Leaders have long recognized the importance of a healthy workforce to driving economic productivity. But they might be surprised at the value at stake—and at the size of the employee population in less-than-fine fettle. In this episode of McKinsey Talks Talent, McKinsey talent leaders Brooke Weddle and Bryan Hancock and Global Leader of the McKinsey Health Institute Lucy Pérez speak with Global Editorial Director Lucia Rahilly about new research on employee health: what it means, its vital link to value, and the steps leaders can take to create workplaces where employees thrive—and competitive advantage rises.
The following transcript has been edited for clarity and length.
A new definition of health
Lucia Rahilly: I have been mired at home all week with COVID-19, so it is opportune timing for us to be talking about employee health today. Let’s start with some context. Lucy, you colead the McKinsey Health Institute [MHI], which recently published a substantive piece of research, in collaboration with the World Economic Forum, on the benefits of investing in employee health. Brooke, you were a coauthor on this research.1
Employers have been reminded of the importance of health in the not-too-distant past. What are they missing now? What’s the biggest thing that leaders are getting wrong when it comes to employee health? Lucy, let’s start with you.
Lucy Pérez: For so long, we’ve understood that the biggest improvements in economic productivity tie back to improvements in health. And when we think about how much time individuals spend in the workplace, it only stands to reason that having a healthy workforce is essential to driving strong economic output.
When it comes to employee health, we often focus on reacting rather than preventing. We correct things on the back end without realizing that the most cost-effective solution is to intervene earlier and ensure that, at an organizational level, we have the right mechanisms in place to foster good health. This is about solving for not only individual needs but also the system enablers that lead to greater health for everyone and to better ways of working.
Lucia Rahilly: And to be clear, health has a very specific valence in the organizational lexicon. What does the term health mean in the context of this research?
Lucy Pérez: It is an interesting question because this definition has been changing over time. For too long, the focus on health was limited to physical health, and looking at it through the lens of the physical safety of the workforce. That is clearly very important but not a complete view of health. This research focuses on employees’ holistic health—not only their physical health but also their mental, social, and emotional health.
The vital link to value
Lucia Rahilly: According to the research, and using this more holistic definition, employee health is linked to a pretty arresting amount of economic value of around $11.7 trillion. How should companies start thinking about the value at stake here?
Brooke Weddle: The value is incredible. One of the things we say in the report is if you just think about the time that adults spend working—globally, about 45 years of their lives—holistic health can impact a number of different value dimensions: everything from absenteeism to attrition to, of course, productivity and retention. All these things add up to a huge amount of value for companies. People are starting to realize that value, and the business case is becoming clearer. There’s less certainty about how companies can respond and more about what happens inside and outside of the workplace.
Bryan Hancock: One of the most interesting things I found in the analysis is that between half and three-quarters of the economic value at stake is based on productivity or avoiding what you label in the report as presenteeism. Can you describe the concept of presenteeism and why that’s linked to decreased economic output?
Lucy Pérez: Too often, when we think about the link between health and productivity, the focus is on absenteeism, or being in poor health that takes you away from the workplace. But what we saw in this research is a lot of presenteeism, which means you are in the workplace and working but not at your full potential. You have days when you just can’t give it your all. It may be for physical reasons, but increasingly it can also be for reasons related to your mental health, your spiritual health, your social functioning. It’s important to think holistically about what enables an employee to be at 100 percent full health.
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Lucia Rahilly: Is quiet quitting a kind of presenteeism?
Brooke Weddle: Colloquially, that’s how we’re talking about it these days. And quiet quitting has almost become one of these things that sounds funny. But to Lucy’s point, it’s quite serious from not only a value perspective but also an individual-impact perspective, including what is not realized if employees are just mailing it in.
Bryan Hancock: It’s also a bit more than quiet quitting. Quiet quitting implies that somebody has given up and is on the way out the door and just waiting to be fired.
But there are also folks who have become demotivated. I was recently having drinks with a dear friend who said, “For the first time in my life, I’m a demotivated employee.” It was driven by a work environment that had shifted: A new owner put in new policies, changed things, took away this person’s agency. As a result, their mental state wasn’t as good. I don’t think they would think of themselves as quiet quitting, but less well-off socially. Some of the things that they valued about the workplace had gone away, and their purpose in life had been altered. So there are cases where it goes beyond quiet quitting and starts taking a toll on a person’s broader health.
Lucy Pérez: What I love about that example, Bryan, is that it emphasizes the need to think about those organizational enablers that can help not just that individual but many others who face a similar situation.
Brooke Weddle: Also, I think this concept of optimization sounds like an efficiency problem. I work with an organization that talks about helping employees do their best work. And I really like that because it’s about creating the conditions for someone to thrive.
There’s an awareness, as we talk about inclusivity, as we talk about trying to help different populations, like neurodivergent populations. How can we set the conditions for these people to thrive in the workplace?
Who’s healthy—and who’s not?
Lucia Rahilly: I was surprised in the research to see how few employees consider themselves healthy by the definition we’re using. The research shows that a little more than half, around 57 percent, describe themselves as being in good health. What’s the reason behind that low number?
Lucy Pérez: Part of what drives that number down is thinking of health in this multidimensional way, including physical but also spiritual health. Are people seeing meaning in the work they do and the lives they lead? An employee’s sense of belonging speaks to their social health—and, of course, everything to do with being in a positive state of being and the mental health associated with it.
Brooke Weddle: The other thing that stood out to me when I was looking at the data was when you look at the predictors of holistic health, this notion of self-efficacy is very important. If we look at what really drives talent to want to stay with an organization, we talk a lot about meaning and flexibility, and having some autonomy and even control. But people want to have a sense of what their role really is: How does it connect to a greater strategy or vision for the company, what are their responsibilities, and where do they decide versus not? In a world that is constantly changing, that’s hard to do. It wouldn’t surprise me that holistic health is in some ways very low, because self-efficacy seems harder than ever these days.
Lucia Rahilly: Brooke, what do you mean by self-efficacy in this context?
Brooke Weddle: Self-efficacy is knowing how to advocate for yourself—knowing the boundaries of your role and where you can be effective. For example, when you talk to someone, they might say, “I think I’m accountable for this, but I’m not sure. No one gave me a budget. I don’t know if I have decision rights. It’s unclear with whom I need to collaborate.” All that contributes to not having self-efficacy, and that’s a hard spot to be in.
Bryan Hancock: One thing I thought was interesting in the research was the distribution of health across industries. In no industry were more than 60 percent of folks faring well. But there was still a spread between people at the top end, such as those in human resources, and people at the bottom end, such as those in agriculture, shipping, and distribution. Why do we see such meaningful differences across different industries?
Brooke Weddle: This could be a function of the job conditions in those different industries. It stands out that there was so much differentiation. A lot of this comes down to a specific role, or even a specific company and how that company is setting these conditions for an employee to be effective. But certainly, there’s something to learn there about the kinds of roles in those different industries and how that could drive such great differences.
Wait, older workers are . . . healthier?
Lucia Rahilly: Bryan’s question about differences across industries reminds me of some of the data in this report about differences across generations, which seems particularly relevant in this new multigenerational workforce. For the first time, we’re seeing workforces with as many as five generations in one workplace, working side by side. How did the research play out across generations in terms of relative health?
Brooke Weddle: Employee health does vary among generations. The youngest workers are 18 percentage points more likely to report burnout symptoms than the oldest workers. You also have higher levels of holistic health for the oldest working-age groups we surveyed—more positive outcomes. And then, when we asked about faring well, we saw that, again, the younger generations report faring less well compared to the oldest generations. And this is talking about holistic health, which encompasses, but is not limited to, physical health.
Lucia Rahilly: That is so interesting. Do we have a theory about why?
Bryan Hancock: We are seeing more prevalence of mental health challenges in our younger generations. We also see in the middle generations that we’re caregivers for children and caregivers for adults. And being a caregiver for an adult was one of the things that popped out in the research as being one of the highest predictors of lower holistic health. If you think about a Gen Xer with an aging parent who may have moderate dementia and who needs help with the activities of daily living, and that person is helping their parent to navigate through the healthcare system, that’s a lot of stress.
By the time you get to the boomer generation, the caregiving obligations have, in many cases, shifted. They may be at a point where they feel comfortable in their workplace, they’re engaged in work, and they’ve chosen to stay in the workplace because they find that it is rewarding. They’ve figured out their work–life balance in a way that works for them.
One of the things I’m excited about is people working longer, because there’s other MHI research that shows that working longer is correlated with better holistic health. So one thing that we can do for older generations is when somebody thinks of retiring, let’s have an exit plan for them. That is a productive way for employers to help ease retirees into the next phase of life and potentially get them to remain engaged in some way that may be productive for both the retiree and the employer.
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Lucy Pérez: As we look at mental health, one of the things to celebrate is the decreasing stigma around it, around seeking help and a diagnosis. And that stigma tends to be less with younger generations. As you are thinking holistically about these different elements of health, that can also explain why we’re seeing more of that pop up in those younger generations.
Brooke Weddle: I also like your hypothesis, Bryan. If you look at the drivers of burnout in the research, the most important predictor for the oldest generations is role ambiguity. So their work experience is helping them, perhaps, to have higher levels of holistic health. But when that gets rattled, you can see how that could put stress and pressure on their feelings of being burned out.
The top predictor of burnout for the youngest generations is toxic workplace behavior. That’s an interesting one, speaking of mental health. When you think about coming into the workforce for the first time, we always say that the younger generations are very familiar with technology, but we’ve also seen the data on the impact of social media, which can cause toxicity in the workplace. So those would be some of the things that I’d be looking at as well to explain some of these differences.
Investing better—not necessarily more
Lucia Rahilly: One of the challenges from the employee point of view on employer intervention into health might be transforming well-being or wellness into a workstream. In other words, I’ve already got a teeming portfolio of work without participating in activities for my employer that purport to improve my health. How are the best companies creating programs that help in this regard?
Brooke Weddle: I’ll tell a story of one organization where we didn’t create a new program, but instead redesigned work to promote things like role clarity and clarity in decision-making. We made a big effort to help upskill and even shift the mindsets of leaders and managers to engage teams differently, to support them in the different ways that they wanted to get their work done and the different ways in which they learn. That was the entire approach at the end of the day—very much the opposite of creating a series of programs.
I’m sure there’s a place for certain kinds of programs that you can roll out to an organization. But in this case, given what we were seeing in the data from this organization, the path forward was a need to change the core of the work. That was what ultimately led to their success, and they have been able to lower their burnout rates because of it.
Lucy Pérez: Over and over, we have examples that this is not necessarily about organizations investing more but about investing better. A lot of things that are tried, frankly, have low ROI. But as Brooke was sharing with that example, it’s about how you are building the capabilities of your managers to enable a space that is psychologically safe for everyone. How are you changing the ways of working so that decision-making is very clear? We don’t necessarily have to throw lots of money at it; it is embedded in how we build the capabilities of our organizations.
Bryan Hancock: One of the things I found most clear and compelling in the report was looking at the four different levels at which you can have interventions: at an organization-wide level, at a team level, at the role level, and at the individual level.
Most companies are focused at the individual level. “Here are the supports you can get. Here is the app you can have. Here are the things you as an individual can do.” Over half of where we recommend that companies spend their energy is at the team level with the manager, and at the job level. If we think about holistic health being defined in large part in the workplace context by the team and the job, that opens up a completely different avenue to think about impact.
Brooke Weddle: It’s such a great point, Bryan. And this data is not in the report, but we’ve done research elsewhere on the relationship between burnout and organizational health, which is really about management practices that are role modeled by leaders and managers and their teams across the organization.2 We found that organizations that are in the top quartile in organizational health—meaning, they are among the highest in terms of their effectiveness on organizational health—have a burnout rate of 25 percent. This is half the burnout rate for the rest of the companies in our organizational-health database.
It’s a huge difference maker to really promote practices across the organization in ways that are more holistic, more systematic, and embedded into these core management practices, versus some of the more targeted interventions we see.
Taking your organizational temperature
Lucia Rahilly: Let’s turn, then, to how leaders can start diagnosing the health of their employees and understanding what their workers really need for their organizations to get healthier.
Brooke Weddle: When you think about taking action and changing the culture of the organization, a couple of things come to mind. The first involves understanding and creating a baseline around your employees’ health and then telling the story about why it matters in terms of the connection to performance, the connection back to the purpose of the organization, what the culture is, the values of the organization—really creating that case for change.
The second is designing a set of practices or initiatives to create the conditions for a sustainable, healthy workforce. And this is where you would want to think in an integrated way about what is going to drive change—from the perspective of the senior leaders in the organization as the ultimate role models to middle managers to teams.
Third, there are probably some interventions targeted to specific groups of talent segments, who would have been identified in terms of the baseline you set up front. To get started, you can take an iterative approach to deploying some of those initiatives and practices and getting feedback. This means piloting or having a few front-runners in your organization to ensure you’re really getting the right results.
And then, of course, there needs to be some tracking mechanism where people self-report how they’re feeling. Many organizations are already doing this, and there are very simple ways to do so. We are all familiar with the smiley face scale, which, in some cases, is a good predictor of how people are doing. And there’s looking at the adoption rates of certain initiatives as well. So there’s a scorecard you can create to keep yourself honest in terms of the efficacy of what you’re rolling out.
Lucy Pérez: One thing that I get energized by is the role senior leaders play in owning this topic and how much a part of the narrative around talent strategy it can be. In organizations where there is more openness to this dialogue and the importance of holistic health, those better, more positive outcomes cascade from senior leaders all the way down.
Bryan Hancock: It’s exciting to see organizations lean into the manager and the important role of managers in creating a healthy environment for their teams. How do we make sure we have the right assessments so that the managers coming in have the right amount of EQ [emotional intelligence]? And how do we support that with the right training and upskilling? Part of it you can get through making sure that you’re assessing for people who might be good bosses, or teaching empathy.
Senior leaders are critical. They have to role model from the top. But organizations need to take a systematic view of the middle-management layer and make sure they’ve got the right managers with the right skills and the right amount of empathy who create a healthy environment for their teams.
Lucia Rahilly: So if you were, for example, a function leader, it seems like you could implement some of these steps at the team level without having to get top leadership buy-in, if that seemed like a barrier.
Bryan Hancock: Role clarity is not a wild and crazy idea.
Brooke Weddle: And it doesn’t cost anything.
How employers make health happen
Lucia Rahilly: Help us bring this to life. Do any of you have examples of organizations that are doing this well?
Brooke Weddle: We’ve been talking a lot about what organizations can do that doesn’t require any investment or requires very little investment. One of the companies in the report is Swiss Re. They rolled out a metabolic-health program that employees could opt in to, and employees were asked to identify potential risk factors. What happened was, after many employees opted in, they found that better awareness and tracking of risk factors—lack of sleep, poor diet—led to employees talking about their energy increasing. They’re sleeping better, they’re more focused at work—all the things that directly contribute to productivity. But we’re talking also about employees as individuals feeling better as well. So that’s an example of one organization that made an investment and saw it paying off in a couple different ways.
Lucia Rahilly: Brooke, your comment earlier about neurodivergent populations reminds me of an episode of McKinsey Talks Talent on neurodivergence, where we interviewed a Stanford professor who said that half the population he deals with refrains from disclosing or talking about their diagnosis at work.3 He was using a very broad definition of neurodivergence—not just the spectrum, but a variety of neurologic complications. How willing are employees to share this kind of information, which could be very personal, about their health, their energy levels, their sleep? Is that a barrier?
Brooke Weddle: When we were talking about neurodivergent talent, what we were talking about was employees who hold back on self-disclosing their neurodivergence because of a fear of being stigmatized or judged. There are some parallels. In the case of Swiss Re, that data wasn’t necessarily being shared with others but rather an input into a system . And so that’s a little different.
That said, I think there is probably not total openness around what people want to share. There are probably some differences by geography and by sector in terms of how this plays out. But I would say that neurodivergent talent is also something that people are becoming more comfortable talking about.
Enabling the new ‘brain economy’
Brooke Weddle: Brain health is also something that we are becoming more comfortable talking about and, frankly, more capable of talking about. We’re better informed about what it means. Lucy, you were at the World Economic Forum’s Annual Meeting in Davos, where this was, as I understand it, a top theme in what was really on the minds of leaders there. That’s a step in the right direction in terms of bringing more openness around this topic.
Lucy Pérez: When we talk about brain health, we’re talking about not just neurological health but also mental health and cognitive performance. It is that holistic definition of brain health that becomes important to understand, especially as you see a greater move toward what I would call a “brain economy”: relying on brain skills like creativity, adaptability, and resilience that become increasingly important. Today, the amount of spend in supporting brain health is on the order of $5 trillion globally. It’s anticipated that by 2030, this number is going to triple.
Investments in brain health can take on many forms. The reality is, there are still a lot of basic science questions about how our brains work. What are some of the sex-based differences associated with brains, like the female brain versus the male brain? How does the brain develop over time? There’s some basic research that we still need to do that then translates into: What interventions can help the many individuals who suffer from some neurological deficit?
Beyond that, we’re talking about other aspects of mental health—for example, substance-use disorders. And, similarly, in taking this expansive definition, those aspects that impact your cognitive performance at work are also part of that umbrella of brain health. There is a lot of interest in this area, because we know that this is a place where prevention ultimately can lead to better health outcomes in a more cost-effective manner.
Bryan Hancock: In addition to making sure that we’ve got a good baseline of data, I would have somebody in the organization, potentially in HR, who is responsible for holistic well-being. Traditionally, well-being within HR would be benefits, total compensation. Now, it should ask, “What do our health benefits look like? What do we have from a mental health standpoint? What are our benefits on the individual level?”
So much of where we see the benefit of holistic wellness at work is at the team level, the individual-role level, which cuts across learning and organizational design within an HR function. And if somebody had that responsibility, we might have different conversations during restructurings, or when we’re thinking about productivity initiatives and how we give time back. We might have more consistency and elevation if somebody was given that more explicit, more expansive mandate.
Brooke Weddle: It would be incumbent on an executive to tell a different story here. If you get some baseline-level data, you can create a picture of where the organization can do better. If your organization looks anything like the average organization, you’re going to have burnout rates that need to be addressed. It’s important to put that together with the potential here and make that something people can have conversations about. It’s not a hot topic; it’s how we do work. And we emphasize things like helping people thrive and holistic health and normalizing that.
Organizations can give people the responsibility and accountability for really thinking about holistic health and acting on it, including someone driving that from a leadership standpoint. But then make sure that every manager and leader feels accountable for doing that at scale. That’s where I would go.
Lucia Rahilly: Suppose I’m a C-suite executive or, as discussed, a middle manager who wants to do right by my team and my organization. What is one meaningful change I can make right now to begin prioritizing employee health and, by extension, productivity?
Lucy Pérez: Top of mind for me: Ask your team how they are doing. Have that baseline, that data, and understand the starting point. Do not make assumptions around who is doing well. This is not something you can guess at or measure just by looking at someone.
