Return on Investment for EAP and Mental Health in the Workplace

Posted on July 15, 2024

Return on Investment for EAP and Mental Health Support in the Workplace

Two exciting pieces of information to share this month. 

One, a new survey result published, stating the increased return on investment on services like Employee Assistance Programs. 

Two, a great article published by the Harvard Business Review explaining in clear steps how to approach your work culture and make mental health improvements in the workplace. 

A quote we want to discuss from this later article is here: 

Those of us in the workplace mental health field look forward to the day when we don't have to try so hard to convince organizations to invest in this work. "What is keeping me up at night is that we are currently in a state of 'pushing' our trauma-informed corporate transformation work with companies and leaders," says Susan Schmitt Winchester, former CHRO at Applied Materials and author of Healing at Work.  "My dream is that in the future, leaders are 'pulling' for our work because they deeply understand the connection between leader and employee well-being to everything they care about - culture, performance, productivity, employee experience, etc."

This is everything. The ROI of investing in a mental health benefit, like EAP, is that the return the company sees goes far beyond monetary. The return is from your people, their loyalty, their motivation, their actual well being. You get higher productivity, less missed days, you get better physical health, and generally a more positive work environment.

The first link here points out there is a 5:1 return for groups investing in EAP. With many groups using financial barriers as the reason or excuse to hesitate with this investment, this negates that argument. The issue we see, is, seeing it. Our CFO's, owners, and organizational leaders want to see a tangible result. It's there, you just have to understand that your group is different from a year prior, possibly healthier from a year prior, but maybe the work is different. There are so many variables and factors that play in, it's almost never apples to apples. It's about your entire group, their engagement with all benefits being provided and the recognition of what that message means from their employers and what the benefit can change for the employee, personally. 

The ROI (Return on Investment) of an Employee Assistance Program (EAP) can vary depending on various factors such as the nature of the EAP services provided, the size of the organization, and how effectively the program is implemented. However, research and studies often highlight several key benefits that can help quantify the ROI of an EAP:

  1. Reduced Absenteeism: EAPs help employees manage personal and work-related issues, leading to fewer days off work. Studies have shown a reduction in absenteeism rates, which translates into cost savings.

  2. Increased Productivity: Employees who utilize EAP services can improve their focus and efficiency at work, leading to enhanced productivity levels.

  3. Lower Turnover Rates: EAPs can help retain employees by providing support during difficult times, thus reducing recruitment and training costs associated with high turnover.

  4. Healthcare Cost Savings: EAPs can lead to reduced healthcare costs by addressing mental health issues, substance abuse, and other health-related problems early on, preventing them from escalating into more serious conditions.

  5. Improved Employee Morale and Engagement: Providing access to EAPs shows employees that their well-being is valued, which can boost morale and engagement, leading to better overall organizational performance.

Quantitative Estimates

Several studies provide specific ROI estimates for EAPs:

  • The Employee Assistance Professionals Association (EAPA) estimates that for every $1 invested in an EAP, employers can see a return of between $3 and $10 in terms of reduced absenteeism, increased productivity, and lower healthcare costs.

  • The Journal of Workplace Behavioral Health published findings that indicate an average ROI of $3 to $8 for every $1 spent on EAPs.

  • A study by the Federal Occupational Health (FOH) found that EAPs provided an ROI of $5 to $16 for every dollar spent.

Example Calculation

Suppose an organization invests $50,000 annually in an EAP. If the estimated ROI is 5:1, the benefits in terms of cost savings and productivity improvements would amount to:

ROI=Cost of Investment/Net Return ⟹Net Return=Cost of Investment×ROI

Net Return=50,000×5=250,000

Thus, the organization would potentially see a return of $250,000 in terms of reduced absenteeism, increased productivity, and other benefits.

Conclusion

While the exact ROI can differ, evidence suggests that EAPs generally provide a substantial return on investment through various direct and indirect benefits. Organizations should track specific metrics such as absenteeism rates, employee turnover, healthcare costs, and productivity levels before and after implementing an EAP to better quantify the ROI in their specific context.

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