Blog. The True Cost of Poor Employee Wellbeing: How It Impacts Your Bottom Line.
April 19, 2025 | Author Guest Blogger
Employee wellbeing is often viewed as a secondary concern in the fast-paced hospitality industry, where long hours, high pressure, and customer-facing roles can take a significant toll on mental health. However, neglecting employee wellbeing can have profound financial and operational impacts on businesses. Discover the true cost of poor employee wellbeing and why investing in support systems like Employee Assistance Programmes (EAPs) is crucial for maintaining a healthy bottom line.
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Financial Impacts.
Absenteeism: Absenteeism is a significant cost factor for businesses. According to the CIPD, employees in the hospitality industry take an average of 3.7 sick days per year. Based on comprehensive studies by CIPD and ONS, the average cost of a sick day in the UK is approximately £538. This accounts for both direct and indirect costs, including lost productivity, sick pay, and other associated expenses. However, this figure could be significantly reduced by implementing an effective EAP. Studies have shown that EAPs can decrease absenteeism by 25-30%.
Presenteeism: Where employees are physically present but not fully productive due to health issues - also affects productivity and can be mitigated with proper support.
Turnover and Recruitment Costs: High employee turnover rates are common in the hospitality sector, partly due to poor wellbeing. The industry faces significant staff shortages and retention issues, leading 45% of operators to reduce trading hours or venue capacity, resulting in an estimated £21 billion loss in revenue. Replacing an employee can cost between 6-9 months of their salary. EAPs can help reduce turnover by addressing underlying issues that lead to dissatisfaction and departure.
Productivity Losses: Poor wellbeing leads to reduced productivity, which directly affects business performance. EAPs have been shown to improve health-related productivity and reduce workplace injury rates.
Impact of Economic Policies on Hospitality: Increases to the National Minimum Wage and National Living Wage will see the UK hospitality sector’s wage bill rise by £3.2 billion, while increases to business rates will add a further £224 million in costs. Employment costs now make up over half of operating costs for the sector. These increased expenses can exacerbate existing challenges, leading to reduced services and higher prices for consumers.
Operational Impacts.
Service Quality and Customer Experience: Employees struggling with wellbeing issues may provide subpar service, impacting customer satisfaction and loyalty. A well-supported workforce ensures better service quality, enhancing the overall customer experience.
Morale and Engagement: Poor wellbeing can lead to low morale and disengagement among employees. This not only affects individual performance but also creates a negative work environment. EAPs can boost morale by providing employees and managers with the support they need to manage personal and professional challenges.
Reputation and Talent Attraction: Companies that prioritise employee wellbeing are more attractive to potential employees. In a competitive job market, offering comprehensive support can be a key differentiator for attracting and retaining top talent.
Investing in EAPs not only improves employee wellbeing but also yields a substantial financial return. Data published by EAPA UK highlights that for every £1 spent on EAPs, employers can expect an average return of £8, highlighting the cost-effectiveness of these programs. This significant ROI is due to reduced absenteeism, improved productivity, and enhanced employee retention.
The Role of EAPs in Mitigating These Costs.
Hospitality Action’s EAP packages are designed to address the specific challenges faced by hospitality workers, including stress, financial pressures, and the physical and mental health impact of a long hours culture. By providing immediate, confidential support, our EAPs will help your employees manage their wellbeing effectively, reducing absenteeism, turnover, and productivity losses.
Investing in employee wellbeing is more than a tick box exercise for your employees – it’s a sound strategic business decision. By understanding the true cost of poor wellbeing and implementing tools like EAPs, hospitality businesses can protect their bottom line while nurturing a healthier, happier, more productive workforce.