The Cost of Poor Mental Health in the Workplace

Employee mental wellbeing can be just as important as physical health. Mental distress is something that affects a lot of New Zealanders, and pressures of a pandemic, inflation and increased living costs appear to be understandably escalating the amount of stress and anxiety in our people. Not only is mental distress challenging  for individuals and organisations to face on an emotional level, it can also be a primary reason for productivity loss, increased absenteeism, and general employee burnout and stress. 

Our minds control our every movement; they are our decision makers, creative thinkers and motivators. The majority of us know someone who is affected by mental health disorders, or have been through them ourselves..  Whether through work stress, family or health issues, in these situations most of us will need support in order to become well again. Poor mental health in the workplace can become costly not only for the employee but also for the team around them and their employer. 

Poor mental health in New Zealand. 

In New Zealand, mental distress affects one in four of us,1 or higher in women where it is one  in three. Advocates throughout the nation have been campaigning directly to the government to address this systemic issue within our society so that in New Zealand, mental health education, support and awareness is at the forefront of the government’s and employer’s minds. 

What is Poor Mental Health?

Poor mental health not only can be considered ongoing levels of depression and anxiety, it can be prolonged levels of high stress and general unhappiness with life. Everyone might go through periods of lows and highs in their life, but poor mental health is more than just feeling low and calls for more support. 

People who feel a potential lack of meaning or purpose in their lives can also be disengaged at work. They might not be able to be diagnosed with an illness however, over time, this distress and feeling can lead to exacerbated life issues, emotional pain and poor physical health issues if not addressed

Substance abuse can cause and affect poor mental health, resulting in mood swings, depression, anxiety and mental distress. It can also be a symptom of poor mental health, as people can use alcohol and drugs to cope with problems.

What is poor mental health in the workplace?

Poor mental health in the workplace can vary – from an employee experiencing depression or anxiety that impacts their work, to a whole team of workers heightened stress due to poor management, bullying or tough deadlines. Poor company culture can also contribute to an organisational issue where teams of people suffer stress or negativity. Within all of these situations it can take a toll on a person’s productivity, as well as create additional pressure on the supporting team and foster a potentially negative work environment.

What Factors Impact Employee Mental Health in the Workplace?

Some factors can enhance and improve employees’ mental health, while others can contribute to poor mental health. Some influences can come from work, while others can be general life and fulfilment.

Factors that Impact Employee Mental Health in the Workplace?

Work-related factors that influence poor mental health.

According to the World Health Organisation, work is good for mental health, but a negative working environment can lead to both physical and psychological health problems.

Many factors at work can influence employee mental health and cause it to decline – from excessive working hours, creating less time to rest to unrealistic work expectations causing significant stress and anxiety.

The key drivers of impaired wellbeing in the workplace include: 

  • Excessive work hours and workload
  • Unclear or unrealistic expectations
  • Job insecurity and restructures
  • Isolated working conditions
  • Social dynamics at work, like bullying or harassment
  • Surveillance of people at work.

Non-work-related factors that influence poor mental health.

An employee’s poor mental health can be affected by external factors. Their life outside can have a negative impact on their mental health and how they perform at work. These non-work-related factors need addressing as they can also cause issues for workplace productivity. 

Non-work-related factors impacting employee mental health and can cause poor performance, productivity loss, and other consequences can include:

  • Bereavement
  • Bullying, discrimination or harassment
  • Mental illness
  • Family issues
  • Physical health conditions and injuries
  • Poverty or debt
  • Severe or long-term stress
  • Social isolation
  • Violence, trauma or abuse.

Companies can help support employees through hard times and mental distress with the aid of workplace wellness programs, which work to support employees' holistic health and help employers identify risks, provide clinical support and ways to improve their team’s mental and physical health at work. 

What Are the Cost Implications of Poor Mental Health in the Workplace?

It is no secret that mental health is an issue in the workplace. A recent study by the Health Promotion Agency found one-third of New Zealanders have a personal experience with mental distress. With this number in mind, employers who do not support their teams towards better mental health could risk loss in both revenue and their company culture. 

Cost Implications of Poor Mental Health in the Workplace?

The financial implications of poor mental health in the workplace.

Where financial implications are concerned, poor mental health in the workforce can affect your business’s bottom line. Poor mental health can significantly impact the productivity and absenteeism of employees which can cause a loss of output and revenue for a business. 

People reporting depression, anxiety, or emotional disorders had a 36.4% decrease in awareness and productivity at work.

Less attentive employees lead to decreased job performance.

Job performance decreases as the severity of poor mental health increases. Mental illness is often a factor for employees outside their work life, which can flow into their work life. Lack of sleep and decreased concentration slows down their performance and causes less attention to be taken which could result in less output, careless decision making or accidents in the workplace. 

For example, in an American Psychological Association study\ on how the effects of stress related mental health issues affected workers productivity and enjoyment of their job shows that nearly 59% of employees had experienced negative impacts of work-related stress in the past month, including a lack of interest, motivation or energy (26%), difficulty focusing (21%), and a lack of effort at work (19%).

Poor mental health can increase the risk of physical health and workplace accidents.

Mental distress can cause sleep deprivation and lack of concentration, leading to severe consequences. This increases the risk of workplace accidents and adds to healthcare costs due to decreased job performance and poor judgement. 

Evidence from the Sleep Foundation shows that mentally unwell and sleep-deprived employees are 70% more likely to be involved in workplace accidents than other mentally healthy employees.

The social implications of poor mental health in the workforce.

From a poor company culture, lack of work/life balance to a depressed co-worker. If there are negative influences impacting how secure or fulfilled people feel at work that are not addressed, the work environment can turn toxic. The social impact can cause teams to resign or higher rates of absenteeism. 

A negative workplace can mean increased absenteeism.

Poor mental health isn’t just depression or anxiety – it can be stress and negativity caused by a hostile workplace environment. A negative workplace includes employee harassment, discrimination and bullying and can cause absenteeism to increase. Employees who are bullied or harassed by coworkers and/or bosses are more likely to avoid the situation by calling in sick, increasing the workload of other employees to make up for their absence. 

Unhappy employees can cause high employee turnover.

Full time employees spend 50% of their waking day at work. Without support, acknowledgement and positive team building, the social side of health at work suffers. Social Health feeds directly into your sense of worth and if it is low, the poor mental health effects can be the primary reason for an employee or employees leaving a job. Negative company culture directly influences this and can lead to employee turnover issues, which is not just a social implication of the destruction of a team, it can also be costly for companies' valuable time and money. 

According to an HR study, 50% of millennials and 75% of Generation Z employees have left jobs for mental health reasons. It was reported that financial problems like unaffordable living costs and healthcare significantly impact their psychological wellbeing.

The negative effect of poor mental health on businesses can be a continuous cycle. 

Being able to reduce the negative effects of poor mental health is complex as there are multiple trigger points both domestic and work related, however, one event often impacts other areas causing a broader issue on both the individual and business. Below are examples of cyclical events that that can be created if nothing is done to address the issue by the employee or employer. 

The cycle of poor mental health and productivity

The cycle of poor mental health and how it affects productivity and business profitability.

Example 1

A team of employees are stressed at work due to unrealistic work deadlines > lose sleep because of the high stress > have difficulty concentrating due to sleep deprivation > take longer to complete tasks, and produce lower-quality outcomes.

Example 2

An employee already has poor mental health due to various factors > anxiety increases at work due to social dynamics > loses sleep because of increased anxiety > has difficulty concentrating due to sleep deprivation and increased anxiety > takes longer to complete tasks and produces lower quality outcomes >  is absent from work > their team increases their output to cover the loss.

Work factors alone can negatively affect employees’ mental health, and influence decreased productivity. But if an employee or team of employees are already coping with mental health issues, additional factors can cause an even greater decline in their productivity. 

Why Do Employers Need to Care About Their Employees’ Mental Health?

Mental wellness is a valuable asset to businesses. Workers can work and interact positively when they are happy and can cope with daily life stresses. When your workforce’s mental state is healthy and strong, they’re more creative and innovative. 

Good mental health can have an abundance of positive impacts on employees and businesses from increase productivity output, retention of employees and lower absenteeism. When workers know their company cares for their wellbeing, they are often more satisfied, more loyal and will be less inclined to take time off, drag time out at work or leave for another job.

How Can Employers Help Improve Mental Health in the Workplace?

It is estimated that by 2030, mental illness will be the leading cause of workplace absence according to Working Wise’s reference to the World Health Foundation.4 Managing mental health is just as important as looking after physical health and workplace safety.

Investing in a workplace wellness program can help you address poor workforce mental health and the financial and social implications that come along with it. 

A Government Inquiry into Mental Health and Addiction reported that for every $1 spent treating depression, $2.50 of productivity is restored and $1 of physical health care cost is saved.5

With the confidential KYND wellness program, you can empower your employees to monitor their mental health. Using the KYND App, employees can measure their health statistics and regularly check how they’re mentally doing. Our clinicians also come to you and provide regular workplace health checks and will highlight any areas of concern and support you and your company with advice on where to get help.

A workplace health and wellbeing program can make a difference to your employees. With KYND, you can empower them to take charge of their health and wellness and prevent needless illnesses. Starting this education and awareness is not only good for them, but it's also good for your bottom line. 

Get in Touch to Find Out More About Our Employee Mental Wellbeing Programs

Prioritising the health and wellbeing of your most valuable assets can only be seen as a net gain for your business. Improved wellness at work will create a happier, healthier work environment and increase overall workplace productivity. 

Contact us today, and we can discuss getting your business on board the KYND Wellness employee wellbeing program.


1 Mental Health Organisation | 25% of New Zealanders have poor mental wellbeing

2 APA | The American workforce faces compounding pressure

3 The Sleep Foundation | Excessive Sleepiness and Workplace Accidents

4 Working Wise | Advocating Mental Health Awareness in the Workplace

5 Mental Health Inquiry | He Ara Oranga Report of the Government Inquiry into Mental Health and Addiction

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