Managing employee mental health

Chirag Shah at Nucleus Commercial Finance explains how SMEs can safeguard employee mental health amid rising costs

Small and medium-sized enterprises (SMEs) are under greater financial pressure than ever before.

Our research has found that, as they struggle just to keep afloat, firms are having to contend with the perfect storm of increasing costs. The biggest expense is internal costs, ranging from staffing to rent, which continues to be driven up by rising inflation, according to 40% of the senior decision-makers at the businesses we surveyed.

External costs, such as their supply chain, have also gone up too as a direct result of inflation, say 35%. Simultaneously, their utility costs have kept climbing at an unprecedented rate as global energy prices have skyrocketed over the last 12 months, fuelled predominantly by the war in Ukraine (37%).

Labour costs are also putting a big strain on SMEs as their wage bills continue to rise just to try to keep pace with inflation.

Mental health issues

Of bigger long-term concern for organisations perhaps than all these rising costs, however, is the condition of their workforce.

The chief worry among respondents is over workers’ mental health (15%). This has deteriorated significantly since the Covid-19 pandemic as millions of people who were previously used to working in an office environment were forced to work remotely almost overnight and became increasingly isolated.

Similarly, there are also growing fears over the senior team’s mental health (10%). But it’s not only their mental state where concerns have been raised; the physical health of the workforce (nine percent) and the senior team (seven percent) rank highly too, as do the shallow talent pool they can choose from (12%) and the quiet quitting of employees (eight percent).

It’s a problem that isn’t going away any time soon either. Going forward, the workforce’s mental health continues to be the key issue. That’s evidenced by the fact that 25% of SMEs list it as one of the top three threats they face over the next year. Eleven percent have even singled it out as the main threat.

Failing to address the problem

While this may seem like a big enough problem as it is, of greater worry, though, is the fact that firms aren’t doing much to tackle this growing issue. That’s reflected in the responses of those surveyed. Only seven percent said that they offer their staff the option to take mental health days when they need them, while just four percent have increased the perks they afford employees.

Despite all of these looming business threats, SMEs have been inactive in mitigating them. Just over one fifth (21%) said that they have taken no action whatsoever. And only nine percent said that they had done something to address them.

Those that have taken action have focused on three key areas to reduce costs, drive revenue and boost skills. These include increasing the price of products or services (26%), relying on switching utility or service providers to help mitigate the cost impact (17%) and focusing on upskilling their employees (13%).

Reducing costs

There’s no doubt that SMEs face a host of challenges both presently and moving forward. But there are several strategies that they can adopt to tackle them. To address the chief concern of rising costs, they need to see where they can make significant savings in the business.

Internally, firms should also look at how they can improve margins and liquidity by reducing costs. Where rent is concerned, they should try to negotiate better rates with their landlord or, if possible, move to more affordable premises.

External costs are harder to control, however. Yet there are still several ways that businesses can try to bring them down. These include dealing directly with suppliers and cutting out the middlemen, negotiating better deals and prices, or changing supplier.

Utility costs are another area where SMEs should look to reduce overheads by trying to use less energy by turning off switches, installing energy-efficient technology and monitoring usage.

Longer term, they should look at using renewable energy sources such as installing solar panels, where possible, to reduce their bills and be more sustainable, making it a win-win all round for the business and the environment.

As far as the problem of mental health is concerned, companies need to provide more help to staff, such as providing regular check-ups with them to make sure they are okay, seeking feedback from them, and giving them the time and space they need.

Added to that, they should offer benefits such as counselling and therapy if they need it, and encourage remote workers to come into the office or have team meetings online to keep connected with their colleagues.

Chirag Shah is founder and CEO of Nucleus Commercial Finance which has a mission to provide flexible funding solutions to the SMEs, the UK’s economic backbone

Main image courtesy of iStockPhoto.com