Employee benefits and retirement plan solutions Trends and Insights Want to improve employee engagement and performance? Look at mental health support.

Want to improve employee engagement and performance? Look at mental health support.

Employees equate their mental well-being to their productivity and performance. Here’s how you can offer more support.

Woman laughing out loud while sitting at sofa and talking with her doctor during therapy.

When you think about mental health concerns in the workplace, you may immediately worry about managing signs of anxiety, stress, and depression. While valid, the No. 1 reason employees say it’s important for their employers to pay attention to mental well-being may surprise you: It affects their performance.

Compared to 13% of businesses, 40% of employees say that employers should be concerned about mental health due to the impact on productivity and performance, a 27-percentage point difference.1

Think mental health should be a top employer concern due to its impact on productivity and performance:1

of business

point difference

of employees

It makes sense. If someone isn’t feeling their best—physically or mentally—they can’t bring their best self to work.

“We don’t magically leave our personal lives at the door when we enter our workplace or set them entirely aside when we log on to work from another location,” says Kara Hoogensen, senior vice president of Benefits and Protection at Principal®. “Employers are well-served to think about their team members as whole humans—people who will take care of business if the business takes care of them.”

As employee disengagement trends make headlines, better employee mental health could be one strong antidote. Here are three ideas to get started.

1. Provide financial tools and education.

Employers and employees agree that the top two contributors to worsening employee mental health are inflation/rising cost of living and concern about their personal financial situation.1

Compared to business leaders themselves, employees are significantly more worried about inflation, rising interest rates, and a recession, according to the Principal Financial Well-Being IndexSM.2

Worry about money isn’t something employees can typically compartmentalize to non-working hours. Financially stressed employees are six times more likely to have troubled relationships with coworkers and are three times less likely to stay with their current employer.3

Financially stressed employees are:3


more likely to have troubled relationships with coworkers.

less likely to stay with their current employer.


This means financial stress is not only bad for workplace culture but retention as well.

Providing the building blocks to a sturdy financial foundation—livable, competitive wages and access to benefits—is the first step. When it comes to workplace benefits for their financial security, employees have three clear winners: health care, retirement, and paid vacation. Dental/vision and life insurance round out their top five.2

Top 5 benefits for employee financial security:2

  1. 1. Health care
  2. 2. Retirement
  3. 3. Paid vacation
  4. 4. Dental/Vision insurance
  5. 5. Life insurance

Beyond providing access to a benefits program, resources and education are key to helping employees get the most out of their money and benefits. A financial wellness program can help do this work for you, with most employees seeking help to save more and pay down or avoid costly debt.3

2. Offer workplace mental health benefits.

Employee mental health isn't all on you. Providing an avenue to professional, affordable resources and care is essential in helping to promote employee mental health and well-being. It’s also the No. 2 benefit workers want their employers to add this year.1

An employee assistance program (EAP), one common offering, provides a vast array of confidential services—from stress management coaching to substance use treatment to grief support—typically at no cost to the individual. Services are available by phone or online and often are included with some types of benefit coverages (e.g., disability or life insurance) at little-to-no additional cost.

"Be proactive about describing what an EAP is and what resources are available, Hoogensen says. “And stress the confidentiality of EAPs. It's not just about a crisis, but about the normal work-life stressors we all face, too.”

From there, consider how easily an employee could get more substantial therapy or treatment and how much it would cost under their health insurance options.

Clearing a path to mental health services not only saves precious (work) hours that employees would spend searching for a covered provider taking new clients but also demonstrates that you care about them holistically.

“Our employers are woven into our everyday lives,” Hoogensen says. “If someone has a death in the family, for example, who they work for and how they were treated during that time will stick with them.”

Our employers are woven into our everyday lives. If someone has a death in the family, for example, who they work for and how they were treated during that time will stick with them.
Kara Hoogensen, senior vice president of Benefits and Protection

3. Ditch burnout culture in favor of work-life fit.

Though not the top concern, employees still report burnout drivers—inflexible, longer work hours, and excessive workloads—as major contributors to worsening mental health.2

But providing flexibility isn’t so simple when running a company that requires in-person work or customer service during open hours. What you can do is get more creative in how you show people you care about and respect their lives outside of work.

Gone are the days of family company picnics—many of today’s workers desire clearer boundaries between work and personal time and compensation for work-related activities. Some more attractive ideas may include a PTO gifting program, donating to employees’ charities of choice, or providing extra paid time off after completing a big project or busy season.

Access to and support from leadership also means a lot—especially to Gen Z and millennials.4 Schedule regular leader-employee touch bases that encompass job and life concerns. A few questions to help with the conversation:

  • What “filled your cup” last week?
  • What stressed you out more than usual?
  • What are you working on that I can help with? What barriers are you facing?

During these conversations, create a plan to address issues or offer additional support—all while gaining insight into how your team member is feeling.

“Be willing to gather feedback regularly and then act on it,” Hoogensen says. “If something can’t be acted upon, be transparent on why.”

What's next?

How do your employee benefits compare to other businesses like yours? Use the Principal® Benefit Design Tool to benchmark.