The Costs of Employee Burnout
The effects of employee burnout on your workforce and organization can rapidly add up. For employers, the costs of burnout include burnout-related healthcare costs, costs due to the loss of productivity, and the cost of new hires due to turnover.
Just take a look at some of the numbers:
- Employee Turnover Costs: The average cost of turnover is ½ -⅔ of the employee’s salary. Employees most at risk of burnout tend to be in the middle-income range. So every employee who makes, say, $50,000/year and leaves the company, will cost the company $25,000- 33,000.
- Health-related Costs: To understand how burnout can drastically affect healthcare costs, look no further than high-pressure (high burnout risk) industries whose healthcare costs are 50% higher than in other organizations. The impact of workplace stress on mortality and health costs in the U.S. has led to nearly $190 billion in spending each year. Furthermore, burned-out employees are 23% more likely to visit the emergency room. Overall, research estimates that workplace stress accounts for 8% of total national spending on healthcare.
- Productivity Loss Costs: Job-related stress contributes to 550 million workdays lost annually, and the WHO estimates that $1 trillion is lost in productivity each year as a result. Additionally, burnout leads to disengaged employees, who end up costing their employer an average of 34% of their annual salary.
This doesn’t even take into consideration the more considerable national impact, the cost to GDP. For example, the U.S. economy loses an estimated $500 billion due to workplace stress. Absenteeism and lost productivity due to depression alone cost the U.S. $51 billion annually.
Why Is Burnout so Prominent?
Employee burnout rates were already on the rise before the pandemic, but the arrival of COVID significantly exacerbated the problem. So much so that burnout has now become endemic in the global workforce.
Before the pandemic, just 5% of employed workers and 7% of unemployed workers said their mental health was poor or very poor. Now, 18% of employed and 27% of unemployed workers say they struggle with mental health issues.
The current global burnout crisis results from a domino effect on the workforce. As mentioned, burnout rates were already on the rise before COVID arrived, but during the pandemic, they increased substantially. The pandemic also changed many employees’ attitudes about work, triggering the so-called “Great Resignation”.
In the U.S., the rate at which people left their jobs in 2021 reached a 20-year high. According to the Bureau of Labor Statistics, a record 4.4 million people – 3% of the national workforce – resigned in September 2021. Many employees left their jobs due to inadequate pay and childcare issues, as well as a lack of respect and recognition, advancement opportunities, flexibility, and autonomy. As a result, these candidates, fresh for new employment and eager for better job satisfaction, are armed with more demands.
Companies unwilling or unable to offer candidates what they are looking for have been routinely postponing the hire of new replacements - in favor of distributing the extra work on the shoulders of remaining employees. Of course, these employees are now experiencing burnout due to being expected to do more with less as more and more companies employ understaffing as a survival strategy.
Employees experiencing burnout can quickly find themselves in a sort of “mental quicksand,” which can be challenging to climb out of and easy for others to be pulled into. This can result in a downward spiral in both individual and organizational performance. And when employee performance suffers, so too does the company’s - resulting in widespread organizational burnout.
What Can Employers Do to Prevent Burnout?
The first step to tackling the problem of burnout is to acknowledge that it exists; 36% of workers state that their organizations have nothing in place to help stave off employee burnout. Education for managers and employees on burnout is essential as burnout reduction needs to be both a bottom-up and top-down effort.
Luckily, there are many ways that employers can approach burnout to help identify, prevent, and reverse its effects.
Management needs to be attentive to burnout, as poor management decisions can heavily impact burnout rates. Management bares a lot of the responsibility for preventing burnout, so awareness and education are essential.
What steps can managers take to prevent burnout in their teams?
According to Gallup’s State of the American Workplace report, only 60% of workers know with confidence what is expected of them at work. Expectations and accountability need to be clear for employees; otherwise, employees can become exhausted from the guesswork of trying to figure out who is responsible for what.
- Ensure Manageable Workloads
Workload and time management are pivotal for preventing burnout; employees are 32% less likely to experience burnout when leadership assists them in managing their workload.
If managers are not properly supervising their team’s workloads, it can spell disaster. Unreasonable deadlines and pressure can cause employees to miss deadlines, which can generate a snowball effect, causing work to mount up and become uncontrollable, increasing employee stress. When employees have enough time to do all their work, they are 70% less likely to experience burnout.
It’s important to mention that manager burnout is also quite common, in fact, it’s slightly higher than other employees. Upper management needs to ensure that managers have a manageable span of control as well.
- Ensure Effective Communication
Employees who feel unsupported by their managers are 70% more likely to experience burnout, so effective and clear communication is key to nipping burnout in the bud. Managers can employ 360-degree feedback models to guarantee 2-way communication channels are open for employees to discuss concerns. Employees who are already grappling with the beginning symptoms of burnout typically have 13% lower confidence in their performance and are half as likely to discuss issues with their manager. This is why it's vital to ensure employees feel comfortable and are provided ample opportunities to discuss their work and concerns with their supervisors.
Focus on Employee Wellness
A focus on employee wellness is a vital part of preventing burnout and reversing its effects. In the past, employees were expected to separate their professional and personal lives and thus discouraged from discussing mental health issues at work. But as humans, there is little we can do to compartmentalize our deteriorating mental health from our professional life. Even if this works temporarily, it is not a long-term solution and is bound for disaster.
Employers can improve employee well-being in a number of ways. For starters, ample paid time off via paid holidays, sick days, and parental leave should be automatically provisioned in employee contracts. Without allotted time to properly rest when employees begin to feel burnt out, the problem can rapidly escalate. Aside from paid time off, 43% of employees also suggest that employers should offer mental health days to help combat burnout; a day here and there for rest can make all the difference.
In addition, employee wellness programs and perks offered to employees at work can help employees better manage their time and stress. Programs like yoga and meditation classes can break up the workday and provide much-needed stress relief. Many apps and digital tools are available to help employees monitor their well-being also.
In order to prevent burnout, employees, managers, and employers should be actively engaging in conversation about the topic. HR leaders should launch burnout campaigns to raise awareness and get the conversation going to remove the stigma of talking about mental health issues at work.
Employees and supervisors need to know how to identify the signs of burnout early, how to have a conversation about them, and what action to take to reverse the process after it begins. HR departments should make burnout awareness one of their top priorities; 56% of employees report that their HR departments do not encourage conversations about burnout.
Know Who’s at Risk
While burnout can affect any employee, some demographics are more vulnerable. In line with burnout awareness, organizations should be extra attentive to demographics who may be more susceptible to burnout.
It’s important for employers to know which demographics are at high risk to ensure proper steps are taken to prevent burnout. For example, certain departments may require extra attention; a study found that 67% of workers in business development and sales were close to experiencing burnout because of long working hours, a dense workload, and feeling required to always “be on.” In this case, employers may want to pay extra attention to burnout trends in their sales department.
Generations also disproportionately experience burnout; younger employees report higher burnout levels, particularly millennial employees closely followed by Gen Z. Working parents are another demographic with a higher risk; 47% of working mothers and 38% of working fathers are often burnt out. Furthermore, high-stress industries and jobs which require a high degree of emotional empathy can also be excessively draining. And this is just to name a few; many other demographics are more vulnerable to burnout. It’s crucial for employers to know their workforce’s risk and consider this when addressing burnout in the workplace.
Remote workers also experience burnout disproportionately. During the pandemic, 61% of remote workers found it difficult to “unplug” during non-work hours, and 70% of remote workers said they were also working weekends. As remote and hybrid teams have become a mainstay of working culture, employers must know how to manage remote workforces properly to prevent burnout.
Allowing flexible working hours is one of the most effective ways to help avoid employee burnout, according to 75% of senior HR leaders. By allowing employees to have more flexibility in when and where they work, and more workplace autonomy to determine how they work, employers can improve employee satisfaction and help reduce the risk of burnout. Five out of workers listed having flexibility in their workday as the top way their workplace could better support them.
Remote and hybrid options can provide employees with the flexibility they need. But, with remote workers being at greater risk of burnout, managers must have the right approach when managing remote and hybrid teams. Luckily, there exist helpful tools that managers can leverage to accomplish a happy, productive, and more flexible work environment.
To help keep employee burnout under control, organizations can seek the help of digital tools. In fact, there are many tools designed for other purposes that can help identify the causes of employee burnout in the workplace and help employees achieve a better work-life balance.
One such tool is software used to monitor employees’ attendance, performance, productivity, and activity. These tools are great for identifying poor working habits or conditions that could signify that the employee is experiencing (or at risk of) burnout.
Take, for example, Insightful, an employee monitoring and productivity application. Features like Insightful’s activity monitoring can provide managers insight into how employees are using their time, and whether they are using it productively or unproductively. This data can indicate to managers how engaged their employees are with their work and whether or not their workloads are manageable.
Most software used to monitor employees has a time and attendance tracking feature, so employers know when their employees are working. This helps employers ensure that employees are not overworking, and are adequately unplugging from work when they should.
Above all, activity monitoring software like Insightful provides employers with the tools they need to offer flexibility and autonomy to their workforce, and to effectively manage remote and hybrid teams - all of which can help your organization prevent burnout.