Thriving Workplaces How Employers can Improve Productivity and Change Lives 2025

Several factors directly contribute to the investment case for employee health and well-being within an individual organization Benefits for an organization can vary widely depending on the number, sector and location of their employees (Figure 3). Consequently, when organizations evaluate their investment cases, they need to calculate all the potential benefits, including costs that can be avoided. Major factors which organizations need to consider as part of their investment case include the following: 1 Direct healthcare costs: Healthier workforces correlate to lower healthcare costs and reduced absenteeism Although not included in the calculation of the economic value at stake globally, healthcare claims often account for the majority of an organization’s total employee health and well-being costs in countries such as the United States where employee health claims are subsidized by employers. In the United States, employers face an estimated $226 billion annually in absenteeism costs (approximately $1,695 per employee), largely driven by chronic health conditions that could be mitigated through preventive care and health programmes.19 Conditions such as hypertension, heart disease and depression cause substantial on-the-job productivity losses, exceeding $300 per US employee annually.20 Cardiovascular disease leads to the loss of $156 billion in productivity annually.21 US employees with untreated insomnia cost employers approximately $2,280 more per year than those without insomnia because of factors such as absenteeism, presenteeism, diminished performance and higher rates of accidents and injuries.22 A survey of more than 1,600 employer benefits decision-makers in the US (including C-level executives and human resources/benefits leaders) revealed that employers are preparing for medical inflation, with more than two-thirds budgeting for healthcare costs to grow at three times the rate of inflation.23 Globally, total healthcare costs are expected to continue growing because of cost pressures such as those related to an ageing population.24 In countries with universal healthcare, organizations currently avoid most of the direct costs of poor health, but this FIGURE 3 Notes: 1. Estimation based on MHI Global Business case calculation with standard values, comprising reduced total direct costs of poor employee well-being (attrition, absenteeism, presenteeism) and increased total benefits created through good well-being (productivity, retention, at traction). Direct healthcare costs are excluded as these are only relevant to employment in select countries (e.g. USA), and costs vary widely country to country. Num bers do not match the earlier mentioned 17% to 55% range as these are rounded numbers, whereas model used for calculation uses exact numbersCompany A ~$138-442 million1 20,000 $22,000 $3,000$44,000 $14,000$1,000 $7,000110,000 1,500~$114-365 million1~$21-66 million1Fictive company Fictive company characteristics Total economic opportunity1 Available from investing in employee health and well-being Total number of employees Experiencing the benefits of investment in employee health and well-being Incremental economic value per employee, $HQ: High-income country, regional activity Industry: Automotive Number of employees: 20,000 Average annual pay: $40,000 HQ: Middle-income country, regional activity Industry: Manufacturing Number of employees: 110,000 Average annual pay: $6,000 HQ: High-income country, global activity Industry: Digital Number of employees: 1,500 Average annual pay: $80,000 Company B Company C Lower opportunity value per employee Additional higher opportunity value per employee Source: McKinsey Health Institute analysisEstimated economic opportunity of investing in healthy workforces for three example organizations in differing geographies Thriving Workplaces: How Employers can Improve Productivity and Change Lives 9