The Case for Making Staff Mental Health a CEO Performance Indicator

Should CEO pay ever be influenced by staffs' mental wellbeing? At least one prominent political personality in Australia thinks it should be, and he's won the backing of the country's chief lobby group for business leaders.

gettyimages-498805260-compressor-1Mental illness affected at least one-in-five Australians in the past year, while various studies point to a similar rate of suffering in the U.S.

Anxiety disorders are regularly found to the be the most commonly-reported form of mental illness in many countries, followed by depression and substance abuse problems. Companies tend to deal with these issues in human resources departments, and it’s hard to find a company that explicitly ties staff well-being with CEO remuneration.

“Employee mental well-being should be an annual key performance indicator of private-sector executives and government department heads.”

The issue of mental illness and corporate risk was thrust into the spotlight last year, when a young co-pilot for Lufthansa’s low-cost airline Germanwings intentionally crashed a passenger jet into the French Alps, killing himself and 149 others.

CEO remuneration should still be based on traditional measures of performance, such as profits and share-price movements, according to Jeff Kennett, a former premier of Australia’s Victoria state. But Kennett said employee mental well-being should also be an annual key performance indicator of private-sector executives and government department heads.

Kennett, who is chairman of mental health advocacy group beyondblue, formally broached the idea to CEOs and other senior executives today at a forum in Melbourne organized by lobby group Business Council of Australia (BCA).

“If some of these people think this is all sort of rubbish and over the top, well, tie their bonus to it, tie their salary to it,” Kennett told the Australian newspaper ahead of his speech. ” Let them understand that this is a major contributor to the effectiveness of their administration.”

The BCA said it was “interested and passionate” about Kennett’s idea for economic reasons. “We do take these things very seriously because they result in unplanned absenteeism, they cost business money,” BCA CEO Jennifer Westacott told the newspaper. ” They’re not just feel-good things.”

Westacott said some businesses already have CEO performance indicators that broadly address staff retention. though she and others have acknowledged that more could be done.

“To date, companies have focused on physical health much more than they have on mental health,” John A. Quelch, a professor at the Harvard Business School said in the wake of the Germanwings incident.

“Most physical conditions are visible, either to the naked eye or an X-ray. Mental health conditions aren’t so easily identifiable.”


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