Does better mental health improve productivity? Here's what the research says

Amid rising costs, economic challenges and growing demands, the question of how mental health affects productivity is a growing focus for researchers and industry experts alike. 

Research into wellbeing and performance can help leaders make evidence-based decisions to optimise growth and promote better mental health. 

In this research round-up, we’ve rounded up the evidence of the impact of employee mental health on measures of growth from the balance sheet to trade indexes, to entire GDPs. 

Around the world, there is growing evidence that poorer mental health is contributing to slowing economic growth. 

In the UK, 23.3m sick days due to work-related stress cost the economy £28bn, with increasing levels of poor mental health and long-term sickness absence since the Covid pandemic. 

In Australia, reduced productivity and compensation claims cost workplaces approximately $11bn per year. 

In the legal sector, mental health is a particular cause for concern as research shows that lawyers are experiencing greater levels of stress, depression and suicidal thoughts compared to the general population. 

In our State of Wellbeing in Law report, we examined workplace factors to understand their impact on mental health and the economic implications for US law firms and the wider legal sector.

Based on self-report data related to performance and average industry salary from six large US law firms, we estimate an average $14,216 loss per employee, per year due to mental health difficulties, equating to an annual average loss of $21,982,675 per firm, or nearly a tenth (9.7%) of annual staffing costs.

But it’s not all doom and gloom... 

Among these eye-opening stats, we also find that better mental health could be the key to driving economic gains. 

Researchers from Harvard and Oxford universities analysed data on work satisfaction and happiness from Indeed.com’s surveys from employees at over 1,600 US companies on the stock market. 

They found that the top 100 happiest companies in the sample have outperformed S&P 500 and Dow Jones by 20% since 2021. 

How can employers tap into the benefits of greater wellbeing for their people? A Deloitte study, tracking large employers over several years, aimed to pinpoint the best ways employers can support their people and economic growth. 

The result? Companies with the greatest ROI went beyond investing in reactive treatment to addressing the full spectrum of mental health, from proactive prevention to managing workplace stressors, and benefited from the greatest returns.

Within this, leadership training and return to work support were identified as high-impact areas of investment. 

As part of Unmind’s roadmap of scientific research, we examined the potential economic returns thanks to improved symptoms in our pilot randomised controlled trials (RCTs) addressing sleep and low mood. We estimate that digital tools addressing these areas could save companies £5,049 per year for every employee experiencing mental health-related presenteeism based on average UK wages. 

As part of our ongoing roadmap of scientific research, we’re aiming to replicate our studies in real-world employee samples with organisations around the world. 

From stock market performance to self-reported levels of productivity, global studies are highlighting the link between employee wellbeing and economic growth. 

While we’ve seen significant social and financial losses from poor mental health, these findings also point to the more hopeful insight that prioritising mental health could play a central role in economic recovery and high performance on a global scale. 

To find out more about our analysis of the financial impact of wellbeing on organisations, book a call with an Unminder today.