Why executives must take employee wellbeing seriously

Taking employee wellbeing seriously is not just a benevolent gesture but a strategic necessity, writes Raechel Gavin.

The success of an organisation hinges not just on its strategic vision and financial acumen but on the wellbeing of its employees. Firstly, prioritising employee wellbeing is a moral and ethical responsibility. In a world increasingly aware of mental health issues and the pressures of modern work life, leaders have a duty to create an environment where employees feel valued, respected, and supported.

However, this focus is as beneficial for businesses’ bottom line as it is for their employees. The direct correlation between employee wellbeing and productivity is well documented. Healthy employees are more engaged, motivated, and productive. After all, when an individual feels physically and mentally well, they are more likely to bring their best selves to work. This translates to higher quality output, creativity, and innovation.

Conversely, workplaces that ignore wellbeing often face high absenteeism, low morale, and a disengaged workforce. The resulting turnover costs and lost productivity can be staggering, far outweighing any investments made in wellbeing programs.

A positive internal culture that prioritises wellbeing can also be a powerful differentiator in attracting top talent, especially among younger generations who prioritise work/life balance and a supportive work environment. With the cost to hire an employee in Australia having increased to an average of $23,000 per candidate – which is up from a typical spend of around $10,000 over the previous year, and only takes into account the very small cost of overall attrition to a business. The case for a wellbeing strategy as a talent attraction and retention tool is compelling.

The latest Sonder data shows 54 per cent of employees believe a wellbeing program is a very important feature when considering their next employer. However, 47 per cent are not satisfied with the wellbeing support provided by their current employer, which means there’s an opportunity to steal talent, too. With the cost of replacing an employee totalling approximately 1.5 times their annual salary, this is an investment worth making.

With so many financial implications, it’s clear that investing in employee wellbeing isn’t just an issue for people and culture or work health and safety function but should also be a priority for the CFO and executive team.

Studies have shown that companies with robust wellbeing programs see significant returns on investment through reduced healthcare costs and improved employee performance. For instance, a report by the American Psychological Association found that for every dollar spent on employee wellbeing, organisations can see an average return of $4 in reduced healthcare costs and productivity gains. These statistics underscore that wellbeing is not just a “nice-to-have”; it’s a strategic lever that can drive financial performance.

Beyond productivity and financial gains, focusing on employee wellbeing enhances a company’s reputation and brand. In an era where corporate social responsibility (CSR) and ethical business practices are under intense scrutiny, companies that are seen to genuinely care for their employees earn greater trust and loyalty from customers, investors, and potential hires.

The evolving nature of work, accelerated by technological advancements and the recent shift towards remote and hybrid work models, further amplifies the need for a renewed focus on wellbeing. The blurring lines between work and personal life, coupled with the isolation that can accompany remote work, pose new challenges for maintaining employee health. Executives must proactively address these challenges by implementing policies and day-to-day approaches that promote flexibility, mental health support, and opportunities for social connection.

Taking employee wellbeing seriously is not just a benevolent gesture but a strategic necessity. Executives who understand this and act on it will not only foster a healthier, happier workforce but will also drive long-term organisational success.

The benefits of such an approach are multifaceted – from enhanced productivity and financial performance to a stronger brand and societal impact. It is high time that employee wellbeing moves from the periphery to the centre of corporate strategy, ensuring that the backbone of any organisation – its people – is strong, healthy, and thriving.

Raechel Gavin is the chief people officer at Sonder.