Provision of quality mental health assistance within firms and portfolio companies is not just the right thing to do, it has a range of commercial benefits too. Lucie Mills, head of business transformation at NorthEdge Capital discusses why improving mental health provisions should be at the centre of every PE firm’s value creation plans.

It’s a sobering fact that more than one in five of us are struggling with some form of mental health issue. The impacts of lockdowns have heightened the situation in the workplace too, with 41 per cent of employees reported to have experienced mental health symptoms caused, or made worse, by work over the last year, according to Business in the Community.

Thankfully, the awareness of the challenges around mental health have come a long way over the last decade. Employers are increasingly rolling out preventative and supportive provisions to help staff, and charities like Mind, have spearheaded the movement to normalise talking about our feelings. But there’s still a lot more to do – particularly in the business community, and the PE industry has an increasingly important role to play in that.

Mental health opportunity

If one in five people in the UK have some form of mental health issue, that means a portfolio of our size at NorthEdge, which collectively employs 6,900 people, will have over 1,000 members of staff affected by mental health concerns. Looking at the PE industry as a whole, which employs 972,000 people according to the BVCA, almost 200,000 employees will be affected.

We are responsible for supporting the management teams we back to grow their businesses sustainably – helping and encouraging them to focus on creating cultures where people feel motivated, empowered, and supported plays a critical role in achieving that success. In addition, research consistently shows there is a strong business case for investing in this area. A recent study from Deloitte found that for every £1 spent on company culture awareness and wellbeing, it delivers a ROI of £6.

With lockdown, and the imminent easing of Covid-19 restrictions, creating new everyday pressures for people, now is a crucial time to embed mental fitness and wellbeing into company culture and processes.

Commercial benefits

It’s estimated that poor employee mental health costs UK businesses between £42bn and £45bn each year, according to another study by Deloitte. The average cost per employee is £1,652 in private sector organisations, rising to £3,300 per employee in the finance, insurance and real estate industries. Only £18bn of the cost to UK employers is caused by absence and staff turnover, two thirds is caused by an increasing rate of presenteeism – where employees turn up to work despite poor mental health, but are unproductive in the work that they do.

It goes without saying that we must not look at mental health through the lens of financial impact only. However, without putting the correct strategies in place to ensure employees feel supported, motivated and engaged at work, the cost of absenteeism and presenteeism – and the mental health challenges that underpin them – will only continue to rise. Mental health is potentially costing a business in the private sector with 100 employees £165,000 per year, with costs disproportionately high among young employees as a proportion of their earnings.

That’s why PE firms have a responsibility to work with their portfolio businesses to ensure company culture and wellbeing remains on boardroom agendas, alongside the financials.

Creating value

As part of our regular portfolio-wide communications, we seek out the areas our leadership teams want support with or are proactively trying to tackle. Increasingly over the last six months mental wellbeing has been high on the agenda.

To date, we have focussed on harnessing the power of the portfolio, encouraging teams to connect and share learnings in this critical area. We’re ensuring that people’s development, health and wellbeing, are at the heart of the value creation plans – because we know that those plans will only ever deliver long-term results if the people who drive the business are aligned, engaged and feel motivated to perform.

A study by Harvard Business Review found that there is a statistical link between employee wellbeing and customer satisfaction, which is supported by a recent Forbes article that states “while it’s good to have a 'customer is king' mindset, it’s just as important to remember the other people whose happiness is vital to your organisation’s success. Becoming a customer-centric business is always worthwhile, if you want to add a serious competitive edge, but concentrate on offering a great employee experience first.”

There are practical steps we can take across the PE industry to support this. For instance, we have invested in mental health first aiders for our business and are encouraging our portfolio to do the same.

We invest in personal leadership training, giving our people the confidence and opportunity to take ownership and think for themselves. We’re also continuously working with our management teams to share ideas and insight, as well as creating a support network for them to access, ensuring that we all understand the importance of proactively looking after mental fitness and that support is easy to access whenever it’s needed.

We have also enlisted the support of specialist mental wellbeing partners to facilitate sessions on mental health.

With the majority of businesses now planning their return-to-work, we believe reviewing their culture and wellbeing strategy is a must. Some people across our network may have had the most challenging year of their lives – therefore we are committed to learning about and supporting this increasingly important area.