How burnout quietly drains company budgets, according to the experts

Over the course of one year, employee burnout can cost a company anywhere between $4,000 to $20,000 per employee, according to a recent study published in the American Journal of Preventive Medicine. 

The study found that for an average 1,000-person company in the United States, employee disengagement, overextension and ineffectiveness costs:

• $3,999 for a nonmanagerial hourly employee
• $4,257 for a nonmanagerial salaried employee
• $10,824 for a manager
• $20,683 for an executive

“Burnout costs employers a lot of money,” said Diane Rohlman, an associate dean at the University of Iowa College of Public Health, and director of the Healthier Workforce Center of the Midwest.

The Healthier Workforce Center of the Midwest is a collaboration between research universities, including the University of Iowa, funded by the National Institute for Occupational Safety and Health. Founded in 2006, it provides important research in occupational health and safety, ergonomics, and health promotion to create a safe, healthy and productive workforce.

“When we measure productivity, we often look at the number of hours people work, but that isn’t a good measure,” she said. “We should look at output and results. Employees may not be producing as much or their quality may be poorer. This leads to a higher turnover rate, which costs companies to rehire and retrain while they are working at a deficit in order to do so.”

What is burnout?

Burnout is feeling physically and mentally exhausted by work, which results in anti-social behavior and reduced personal accomplishment, or when the demands workers face exceed their psychological resources. 

“You don’t have the capacity to do the job at a quality level,” Ms. Rohlman said. “You’re not as productive and you feel that way.” 

Lots of things can cause burnout. For example, frontline health care workers experienced burnout during the COVID-19 pandemic because they were faced with huge numbers of critically ill patients. Today, budget cuts, funding issues and uncertainty are impacting those in higher education or government workers. 

One common thread, Ms. Rohlman said, is too much work and not enough control over the situation. Little reward or recognition of the work you are doing also contributes, she said. 

“You’re more likely to experience burnout if you’re worried about job security, if expectations either aren’t clear or they are constantly shifting, if you’re in a culture that is toxic or not supportive, or if you’re not sure what your career path is,” she said. “You feel like ‘I’m here but what’s the next step and what am I working for?’”

Globally, 20% of employees say their job impacts their mental health in a negative way, according to a UKG global workforce study. More than 40% of employees are “often” or “always” exhausted, while 78% say that stress negatively impacts their work performance.

Managers and leaders play a big role when it comes to burnout. They assign tasks and deadlines, but also implement and enforce policies and model behaviors. If your manager is answering emails and calls at every hour of the day, you probably feel like you need to do the same, Ms. Rohlman said. 

“You need time to rest and recover, to have a boundary between work and home,” she said.

Executive burnout

But what happens when a leader has to deal with work issues, marital problems, a sick parent or a death in the family while also juggling the demands of their job? 

“When we talk about burnout in organizations, it’s the leader’s job to make sure their employees aren’t burnt out, but what about that leader?” said Stephen Courtright, a professor of management and entrepreneurship at the University of Iowa’s Tippie College of Business.

“There are often unrealistic expectations,” said Mr. Courtright, who is also the executive director of the Tippie Leadership Collaborative. “You get paid the big bucks, so this is what you get to deal with. But interventions are often focused on nonleaders.”

And that can have negative effects. If a leader is feeling depleted and burned out, they have a harder time controlling and managing their emotions, Mr. Courtright said, which makes them more likely to verbally abuse their subordinates.

“They’re trying to solve so many problems, they have little resources left to manage their own emotions,” he said.  

Middle managers in particular have a hard time because they’re getting conflicting directives from the top and bottom. 

“There’s this myth that once you’re a manager you can implement all of your ideas, but most managers consider themselves hostages,” Mr. Courtright said. “Yes, you have more resources but you also have very constrained demands.”

A recent study at the Workforce Institute at UKG found that more than half of managers wished they had not taken their current roles, and 70% would take a pay cut to have a job that better supported their mental health. 

Not only do leaders have higher levels of responsibility and more stakeholders to answer to, including their team, boards of directors and the community at large, but they’re often lonely.

“They have lots of connections but not deep friendships,” Mr. Courtright said. “It’s harder when you’re a leader. Leaders can make a huge impact in their community and they feel that magnitude — their failures are very public.” 

How to help counteract burnout

When it comes to burnout,  Mr. Courtright and Ms. Rohlman agreed that while the costs are enormous, the steps to take to counteract it are pretty simple. 

“You can get a lot of value out of small changes,” Mr. Courtright said. 

The first thing to do — acknowledge it. “Give people the freedom to talk about it,” Mr. Courtright said. “Do it through mentoring, coaching, and giving them the opportunity to talk. You’re not trying to solve stress. You’re trying to manage stress before it transforms into burnout.”

Then, look at your data. Review your policies and look at utilization of things like Employee Assistance Programs, leave and additional support, Ms. Rohlman said.  

It’s also important to evaluate workloads. It can feel disingenuous if you offer support but don’t change any demands, Mr. Courtright said. 

Have meeting-free days so leaders and employees have more control over their calendar and time to finish important tasks; use the “send later” email option if you’re sending emails outside of regular business hours so others don’t feel the need to immediately respond; and set up a system where tasks can get done even if someone is out on leave. 

Finally, recognize good work. “Bonuses are nice — no one turns down money,” Ms. Rohlman said. “But public recognition during a meeting or a note, little things that say ‘I saw you and appreciate what you did’ can make all the difference.”

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