In previous generations, a fair wage and safe working conditions were enough to engage employees. However, in today’s workplace, no conversation about employee engagement is complete without talking about employee well-being. Modern leaders inspire employees by meeting their psychological and self-fulfillment needs. They require meaningful relationships, a sense of belonging, and purposeful work. Nowhere is this more evident than in the generations of young people who have been exhorted to “follow their passion” in their careers. To engage modern workers, leaders and organizations must prioritize well-being.
It’s clear that business leaders are catching on. According to Forbes, the corporate well-being market is now estimated to be $20.4 billion in the U.S. and is forecasted to grow to $87.4 billion by 2026. Smart leaders recognize that well-being is not only critical to employee health, but to bottom-line results as well. Workplace well-being minimizes expenses, retains top talent, and results in greater profitability.
What is Well-Being?
At a broad level, the definition of employee well-being can be summarized as the way employees feel about their jobs, their work environment, and the support they receive from their employers. It includes several aspects, including emotional, mental, and social health. Employees must feel invested in their work, have manageable stress levels, and build positive relationships with peers. Employee well-being depends on eight key pillars:
- Purpose: Does the employee find meaning in their work? Do they understand how their role contributes to the overall mission of the company?
- Physical health: Is there a well-being program in place that encourages movement and other healthy habits? For instance, is a gym stipend provided, or are incentives offered for daily exercise?
- Career growth: Is there a clear path for advancement for each employee? Are there mentorship opportunities and stretch projects assigned?
- Emotional well-being: Is psychological safety prioritized in the workplace? Do employees feel safe showing up as their true selves?
- Community: Is there a sense of camaraderie at the organization? Or do employees feel siloed and unsupported?
- Financial security: Are employees offered fair and competitive wages? Or are they struggling to pay their bills every month?
- Social interaction: Do colleagues socialize on a personal level? Are they encouraged to develop meaningful relationships with peers?
- Work-life balance: Does the employee’s job leave time and space for them to prioritize other aspects of their life, including family, friends, and hobbies? Are they able to “turn off” at the end of the day, or do they carry workplace stress with them after they log off?
Employers should look to create programs and initiatives that address each of these core pillars. For instance, formalizing annual reviews and pay audits, hosting team-building events, or instituting Summer Fridays, the practice of allowing employees to take off early on Friday afternoons in the Summer.
Why Does Employee Well-being Matter?
It’s no surprise that the corporate well-being industry is booming given the crisis of employee engagement. Only 23% of global employees are engaged, and four in 10 U.S. employees say their job is negatively impacting their mental health. Not only are employees feeling distracted and burned out, but less than a quarter of employees think their organization cares about their well-being. This matters because employees look to leave employers who don’t care about them. Nearly two-thirds (62%) of U.S. workers say that having better personal well-being is very important to them when considering whether to take a job with a different organization.
In addition, a lack of well-being has serious financial consequences. Gallup found that companies lose $20 million in opportunity costs for every 10,000 workers due to struggling employees. Three-quarters of organizations’ healthcare costs can be attributed to preventable conditions. And, globally, turnover and lost productivity costs businesses $322 billion. Investing in employee well-being can lead to significant savings and improved financial performance. By fostering a healthy work environment, companies can reduce costs and enhance overall productivity.
Benefits of Employee Well-being
Employee well-being isn’t only important because it saves money, but it also makes companies money. Resilient, healthy employees make better decisions, are more productive, more innovative, and more collaborative, leading to direct benefits to a business’ bottom line. Research by Gallup found that employees who strongly agree that their employer cares about their well-being are 3x more likely to be engaged at work and 5x more likely to recommend their company as a great place to work. These employees aren’t only inspired to do their best work but are helping to recruit new great talent.
It’s important to note that well-being and engagement are interconnected and must both be prioritized. The same research from Gallup found that employee engagement alone is not enough to drive positive outcomes, but had the greatest impacts when combined with well-being. For instance, compared to engaged employees who were not thriving, engaged employees who were thriving experienced lower burnout, less daily stress, less daily worry, and less daily sadness and anger. Therefore, any employee engagement initiatives must incorporate well-being, and vice versa.
Finally, Workhuman found recognition to be an integral part of employee well-being. Much as employee engagement and well-being go hand in hand, so do recognition and well-being. Each is necessary to maximize the other. Specifically, when employees are thriving and are experiencing positive recognition, they’re more likely to be a top performer and to feel like they’re paid fairly. They are also less likely to be actively looking for job opportunities. Retention and performance are direct business benefits of well-being that are enhanced when employees are praised for their good work.
It’s clear that employee well-being is critical for business success, but several aspects of well-being must be met in order to realize results. In order to see reduced turnover, increased productivity, and better collaboration, employers must cater to employees’ emotional, mental, and social well-being as well as incorporate ways to keep employees engaged and meaningfully recognized. By addressing these key elements, organizations can create a thriving work environment that benefits both employees and the business as a whole.
To learn how managers can increase well-being among their employees, read our article Building Resilience: How Leaders Can Prevent Burnout and Fix Chronic Stress.
Kaela Sosa is co-founder and Manager, Curriculum and Programming at The Diversity Movement. Her expertise includes psychology, gender identity and sexual orientation and racial identities. Kaela has written and spoken about a range of topics: active allyship, the inclusive talent lifecycle, disability etiquette, LGBTQ+ inclusion and inclusive language. At The Diversity Movement, she leads the development and execution of learning programs, including digital learning, online courses, certificate programs and certification opportunities. Connect with or follow Kaela on Linkedin to learn more.
