Real Employee Wellbeing Requires Real Change, Not Band-Aid Solutions

I’ve read a lot about employee wellbeing over the past few years, and some points are beyond argument.

We’re in the grip of a global wellbeing crisis—particularly since the pandemic—that is seriously impacting the workplace. The toll on people and the cost to business is enormous. But that’s just one side of the coin.

The other is that the wellbeing sector is on fire, a booming, multi-billion-dollar industry. Almost 85% of US companies with over 200 employees now offer wellness programs. The research company MarketsAndMarkets predicts that by 2026 global corporate spending on wellness is set to top $94.6 billion, up from $53 billion in 2022. And yet, despite the enormous investment companies are making, the wellbeing crisis continues to escalate, leading some commentators to question why, despite the billions of dollars being targeted at the problem, outcomes aren’t better.

In a recent Harvard Business Review (HBR) article, health researchers Jazz Croft, Acacia Parks, and Ashley Whillans posed this question: “Despite this substantial investment, anticipated improvements in wellbeing are not being realized. This mismatch between increased money spent and declining mental health outcomes prompts a crucial question: why aren’t workplace wellbeing programs achieving better outcomes?” 

We’ll dig deeper into that a little later, but essentially, the authors blame over-reliance on individual-focused programs that treat poor wellbeing symptoms instead of a more holistic approach that focuses on workplace structures and systems that could be contributing to poor employee wellbeing.

The HBR researchers state: "We argue—based on a systematic review of recent research in this area—that the lack of impact of wellbeing programs is explained in part by a focus on the individual employee rather than the systems that affect them."

"To tackle the challenges employees face, we argue that there must be a shift from individual-level interventions, like well-being apps, AI chatbots, and employee stress management training, to broader systemic interventions, such as workload management and mental health development training for leaders,” the authors state.

They claim that individual-focused wellbeing programs fall short because: “Companies tend to prefer digital solutions, like meditation apps, chatbots, or online therapy, because they are significantly easier to scale and standardize compared to on-site solutions and can be made available without having to make major organizational changes.”

This line of argument is supported by separate recent research by Dr William Flemming at Oxford University’s Wellness Research Centre. The study of 46,336 workers in 233 organizations compared employees who did and did not engage in a range of common individual-level wellbeing interventions, including resilience training, mindfulness, and wellbeing apps. The results: those who took part in the wellbeing program were no better off afterwards than those who didn’t.

The need for companies to consider and examine causal issues in addition to offering symptom-focused wellbeing interventions—such as mental health helplines and supports, and physical-oriented interventions like gym memberships and dietary advice—underlines the complexity of employee wellbeing.

“Improving employee wellbeing can be complex—our research highlights a need for leaders to address organizational culture factors coupled with a more nuanced management approach to create a climate of wellbeing for all,” said John Hopkins University Professor Rick Smith, faculty director at the Human Capital Development Lab and co-author of Wellbeing at Work U.S: Research Report 2024.

Interestingly, the report found that companies recognized as Great Places to Work have significantly higher employee wellbeing scores than non-ranked companies, “further strengthening the potential link between employee wellbeing and organizations recognized as great places to work.” As this Great Places to Work article highlights, creating a great place to work requires a great company culture—and building a company culture starts with internal communication.

Recommended read: Employee Wellbeing: How to Build a Culture of Connection Through Effective Communication

But let’s first track back to why employee wellbeing matters, the impact it has on business as well as the individual employee, and explore potential answers to that question posed by the HBR health researchers.

The Business Case for Employee Wellbeing

Of course, we know employee wellbeing matters—but how much?

Aside from the impact on the individual person, the business impact of employee wellbeing is enormous. Extensive research over several years—which I will come to shortly—proves beyond any doubt that wellbeing significantly impacts productivity, recruitment and retention, and ultimately the financial bottom line.

We could quote stats all day, but let’s just take this from Gallup: “The impact of wellbeing extends far beyond how people feel—it affects the number of sick days employees take, their job performance, burnout, and the likelihood of leaving your organization.

Here are just some of the costs of poor wellbeing, from Gallup research:

• $322 billion of turnover and lost productivity cost globally due to employee burnout
• 15% to 20%of total payroll in voluntary turnover costs, on average, due to burnout
• $20 million of additional lost opportunity for every 10,000 workers due to struggling or suffering employees

Understanding Employee Wellbeing

What is employee wellbeing? That might sound like a very basic question, but organizations sometimes take a very narrow interpretation of employee wellbeing and simply invest in individual-focused wellness programs to “fix” a problem, instead of looking at wellbeing from a holistic organizational level in a way that forensically examines the causes of poor wellbeing as well as the symptoms.

Essentially, workplace wellbeing is all about ensuring that employees feel healthy, happy, and supported at work—going beyond just physical health to include mental and emotional wellness too. Ultimately, it's shaped by how much a company genuinely cares about its people and the steps it takes to create a positive, supportive atmosphere. 

What Companies Think Drives Employee Wellbeing vs The Reality

But are companies getting their focus on employee wellbeing right? Groundbreaking research published earlier this year and showcased at Poppulo’s Engage ‘24 Conference strongly indicates that they are not—which could go somewhere towards explaining why the billions of dollars being invested in wellbeing programs aren’t as effective as they should be in tackling the global crisis.

The largest global study of workplace wellbeing was conducted by Professor Jan Emmanuel de Neve, Director of Oxford University’s Wellbeing Research Center, and its findings revealed a wide gulf between what company leaders believed are the main drivers of employee wellbeing and the actual drivers—as expressed by employees themselves.

Traditional opinions around what drives employee wellbeing—which still underpin CEO, CFO, and HR thinking and initiatives in many companies—center on what could be considered transactional:

• Compensation
• Flexibility
• Appreciation

But what the research shows is that, while compensation is important, particularly for lower-paid workers, the social elements of workplace experience are underestimated.

The starkness of the gulf between what companies think drives wellbeing, and the reality for employees is highlighted by the fact that the research found the top three to be completely different for both cohorts. Company leaders ranked the top three as:

1. Compensation

2. Flexibility

3. Inclusion

But employees felt their wellbeing is most influenced by:

1. Belonging

2. Trust

3. Achievement

This raises two obvious questions:

• With employees calling out “belonging” as the most important influence on their workplace wellbeing, do organizations need to reevaluate and recalibrate their entire wellbeing thinking and strategies? 
• What helps create the sense of belonging that employees value so much?

The answer to the first question must be an emphatic yes, not only because belonging was way down the list for company leaders—ranking No.5 of 10 drivers—but the second most important belonging influencer for employees, "Trust", ranked third from the bottom for company leaders.

As for question two, when Professor De Neve’s research sought answers to what the key influencers of belonging are, they found that “feeling that the company values me as a person” topped the list, followed by “having a friend at work.”

The critical importance of employees feeling a sense of belonging where they work and having friends at work—or, more pointedly, not feeling that sense of belonging or having friends at work—could be feeding into one of the current main causes of poor employee wellbeing: mental health challenges in the workplace. 

The World Health Organization (WHO)estimates that 12 billion working days are lost globally every year to depression and anxiety at a cost of US$1 trillion per year in lost productivity. While mental health issues and poor workplace wellbeing were a problem long before the COVID-19 pandemic, they have rocketed since then.

An increase in mental health challenges has been cited by the US-based Business Health Group as the most significant area of prolonged impact resulting from the pandemic. In 2022, 44% of employers saw a rise in mental health concerns, and this jumped to 77% in 2023.

Gallup research in 20222 showed that nearly one-fifth of U.S. workers (19%) rated their mental health as fair or poor, and these workers reported about four times more unplanned absences due to poor mental health than their counterparts who report good, very good or excellent mental health. Gallup estimates that lost work due to mental health issues costs the US economy $47.6 billion annually in lost productivity. 

Feeling like you belong at work cannot possibly be a panacea for everything, but belonging is intrinsically linked to our mental health and, therefore, needs to be prioritized in any reevaluation of workplace wellbeing strategies.

According to New York’s Mayo Clinic Health System, “We cannot separate the importance of a sense of belonging from our physical and mental health. The social ties that accompany a sense of belonging are a protective factor helping manage stress and other behavioral issues. When we feel we have support and are not alone, we are more resilient, often coping more effectively with difficult times in our lives. Coping well with hardships decreases the physical and mental effects of these situations.”

As we’ve seen, companies are spending billions on wellness programs, including mental health resources, so why aren’t they achieving better results?

The Harvard Business Review research mentioned earlier has very definite views, and they happen to chime with separate research at Oxford University. Both argue that programs that address the symptoms of poor wellbeing—through individual-focused interventions, rather than systemic interventions that address organizational or structural workplace causes, are less effective than they could be.

The authors of the HBR research argue that “to truly combat rising needs and mitigate the costs of poor wellbeing, we believe that systemic change is essential. We offer research-based strategies that leaders should consider o help unlock the return-on-investment of their well-being programs.”

These changes include:

1. Responding to employee needs with organizational change

2. Supporting structural changes with clear goals and metrics

3. Developing grassroots employee well-being champion networks

4. Equipping leaders to support organizational change

5. Building accountability with global standards and ESG

Unsurprisingly, the authors stress the crucial role of business leaders in advocating for these changes, “aligning both individual and organizational commitments to mental health."

"By acting as behavioral architects, they can foster a culture that prioritizes mental health and wellbeing at every level, ensuring that support is deeply integrated into the organization. This approach has the potential not only to enhance employee satisfaction and engagement but also to deliver a strong return on investment on corporate wellbeing initiatives,” the report concluded.