How Focusing on Employee Wellbeing Can Reap a 5x ROI

A 5x return on investment in year one – it’s as elusive as a unicorn and equally improbable. Yet it’s entirely possible if, over the next year, you begin to proactively look after employee wellbeing and team morale.

ROI calculator

Putting numbers on what is intangible is, by nature, an estimation compared to other financial drivers within a business. But that doesn’t mean it can’t be done. At Friday Pulse we’ve done just that – estimated the return on investment in wellbeing. And when the potential returns are so significant, it shows the investment is worthwhile.

We have previously outlined the cost and impact of low team morale. Productivity, creativity, and innovation are all undermined when employees are struggling or disengaged. Recently, we created our Resilience Calculator to help identify the financial impact 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.).

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

What it costs to invest in wellbeing

It’s important to recognize that improving culture isn’t about paying people more money – it’s about consistently listening to people, having strong team communication, and recognizing individual and team efforts. These activities don’t cost money, but they do require an empathetic approach, time and energy.

So, the question to ask is “how much time does it take to create real relationships?”. Creating a better culture requires better relationships yet these don’t spring up overnight, especially if the culture hasn’t been supportive in the past.

Investing in empathy

Empathy is part of the injection of capital your workplace needs to become more productive, creative and successful. It’s built at a team level by systematically setting aside time to listen, reflect and collectively respond to whatever is happening in the workplace (whether in person or remotely). As that happens, workplace culture gradually becomes more empathetic and thereby improves.

Investing in team meetings

One proven way of developing empathy is by having a team meeting at the start of the working week. In this meeting, teams can reflect together on the events of the previous week – what went well, and what didn’t – and not just detail upcoming assignments.

It’s crucial to acknowledge and appreciate people’s efforts and listen to their frustrations. In this way, team members and leaders get to know each other better and become more supportive. The meeting sets the tone for the week ahead, in the way people work individually and as a team.

So, how do you build empathy and improve your culture? Invest in this weekly check-in process. It’s tough to develop and maintain levels of team morale without it, and the commitment is just half an hour a week, every week. The investment for a more productive and happier week is the time it takes to have this ‘check-in’ process.

What is the ROI on investing in team morale?

Improving team morale results in changes in employee wellbeing. Our estimates indicate that a modest and attainable increase in employee wellbeing can translate to a 7.5% increase in productivity. With that in mind, let’s look at some of the figures behind investing in morale and wellbeing:

  • Time investment: half an hour for a team 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 time investment and productivity gain is calculated by being multiplied by the cost of employment. In an ROI calculation, the precise cost of employment is not necessary 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 we know a company investing in team morale and employee wellbeing can reap a 5x return on investment.

We're 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.