Workplace mental health risks that go beyond compliance

Prioritizing mental health in the workplace is crucial for meeting EHS compliance requirements, but there are a host of social and reputational risks beyond the consequences of regulations.

Fostering a safe working environment is more than just meeting regulations for safeguarding employee mental health. Just meeting compliance minimums isn’t enough — modern employees expect more support, training, learning opportunities, leadership modeling, compassion, and resources. As the topic of mental health expands and enters workplace conversations, employers, now more than ever, need to ensure they prioritize mental wellbeing for their workers. 

Our Mental health in the workplace eBook features expert insight into the challenges companies face and the business risks of non-compliance. In this article, we summarize how dismissing mental health in the workplace can have significant social, reputational, and financial consequences.

Employee risks

Untreated mental health can have major impacts on not only employees, but on your organization as a whole.

It’s been reported that work-related stress, burnout, anxiety, and depression is increasing, exacerbated by heavy workloads, lack of management support, bullying or harassment at work, and exposure to trauma and violence at work — to name a few.  

A report by Gallup found that 25% of participants strongly agreed that their business cared about their wellbeing, leaving 75% who didn’t feel their mental health was being prioritized. Our experts report that the largest decline in employee wellbeing was found in workers under 35, which aligns with Generation Z’s perception of, and approach to, mental wellbeing. In contrast to the generations that came before, Millennials (1981-1996) and Generation Z (1997-2012) are more transparent about mental wellbeing and encouraging honest conversations about stress and burnout in the workplace.  

With the reported decrease in mental health at work, companies face societal risks, including difficulties in employee retention and attraction, loss of productivity and motivation, and loss of business opportunities.  

In May 2024, only 25% of participants strongly agreed that their organization cares about their overall wellbeing, compared to 49% in May 2020.

Loss of retention and attraction 

As the topic of mental health expands — both in terms of legal regulations to mandate more wellbeing support, and employee expectations to feel cared for at work — companies need to develop programs, policies, and initiatives to market their company as compassionate and caring.  

Having a mental health policy in place can not only help to retain current employees, who feel that help can be found if needed, but also helps to attract prospective workers. According to Forbes (2019), however, retaining employees is becoming more difficult as expectations for wellbeing support increase, with 50% of Millennials and 75% of Generation Z workers quitting in part due to mental health reasons. 

Our experts note that “employees who feel heard or that their company prioritizes mental health are more likely to be satisfied with their jobs, more productive, and more loyal.”
 

Loss of productivity 

However, issues arise for the employees that do stay but don’t have any available support when struggling with their mental health.  

The WHO found that lost productivity and working days due to depression and anxiety alone costs the global economy USD 1 trillion annually.

Our experts state that “poor mental health results in a loss of productivity, more days away from work, and presenteeism — all which cost the business money.” This, in turn, leads to poor work performance which affects the goals of the business.  

A host of newer themes have entered the workplace to detail consequences of poor mental health at work: 

  • Absenteeism — when employees are physically absent from work. Without sufficient support, employees may take more time off and request additional sick leave citing depression, anxiety, or burnout, for example 
  • Presenteeism — when employees are physically at work but not engaged, or functioning at their best, due to an illness, injury, or other condition such as mental health disorders 

Presenteeism, in particular, can cost companies higher financial losses than absenteeism, as businesses are still paying for the technology and resource use, but not receiving adequate results.
 

Loss of business and reputation 

In addition to the risk of prospective employees rejecting roles at a company, “high turnover rates due to dissatisfied workers… could impact business and reputation.” 

If a company’s public reputation is marred, due to not supplying mental health support or otherwise, employees, customers, clients, and vendors may refuse to work with them. Companies risk actively losing business opportunities due to their reputation.

Why do businesses need to manage mental health beyond compliance?

While many employees fell adequately protected because their country has strong labor protections or laws in place, many rely on their companies to implement measures, especially where there are no statutory requirements.

As more mental health regulations emerge, companies need to go above and beyond legal compliance to showcase their support for their employees. It’s “evidence that as regulatory and public scrutiny over workplace mental health increase, so too does the need for companies to do more to protect and support workers.” 

If a company doesn’t support the wellbeing of its workers, provide resources and training to improve mental health programs, advocate for honest and transparent communication and support, and work to foster a safe and healthy environment, they risk: 

  • Struggling to both attract prospective workers and retain current employees 
  • Struggling to meet business goals as employee performances suffer, with loss of productivity, loss of motivation, and burnout 
  • Losing money to presenteeism and absenteeism due to poor mental health 
  • High employee turnover rates, costing financial and reputational damage 
  • Cultivating a negative reputation, resulting in less employee applications, as well as a lack of public support from customers, clients, and stakeholders 

“Other fiscal risks also need to be considered,” notes our experts, “such as reparative costs, fees, and increased insurance premiums.” 

In other regions where mental health requirements are voluntary or non-mandatory, companies can suffer the societal risks of productivity loss, absenteeism and presenteeism, loss of business opportunities, and reputational damage. These, like legal consequences, can pose the same issues. 

Companies will have to develop concrete goals to prioritize and manage the mental health of their workers across the globe.

Navigate mental health in the workplace

Learn more about this ever-evolving topic in our eBook, Mental health in the workplace: A guide for EHS managers, with expert insight on: 

  • Emerging mental health themes in the workplace 
  • Business risks posed by mental health requirements 
  • Ways of managing and mitigating these risks for a successful company 
  • How Enhesa solutions can help you identify, meet, measure, and track mental health regulations 

Download the eBook today to discover the importance of mental health initiatives to cultivate a successful, futureproof business. 

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