Psychology for Business

We are dedicated to bringing out 
 the best in you and your employees

Vol.2, No.11                                                                                                       June 1, 2001


 By Dr. John Weaver, Business Psychologist and Independent Consultant

 In this issue:

 Stress and depression in the workplace:  Why should you care?  The benefits to your bottom line if your organization:

v     Provides adequate treatment resources (the most expensive route, but still cost effective)
Takes steps toward early intervention (less expensive with a ROI of $2.50 to $4.70 per $1 spent)
Establishes an emotionally healthy workplace (the doorway to high level performance for every employee in your organization)


Recently I was talking with a friend who is also a psychiatrist.  He commented to me that soon stress and depression would become the major source of workplace disability.  I told him,  "You do not need to wait.  Stress and depression are the number one source of disability in the United States right now."

Stress and depression combined cost the American economy 88 billion dollars in treatment costs and lost work time.  This includes treatment expense and lost time from work.  But these are only the direct costs. 

*  In a survey of Ohio small business executives, 57% claimed that their companies have suffered productivity losses due to emotional or personal     problems of employees. 

*  Stress accounts for 10% of all worker compensation claims.

*  80% to 90% of all industrial accidents are likely related to personal problems and employees inability to handle stress.

*  Employees suffering from stress and depression had an average of 16 lost work days per year.

*  In a 3 year study of a large corporation, 60% of employee absences were found due to psychological problems.

This is the bad news.  It is news bad enough that organizations ignore it at their own peril.


Now for some good news:

Establishing an emotionally healthy workplace is good for the bottom line.  It is also a realistic goal.

There are three levels that need to be addressed to eliminate the negative effects of stress and depression:

  1) providing adequate treatment interventions,

  2) establishing early intervention programs, and

  3) creating an emotionally healthy workplace.

1) Adequate treatment interventions.

Treatment works.  In a review of 58 studies of the effectiveness of psychotherapy for depression, 77% of depressed patients were significantly improved. 

The provision of adequate care for mental and behavioral health reduces medical costs.  In one study, individuals receiving psychotherapy reduced physician’s office visits 47.1%, used 48.6% fewer prescriptions, had 45.3% fewer emergency room visits and had decreased frequency of hospital stays by 66.7%.  In another, Blue Cross showed that medical costs dropped by $9.41 per patient per month when adequate mental health treatment was provided.

According to Northwestern National Life, the average cost per person in lifetime disability payments is $73,270.  The cost to rehabilitate disabled employees is an average only $1925, a savings of more than $71,000.

Treatment is also the most expensive and the least effective response to the problem.  Although it is clear that providing adequate treatment IS cost effective (it saves money on medical costs and there is a reduction in absenteeism, tardiness, and workplace accidents), there are higher mental health premiums to pay and treatment can result in lost work time (for doctor’s appointments). 

Depending on the seriousness of the problem prior to diagnosis, treatment may take longer to complete and may be less effective at completely resolving the issues.

Needed for treatment: Psychiatrists for medication, Psychologists, Social Workers and other licensed Professional Counselors for psychotherapy.  Employee Assistance Professionals (EAPs) provide brief interventions and act as liaisons for the mental health professionals.

2) Early Intervention Programs

Early intervention is less costly than treatment.  It attempts to assist employees in identifying problems in the early stages, and provides resources for them to take action.  It is less costly because often expensive psychiatrists, psychologists, social workers and other professional counselors will not be needed or needed as extensively when problems are identified prior to reaching crisis proportions.

Early intervention programs can be as simple as providing self-care information and telephone contact with an effective EAP.  In one study, for every $1 spent on self-care, $2.50 was saved in medical costs. 

In a more aggressive approach participants covered by Kaiser-Permanente, heath care groups in Southern California were divided into a control group and a stress management group.  At a 2-year follow up, the stress management group reported a 70% reduction in physician visits, while the control group had a 26% increase.

Another stress management program for a major food company reduced lost workdays from employee injury from 1,740 days in 1977 to 0 days in 1990.

Citibank employees were included in a study that included health risk assessments and subsequent availability of books, and tapes and a personalized letter.  For every $1 spent, the company realized a return on investment of $4.70.  The program savings amounted to $7 million dollars in 23 months.

Early intervention is wise, both from a financial point of view and for the best interests of the employee.  When problems are discovered early, they are easier to solve and resolution is likely to be more complete.

Needed for early intervention:  EAPs, occupational health personnel, and a proactive program to educate employees about stress and depression.

3) An Emotionally Healthy Workplace.

If early interventions are significantly more effective than treatment, promoting an emotionally healthy workplace is the gold standard.  It is also more difficult to measure because in an emotionally healthy workplace stress and depression are transformed to become assets for the company rather than liabilities.

The changes are likely to take place over time when an emotionally healthy workplace emerges and can occur in a variety of important junctures of the organization.

In one health care organization, that made this emotional health a goal, not only did the staff of administrators, doctors, nurses, and staff benefit, but also patient satisfaction scores rose to and stayed above the 90th percentile, previously considered impossible to achieve.

In 1998, a trade magazine for the advertising industry in the UK voted St. Luke’s as the Agency of the Year.  This agency attempted to design the perfect company, based on "friendship," "cooperation," "trust," and "being proud of the company." 

A major chemical company set out to achieve a culture that valued people, attended to relationships, reduced hierarchy, and included everyone in a rich web of interactions.  The results:  injury rates were down by 95%, environmental emissions were reduced by more than 87%, uptime for the plant rose from an average of 65% to 90%, productivity increased by 45% and earnings per employee tripled.

You might notice a difference between the first two interventions: treatment and early intervention, and the third, health promotion.  In the first two, the savings are real but focused on decreasing medical costs.  When an emotionally healthy workplace is established, the organization performs at a higher level.

 Needed for an Emotionally Healthy Workplace:  Leadership that values emotional health.  It is necessary to develop attitudes that reflect the value of each member of the organization and hold employees accountable for expressing their gifts and using their talents.  It is a much bigger task, but one that will pay much bigger dividends.


 It is most effective for organizations to provide all three levels of response to the problem of stress and depression in the workplace.  As more resources are devoted to step 2 and 3, step 1 will be less costly because it will be utilized less often. 

 If you would like to learn more about creating an emotionally healthy workplace, or you would like to arrange for an Emotionally Healthy Workplace training program, you can contact us at or call usat (262) 544- 9918.

 I will be talking about this topic at the Healthiest Employer 2010 conference on June 8, 2001 at the Clarion Hotel in Milwaukee, Wi. 

About the Author

John Weaver, Psy.D. is a licensed psychologist with 22 years’ professional experience working with organizations, groups, and individuals. He has experience leading groups and creating teamwork in organizations. His areas of expertise include assisting teams and individuals to improve performance under stress, assessing employees and potential employees to ensure the right person for the right job, working toward conflict resolution, and training in stress management and "stress hardiness" skills for individuals and groups. He is an experienced public speaker. 

Based in Waukesha, WI, Dr. John Weaver is available for consultation or coaching by phone, e-mail or in person. He may be reached at (262) 544-9918 (office) or (414) 491-8719 (cell), by e-mail at or: 

    John Weaver, Psy.D. 
    Psychology for Business 
    2717 North Grandview Boulevard, Suite 303
    Waukesha, Wisconsin, 53188

Have you considered adding PSYCHOLOGICAL ASSESSMENTS as a component of your executive hiring 
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