The real cost of poor workplace mental health

Burnout, absenteeism, and turnover are widely known challenges for HR and People leaders. But the deeper, often overlooked cost of poor mental health in the workplace is what it does to trust, team dynamics, and company culture.

These aren’t new problems, but how we need to respond to them has changed. It’s no longer enough to roll out wellness initiatives just to say we have them. Today’s employees want to feel that what’s being done is real, relevant, and built with their lived experience in mind.

This post will explore the true impact of declining employee well-being—both the measurable financial losses and the harder-to-track erosion of culture—and why understanding these costs is now business-critical for HR leaders.

What is mental health in the workplace and why does it matter?

Mental health in the workplace refers to the emotional and psychological well-being of employees. It encompasses everything from short-term stress and fatigue to long-term anxiety, depression, and burnout caused or worsened by work conditions.

While mental health has become a more common topic in corporate circles, many companies still see it as a personal issue, rather than an organizational one. But poor mental health doesn’t happen in a vacuum. It’s shaped by workload, leadership behavior, team culture, and how safe people feel to speak up. And the cost of not paying attention is huge.

The financial and operational impact

• Low productivity: According to the World Health Organization, 12 billion workdays are lost globally each year due to depression and anxiety, amounting to over $1 trillion in productivity losses.
• Presenteeism vs. absenteeism: Deloitte reports that nearly 46% of mental health-related workplace costs come from presenteeism—employees showing up but functioning well below their full potential.
• Disengagement: Gallup estimates that low engagement, much of it driven by emotional and mental fatigue, costs the global economy $8.8 trillion annually.
• Turnover and talent loss: During the Great Resignation, 61% of employees cited poor mental health as a key reason for leaving. Deloitte estimates that these departures now make up 40% of total turnover-related costs.

Even at the company level, the numbers are sobering. In the UK, for example, poor mental health cost employers £56 billion in 2021—around £1,900 per employee.

These data points puts into evidence how people are struggling to sustain performance under increasing pressure. In high-performing environments, where standards are high and change is constant, that struggle can be hidden for too long before it’s addressed.

But these numbers only scratch the surface. What often gets missed is the cultural toll.

The cultural cost: when people stop believing you

HR leaders often notice the shift before anyone else: teams are quieter, creativity drops, and feedback dries up. On the surface, things look fine. But underneath, something has changed.

Employees aren’t always burnt out in dramatic ways. Many are still showing up, but are emotionally checked out. That’s what makes poor mental health in the workplace so tricky to spot. It doesn’t always appear as a crisis. Sometimes, it just feels like low energy that never lifts.

And when people feel like their well-being is not truly supported, they stop believing the messaging. They start to protect themselves by disengaging, withdrawing, or quietly looking elsewhere.

Over time, this hurts trust, weakens collaboration, and makes every initiative harder to implement. People no longer believe that leadership will listen, or that change will follow feedback.

Even small inconsistencies between what companies say and what people experience can create lasting skepticism. One skipped 1:1, one unacknowledged concern, or one overloaded team can be all it takes to send the message that well-being is conditional:only supported when convenient.

What HR leaders should be asking now

If you’re leading people strategy, here are the questions worth asking:

• Are we mistaking silence for stability?
  
  
• Do our managers know how to spot early signs of stress or disengagement?
  
  
• Are we relying too heavily on surveys to tell us how people feel?

• Are we seeing real results from our well-being programs?
  
  
• Do our people actually believe us when we say their well-being matters?
  
  

Because once that belief is gone, it’s not just culture that suffers, it’s also your credibility as a leader.

Building back trust and stability

The cost of poor mental health in the workplace is more than financial. It affects how people feel, connect, collaborate, and contribute. It shapes how much they trust your leadership, and whether they’re willing to stay and give their best.

Companies that treat well-being as a strategic priority are better equipped to lead, grow, and retain their talent. And HR leaders are at the center of making that happen.

Now is the time to shift from awareness to accountability. Leaders who create the conditions for people to feel safe and supported will be the ones who earn trust, and keep it. Because when people believe their well-being truly matters, they consistently  show up, with a purpose.

And here’s the truth: not every initiative is better than nothing. If programs seem superficial or disconnected from real needs, they can foster more skepticism. In today’s workplace, relevance matters. Personalization matters. If people can’t see themselves in the effort, and leaders can’t measure its real impact, they can’t (and won’t) believe in it. 

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