Mental Health, Emotions and Business Productivity

A recent high level Report makes a strong connection between emotional stressors at work and productivity. A consortium of researchers led by the consultancy Pricewaterhouse Coopers studied the impact of reduced mental health on absenteeism, presenteeism (underperforming at work), and workers’ compensation claims.[1] A headline finding is that every $1 invested in mental health returns $2.30 in saved costs. Poor mental health costs Australian business $10.9 billion annually.

Providing a mentally healthy workplace is a rational business investment. To bring this point home, the Report provides some statistics of the prevalence of mental health conditions.[2] Some remarkable facts are:

1)      In a 12-month period, 20% of Australians experience a mental health condition.

2)      45% of Australians in the age range 16-85 experience a mental health condition at some point in their lives.

The data came from the National Survey of Mental Health and Wellbeing conducted in 2007,[3] when the economy was still booming one year before the 2008 financial crisis. The survey reports high rates of conditions caused or exacerbated by stress, such as can occur at work. Mental illness is a “clinically diagnosable disorder that significantly interferes with an individual’s cognitive, emotional or social abilities”.[4] Milder conditions can also reduce productivity. Anything that reduces mental wellbeing, such as low morale, is likely increase costs.

It is worth identifying these disorders to better understand how they might be exacerbated or improved by workplace experiences.

Anxiety disorders affect 14.4% of Australians every year. These consist of:

  1. Panic disorder (2.6%)
  2. Agoraphobia (2.8%)
  3. Social phobia (4.7%)
  4. Generalised anxiety disorder (2.7%)
  5. Obsessive-compulsive disorder (1.9%)
  6. Post-traumatic stress disorder (6.4%)[5]


Of these, 1, 2, 3, 4, and 6 are sensitive to stressful emotional experiences. Most anxiety disorders are associated with feelings that can be induced in organisations: “tension, distress or nervousness”.[6]

Affective disorders affect 6.2% of Australians every year. These consist of:

  1. Depressive episode (4.1%)
  2. Dysthymia (chronic mild depression) (1.3%)
  3. Bipolar affective disorder (1.8%)[7]


All affective disorders are sensitive to negative emotional experiences – being triggered by them and contributing to them.

The Survey shows significant age and sex differences. The 25-34 age group suffered most mental health problems (18% per year). Women are especially vulnerable to anxiety disorders. In the age range 25-34 they show almost twice the frequency shown by men.[8] They are also more liable to affective disorders, except for the bipolar condition. In the age range 16-24, women show almost twice the prevalence of affective disorder shown by men. This disparity is confirmed by a study – the Youth Mental Health Report –of 15,000 young people aged 15 to 19 who completed the Kessler 6 Test for anxiety and depression. Indications of mental illness were reported by 14 per cent of males and 26 per cent of females.[9]

The Youth Report confirmed the connection between mental ill health and negative emotional experiences. Young people with an adverse Kessler 6 Test score are more likely to express concern about bullying, emotional abuse and family conflict.

Industries differ in prevalence and type of mental ill health. Overall prevalence is highest in the financial and insurance sector, where 33% of employees experiencing it per year. It is almost as prevalent in electricity, gas, water and waste services (EGWW, 31.6%) and information media and telecommunication (31.5%). Anxiety conditions are most common in the IT, media, financial and insurance, and EGWW sectors. Affective disorders (especially depression) are most prevalent in financial and insurance, IT, and EGWW industries. Full statistics on prevalence are provided in Appendix C of the Report.

Return on investment in mental wellbeing, if efficiently targeted, can be substantial. A 33% reduction in absenteeism, presenteeism and workers’ compensation across the country would yield the following returns. A person with a mild mental health condition will work 10 more productive hours per year, with a moderate condition 52.5 more productive hours and 2 fewer days absent per year, and with a severe condition 127.5 more productive hours and 13 fewer days absent per year.

Further return on investment can be expected from the higher morale that flows from mental wellbeing. The Report calls these benefits “intangibles” though group morale is a known positive indicator for raised productivity and, as argued in future posts, is measurable and predictable given the right analytic tools.

In summary, the data indicate that negative emotional experience is a major cause of lost mental wellbeing and therefore lost work productivity. Mental disorder can be brought into organisations and it can be caused or exacerbated by them. Either way, it lowers their productivity and reduces the wellbeing of the team. That is why a dollar spent on remedies returns, on average, $2.30.

Affordable solutions

The Report recommended “organisational change” to safeguard mental health, and identified seven actions for achieving this:

  1. Worksite physical activity programs;
  2. Coaching and mentoring programs;
  3. Mental health first aid and education;
  4. Resilience training;
  5. Cognitive behaviour therapy (CBT) based return-to-work programs;
  6. Well-being checks or health screenings;
  7. Encouraging employee involvement.


Actions 1, 3 and 7 can be used preventatively. Omitted from the list are two key preventative measures: analysing an organisation to identify patterns of negative emotions and stress; and, based on this analysis, making minimal changes to the organisation to reduce systemic negative affect. These measures are briefly indicated in the HeadsUp website (see below).

All of these actions can be costly and difficult to execute, especially the last two. Surveying, interviewing and observing staff costs time and disrupts work flow. Changing organisations also costs time and stress, and without a guiding theory and associated data-gathering methods might need to be repeated until the right constellation is hit upon.

Size of organisation and cost of investing in mental health

The need for efficient screening methods and valid theory is not as urgent when the incidence of mental health conditions is high. Remedial and preventative actions can yield strong returns on investment, even when those actions are not targeted. This is the case for small organisation in the EGWW and IT industries and for medium sized organisations in the public administration and safety, mining, and EGWW industries.

Return on investment is more variable in large organisations. It is high for public administration and safety and mining industries but more often low in other industries.[10] The Report does not offer an explanation for these low returns The Report does not suggest that large organisations are generally immune to mental health problems. On the contrary, it recommends remedial actions in large organisations based on decentralised monitoring and leadership of mental health programs.[11] Taken together, this part of the Report indicates an analytical deficit, perhaps originating in mainstream management theory. That impression is reinforced by the HeadsUp website’s vagueness on the subject. It states, without elaborating, that organisations can create a mentally healthy workplace by identifying and minimising workplace risks to mental health. And the website states that employers are legally required to provide a mentally safe and healthy workplace as part of their responsibilities under work health and safety legislation.[12] Again elaboration is not provided.

Perhaps large organisations with moderate mental health issues do not respond well to remedial efforts because their negative-affect hot spots and mental health conditions are not very detectable or predictable using existing methods and theories.

Cost-efficient prevention requires a theory of how organisations shape emotions. Such a theory would allow managers to predict where negative affect is likely to occur, focusing attention where it is most needed. And it would indicate the minimum organisational changes needed to reduce mental ill health.

Such an analysis was developed by Frank Salter in his book Emotions in Command: Biology, Bureaucracy, and Cultural Evolution (Transaction 2008). The analysis identifies causal links between authority and emotions, both positive and negative, in work organisations. The book also develops observational methods for analysing emotions in numerous work contexts.

The analysis is situated within the discipline of human ethology. Ethology is the biological study of behaviour, pioneered by scholars such as Charles Darwin, Konrad Lorenz, Demond Morris, Irenaeus Eibl-Eibesfeldt and Robert Hinde. The discipline overlaps urban anthropology and biopolitics.

Ethology is integrative, showing the connections between social relationship (e.g. leader-follower), physiology (e.g. stress and wellbeing), emotional expression and corresponding psychological experience (happiness, fear etc.). Emotions in Command shows that different organisations arouse different emotions but also distribute emotions in different patterns among employees. A fundamental finding is that organisations distribute emotions unevenly among leaders and followers.

Ethological analysis can identify stress risks and help design new structures and routines to reduce those risks. Observation of relevant behaviours is needed to identify structural and behavioural factors that raise the risk of conflict and stress, which in turn raises the incidence of mental health conditions. The theory also allows an analyst to use observational data to categorise organisations according to the types of behavioural systems used to manage employees. This categorisation provides some predictability of negative emotions and associated stress likely to be experienced.

The next posting outlines the discipline of ethology, followed by a post that sets out how ethological theory and methods can help detect emotional stressors and change organisations to reduce their effects.

Frank Salter




[1] Pricewaterhouse Coopers (2014). Report: Creating a mentally healthy workplace. Canberra, National Mental Health Commission, 20 March: 46 pp. Available at:

[2] PwC Report, p. v.

[3] ABS (2007). National Survey of Mental Health and Wellbeing: Summary of Results, Table 1, 23 October 2008,$File/43260_2007.pdf, accessed 28 May 2014.

[4] Survey of Mental Health, p. 4.

[5] Individuals can have more than one condition.

[6] Survey of Mental Health, p. 10.

[7] Individuals can have more than one condition.

[8] Survey of Mental Health, p. 9.

[9] The Report was prepared by the NSW Mental Health Commission. Patricia Karvelas (2014). Girls twice as likely to be mentally ill. The Australian, 18 June, p. 5.

[10] Detailed returns on investment in mental health are provided in the Report, Appendix E.

[11] Report, p. viii. Regarding large organisations’ low return on investment, the Report states that actions might need to be implemented on a team or group basis and engaging local “champions” to ensure that the investment “remains targeted amongst employees”.

[12], accessed 5 June 2014.

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