Why the C-Suite is prioritizing workforce wellbeing

During the pandemic we pushed employees to do numerous challenging things. People built makeshift home offices, learned to adapt to the constant use of masks in their personal and professional lives, and changed job titles and responsibilities at an unprecedented pace.

However, it has come at a cost. This remarkable level of mobility, positive in many ways (workers who changed companies received almost a 10% wage increase vs. 5% for those who stayed, for example), has left a significant legacy of workforce stress. For instance, Mercer’s latest data shows that 81% or more of the workforce are experiencing burnout.

Fast forward to 2023, and the workforce has reached a breaking point. Amazon, Apple, and Starbucks are all experiencing pushback from labor unions, a first in their respective histories. With a tight job market, workers now possess greater agency and bargaining power than ever before. Even the world’s leading investment banks are not immune to the effects of this labor landscape. One such institution, renowned for maintaining a turnover rate of under 10%, shared that their early-career turnover rate has skyrocketed to 26% this year, a painful reality for all involved.

Leaders at various global organizations are now hastily devising strategies to address the situation. Many have come to the realization that a radical improvement in the employee experience is the only viable path forward. As a result, they are prioritizing measures such as more flexible work conditions, increased compensation, and greater opportunities for career advancement.

Wellbeing is a necessary investment

Wellbeing has evolved from a mere add-on benefit to be offered along with vacation and insurance to a crucial component of corporate growth. Our research on Healthy Organizations, coupled with our recent studies on Human-Centered Leadership, have demonstrated how CXOs have embraced this approach in the wake of the global health crisis. What was once perceived as a “nice to have” perk is now viewed as a necessary investment in the physical, mental, and emotional health of employees.

The reason behind this shift in mindset is the recognition that in today’s rapidly evolving economic and technological landscape, skilled and highly engaged employees are a company’s most valuable asset. For instance, a major telecommunications provider reported that 68% of their employees felt overwhelmed with excessive workloads and managers who hindered their productivity with too many meetings, interruptions, or competing projects. It is important to understand that employee burnout is ultimately a management issue, not a personal problem for each individual worker. This underscores the need for leaders to take an active role in creating a culture that prioritizes employee wellbeing and addresses management practices that contribute to employee burnout.

The good news is, they are. CEOs are now front and center in prioritizing employee wellbeing. Howard Schulz, the CEO of Starbucks, recently acknowledged that his company’s biggest challenge is the mental health of his employees. After examining the issue and union trends within the company, Schulz and his team realized that they had broken the trust with their workers. Despite offering above-market benefits and pay, the employee experience had nonetheless declined.

To address this, Starbucks has taken action to completely overhaul its store systems, metrics, and performance management processes. As a result of these efforts, the company’s Glassdoor rating has improved to 3.8, slightly above the average rating. Microsoft, Walmart, IBM, AstraZeneca, and Deutsche Telekom, are also making significant strides towards prioritizing employee wellbeing. Even Morgan Stanley one of the most competitive investment banks in the world, has recognized the importance of prioritizing employee wellbeing. The company has recently onboarded a Chief Medical Officer who reports directly to the CEO.

An emerging natural service economy work style

In my new book, I discuss the absolute workplace need for slack time. Unlike robots or machines, we need time to recharge our energy, reflect on our work, learn new skills, and grow both personally and professionally. When employees are overworked, they can experience burnout, decreased productivity, and increased turnover rates.

Research from the Four-Day Work week initiative, demonstrates that companies can significantly reduce burnout by embracing a 32-hour work week with no decrease in pay see a welcome 94% reduction in burnout. At the same time, most companies found that the quantity and quality of work produced remained equal or even higher.

We’d finally figured out that the traditional industrial model of an 8-5, five-day work week is no longer effective. This model was designed for the Steam Age, and in today’s economy, over 80% of workers provide services such as creation, design, building, or serving others, rather than working in metal bending or ironware assembly.

We are witnessing a growing consensus regarding the ideal work week for service professionals. German manufacturers have discovered that total work output reaches its maximum at around 50 hours per week, and productivity decreases beyond 50-55 hours. Similarly, Mercadona and Costco, two highly successful retailers, have found that overstaffing stores (i.e., reducing workload per worker) results in higher profits. This approach not only boosts employee satisfaction but also provides workers with more time to attend to tasks such as product stocking, maintaining cleanliness, and delivering exceptional customer service.

Wellbeing is not just an issue of benefits

In today’s workplace, prioritizing employee wellbeing is no longer just a matter of providing benefits; it’s a fundamental aspect of work design. When companies are designed for productivity, employee wellbeing naturally improves. This, in turn, leads to increased engagement and productivity, creating a positive cycle of boosted employee engagement.

Related: Employee wellbeing: 63% of employers say it’s more important since COVID

The bottom line is that when people are performing tasks that align with their strengths, they feel a sense of purpose and fulfillment, which enhances their overall wellbeing. Conversely, when employees feel that their skills are not being utilized or that they are wasting their time, they may become disengaged and quietly quit. It’s essential to ensure that employees are utilizing their most valued and credentialed skills in their jobs, in other words, as that’s where real wellbeing for you and them lies.

The author is Josh Bersin, global HR analyst and CEO of The Josh Bersin Company.