Reducing Costs and Retaining Talent: The Financial Case for Workplace Wellbeing Supports

New Zealand organisations currently face significant economic pressures, from rising costs to market uncertainties. In this environment of tight budgets and careful spending, workplace wellbeing programmes might seem like a discretionary expense. However, investing in employee wellbeing is not just the right thing to do—it makes clear economic sense.

A workforce that feels supported, valued, and mentally well is more productive, engaged, and less likely to leave. Research consistently shows that companies that prioritise mental health and wellbeing enjoy lower absenteeism, reduced turnover, and increased overall performance. Wellbeing programmes are not simply a cost; they are a strategic investment that yields measurable financial returns. This article examines the return on investment (ROI) of workplace wellbeing initiatives and their impact on New Zealand businesses' bottom line.

The Cost of Poor Mental Health in the Workplace

Poor mental health carries substantial financial implications for organizations. It undermines productivity, drives absenteeism, and accelerates employee turnover. A recent Deloitte report revealed that poor mental health among UK employees costs employers between NZD 110-115 billion annually. With the UK's workforce of approximately 33 million, this amounts to a per-employee cost of NZD 3,340-3,531. Notably, presenteeism – working while unwell – accounts for nearly half of these costs. Additionally, labour turnover costs have escalated as more employees cite mental health concerns as their reason for leaving.

The ROI of Workplace Wellbeing Interventions

Organisations that take proactive steps in supporting employee mental health see significant financial benefits. Deloitte's analysis reveals that employers receive an average return of $5.30 for every $1 invested in mental health initiatives. The ROI varies by intervention type:

1.        Preventative Measures (ROI: NZD 5.60 : NZD 1)

Preventative measures include workplace mental health awareness campaigns, wellbeing workshops, and proactive support for employees before challenges escalate. These initiatives help employees address issues before they escalate into serious mental health concerns, preventing costly absenteeism and presenteeism.

2.        Proactive Interventions (ROI: NZD 5.00 : NZD 1)

These measures, such as supervision, coaching and training for managers are effective in identifying and mitigating potential issues before they become detrimental to both the employee and the company.

3.        Reactive Measures (ROI: NZD 3.40 : NZD 1)

While reactive measures, such as individual therapy or Employee Assistance Programs (EAPs), offer the lowest ROI they still provide significant value. These programs are particularly important for supporting employees who may already be struggling with more severe mental health challenges, enabling them to recover and return to their full potential at work.

Understanding the Financial Impact

The costs of poor workplace mental health manifest in three primary areas:

1. Absenteeism: Approximately NZD 385 per employee annually

2. Presenteeism: Estimated at NZD 1,600 per employee annually

3. Labour Turnover: Around NZD 1,413 per employee annually

Presenteeism, though less visible than absenteeism, represents the largest financial burden. It manifests as reduced productivity when employees work while struggling with mental health challenges.

Maximizing ROI Through Strategic Wellbeing Initiatives

Organisations can optimize their wellbeing investment returns through comprehensive support strategies:

1. Cultivate a Preventative Culture

• Foster open dialogue about mental health

• Train managers in early warning sign recognition

• Implement regular wellbeing check-ins

• Develop clear mental health policies and procedures

2. Deploy Comprehensive Assessment Tools

• Conduct regular wellbeing surveys

• Implement psychological safety assessments

• Monitor key wellbeing metrics

• Analyse organizational risk factors

3. Provide Professional Development Support

• Offer targeted coaching programmes

• Implement structured supervision frameworks

• Develop career progression pathways

• Support skill development and resilience building

4. Establish Responsive Support Systems

• Provide access to qualified mental health professionals

• Implement crisis response protocols

• Offer flexible working arrangements

• Create peer support networks

5. Deliver Comprehensive Training

• Mental health first aid certification

• Leadership mental health awareness

• Stress management techniques

• Resilience-building workshops

Conclusion

The business case for workplace wellbeing is straightforward: it delivers measurable financial returns, with up to NZD 5.60 returned for every dollar invested. For New Zealand businesses managing current economic challenges, wellbeing programmes offer a practical way to reduce costs and improve productivity. Organizations that invest in employee wellbeing now will be better positioned both financially and operationally for the future.

References

1. Deloitte. (2024). Mental Health and Employers: The case for employers to invest in supporting working parents and a mentally healthy workplace. Deloitte UK.