How investing in wellbeing gives a 5x ROI

Returns on investment have never been more critical as businesses are increasingly cash strapped. Yet if you were a financial advisor that offered me a 5x return on my investment – in year one – I would certainly not believe you. There has to be a catch.

May 1, 2020 3 mins read

Returns on investment have never been more critical as businesses are increasingly cash strapped. Yet if you were a financial advisor that offered me a 5x return on my investment – in year one – I would certainly not believe you. There has to be a catch.

However, this is exactly what I am suggesting. By proactively looking after employee wellbeing and team morale, across the next year you can reap a 5x ROI. The catch? You have to invest time and effort, not just money. Putting numbers around what is often viewed as soft and intangible is by nature an estimation, but that doesn’t mean we can’t estimate the return. 

In my last post, I outlined the cost of low team morale. Productivity, creativity and innovation are all undermined when employees are struggling and disengaged. Over at Friday Pulse, my team and I created the Resilience Calculator to help identify the financial impact that team morale and resilience can have on a company in terms of reduced productivity and innovation, as well as the effect of increased staff turnover and sickness absence. We know from tracking weekly employee wellbeing numbers that low team morale can amount in losses of approx. $1,000,000 a year (based on a 200-person business – the average company size in the U.K. and the U.S.).

So how do you mitigate this loss? You improve your workplace culture.


How to invest in workplace culture

Improving culture isn’t about paying people more money; it’s about listening to them, creating strong team communications, and recognizing individual and team efforts. Though this doesn’t ‘cost’ anything per se, it does require an empathetic approach, time and energy.

Why empathy and team meetings are the most important investments

Empathy is built at a team level by systematically setting aside time to listen, reflect and collectively respond to whatever is happening. This can be done by beginning each working week with a team meeting. In these meetings, teams can:

  • reflect on the last week (what went well and what didn’t)
  • acknowledge people’s efforts
  • share any frustrations.

As teams work together to build on the positives and work on the negatives, team members and leaders get to know each other better and become more supportive. This meeting, and the mindset it creates, can set the tone for the week and how people perform individually, and as part of the wider team. This check-in process is the principal investment and commitment needed to build and maintain levels of team morale.

And it really is just half an hour a week — every week.


The ROI on investing in workplace culture

Improving team morale results in an improvement in wellbeing. Our estimates suggest a modest and attainable increase in employee wellbeing can translate to a 7.5% increase in productivity.

I’m a numbers person so let’s talk about the other figures involved with this investment:

  • A half-hour meeting is 1.25% of a 40-hour workweek
  • Productivity gain from a half-point increase (on a five-point scale) is 7.5%

The cash equivalent of these two factors — time investment and productivity gain — are calculated by being multiplied by the cost of employment. In an ROI calculation, the precise cost of employment is not necessary to know as you divide one by the other.

ROI = {return benefits – investment cost} / {Investment cost}

(7.5 – 1.25) / 1.25 = 5

And that’s how you can get a 5x return on your investment in wellbeing.


Here to help

During this pandemic period, my team and I are committed to helping businesses build better work cultures and improve employee morale. That’s why, we are offering companies and teams (50 – 1,000 employees) free access to our Friday Pulse people platform for 12 weeks.

For more information on how we can help your organization weather the crisis please contact Clive Steer, Head of Helping People, at [email protected].