In the midst of today’s “Great Resignation,” attracting and retaining talent has quickly become employers’ biggest challenge.
Cynthia Castro Sweet, Ph.D.
Senior Director of Clinical Research, Modern Health
Talent attrition not only has a widespread impact on productivity and team morale, but it can also be costly to organizations. It is estimated that it costs an employer an average of 6 to 9 months’ salary to replace an employee who leaves.
“Turnover contagion” is an HR management concept that adds fuel to the resignation fire. The idea is anchored in the notion that humans take cues from others. “If just a few people choose to leave an organization, it is likely to prompt a number of other people to start seriously looking for other employment,” University of New South Wales management professor Will Felps told the BBC.
There’s no denying there’s fierce competition in play to retain top talent, and HR and other business leaders are increasingly turning to evidence-based strategies to accommodate their workforce’s mental health needs in a bid to keep employees.
Numbers don’t lie
One research-backed step toward increasing employee retention is by investing in benefits that bolster employee well-being. Recent research shows that employees — now more than ever — are willing to stay (or leave) based on the quality of their mental well-being benefits. In a recent study conducted by Forrester Consulting on behalf of Modern Health, 73 percent of employees and 81 percent of managers indicated they would be more likely to stay at a company that offered high-quality resources to care for their mental health; 73 percent of non-managerial employees and 76 percent of managers said they valued mental health benefits over other employer-provided perks.
To understand more about the relationship between employee retention and engagement with mental health support, Modern Health conducted another study of members using its own services as a provider of mental health benefits. We wanted to know if employees who utilized Modern Health’s mental health offerings — including coaching, therapy, live group sessions, and mindfulness exercises — had higher retention rates than those who did not.
After analyzing pooled, anonymized utilization data from more than 100 companies and their nearly 150,000 employees, we found that employee retention was 5.5 percent higher among employees who used Modern Health than it was among employees who didn’t use their mental health benefits. That difference could mean enormous cost savings over time. Take this example scenario for an employer with 10,000 employees: Assuming an average salary of $56,310, an estimated replacement cost of $28,155 to $42,233 per employee, and a Modern Health engagement rate of 25 percent, a 5.5 percent increase in retention would result in estimated savings of $3,857,235 to $5,785,921 for the employer.
Beneficial for all
While the impact of mental health benefits on employee retention is compelling, there are many ways that mental health benefits drive better business ROI, like helping to reduce healthcare costs by slowing down the progression of severe mental health challenges and even preventing them entirely. Mental health benefits can also save money by maximizing the value of the workforce; in the Forrester study mentioned above, 65 percent of C-level executives and HR leaders said they hoped to make their organizations more productive by offering mental health support.
Of course, there’s also a business case for the “value on investment,” which includes those intangibles that cannot be easily classified with a financial return — such as improved resilience, performance, equity, and sense of belonging among employees. And equity as part of a diversity, equity, inclusion, and belonging (DEIB) strategy is inseparable from mental health, if your goals include uplifting your employees, prioritizing their well-being, and offering them more equitable opportunities.
“To recruit and retain employees in this highly competitive job market, employers will start making unprecedented investments to support their workers’ mental health and wellness,” said Alyson Watson, founder and CEO of Modern Health. “And when they do, they’ll not only discover happier and more loyal employees, but better business results.”
When it comes to supporting mental health, there’s always a cost to doing something, but it must be weighed against the cost of doing nothing. Our Forrester research revealed that more than half of HR leaders and C-level executives worry that insufficient mental health support will have their employees heading for the door, and their fears are founded. To stave off an exodus, consider offering a solution that is flexible and tailored to the unique needs of the entire workforce.
By meeting individuals where they are and offering optimal care when people need it, your organization is poised to retain top talent and boost productivity while doing the right thing by supporting your workforce’s mental health needs.