The Economics of Wellness: Why Poor Practices Lead to Poor Productivity

 

In secondary school, I had a love affair with economics. The subject fascinated me. The idea of understanding how resources, systems, and people interacted to create value captured my imagination. I could spend hours poring over my textbooks, crafting detailed notes, and solving equations. Yet, despite my dedication, my grades stubbornly hovered around a C. No matter how hard I worked, I couldn't crack the code. Frustrated but undeterred, I shifted my focus to the sciences. To my surprise, I excelled, consistently earning A's with far less effort. It was clear: my strengths lay elsewhere. Yet, even now, I can’t resist drawing on economic principles to explain the world around me. Today, I’d like to use one of those principles to explain why poor organizational wellness practices inevitably lead to poor productivity ratios.

The Law of Diminishing Returns

In economics, there’s a principle called the law of diminishing returns. It states that as you continue to invest resources into a single factor of production, the additional output you get from that investment will eventually decline if other factors remain unchanged. Imagine a farm: adding more fertilizer to a plot of land initially boosts crop yields. But after a point, each extra bag of fertilizer produces smaller gains, and eventually, the soil becomes oversaturated, reducing overall productivity.

Now, let’s apply this principle to the workplace. Organizations often pour resources into achieving specific outcomes, like increased sales or improved service delivery, without addressing the underlying wellness of their workforce. They demand longer hours, set unrealistic expectations, or neglect to create a supportive environment. Initially, these efforts might yield results. Employees might rally to meet tight deadlines or stretch themselves to hit targets. But over time, the strain takes its toll. Burnout sets in. Engagement drops. Turnover increases. And, just like the oversaturated soil, the organization’s productivity begins to decline.

Wellness as a Productivity Multiplier

Contrast this with organizations that prioritize wellness. These companies recognize that their most valuable resource isn’t their technology or their capital—it’s their people. By investing in wellness initiatives, such as mental health support, flexible work policies, and professional development opportunities, they create an environment where employees can thrive. And when employees thrive, so does the organization.

Consider the research: a 2019 study by the World Health Organization found that for every dollar invested in workplace mental health programs, organizations see a return of four dollars in improved health and productivity. Similarly, Gallup’s State of the Global Workplace report highlights that companies with high employee engagement—a key indicator of wellness—are 21% more profitable than those with low engagement.

The Productivity Equation

Poor organizational wellness practices disrupt the productivity equation. When employees are overworked, stressed, or undervalued, they’re less likely to give their best. Mistakes increase. Absenteeism rises. Collaboration suffers. On the other hand, a focus on wellness creates a positive feedback loop. Healthy, happy employees are more creative, efficient, and committed. They’re also more likely to stay, reducing the costs associated with turnover and recruitment.

My Science Lesson for Economics

While I may not have mastered economics in school, I’ve learned that its principles apply far beyond the classroom. Organizations, like economies, are complex systems. And just as sustainable economic growth requires balanced investments across multiple factors, organizational productivity depends on more than just pushing for results. It requires nurturing the people who make those results possible.

So, let this be a reminder: investing in wellness isn’t just the right thing to do—it’s an economic imperative. The next time you’re tempted to cut corners on wellness programs or demand more from an already stretched team, remember the law of diminishing returns. Without the right balance, you risk undermining the very productivity you’re trying to achieve.

Join the Conversation on Organizational Wellness

At our organization, we’re passionate about helping others unlock the full potential of their teams through strategic wellness practices. If this topic resonates with you, we’d love to hear your thoughts, experiences, or challenges. Let’s discuss how we can create healthier, more productive workplaces together. Reach out to us—your journey to organizational wellness starts here.