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What is the Cost of Depression to You and Your Business?

As leaders, in the financial projecting we do, do we ever consider the growing cost of mental illness, specifically depression, to our business? That’s right, the cost our organization bears due to depression. The answer is likely a resounding no! We spend a significant amount of time developing pro forma financials as guides to lead […]

As leaders, in the financial projecting we do, do we ever consider the growing cost of mental illness, specifically depression, to our business? That’s right, the cost our organization bears due to depression. The answer is likely a resounding no! We spend a significant amount of time developing pro forma financials as guides to lead the business and the growth of our enterprises. We factor in the cost of employee benefits and yet most benefit plans do not include a significant contribution to better mental health, or therapies to assist those that suffer.

Over 35 million North Americans struggle with major depressive disorder (MDD); worldwide, there are 350 million people suffering. These numbers only identify those that admit to struggling. Since the stigma of weakness surrounds depression, how many are actually admitting to it? This is an epidemic and the costs to business, the economy, and society are significant.

The economic burden on the US economy is estimated to be north of $210 billion per year, on the Canadian economy $32 billion, and on the British economy a staggering £94 billion.  In the US, close to 16 million full-time employees admitted to struggling with depression.

Of the stated economic burdens,

  • 48% is attributed to absenteeism and presenteeism.
    • Absenteeism – 11 lost workdays per year
    • Presenteeism – 57 lost workdays per year in reduced productivity per year
  • 47% due to direct medical costs
  • 5% attributed to costs due to suicide.

The majority of costs are borne by the business community.

Presenteeism is contributing more and more to the economic burden on the business. Employees experiencing presenteeism are struggling with their responsibilities as a result of depression and do barely enough to keep up, thus productivity decreases dramatically. With unemployment rates at close to historical lows, employers are forced to settle with the reduced productivity. Is this happening in your business? Are you paying attention to it? Could a disappointing year-end be in part as a result of this?

Terminations and resignations due to behavioral issues add significant cost to the business as well. A growing number of terminations and resignations can be traced back to mental illness – primarily depression. Based on the position, rehires can cost up to three times salary. Have you ever projected the cost of terminations and resignations? Likely not.

The larger the workforce, the larger the economic impact. And yet, in smaller businesses the impact is exacerbated as the team is expected to do more with less. Studies have shown the higher rates of depression are directly tied to frequent or difficult interactions with customers and unfair expectations set by leadership further compounds the situation.

Do you lead a customer centric organization or an employee centric organization? In my case, for many years, the customer was king. We placed a strong focus on customer expectations and delivery at the expense of our most precious resource – our team. This came to a head when one of our most dedicated employees was forced to resign.

Bob came into my office one day and told me he had to leave the organization, or his wife was going to leave him. Our customers loved Bob. He was first in every morning and last out in the evening. He was in on Saturdays and Sundays. Bob never required discipline; Though his project load was less than the other employees he did an awesome job for the business. Everybody in the organization admired him – the perfect team member. I wish I could have had 10 Bobs!

The truth is, as his leader, I let Bob down allowing this behavior to persist, and I didn’t realize it – even though I was struggling myself. After he told me of the situation I told him I wanted to speak to his wife personally and he agreed. She gave me a dressing down that I will never forget. She told me I should be ashamed of how I treated Bob and allowed his behavior to persist. It was my duty as the leader to watch out for the well-being of the team. He had a wife and two young children that he rarely paid attention to, and she wasn’t going to stand for it any longer. I offered concessions on his time spent at work and yet the damage had been done – Bob left the organization.

For me, this was an epiphany moment. Modelled by the generation of my father, my partner and I worked very long hours and we expected our team to do the same. During my twenty years as the leader of the organization our team experienced multiple divorces, plenty of infidelity, countless meltdowns (both of us partners were not immune), and couple a of serious physical injuries – due in large part to the workplace environment. Bob’s leaving forced me to re-evaluate the culture of the organization. We began to pay significantly more attention to the well-being of our team. We monitored hours worked, provided additional tools and support staff to simplify our team member’s work lives, and we lessened workloads.

And guess what? Profit increased……

Knowing what I know now, Bob was likely struggling with depression. The signs were all there. He preferred the solitude of his desk. He rarely went for lunch with his peers, or for a beer after work. He rarely smiled and was totally immersed in his work and his level of needless detail (which we discovered later) – defined who he was. If you, as the leader aspire to providing outstanding customer service, you must first start with providing outstanding workplace conditions for your team. Bob’s example is the reverse of absentee or presentee employee. The employee that delivers time after time and then out of the blue they have a meltdown and or resign.

The question is, why is this happening? Traditional outdated claims indicate the causes of depression are primarily due to a chemical imbalance and genetic pre-disposition. Though many in the mental health and big pharma communities still subscribe to these causes, research has proven otherwise. Depression is a result disconnections from the environment we grew up in and more and more disconnections from the workplace environment we deal with each and every day.

Negative work environments lead to disconnections in our lives.

  • Disconnection from values – A lack of respect for the team, layered with unfair expectations equals a stressful workplace.
  • Disconnection from respect – When the customer is perceived as king, where does that leave the employees?
  • Disconnection from work – Excessive stress can lead to anxiety, which can result in depression, which leads to less effort, exacerbating absenteeism and presenteeism

The truth is people spend the largest portion of the day at their place of employment. Though some stress is good for us, elevated and consistent levels of stress, as a result of increasingly heightened levels of expectations can lead to anxiety which can lead to depression. In childhood, the layering of physical and/or emotional trauma, left unattended can result in lifelong depression and associated physical ailments. We are doing the same to our teams; providing organizational trauma. And the situation is getting worse as time passes. The statistics don’t lie and inattention is costing us – in our human resources and the bottom line.

One solution is to provide, champion, and execute the employer’s duty of care. This is a declaration by leadership on the responsibility they undertake to ensure the mental health of team members.

  • Provide clearly defined and published job descriptions; explaining how each team member fits in the strategy of the business
  • Ensure consistent leadership connection with the team
  • Ensure ongoing organizational and mental health awareness training
  • Provide a safe work environment – soliciting team feedback on a consistent basis
  • Ensure consistent and scheduled informal and formal job performance reviews
  • Ensure that team members do not work excessive hours
  • Provide team benefits that cater to both physical and mental health well-being
  • Protect the team from bullying, harassment or discrimination, from colleagues or third parties
  • Provide non-threatening and confidential communication channels for the team to raise organizational and personal concerns.

Some of you may be thinking – “even more to add to my already full plate!!” You’re right and yet think about the benefits of having a workplace that promotes great mental health. You don’t have to do it all by yourself. Engage the team, look for volunteers and you’ll find your employees will surprise you. This a positive step to begin to normalize the conversation around mental illness and by extension increased employee engagement. Depression is the invisible disease, there is no blood test, or cure. It carries the stigma of weakness, as a result people are reticent to engage in conversations about it. Expressing an interest in the team’s well-being will lead to increased workplace satisfaction, increased retention, lower hiring costs, increased productivity, increased business opportunities, and ultimately, profit; after all is that not the goal?

Remember Bob? A year after he left the organization he came back to see me to ask for his job back. He and his wife had attended a wedding where several of his former workmates were present. They told Bob how the organization had changed. Significantly more emphasis was being placed on working conditions, more people had been hired, and the organization had invested in tools that made work much easier! I accepted his request…..

As the competition for talent increases, an emphasis on workplace well-being will become a point of differentiation for your business.

John Panigas provides workshops, coaching, and in-house mental health wellbeing programs to leaders and organizations that realize there is both a personal and economical cost of depression to the business and the team. His methodology highlights a tool called “The COD (Cost of Depression) Calculator©” which calculates the current cost of depression on the business.

John can be reached at [email protected] or at www.johnpanigas.com

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