Change: the mental health and profit correlation

Evolution tells us if we don’t change we’ll die – just ask the dodo.

Just like nature, organisations are also asked to adapt to changing environments which is often driven by a quest to improve productivity and profitability. Despite this requirement, economic history shows that many have not managed change well, with Kodak, Blackberry, Nokia, General Motors, and Angus and Robertson being high profile examples.

This need for continuous improvement has led to over 25,000 books being written about organisational transformation in the last 15 years, and yet only 30% of change initiatives are deemed successful. Something is not working.

Research shows that 72% of change efforts fail because of negative employee attitudes, and unproductive management behaviour. It doesn’t appear that the ideas to improve productivity are wrong, but there are serious shortcomings in convincing employees why they should change and preparing them for it.

A comprehensive review of transformational change in the book Beyond Performance reveals that the key to success is focusing on performance AND the mental health of employees. In fact, this research shows that organisations that focus on both these elements are 220% more likely to be in the top quartile of profitability than those that focus on performance alone.

Mental health has often been deemed as something incidental to organisational performance, but recent research has shown that robust mental health provides a sustainable competitive advantage. The American Psychological Association each year has a Psychologically Healthy Workplace Awards. The winners in 2010 had 71% lower turnover, 50% less employees reporting chronic work stress, and 62% more employees recommending their employer to others.

The moodometer

Let’s consider the concept of an employee moodometer, to understand the costs of low mood, and the productivity and profits associated with high mood. When employee mood is negative (0-4) we find high levels of stress, anxiety and depression. Conversely when mood is positive (6-10), we find high energy, engagement, and creativity. Let’s now consider some of the hard facts behind the soft stuff.

Negative mood costs

A RUOK?atWork survey showed that 40% of Australian employees are “typically stressed out every day”, whilst 12% live with extreme stress.

When you consider that American Medical Association estimates that stress is the basic cause of 60% of all illness and disease, you begin to understand the magnitude of the costs related to high stress.

A report commissioned by the International Labour Organization in Geneva also estimates that up to 40% of employee turnover can be attributed to stress.

The Medibank report SICK AT WORK found that 34% of all employee productivity is lost because of depression and stress disorders, through absenteeism and presenteeism (when people are at work but under productive).

When employees and managers are under high stress, they are often immobilized, and think in a black and white manner. This is hardly conducive to adapting to new environments.

Despite this, 70% of Australian workers believe that their workplace does not offer programs to support their mental and emotional wellbeing.

Positive Mood Productivity

The benefits of facilitating a positive mood appear self-evident, but do they translate to productivity and profit improvement.

Shawn Achor’s Harvard Business Review February 2010 article found that workers with positive mood are 300% more creative, 31% more productive, and sell 37% more.

These 3 factors greatly enhance employee’s capacity to thrive through change.

So, how do we create a culture that promotes both performance and mental health?

Positive Leadership

Not surprisingly, great results often come through great leadership. In fact, the right leadership style is most correlated with successful change – but what style of leadership?

Dave Logan et al in their book Tribal Leadership found through interviewing 24,000 employees that tribes (between 20-150 employees) are the basic building block of any organisation.

Their influence is greater than teams, entire companies, and the CEO. Tribes decide how much work is going to get done, and of what quality, and whether a leader is going to flourish.

This work has shown that tribes can be categorized as being in one of 5 stages: “Life sucks”, “I suck”, “I’m great”, “We’re great”, and “Life’s great”, and distributed as per the graph. These stages are determined by the predominant behaviours and language used by the tribe. Stage 4 – “We’re great” – is where extraordinary results occur. So what are the secrets of a ‘we’re great’ tribal leader?

1. We trumps me:

Ideas workers are motivated by purpose. Leaders who can communicate their tribe’s mission in a compelling way will increase the group’s energy. Daniel Pink’s book DRIVE shows that purpose in a key ingredient of sustained performance. The 2011 R U OK?atWork survey showed that only 27% of highly stressed workers agreed with “my organisational purpose energises me” compared with 66% of low stressed workers. When considering emotional support, 81% of low stress employees believed that there was someone at work that cared about them as a person, compared to 54% of high stress employees.

2. Acknowledge progress (and setbacks):

What motivates employees on a day-to-day basis is the knowledge they are making progress on meaningful work. Teresa Amabile in her book The Progress Principle found that when a leader recognized small wins it ignited joy, engagement, and creativity at work. The R UOK?atWork survey showed that 71% of low stressed employees were satisfied with the employee recognition practices of their organisation, compared to 32% of highly stressed employees. A Gallup survey reveals that if a manager coaches an employee and focuses on their weaknesses there is a 22% likelihood that they will be disengaged, compared to only 1% disengagement if they focus on their strengths. Whilst early intervention is an essential element of preventing psychological injury, only 40% of high stress employees believes their employer has systems and management practices in place that stop little problems turning into big problems, compared with 68% of low stress employees.

3. Encourages physical health:

In their book The Power of Full Engagement, Jim Loeher and Tony Schwartz show the linkage between health and productivity is extremely strong. They conclude that you are much better served by managing your energy than your time.  The RU OK?atWork survey showed that 73% of low stressed workers agreed that “my organisation encourages physical wellbeing”, compared with 42% of high stressed employees. It also showed that whilst 91% of low stressed workers felt physically and emotionally safe at work, only 43% of high stressed workers did.

4. Mastery focus:

Daniel Pink’s book DRIVE also shows that ideas workers are motivated by mastery and autonomy. Cultures that encourage creativity to produce a better result are highly energizing. A continual learning environment helps facilitate this. The R U OK? Survey revealed that 66% of low stress workers were satisfied overall with the growth and development opportunities of their employer compared to 34% of high stress employees. Whilst 89% of low stress employees were satisfied with the amount of control and involvement they had in their work, only 47% of highly stressed employees were.

5. Invest time wisely:

Employees who use their strengths, work with colleagues they like, and focus on the here and now, enjoy the most positive mood. Leaders who are mindful of this yield the greatest return. Not surprising, 70% of low stress workers agreed that their supervisor understood their strengths and encouraged them to use them, compared to 42% of high stressed employees.  When considering time management, 84% of low stressed workers said that overall they were happy with the work life balance practices of their employer compared to 42% of low stressed employees. -life

A review of the evidence shows that leadership that optimizes mental health is no different to the leadership that optimizes performance. Positive leadership produces good mental health AND performance. Optimizing mental health and performance is the most likely way to outperform in both productivity and profitability.

Enhancing mental health in the workplace is not a soft and fuzzy “nice to do” concept. It greatly reduces the costs of absenteeism and presenteeism and creates an employee mindset and energy level that thrives with change. It’s time for all leadership teams to make plans accordingly.

Graeme Cowan

In 2000 Graeme Cowan went through a 5 year episode of depression that his psychiatrist described as the worst he had ever treated. This experience has fuelled his passion to prevent other people from suffering a similar fate.

Best known for his award-winning BACK FROM THE BRINK book series and the report Best Practice in Managing Mental Health in the Workplace, he is also a Director of RUOK? Day.

He recently signed a contract with the US publisher New Harbinger for the international release of his new book about how to bounce back and thrive from setbacks.

In his early career Graeme worked as a Marketing Manager with Johnson & Johnson and Pfizer, and then worked in recruitment, outplacement, and culture change with Morgan and Banks, before becoming Joint Managing Director with AT Kearney Executive Search.

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