In the hustle of meeting bottom lines and pushing for growth, small business owners often overlook a silent saboteur lurking within their ranks – employee stress.
According to a study from the University of Massachusetts at Lowell, estimates that work-related stress costs American businesses upwards of $300 billion each year.
Understanding the Impact of Stress
Employee stress is not just about the occasional headache or a day off work.
Stress is a persistent, pervasive issue that can drastically reduce employee engagement and productivity.
Workers experiencing severe stress from personal financial or family issues, health issues, and other work and non-work-related problems generate costs in the form of higher absenteeism and presenteeism.
Prolonged stress can lead to serious physical and mental health problems.
Stress is also a known contributor to the cost of accidents and injury at work.
Ultimately, poorly managed stress can jeopardize your competitiveness and survivability as a small business.
The Cost of Stress in the Workplace
For small businesses operating with tight margins, the costs that come from stress at work can hit especially hard.
Reduced productivity, increased error rates, and higher healthcare utilization costs directly affect the bottom line.
But the costs don’t end there. Employee turnover can be a massive expense for small businesses, with the cost of replacing an employee ranging from half to two times the employee’s annual salary.
The financial costs of job stress are stark. Consider this: 40% of job turnover is due to stress, and healthcare expenses are about 50% higher for workers reporting high levels of stress.
When it comes to employee injuries and workers’ comp claims, the expenses are staggering. And these costs aren’t just numbers on a spreadsheet; they represent real people and real lives impacted by stress.
Factors Contributing to Employee Stress
With today’s economic pressures, inflation, and credit challenges, stress among employees is intensifying.
The PwC 2023 Employee Financial Wellness Survey illuminates this trend. It notes that financially stressed employees are increasingly distracted. This, in turn, costs employers in lost productivity.
But many workers skip necessary healthcare to manage the effects of stress because it’s just too expensive for them. This includes crucial mental health services. So they aren’t getting the help they need to manage their stress more effectively.
When healthcare is bypassed, stress doesn’t just simmer—it boils over, impacting employees’ ability to perform their jobs effectively.
This can result in a vicious cycle where stress leads to illness, and illness, in turn, leads to more stress due to mounting healthcare bills.
And the switch to remote work has brought its own set of mental health challenges. The World Health Organization reports a 25% increase in depression and anxiety globally, which is largely tied to the transition to remote work environments.
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Do These Things to Mitigate the Effects of Employee Stress
Employers are not helpless in the face of rising stress-related costs and its effects on their workforce.
A smart and focused effort at combating the negative effects of employee stress can pay big dividends. Effective stress management reduces sickness absence costs by up to 20%.
Here are several things you can do as an employer to mitigate employee stress costs to your workers and your business.
Employee Assistance Programs (EAPs)
EAPs are work-based intervention programs designed to identify and assist employees in resolving personal problems that may be adversely affecting their performance. These programs often include:
- Short-term counseling
- Referrals for additional services
- Support for issues ranging from mental health challenges to substance abuse
- Free or discounted screening for depression and anxiety
Wellness Programs
Implementing a wellness program can take many forms, but the goal is always to promote healthier lifestyles and, by extension, reduce stress. Elements of a robust wellness program might include:
- Fitness challenges or gym memberships
- Nutrition classes
- Stress management workshops
- Regular health screenings
- Smoking cessation or weight loss clinics and other resources
- Quiet meditation spaces in the office
- On-site child care
Flexible Work Schedules
- Allowing for flexible work hours or the ability to work from home can help employees balance their personal and professional responsibilities, reducing stress from commuting and rigid schedules.
- Instituting a four-day workweek, compressed hours, or job sharing can give employees more control over their time, which can significantly decrease work-related stress and improve job satisfaction.
Upgrade Your Benefits Package
Traditional health insurance has its place.
But it’s extremely expensive. And high deductibles and coinsurance costs can mean needed health care is unaffordable for many lower-income workers and their families, even with insurance.
According to a recent New York Times report, nearly 4 in 10 Americans are putting off needed medical care because they can’t afford the out-of-pocket costs.
This has massive downstream effects in the form of higher future health care costs, lack of engagement, employee stress, presenteeism, and absenteeism.
As an employer, you can help solve that problem in a variety of ways.
Here are some successful strategies you can implement:
- Offer a Health Sharing Plan.Health sharing, also called medical cost sharing, is different from the traditional health insurance model.
Health sharing is a non-insurance alternative based on a non-profit, voluntary association of people who share one another’s health expenses.
In most cases, health sharing is a much more affordable alternative to traditional group health insurance and can foster a sense of community support.
That can generate significant savings for both your business and for your employees in overall health care costs.
- Offer an HSA-compatible High Deductible Health Plan.HSAs, or health savings accounts, are pre-tax savings accounts that allow employees to pay for qualified medical expenses tax free.HSAs help workers cover out-of-pocket costs for health care such as deductibles, co-insurance, co-pays, doctors’ fees, and drug costs.
Your workers can make pre-tax contributions, or you can make employee contributions to them on your employees’ behalf.
HSAs can go a long way to make healthcare more affordable and accessible for employees. And employer contributions are a great way to make the benefits of HSAs accessible to lower-income workers who might be unable to maximize their contributions on their own.
For employees to be eligible for HSA contributions, they must enroll in a qualified high-deductible health plan (HDHP. Which means you need to offer an HDHP as an employee health plan option.
Click here to learn more about health savings accounts and how to offer them to employees.
- Direct Primary Care (DPC).DPC offers a subscription-based model for primary care services, bypassing insurance and giving employees direct access to doctors for a flat monthly fee.With DPC memberships, there are no additional out-of-pocket costs to see a primary care or family doctor. There are no deductibles, copays, coinsurance costs, or surprise bills. Patients can see the doctor as often as they need to.
DPC memberships help bridge the healthcare affordability gap. With a DPC membership supplementing an employee group health insurance or health sharing plan, this means your employees won’t have to delay or skip needed medical care for themselves or their families.
With today’s telemedicine technology, they don’t even need to take a day off work. They can see their doctor via an app in the employee break room or parking lot. And they can stay current on their medications, and even get help treating stress.
Click here to read more about direct primary care plans for employers.
- Health Reimbursement Arrangements (HRAs):HRAs are employer-funded plans that reimburse employees for medical expenses and, in some cases, insurance premiums.This flexibility can alleviate the financial burden of healthcare costs, reducing one major source of stress.
One big stressor with employee group plans is that one size does not fit all:
With a qualified small employer HRA (QSEHRA), companies that don’t offer their own health insurance plans provide tax-free benefits that allow employers to buy the health insurance plan that works best for them.
Click here to read more about the benefits of establishing a health reimbursement arrangement.
By adopting these strategies, employers not only support the health and well-being of their employees but also potentially save on the high costs associated with workplace stress. It’s a win-win for both the employees and the bottom line of the business.
Want to offer a health sharing, DPC, HSA, or other health benefit for your employees? Click here to make an appointment with a Personal Benefits Manager.
Our highly-experienced Personal Benefits Managers can help you analyze your work force and assist with benefits upgrades, plan design, and implementation.
Click here to start the process with a free consultation.
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Be Proactive
The financial toll of employee stress on a small business can be immense.
Employees calling in sick, not getting enough work done, and dealing with injuries at work – all these stress-related issues add up to costs that small businesses cannot afford. And expecting employees to cover all of their own healthcare costs only contributes to their overall stress level.
As a small business owner, addressing the root causes of stress and investing in the well-being of your employees is not just a moral imperative, but a financial one as well.
For Further Reading: Complete Guide to Direct Primary Care | The 2024 Complete Guide to Employee Health Benefits | How to Prepare an Employee Census for Benefits Selection
