HC talks to Beyondblue chairman Jeff Kennett about linking performance bonuses of CEOs to the mental wellbeing of employees
Poor mental health costs the economy about $11 billion a year and workers’ compensation is just a minor part of that. Other factors at play include absenteeism and presenteeism, resulting in staff performing well below their potential.
That’s one of many reasons why performance bonuses of chief executives should be partially tied to the mental wellbeing of their employees, said Jeff Kennett, CEO of Beyondblue.
The former Victorian Premier told HC that the initiative makes good business sense because if you have a mentally healthy workplace you can lift your productivity by up to 4%.
“This is quite a considerable outcome for such little effort,” he said.
He added that it is also good for the morale of the staff to know that everyone from the CEO down is concerned about their welfare.
Moreover, in many companies, there is a growing drift between those who are at the coalface, as opposed to those who sit in the CEO’s office.
“And that is just often talked about in terms of a difference in pay level,” said Kennett.
For instance, the CEO of a bank might be getting millions of dollars, but the frontline teller may be on $60,000.
“Yet the latter are the ones that have to put up with the frustration of queues and abuse from time to time,” he said.
“So for the CEO to have his or her salary tied in part to the mental health of their organisations is good commercial sense, it’s good social sense and it’s also an important ingredient in ensuring you have a happy workforce.”
Kennett added that in addition to chief executives, other positions should also have similar KPIs to ensure mental health is improved.
“I think all direct reports to the CEO should also have in their KPIs the mental health of those who are their responsibility,” he said.
“I’m a great believer that bonuses should only be paid when budgets are met and when the mental health of the staff is in good shape.
“In other words, I only believe a CEO and direct report should have only five KPIs, the first of which would be the mental health of staff.”
The Commonwealth Bank recently had a KPI for their CEO voted against by Australian superannuation funds because they thought the non-financial target (including the mental health of the staff) was a “soft target”.
“Certainly, we have got to make sure that the method by which you measure the mental health of your staff is a real and well-designed measuring device,” Kennett said.
Kennett said he hopes the Australian superannuation funds that voted this down in future will have reason to support it.
“It is interesting the overseas superfunds that invested in the Commonwealth Bank did support the measurements and the welfare of the staff, but the Australian superannuation funds did not,” he added.
“To me this indicates that the American superannuation organisations have a much better appreciation of the quality of the health of the people that work for these organisations.”