The Magic Formula to Ensuring Loyal Employees: Mental Health Benefits

An exposition on how mental health benefits can improve employee retention and workplace performance.

January 24, 2023
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With the avalanche of resignations in today's workplace and the dynamic labor market, employee retention is now a topmost priority for employers. And the panacea for employee retention borders on creating a work environment that caters to employee mental health. 

So, what if employers could do something about it? What if they could help employees struggling with mental health issues and promote worker retention?

The real question is how.

While some business owners may realize that providing mental health benefits in the workplace contributes to employee retention, many don’t know how to incorporate it.

We’ve got you covered!

This article will explore how mental health benefits boost employee retention and improve workplace performance. And we'll start by answering the most burning question:

Can Mental Health Benefits Boost Employee Retention?

Yes, mental health benefits can boost employee retention.

According to a recent survey, 73% of employees stated they would be inclined to remain in a company that provided a top-rated employee mental health program. 76% of managers noted they would place a higher priority on mental health benefits compared to other forms of incentives.

Although very needed, employee retention is still a challenge in today's workplace

The increased levels of anxiety and depression that characterized the recent pandemic are still very much present. Consequently, mental health awareness is currently at an all-time high. And employers who can incorporate mental health benefits into the welfare of employees have higher retention rates, as they attract more talent from the labor market. 

In a 2021 survey, 76% of participants stated that mental health benefits are a major criterion when assessing job offers. Therefore, employees should have access to the personalized mental health care that best suits them - one-on-one therapy sessions or routine medications. 

Employee mental health benefits include:

  • Flexible working hours
  • Paid leave
  • Credit support
  • Wellness options
  • Yoga and gym memberships
  • Health insurance
  • Dance classes, etc.

These perks help in stress management and boost workplace productivity. They increase employee retention while also helping them thrive.

Mental health benefits extend beyond care. They also include the company culture. The type of company culture practiced should avoid burnout; it should advocate cordial treatment of employees.

Read more on: How to manage and engage employees in a hybrid workplace.

Assembly has the perfect guide to setting up a supportive company culture. Book a demo today!

How Does Mental Health Impact Employee Performance?

Mental health impact employee performance in the following ways:

  1. Absenteeism

Mental health issues are a significant cause of work absenteeism worldwide, according to a 2018 report. Employees battling mental health issues form the habit of being absent at work in person and mind.

Absenteeism has adverse outcomes for the employee and the company as a whole. It affects business growth. Approximately 7% of the global payroll is accounted for by desertion due to mental health reasons.

When employees become increasingly absent, co-workers also experience the ripple effect. This is evident in those who will be required to fill in for the absent employees, like carrying out additional tasks that may also cause burnout.

Absenteeism eventually results in a wave of disengaged employees in the workforce, which must be addressed.  

  1. Reduced Productivity

Reduced productivity is often a direct consequence of absenteeism. When absenteeism is high, the company's overall productivity is affected. According to W.H.O., anxiety, and depression cost the global economy an estimated 1 trillion dollars in reduced productivity yearly.

Employees dealing with anxiety are prone to reduced attention. As a result, they find it challenging to execute multiple tasks concurrently. In cases of repeated chronic stress with minimal rest, repeated errors while carrying out tasks are unavoidable.

Mental health issues also take a significant toll on the ability of employees to work at total capacity. Meeting deadlines become difficult, and employees need help to handle constructive criticisms, causing a drop in their self-belief and confidence level.

  1. High Turnover Rate

A high turnover rate significantly derails productivity and brings about a corresponding decrease in employee input.

Now that many employees are quitting their jobs on the grounds of mental health, the remaining workforce may feel less motivated and enthusiastic, affecting revenue as well. Income decreases when a significant fraction of the workforce frequently calls in sick, experiences burnout, or becomes disengaged from the company's overall affairs.

Prioritizing employee mental health will bring about a decline in the turnover rate of employees and also foster a motivated and engaged workforce.

Furthermore, an elevated turnover rate increases the running cost of the business. Hiring new employees is capital-intensive, and it costs approximately eight months' salary to recruit another employee.

Apply Assembly's key employee engagement KPIs to monitor your company’s employee retention.

  1. Lack of Improvement

Innovation can only thrive in the presence of motivation. A decline in motivation is associated with anxiety and depression, and these conditions reduce stamina and the desire to continue working. In addition, they cause an apparent reduction in attention span with a corresponding inability to undertake compound tasks.

Mental health issues also impact social life; this is evident in how much employees interact with co-workers and their reluctance to collaborate. This ultimately affects job performance and brings about a progressive decline in efficiency due to a lack of improvement.

A company that doesn't offer mental health employee benefits runs the risk of having its workforce not being able to engage in capacity-building schemes. The resultant effect is the absence of essential learning and developmental opportunities amongst its workforce; these opportunities are crucial for improvement.

Should Employers Invest In Employee Mental Well-Being?


Employers should invest in the welfare of their employees, including, and importantly their mental health. Paying attention to the well-being of employees encourages their participation and engagement in activities that boost their productivity.

Let’s dive deeper into the benefits of investing in employee mental well-being. They include:

  • Increased productivity

Integrating employee mental health programs helps create a culture that accommodates collaboration and accessibility to guidance when necessary. And this Investment in mental well-being helps to avoid losses due to decreased employee productivity. 

A happy and healthy workforce means higher performance and revenue; employees perform at their optimal level and become confident about overcoming obstacles.

  • Lower operating costs

If left unchecked, mental health issues can alter physical health. Investing in employees' mental well-being helps to avoid additional costs arising due to medical expenses.

Therefore, providing mental health benefits is one way of lowering operating costs.

  • Improved customer service ratings

Employees who feel valued and appreciated tend to provide better customer service.

And this is especially important for B2B companies where client relationships can last decades or even lifetimes!

  • Retention of talented employees

Investing in the mental well-being of employees helps position and promote your company as a haven for top-rated professionals.

Employers that pay attention to mental health attract and retain talents with less difficulty. It shows that the company is committed to its workforce's personal and professional advancement, and employees will appreciate this gesture.

  • Improved decision-making

Decision-making relies on cognitive skills that stress can negatively impact. 

Investing in your employee's well-being reduces stress, helping employees deal with difficult situations without feeling overwhelmed and giving them a clearer head to make better decisions.

  • Transparency and empathy

An environment that values mental health encourages employees to do the same. 

Employees will feel secure discussing their emotions and mental health concerns with supervisors. This improves empathy among staff and may reduce conflict between coworkers.

  • Brand reputation

Brand reputation is an important asset that sets any brand apart. 

Investing in the mental health of your employees creates a more positive workplace culture, and even when employees leave honorably, they'll spread the word about the excellent work culture.


When it comes to employee retention, the best strategy is to invest in your employees—providing mental health benefits and establishing a supportive company culture form the basis for creating and maintaining employee engagement and retention.

Employee retention correlates directly with employee happiness. And it makes sense. Nobody wants to be unhappy in their jobs.

According to the Depression and Bipolar Support Alliance, Major depressive disorder affects approximately 17.3 million American adults. And other mental disorders can interfere with their daily lives.

So, although investing in employee mental well-being may seem like a luxury, it could be the key to improving your bottom line. 

Assembly’s suite of services offers an excellent strategy for employee retention. Try for free today.

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