Asha Musoni – Chief People Officer, CBI

Wellbeing is often described as employees “feeling good and functioning well”.

During Covid the business case for investment was clear: organisations that supported their people through uncertainty reaped returns in loyalty, resilience and productivity. But the economic climate today is different. Businesses face difficult fiscal trade-offs: invest in wellbeing programmes across the organisation, or simply keep people employed. That stark choice illustrates a deeper tension on how businesses balance the wellbeing of their workforce with the imperative to deliver shareholder value in a low growth economy.

We know there is a strong cultural and economic link between wellbeing and outcomes such as psychological safety, innovation and customer service. Research consistently shows this. Yet a key question remains: can organisations over invest in wellbeing with diminishing returns?

The risk of over-indexing

What works in a professional services firm may not deliver value in hospitality or manufacturing. At a recent CBI roundtable, senior people leaders described wellbeing services being prone to the “untidy cupboard syndrome”: where organisations offer an abundance of services without clear strategy, coherence or accessibility. Employees are overwhelmed. Leaders cannot see the return on investment.

The Inclusion at Work Panel Report published in March 2024 cautions that many organisations “over invest in interventions with little evidence of impact” noting that poorly designed or purely symbolic initiatives can backfire – undermining inclusion and harming wellbeing instead of supporting it.

The key question becomes: is investment best placed in preventative services, such as proactive financial wellbeing programmes, or reactive services like counselling? The answer must be linked to the unique pressures of the organisation. Without this discipline, businesses risk wasting money or worse, creating confusion and false expectations.

The lost role of line managers

Too often leaders are expected to act as amateur counsellors. This is risky both for the business and individual. Managers should be sign-posters, not psychotherapists. Their focus should be on helping teams’ function well, setting expectations and creating environments where conflict is managed productively.

The economic stakes are high. ACAS, in its newly launched conflict strategy estimates that workplace conflict costs UK employers £28.5 billion annually. Against the backdrop of increasingly diverse teams, spanning up to five generations and greater cognitive diversity, investing in manager capability to manage difference is not a “nice to have” but a necessity.

Targeted investment, real returns

What does smart investment look like:

  • Personalisation: Align wellbeing investment with organisational realities. In minimum wage sectors, financial wellbeing initiatives may be paramount. In trauma exposed industries, trauma informed counselling can be critical
  • Clarity: Wellbeing services should be accessible, and take-up should be actively monitored, considering the demographic of those who use these services to support effective promotion and communication
  • Manager capability: Invest in training managers to handle conflict, build inclusive teams and protect psychological safety

Preventative approaches are more cost effective than firefighting. By reducing conflict and disengagement, businesses free up time and energy for innovation, service excellence and customer growth.

So, what does this mean for organisational investment in wellbeing?

Wellbeing is a lever for productivity, customer loyalty and shareholder value but only if investment is strategic, disciplined and personal. The proof lies not only in employee surveys but in business performance, including higher retention, stronger margins and customers who feel the difference.

The challenge is no longer whether to invest in wellbeing, but how to invest wisely. After all, GDP tells us how the economy is doing but wellbeing tells us how the economy is working for people. This is the balance business leaders should be striving for.

This article is part of our new ‘Economics to improve lives’ series that explores a question at the heart of PBE’s mission: How do we ensure that wellbeing – the quality of life experienced by individuals – is the ultimate goal of government? 

We’re bringing together thinkers and commentators from across economics, policy, academia, media and civil society to challenge conventional wisdom and consider how we might build an approach to measuring economic success that puts the lived realities of people at its heart and fits the times we live in. Opinions are the author’s own.

Read previous articles in this series from Lord Blunkett, Diane Coyle, Hetan Shah, Nancy Hey, Sarah Davidson, Jon Franklin, and Ed Humpherson.