conventional treatment.

For instance, a business may provide distraction-free workplaces and wellness choices like on-site yoga, meditation, and fitness courses to promote mental health in the workplace in a manner that lowers anxiety and boosts performance. Additionally, flexible schedules are becoming more widely acknowledged as a driving force for better work/life balance and stress reduction that benefits mental health. This benefit satisfies the requirements of workers with various expectations, and engagement programmes for remote workers are also becoming more and more in-demand perks. Given that more than half of workers prefer alternatives to one-on-one counselling, it’s critical to provide choices that are more likely to be employed. For instance, internal therapy and counselling coaching may increase self-awareness and assist individuals in letting go of negative thought patterns. Another option that might promote a feeling of belonging and unite staff members who are dealing with similar difficulties are employee support groups.

Employees look to their companies for high-quality mental health benefits. However, further research was needed to establish a connection between the availability of mental health treatments and employee retention. The overall proportion of workers maintained on eligibility files compared to the % removed from eligibility files throughout one year was estimated after we examined data of 149,451 unique employees from 104 Modern Health clients. According to our research, workers who participated in Modern Health had 5.5% greater retention rates over all years of employment than those who did not. Employees who had never utilised Modern Health were let go (voluntarily or involuntarily) at a rate of 23.56% on average. However, just 18.03% of workers who participated in Modern Health left the organisation.

ROI of Adding Mental Health Benefits

Does it provide a good return on investment if there is a clear connection between fair mental health benefits and employee retention? We can see the possible ROI when we take a particular example’s difference of 5.5% into account. A 5.5% retention rate for a firm with 10,000 workers would mean keeping 137 more workers. Employers might save between $3,857,235 and $5,785,921 if the replacement cost per employee is between $28,155 and $42,233.

A quick calculation will show you how much money your company may save on turnover if you use a mental health solution like Modern Health. Your overall personnel count and average compensation are all you need.

Calculate extra retained workers in step one. Add 5.5% to the projected number of workers receiving mental health benefits.

Step 2: Estimate the savings for the employer. Multiply the extra workers kept over from step 1 by the replacement expenses for 6 and 9 months.

Our most recent webinar, “Employee Retention During the Great Resignation,” with Modern Health’s Senior VP of Sales, Hannah Wilson, and Senior Director of Clinical Research, Cyntia Castro Sweet, provides more background on the current challenges with employee retention and offers more insight into our methodology and findings. To read more about how your company can reduce turnover by funding mental health assistance, download our Employee Retention study paper.

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