Why Wellbeing Drives Performance

Employee wellbeing has long been viewed as a “nice-to-have” rather than a strategic priority. However, recent research in organisational psychology has demonstrated that mental health is directly linked to productivity, engagement, and overall organisational success. Far from being a peripheral concern, wellbeing is now a central business issue that can determine whether organisations thrive or falter in today’s competitive environment.

This article will explore the evidence for why supporting mental health at work is not simply an ethical responsibility but a performance imperative.

Wellbeing and Organisational Performance

The World Health Organization (WHO, 2020) defines mental health as a state of wellbeing in which individuals can cope with normal stresses, work productively, and contribute to their communities. Within the workplace, this definition underscores a vital point: employees’ mental health directly affects their capacity to perform effectively.

Studies have consistently shown a strong correlation between wellbeing and performance. For example, research by Wright and Cropanzano (2000) demonstrated that employees with higher levels of psychological wellbeing were more likely to be rated as performing better by supervisors. Similarly, a large-scale Gallup (2022) report found that organisations with higher levels of employee wellbeing were significantly more profitable, with lower turnover and absenteeism.

Wellbeing therefore functions as an enabler: when employees feel mentally supported, they can focus more energy on innovation, collaboration, and achieving organisational goals.

The Cost of Poor Mental Health

Conversely, neglecting mental health has tangible financial and human costs. In the UK alone, mental health-related absenteeism is estimated to cost employers up to £45 billion per year through lost productivity, presenteeism (being at work but unwell), and staff turnover (Deloitte, 2020).

Burnout, now officially recognised by the WHO (2019) as an occupational phenomenon, highlights the risks of unmanaged stress. Burned-out employees often experience cynicism, exhaustion, and reduced efficacy, which not only lowers their own output but also undermines team morale and client relationships. Left unaddressed, poor mental health can lead to higher attrition, reputational damage, and long-term cultural decline.

Beyond Ethics: The Strategic Advantage of Wellbeing

The case for mental health is not solely about avoiding costs, it is also about creating competitive advantage. Research by Harter et al. (2020) shows that when employees report higher levels of wellbeing, organisations benefit from:

• Stronger engagement: Employees are more committed and motivated.

• Higher innovation: Wellbeing supports cognitive flexibility, creativity, and problem-solving.

• Better retention: Employees who feel supported are less likely to seek opportunities elsewhere.

This suggests that mental health initiatives, whether through flexible work policies, access to counselling, or fostering a culture of psychological safety, should be viewed as investments with measurable returns. Organisations that build a reputation for supporting wellbeing also strengthen their employer brand, making them more attractive in competitive talent markets.

Conclusion

Wellbeing is no longer a soft issue. It is a measurable driver of performance and long-term organisational sustainability. By investing in mental health, organisations not only protect their employees but also unlock greater innovation, resilience, and profitability. The evidence is clear: prioritising wellbeing is both the right thing to do and the smart thing to do.

Deloitte. (2020). Mental health and employers: Refreshing the case for investment. Deloitte UK.

Gallup. (2022). State of the Global Workplace 2022 Report. Gallup.

Harter, J. K., Schmidt, F. L., Agrawal, S., & Plowman, S. K. (2020). The Relationship Between Engagement at Work and Organizational Outcomes: 2020 Q12 Meta-Analysis. Gallup.

World Health Organization. (2019). Burn-out an “occupational phenomenon”: International Classification of Diseases. WHO.

World Health Organization. (2020). Mental health: Strengthening our response. WHO.

Wright, T. A., & Cropanzano, R. (2000). Psychological well-being and job satisfaction as predictors of job performance. Journal of Occupational Health Psychology, 5(1), 84–94.