How to Improve Employee Wellbeing and Productivity

By Bill Peatman | Updated: 21 Apr, 2022

Employee wellbeing took center stage in the wake of the pandemic and the ensuing record numbers of resignations. The physical and mental toll was intense, and the message from employees was loud and clear. Employees value psychological and physical health more than the stability of a paycheck—half of the employees moved to a new job to improve their wellbeing.

Gallup asked employees what they look for most in an employer and found that all employees generations rank "the organization cares about employees' wellbeing" in their top three criteria. It is the number one factor millennials and Generation Z wants in jobs.

What is Employee Wellbeing? 

While the focus on employee wellbeing is intensifying, the concept and its link to productivity are not new. Wellbeing is an expanded version of wellness, and corporate wellness programs have long been used to keep people healthier, reduce absenteeism, and cut health care costs. Johnson and Johnson found that every dollar spent on wellness returns $2.71 in increased productivity.

In another study, employees received expert cardiac rehabilitation training, and 57 percent were converted from high-risk to low-risk status after six months. Compared with the previous year, medical costs declined by $1,421 per participant.

Gallup has studied wellbeing for decades and identifies five common elements people need to thrive:

  • Career--you like your company and what you do every day.
  • Social--you have meaningful friendships.
  • Financial--you manage your money well and feel financially secure.
  • Physical--you are healthy and have energy for work and activities you enjoy.
  • Community--you like where you live and engage with groups like churches or service organizations.

What is the Impact of Employee Wellbeing on Productivity? 

"Wellness programs have often been viewed as a nice extra, not a strategic imperative," Harvard Business Review said. "Newer evidence tells a different story." A study by the nonprofit Health Enhancement Research Organization (HERO) found that 57 percent of business leaders viewed wellbeing as part of the organization's core business strategy.

Data also clarifies that the cost of poor wellbeing includes more than just higher healthcare expenses. Gallup surveys show wellbeing results in:

  • $2000 in lost business opportunity per employee.
  • Due to turnover and lost productivity, $355 billion less revenue (15-20 percent of payroll).
  • 75 percent higher medical costs from preventable conditions.

A study of than 300 research reports by professors from the London School of Economics, MIT, and Oxford found strong correlations between employee wellbeing and:

  • Customer loyalty
  • Profitability
  • Employee productivity
  • Staff turnover

How Do You Measure Wellbeing? 

To measure wellbeing, you need to know what your employees want at work and in life and if they are getting what they want. Gallup developed Net Thriving—a simple poll that enables employees to assess their status in each of the five elements of wellbeing on a 1-10 scale:

  • Thriving: people with positive views of their present life and the next five years.
  • Struggling: people who struggle in their present lives and have uncertain or negative future views.
  • Suffering: people who report their lives are miserable and have only negative thoughts of the future.

Like Gallup, the Warwick-Edinburgh Mental Well-Being Scale (WEMWBS) uses a scale of 14 elements to enable people to self-assess their wellbeing. Examples are:

  • I am optimistic about the future
  • I am thinking clearly
  • I am interested in new things

Participants answer using a one-to-five scale with a total score between 14 and 70.

How do you Improve Employee Wellbeing 

Multiple studies show that beyond the basics of food, shelter, and health, the most significant factor influencing employee wellbeing is management—more specifically, micromanagement.

"Studies going back decades have shown that job control—the amount of discretion employees have to determine what they do and how they do it—has a major impact on their physical health," Standford business school professor Jeffrey Pfeffer wrote. "Recent research also indicates that limited job control has ill effects that extend beyond the physical, imposing a burden on employees' mental health, too."

"Organizations can guard against these dangers by creating roles with more fluidity and autonomy, and by erecting barriers to micromanagement," Pfeffer said. "Giving people autonomy about how, where and when they work is critical to wellbeing."

Beyond giving employees more autonomy, Gallup identified seven strategies to apply to each of its five elements of wellbeing, integrating them into your work routines:

  • Development--ask about employees' wellbeing goals just as you would career development goals. 
  • Recognition—recognize wellbeing achievements and milestones like you recognize performance achievements.
  • Communication—communicate workplace wellbeing goals with clarity about human and business outcomes you expect.
  • Incentives--create incentives to participate in wellness that produce results.
  • Events--create events that drive awareness of Net Thriving culture and change behaviors.
  • Rules and Guidelines—make certain rules and guidelines foster and do not work against thriving in the five elements.
  • Facilities—make sure it is easy to move around your office space, see outdoors and collaborate.

Pfeffer recommends these strategies to improve employee wellbeing:

  • Provide job control—as seen, autonomy is key to wellbeing.
  • Provide social support--having friends "protects your health as much as quitting smoking and a great deal more than exercising."
  • Demonstrate commitment to offering help—you can "signal in ways large and small that it cares about its employees' wellbeing."
  • Encourage people to care for one another—create internal GoFundMe vehicles that enable employees "to help each other during times of crisis—such as a natural disaster, an accident, or an illness."
  • Fix the language—language in the workplace like "management" and "staff" often "emphasize divisions between leadership and employees can further alienate people and erode any sense of shared community or identity."
  • Support shared connections—create events that "bring people into contact in a pleasant and meaningful context—from holidays to community service to events that celebrate employee tenure or shared successes such as product launches."

Measure and Act on Employee Wellbeing 

Measure employee wellbeing to demonstrate to employees that this is a critical goal for your company. Use a framework like Gallup or WEMWBS to track overall employee wellbeing over time and show whether you are reaching goals. The good news is that measurement through polls is not difficult. The more challenging fact is that if you measure wellbeing and do not act on issues and low rankings, you risk losing the trust of your teams.

About the Author: Bill is Prialto's senior content marketing manager and writes about the future of work and how businesses can be more productive and successful. His work has appeared in the World Economic Forum Agenda blog and CIO magazine.