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  • A new report funded through the Midlands Engine Mental Health and Productivity Pilot (MHPP) finds that firms impacted by mental health sickness absence suffered a 25% hit to their productivity
  • Bosses surveyed cited remote working and job insecurity as risk factors – but many unsure where to turn for advice on boosting staff wellbeing
  • Report calls for firms to appoint ‘mental health leads’ to oversee wellbeing policies and seek advice from specialist mental health charities
  • Report is part of 3-year programme funded by the Midands Engine that is supporting employers with workplace mental health challenges

Companies that don’t do enough to support their workers’ mental health risk seeing their overall productivity dropping by a quarter, new research suggests.

The findings from a large-scale survey commissioned by the Mental Health and Productivity Pilot and conducted by the Enterprise Research Centre found that, despite the potential hit to their bottom line, less than half of firms offer proactive support for mental health and many are unsure where to turn for advice.

Responses from individual company bosses also suggest that a post-COVID ‘new normal’ with more remote working could exacerbate productivity-sapping mental health problems among employees.

Questioning 1,900 Midlands firms ranging from micro-businesses to large companies, the researchers found that on the eve of the COVID-19 lockdown, nearly a third (31%) of all firms reported seeing sick leave due to mental health problems such as depression and anxiety in the past year.

And significantly, in firms that recorded a hit to their performance as a result, the overall productivity of the company – defined as turnover per employee – was cut on average by 24.5%. It suggests firms that fail to address problems caused by stress could be putting both their workers’ health and their own viability at risk.

According to a recent study by Deloitte, mental health problems could be costing UK firms up to £45bn per year from sickness absence, ‘presenteeism’ – being at work when ill but working less effectively – and higher staff turnover.

The ERC research found in interviews that employers believe a number of key factors contributed to poor mental health in the workplace, including isolation due to remote working, worries about job security and demands from clients and customers.

Sickness absence for mental health, meanwhile, impacted on firms by placing additional burdens on other workers, affecting staff morale and time spent on management issues, as well as creating extra costs from hiring temporary or permanent replacements – all leading to reduced efficiency across the business.

But despite the substantial costs to firms, only 44% offered proactive support for mental health problems, while only a fifth (22%) had a mental health plan for the business and just over a third (35%) had a health and wellbeing lead on the board.

Nearly two-thirds (64%) of companies said they wanted to offer more support. However, many firms tended to look internally or online for ideas to improve mental health, with just 14% consulting specialist mental health charities.

The report recommends that firms should appoint a ‘mental health lead’, particularly in larger companies which tend to experience higher sickness absence for mental health reasons. It also calls for greater partnership working between employers, human resources specialists and mental health charities. The researchers suggest more structured, open and proactive approaches are needed to employee mental health, with issues dealt with in the same way as physical health problems.

The ERC is the UK’s leading independent research institute on growth, productivity and innovation in small and medium-sized enterprises (SMEs). It said the findings, collected in the first quarter of this year just before coronavirus struck, would provide an important baseline for future studies on the effects of the virus on workers’ mental health.

Stephen Roper, Director of the Enterprise Research Centre and Professor of Enterprise at Warwick Business School, said:

“This study shows that the scale of the mental health challenge in workplaces was already huge before the onset of COVID-19. Given the massive dislocation to people’s working lives since then, we can expect that situation to have got worse, especially because some of the risk factors highlighted by our study participants such as remote working have suddenly become far more commonplace.

“We’ve also shown that poor mental health among staff can have a big impact on the productivity of the entire firm. It may seem obvious that having people off sick or trying to work when ill would mean, ultimately, that sales suffer. But many, many firms aren’t measuring this impact in any real way, so may be seeing a far bigger loss of business than they realise.

“It’s therefore really important for firms to have a proper plan and policies in place. The more proactive ones are appointing mental health leads to take responsibility for this issue across the business and that’s a model that we believe needs to be mainstreamed.”

Professor Guy Daly, Deputy Vice-Chancellor of Coventry University and MHPP Programme Lead said:

“We have been working on this seminal pilot programme since before the COVID-19 pandemic hit the world. As the nation and the region work on the recovery phase, the matter of mental health at work is even more significant with the meanings of ‘workplaces’ and ‘productivity at work’ being redefined. MHPP is a pilot with and for employers – small and large – and employees and is, therefore, a huge opportunity to co-create and pilot interventions that will add-value to improvements in mental health and productivity in workplaces.”

Download the full report here.

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