While talent and work ethic always matter, employee mental health may actually be one of the most essential predictors of company productivity. Employee mental health doesn’t just impact individuals or their families. Instead, it influences workplace dynamics and company morale.
Poor mental health can affect everything from communication and conflict resolution to resilience and company reputation. Over time, these collective challenges can erode even the most successful organizations. With that, a company’s collective mental health should be a key component of any organization’s foundation.
Understanding the Invisible Impacts of Mental Health
We know that good (or even bad) mental health doesn’t always have an outward appearance. You can’t necessarily tell how someone is coping based on how they present themselves at work.
Employees might mask their distress, appearing composed in meetings while privately grappling with anxiety or depression. Over time, these unresolved barriers often compound and can negatively impact performance. That said, if you’re paying close attention, covert patterns eventually do emerge.
Poor mental health may be associated with:
- Increased absenteeism or sick days
- Missed deadlines
- Reduced creativity
- Isolation from the rest of the team
- Causing dangerous work mistakes/oversights
- Quitting a job prematurely
The concept of presenteeism is often overlooked. Presenteeism refers to employees showing up to work while operating at just a fraction of their capacity. With that, many employees struggling with their mental health show up to work physically. However, they aren’t functioning with optimal performance. I
In fact, it’s estimated that anxiety and depression are responsible for over $1 trillion annually in lost productivity. Research shows this number can reach $16 trillion by 2030.1 These staggering numbers don’t only represent absentee days; they capture a more subtle but pervasive form of dysfunction.
The Connection Between Mental Health, Brain Function, and Work Performance
Although mental health is often associated with emotional well-being, it’s also important to understand the neurobiological component. Mental health conditions directly affect brain function, and this disruption often affects essential work functions. Employees who experience chronic stress, for instance, may have reduced ability to make rational decisions or manage time effectively, which are foundational skills in nearly every professional role.
Stress and the Prefrontal Cortex
The prefrontal cortex contributes to problem-solving, impulse control, planning, and other key executive functions. Research shows that anxiety and stress increase the production of cortisol, the body’s stress hormone, which can directly impact this function.
In the workplace, a surplus of cortisol can look like 2:
- Memory problems
- Poor judgment
- Difficulty prioritizing or completing tasks
- Forgetfulness
- Mood swings
- Limited flexibility
Cortisol overload may also compromise social functioning because higher cortisol can cause more emotional reactivity and defensiveness. These interpersonal disruptions can strain team relationships and cause communication issues.
Depression and Cognitive Impairment
Although people often think about sadness or apathy when they think about depression, this condition can also hinder cognitive function. Some key cognitive concerns associated with depression include:
- Problems with concentration
- Sleep or appetite issues (that can affect energy levels)
- A sense of persistent fatigue
- Slowed reaction time or problem-solving capacity
A depressed employee may take longer to complete tasks or disengage from ongoing feedback. Over time, this creates a gap between their potential and their actual performance. If the employee is simply perceived to be lazy or inconsiderate, management may miss the mark altogether.
Untreated depression concerns also exist among leadership. Leaders inherently set the emotional tone of an organization. If their emotional regulation or cognitive functioning is impaired, the entire organization may suffer.
Burnout and Executive Function
Career burnout is a rampant problem across all industries. Burnout refers to a state of emotional exhaustion that can cause employees to feel depleted or resentful at work. It can happen at any stage of professional development, and if it’s unaddressed, it may affect employee productivity by:
- Magnifying a sense of emotional detachment
- Impacting logical decision-making
- Decreasing self-regulation (more irritability or impatience)
- Reinforcing avoidance behaviors, including procrastinating important assignments
Burnout is not merely about being tired or overwhelmed. It is a serious cognitive impairment. It often begins insidiously and with good intentions. An employee might overextend themselves to make a good impression or because they have a strong work ethic. But without the proper training or boundaries, their mental resources reach a threshold.
The organizational cost of burnout is also worth noting. Burnout contributes to increased turnover, healthcare claims, and workers’ compensation cases. According to a Gallup study, burned-out employees are 2.6 times more likely to be actively seeking a new job and 63% more likely to take a sick day.3 For employers, this phenomenon often translates to expensive recruitment costs and a sense of a revolving-door workplace.
The Organizational Impact of Poor Mental Health
Poor mental health transcends individual wellness. It can affect all parts of the workplace, including leadership and clients/customers. Disengaged or depressed employees may be less likely to meet critical deadlines. Subsequently, a manager who feels burnt out may micromanage to cope with their stress or take excess time of work, causing the rest of the team to feel resentful.
Even if just one person on the team is struggling, their difficulties can ripple through the organization. Furthermore, poor attitudes can be contagious- if one employee is cynical about work, their opinions may influence others.
With that, there is a strong relationship between poor mental health and employee turnover. This appears to be especially true among the workforce’s youngest Gen Z employees. Research from the American Psychological Association (APA) reports that 81% of employees will consider how their employer supports mental health when looking for their next job.4
When an employee prematurely leaves an organization due to stress or burnout, employers face significant concerns, including:
- Costs associated with recruiting and training
- Reduced morale or anxiety among remaining team members
- Potential reputation damage (if many people leave prematurely)
- Struggles associated with being “stretched thin” if job openings remain unfulfilled
Guidelines for Promoting Mental Health in the Workplace
While it’s impossible to eliminate all stress from work, it’s essential to focus on creating an environment that feels inclusive and supportive. When companies prioritize mental health, they tend to have stronger employee retention and a more collaborative team.
Here are some strategies that may be worth implementing:
Normalize discussions about mental health: Open dialogue is key. When mental health is treated with the same respect as physical health, stigma feels less sticky. You can offer this sense of normalization by regularly integrating mental health into workplace communication. This might include team check-ins, monthly wellness newsletters, and hiring guest speakers to speak on mental health topics.
Prioritize employees using their EAP: EAPs can be beneficial for treating numerous work-related issues, including stress, depression, anxiety, substance use, and more. These programs offer a variety of clinical or legal services to help your employees take better care of themselves. However, many employees either don’t know these programs exist or don’t understand how they work.
To increase utilization, you may need to regularly promote your EAP and ensure that employees fully understand that the services are both free and confidential. Allow time during standard work hours for your employees to attend their therapy sessions.
Offer flexible schedules that honor work-life balance: Employees generally feel more valued when they sense their company cares about their preferences. This is why remote work or flexible scheduling options are so attractive. They honor individual needs while still ensuring that the work gets done.
Based on your industry, flexible work schedules might include:
- Four-hour workweeks or other compressed work schedules
- Asynchronous work hours that allow employees to choose when they complete designated tasks
- Hybrid work hours where they only need to meet a minimum threshold of hours in office vs. remotely
Ensure inclusive mental health support practices: Mental health problems are diverse, and culture, socioeconomic status, gender identity, and other environmental factors all influence how people experience certain symptoms or access help. Support, therefore, needs to be inclusive.
Inclusive practices may entail:
- Offering professional mental health services that extend beyond traditional talk therapy, including experiential therapies, therapy groups, or trauma-focused therapy).
- Providing mental health resources in multiple languages
- Ensuring that benefits fully cover LGBTQIA+ affirming care
- Offering tiered benefits for employees to choose mental health options based on their specific needs (i.e. virtual vs. in-person therapists, other culturally-specific providers)
Harnessing Leadership to Strengthen Emotional Well-Being
Leaders tend to either strengthen employee well-being or diminish it. Leaders who remain regulated, compassionate, and grounded in reality model a sense of safety to their team. On the other hand, when leaders are perpetually stressed out or moody, they may come across as unapproachable.
Leaders, of course, have varying strengths, but from a mental health standpoint, they should strive to:
Model humility and openness about mental health themselves: Employees absorb how their employers handle certain precarious concerns. Therefore, when leaders share their own experiences with stress or adversity, they can convey that struggling is not a sign of weakness. This modeling shows an important sense of authenticity, and that vulnerability can strengthen company culture. As a leader, consider how you can integrate disclosing how you practice self-care, deal with stress, or approach challenging conflicts.
Promote healthy boundaries: Regardless of your sector, leaders should be cautious about glorifying ‘hustle culture’ or rewarding patterns of overworking. This energy can quickly feel toxic. Effective leaders should model taking time off regularly and disconnecting from work after hours. If you’re working on this, try to avoid sending late-night emails (when possible) and encourage your own team to use their PTO proactively. Remember that boundaries protect against burnout and support employees in feeling more empowered at work.
Truly embrace an ‘open door’ culture: Ideally, employees feel secure reaching out to management without fears of judgment or retaliation. As a leader, you should always prioritize curiosity and empathy when people share their concerns with you. Even if you don’t have an immediate solution, active listening should always be your first priority.
Provide ongoing, effective feedback: Employees benefit from receiving constructive feedback at all stages of work. Your job is to ensure that your delivery is supportive and designed to foster growth. If you come across as dismissive or hostile, employees tend to become more defensive or withdrawn. This stunts communication and can exacerbate work problems.
Invest in leadership mental health training: Leaders may benefit from specialized support in conflict resolution or emotional intelligence. Industrial-organizational psychologists or other specialists can come to your organization and offer particular trainings in these focus areas.
Acknowledge progress and praise ‘small wins’: It’s easy to get lost in concrete metrics or hard results. But small wins have weight, and it’s important for leaders to regularly acknowledge each employees’ strengths. While celebration certainly doesn’t need to be formal, you should make it a goal to focus on helping your team feel appreciated and seen.
Final Thoughts
A company is really only as successful as its capacity to nurture and protect its employees. If your team is perpetually feeling anxious, depressed, or disconnected from the work, everyone suffers. When employees are mentally healthy, they tend to be more present and collaborative. These are the conditions every business needs to thrive.
Sources
- https://pmc.ncbi.nlm.nih.gov/articles/PMC9925363/#:~:text=Lost%20productivity%20alone%20for%20depression,Gross%20Domestic%20Product%20(GDP).
- https://www.nature.com/articles/nrn2648
- https://www.gallup.com/workplace/288539/employee-burnout-biggest-myth.aspx
- https://www.apa.org/pubs/reports/work-well-being/2022-mental-health-support
