Retaining Employees By Investing In Their Wellbeing

Do you know replacing an employee can cost 50 percent to 200 percent of their annual salary? Or that the average cost of turnover per employee is $15,00 and that high turnover rates are linked to 28 percent decrease in employee morale and 33 percent lower profitability? In fact, organizations with strong retention practices see a 28 percent improvement in customer satisfaction.

These data came from credible sources such as Gallup, the Work Institute, Society of Human Resource Management (SHRM), and Glassdoor, and are supported by ample academic research evidence. These numbers present a strong business case for the need to improve employee retention, a mission critical to maintaining workforce stability and organization sustainability in the increasingly competitive workplace.

In the first of the four-part Talent Retention webinar series I held with MSCI in March, I made a business case for promoting employee wellbeing as a viable organizational strategy for talent retention. Why? Because according to Gallup’s State of the Global Workplace 2024 Report:

• Globally, employee wellbeing has been steadily declining. The majority of employees struggle at work and in life.
• Among negative emotions experienced daily by employees, stress is ranked as the number one (49 percent), followed by sadness (21 percent), loneliness (18 percent), and anger (17 percent).
• Employees under 35 or working fully remote reported significantly higher levels of loneliness.

In particular, organizations are challenged by an emerging mental health crisis. As revealed in 2025 State of Workforce Mental Health Report:

• Stress is on the rise and the top mental health challenge in the workplace.
• 73 percent of employees acknowledged that work-related mental health struggles affected their performance.
• Mental health care is the number one priority for Gen Z (59 percent) and Millennials (52 percent), compared to Gen X (36 percent), and Boomers (24 percent).

These alarming findings make employee wellbeing a more prominent issue than ever before.

What Is Employee Wellbeing?  

Employee wellbeing is the state of an individual’s physical, mental, and emotional health and overall experience in the workplace. It is a holistic view of an employee’s job satisfaction, well-life balance, relationships with colleagues, and access to support and resources. Employee wellbeing has five dimensions:

• Physical wellbeing, which is the foundation of employee health. It relates to physical fitness, proper nutrition, regular exercise, access to healthcare, and healthy lifestyle choices. Physically healthy employees are more alert and energetic, and less likely to be sick and stressed and absent.

• Emotional wellbeing, which involves managing stress, developing resilience, and cultivating a positive mental attitude. In the modern workplace, stress and burnout are key factors affecting employees’ morale, creativity, engagement, and satisfaction. 

• Social wellbeing ,which highlights the importance of building positive relationships at work and beyond, creating a sense of belonging, establishing social support systems, and facilitating work-life balance. Employees with strong social connections exhibit more motivation, collaborative spirit, and more loyalty to their organization.

• Financial wellbeing, which centers on concerns regarding financial stability and security, budgeting and saving, compensation and benefits, and access to financial resources. Financially secure employees are less distracted and stressed and more likely to be focused and committed to their job roles.

• Career wellbeing, which focuses on personal and professional development, growth opportunities, job satisfaction, and recognition. Employees who experience fulfillment at work tend to be more motivated and dedicated to their roles.

What Is the Impact Of Employee Wellbeing And How Can Employers Promote It?

Employee wellbeing has a widespread impact, and different dimensions can affect individuals and organizations differently. Employees who are not mentally healthy will affect:

• Productivity and performance
• Overall absenteeism and turnover
• Morale and engagement
• Job satisfaction and commitment
• Trust and loyalty
• Workplace safety, health, and stress
• Talent attraction and retention
• Healthcare costs for organizations

To improve employee wellbeing, employers must first create a wellbeing culture. To effectively promote employee wellbeing in the workplace, the first step is to create a positive, and supportive wellbeing culture. In this culture, open communications are encouraged, social interactions and team building are facilitated, healthy work habits are modeled, emotional support is advocated, and employee contributions are recognized. A wellbeing culture provides a foundation for success.

Second, employers must establish strategies for promoting physical health. There is a lot that organizations can do to promote employees’ physical health. For example, offer employees gym memberships, provide healthy snacks in the workplace, facilitate access to regular health check-ups, provide wellness programs, and encourage self-care practices.

Strategies for mental health come next.  Given the rising mental health crisis in the workplace, this is the area that deserves extra attention from organizations. In addition to Employee Assistance Programs (EAPs) and counseling services, consider providing employees with regular physical and mental health literacy training, stress management workshops, and wellness programs. Encouraging employees to incorporate daily mindfulness practices can also be helpful.

Next, let’s talk about social health and financial wellbeing

Five specific strategies can be helpful to promote employees’ social wellbeing. First, incorporate team building activities as often as possible such as at weekly meetings. Second, offer flexible work arrangements to facilitate work-life balance. Third, encourage employees to take regular breaks during work and vacation time to refresh and recharge. Fourth, set clear boundaries to avoid work spilling over family life. Finally, minimize overtime at work to allow employees more time to participate in social activities.

Financial health starts with competitive compensation and benefits packages, but it is not enough. To help employees achieve long-term financial stability, organizations should provide employees with essential financial education and financial wellness programs so that they learn how to make smart budgeting and saving plans.

Finally, employers must develop strategies that promote career health. Career wellbeing centers around personal and professional development and job satisfaction. To maintain workforce stability, organizations should assist employees in setting meaningful career goals, offer training and development opportunities, sponsor continuing education, provide mentoring/coaching, and expand job roles/responsibilities to encourage further growth.

In today’s economy, retention is about creating an environment where employees feel valued, engaged, and empowered to succeed. A strong retention strategy begins with a solid understanding of your employees. By investing in their wellbeing, you will have a healthy, productive workforce and stable, thriving business.

Jia Wang is a professor in the Department of Educational Administration and Human Resource Development at Texas A&M University. Her research focuses on international and national human resource development, organization crisis management, and learning within organizations.