The cost of neglecting mental health in the workplace

We know neglecting the well-being of your employees can damage business performance in the long run. Here, Ant Coen, Principal Consultant at Macmillan Davies highlights some methods where HR can help prioritise mental health in the workplace.

When cutting costs is essential, employers may deprioritise initiatives that don't offer immediate or visible returns. This often results in scaling back employee well-being programmes, training, or mental health support services. During financial difficulties, many businesses are forced to make tough decisions about where to allocate limited resources. Investment in mental health and well-being is frequently viewed as discretionary rather than a business necessity. There’s a belief that focusing on core operations will keep the business afloat, while areas like mental health may not be as critical. However, this mindset is fundamentally flawed. Mental health and productivity are deeply interconnected.

The essential investment

Research from Deloitte, published in May 2024, revealed that poor mental health cost UK employers £51bn in 2023-24, with absenteeism, presenteeism, and employee turnover being key contributors. The cost of replacing an employee can range from half to double their annual salary, not to mention the loss of institutional knowledge and disruption to teams.

Furthermore, interim findings from the Macmillan Davies 2025 HR Insights Report show that 83% of employers now have a mental health policy in place, with 30% of employees classing the support they receive as ‘amazing’. Despite this progress, there is still work to be done.

Ignoring mental health creates a ripple effect. Stressed employees tend to be less engaged, creative, and productive, which can spread negativity across the organisation. Left unchecked, this can harm the company’s reputation, increase liability risks, and deter new talent from joining.

Supporting mental health isn't just beneficial for employees; it’s a smart business strategy. The same Deloitte research shows that for every £1 spent on employee wellbeing, businesses receive an average return of £5. From improved retention rates to increased engagement and performance, the benefits far outweigh the initial costs.

How HR can lead the way

HR teams are instrumental in developing effective and sustainable mental health strategies. Employers have a duty of care to protect the wellbeing of their staff. According to the CIPD’s 2023 Health and Wellbeing at Work Report, 53% of employers have a standalone well-being strategy, reflecting the increasing importance of mental health in the workplace.

Here are five practical steps HR teams can take to prioritise mental health:

1. Champion a preventative approach
   Early interventions such as culture change and raising awareness about mental health provide the highest return—£6.30 for every £1 spent. HR should focus on shifting from reactive measures to preventative initiatives to identify and address issues before they escalate.
2. Embed mental health in company culture
   Instead of offering standalone workshops, HR should integrate well-being into the company’s culture. This means training staff and management to recognise the signs of mental health issues and fostering an environment where open conversations about mental health are encouraged.
3. Measure the impact
   HR should measure the return on investment of mental health initiatives by tracking absenteeism, employee satisfaction, and productivity. For instance, how many employees feel supported in their mental health? What is your staff turnover rate? Monitoring these indicators helps justify continued investment and informs ongoing improvements.
4. Support leadership and management
   Managers play a pivotal role in building workplace environments where people can thrive. Providing them with the right training and tools enables them to foster cultures of well-being and high performance, benefiting both employees and the organisation.
5. Promote work/life balance
   Encouraging flexible working, regular check-ins, and ensuring employees take breaks and annual leave are vital to maintaining mental well-being. HR must champion these practices and ensure they are embedded in company policies.

“It may be tempting to see mental health support as a non-essential expense, but neglecting it is a false economy” says Ant. “The costs of poor mental health are vast and growing, while the benefits of investing in employee wellbeing are clear. HR can lead this transformation, ensuring businesses not only survive but thrive by prioritising their people.” A mentally healthy workforce is more engaged, productive, and ultimately the backbone of any successful organisation.

Upcoming events

We have a series of roundtables and webinars coming up on hot HR topics, give us a follow-on LinkedIn or contact Ant Coen to be kept updated on the dates for our next event.

Get in touch

Should you wish to have a confidential chat with Ant Coen to discuss the current HR market and where we can help with inclusive recruitment or your search for work/recruiting into your team, please contact him directly at acoen@mdhr.co.uk

To ensure you don’t miss any updates from Macmillan Davies and to hear about our latest events click here to sign up to subscribe to our updates.