Leadership Ripples with Leah Fink

53 - You're Wasting Money!

• Leah Fink • Season 2 • Episode 3

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What are the financial repercussions of neglecting mental health in the workplace?  In this episode we dive into eye-opening data of how much your bottom line is being affected by how you are treating your employees. Let's shatter the myth that employee welfare is just a "people thing", not a "business thing", and prepare to rethink your approach to employee investment.

Are you tracking the unseen costs of lost productivity, morale and staff turnover? 

If you want to ensure you are enhancing employee retention by taking action on employee mental health, you should join us for this one!

To have your questions answered on the show, submit your story here: https://allthrive.ca/share-your-story

Leadership Ripples with Leah Fink is live every week at 12:00pm MST.  Please join us to get answers to your leadership questions! https://www.linkedin.com/in/leah-fink-all-thrive/

Speaker 1:

Every action you take as a leader has a ripple effect, starting with your team, going out to the organization and even out into people's personal lives. Here we offer you the chance to learn from real-life stories of leadership so you can gain a deeper understanding and level up your own skills From communication to culture, to power and equity, to feedback, to resolving conflict and more. Join us and make sure you're creating the ripples you want. Welcome to Leadership Ripples with Leah Fink.

Speaker 2:

Hello and welcome to Leadership Ripples with Leah Fink. Today, we are going to be talking about the cost of staffing, and this is based on a comment that was made to me by a leader when I was explaining the work I do. He mentioned that when we talk about employee well-being, it's not a business thing, it's a people thing, and this is from someone who cares and works a lot on employee welfare and well-being and advocates for investing in employees, and this isn't the first time I've heard similar statements, so I wanted to address this concept. When we look at business versus employees in the business and what that means for the financial side of this, all I understand where people are coming from when they think like this. When we talk about business things, we're often talking about things that make us profit. We're talking about how much we can make. And then, when we talking about how much we can make and then when we think about our expenses, we have this assumption that there's something we're just going to have to deal with. It takes money to make money and, of course, there are a lot of expenses that we can't do much to change. We're going to have to take them on. That's a reality, but there is one expense that is so changeable and might still have this sense, though, but I want to say that it is changeable. We're going to talk about that today because this is all about employees, their well-being and investing in a culture that does that.

Speaker 2:

I generally work with leaders who prioritize their staff. That's why they come to work with me, and that is fantastic. I also recognize that, with the sheer amount of things that leaders have to do to make a company profitable and successful, it can feel like there's so many other priorities all the time and a lot of leaders feel like they can't commit the time to focus, to really dive into this piece of staff experience. They get focused on those business things, right, those tactical components maybe looking at growth, looking at sales, looking at marketing, and of course they're looking at staffing of. Of course they're looking at staffing, of course they care about their staff, but maybe they just believe that staff turnover is a reality of business, maybe they feel powerless to support staff mental health, maybe they're worried about spending too much on staffing and staff development, and then they won't have the money they need for critical things like marketing.

Speaker 2:

So if you are that kind of leader that's focused on strategies and tactics and want to make sure you are making the best decisions financially to grow your organization. This is the episode for you. I'm going to share facts and stats about how you might be bleeding out money that you don't have to. So we're going to start with some numbers from the Canadian Psychological Association and STEM Capital, and we're going to start by talking about mental well-being for employees that you are keeping in your office or in your workplace. Around 70% of Canadians report that their work experience impacts their mental health.

Speaker 1:

That's already a large number to start off with.

Speaker 2:

At least 500,000 Canadians miss work due to mental illness every week, with an estimated cost of $51 billion annually. It's estimated by 2041, the cumulative cost of mental illness in Canada will be $2.5 trillion. 30% of disability claims in Canada are due to mental illness, accounting for 70% of all disability costs are due to mental illness, accounting for 70% of all disability costs. And the cost of disability leave for mental illness is about double the cost of leave due to physical illness. Some pretty big numbers when you're keeping employees in the office. And what is this all associated with? So poor employee mental health often comes with these behavioral changes that result in even worse outcomes for your workplace as well. So you have increased absenteeism and long-term disability. You have increased presenteeism, which is trying to show up to work despite impaired functioning due to that medical or physical illness. You have increased intentions to quit the job, the organization. You have reduced productivity and job performance, reduced job satisfaction and commitment to the organization, more risk of unsafe work behaviors. This could be things like medication errors among healthcare professionals, greater interpersonal conflict with other employees, co-workers and greater risk of physical illness. None of that sounds good, does it? And those are just the costs for employees that stay with the company. So what happens when some of those 70% of employees that say their workplace impacts their mental health believe that your workplace negatively impacts their mental health? They have a poor experience and they leave the company. What happens then?

Speaker 2:

Let's go to the next big expense and look at some turnover stats from psychometricscom. Statistics indicate that the direct cost of replacing an employee depends on their position. For example, a low estimate of replacing a mid-level employee can cost 20% of their annual salary. So, for example, if you have a $60,000 a year manager, that can cost about $12,000 to replace them. That's when you're accounting for all the HR, all of the time it takes to train a new person, their productivity from that position not being filled. All of the time it takes to train a new person, their productivity from that position not being filled, all of those pieces. Meanwhile, replacing a high-level employee with large salary and specialized training can cost up to 213% of their salary. So if you have, maybe, a C-suite executive or a higher-level manager $100,000 a year, you're now looking at $213,000 of cost for that one employee. And of course, like we've said, the indirect costs of staff turnover are also included in this too. They're not even included in those numbers, but we want to talk about them. So you've got lost productivity, lost engagement.

Speaker 2:

The employees that are staying are going to start questioning why turnover is so high. They might start disengaging as well. You're going to lose knowledge that comes from people being in organization for a while. You're going to have reduced morale from people leaving. There's going to be more gossip and it's hard to really track the monetary impact of those pieces. But they also play into those poor experiences in the workplace that I mentioned before.

Speaker 2:

When you keep your employees, and so when you look at this piece of staff turnover, you think, well, okay, how much do I actually have turnover? What are the numbers? So let's add one last stat from jobvitecom, and that is voluntary attrition ranges from 12% to a whopping 60%. In a year, 12 to 60% of employees choose to leave their jobs, and I know there's some differentiating in that due to industry. There's obviously going to be some roles that maybe have higher turnover, but there's also a lot about the culture of your organization that's going to bring you closer to that 12% or closer to that 60%, and you're going to be hit doubly If you have a poor culture. If you're not prioritizing this piece of staffing, you will be experiencing all of these poor outcomes in the workplace and paying out money for those who are on leave and paying out money to keep replacing your employees, so you are going to be hemorrhaging quite a bit.

Speaker 2:

This all being said, I know that's a lot of numbers and there might still be facts and thoughts in your head about how unfixable some of these problems are. First of all, you can't please everyone. You may be unsure about what actual challenges you can take on and face them, how you're going to take action to fix them. Workplace when we use that language, people don't feel qualified to say I'm going to stop mental illness in my workplace. That doesn't feel like the role of a manager, and so we have to start looking at mental health in the workplace, how to procure a healthier place, because that is when we can create actionable steps for change. And so that's what I do. For example, I use mental health assessments to see what's happening in the workplace and then we create a plan that is actionable steps to make a healthier workplace. So you're getting away from a lot of the problems that I just mentioned, and if it's not me, there's other consultants doing similar work. They're looking at culture assessment, they're looking at these other metrics and can also help with that. There are people that can help with this.

Speaker 2:

This is all changeable. Repeat this is all changeable, but it takes commitment. It takes time and money to invest in that kind of change. So if you're currently looking at your staff metrics and they're maybe a bit lower than what you want, you get to decide how you want to invest your money and time. You can do that by continuing to pay out for absenteeism, disability, staff turnover, low productivity, decreased quality performance, maybe even worse, customer service, or you can take the step to look at what's really happening in your company, what's really impacting employee mental health, and then invest in taking meaningful steps to change it. That's entirely your choice, where you want your money and time going.

Speaker 2:

As a reminder to all our listeners, if you have a great question that you want to share with the show or a story, we would love to hear it. You can find the link for that in the description below and we hope to hear from you. We would love to interact with you and, if you have been enjoying this show, if you're a regular listener. Thank you first of all, so much and, if you wouldn't mind taking just a moment and leave a quick rating or review, it really helps us out, so thank you for that. I want to thank you so much for listening, for learning with me, for considering these really hard pieces about money. Balance your time and energy, balance your own confidence and commitment to this kind of work. So thank you so much for joining us and remember to ask yourself what kind of ripples am I going to create this week?

Speaker 1:

We hope you enjoyed the episode. Make sure to subscribe, comment and connect with Leah at meetleahca.