II The impact of flexible working on health and productivity

Employees’ psychological health and the impact of flexible working arrangements

Introduction

In this chapter we discuss the construct of psychological health and its relationship with enhanced organisational productivity. Unlike previous generations where workforces were primarily male and work locations were fixed, modern workplaces are characterised by a greater diversity in personnel and locale. Many organisations have adopted flexible work arrangements (FWAs) which assist employees to balance their competing responsibilities. Commitments to work can be constrained by other compelling commitments in people’s lives, commonly including demands arising from family responsibilities, sports activities, study, community work, and such like. However, in spite of the need, the take-up of FWAs can be varied. Many workers find alternative, but less satisfactory, ways of addressing the competing demands in their lives. In many cases, the reason for poor take-up is influenced by organisational cultures that covertly discourage employees from utilising FWAs (see, Cech and Blair-Loy, 2014; Fuller and Hirsh, 2018). Consequently, employees with few alternatives may experience a stigma when accessing FWAs, which can adversely affect their wellbeing and their career advancement. We begin this chapter by defining what we mean by psychological health and we discuss why organisations should be interested in their employees’ levels of psychological health. We discuss the commonly available FWAs and their demonstrated impacts for levels of employee engagement and productivity. Finally, we review the common gender and generational differences which impact FWA offerings, and we suggest key issues for the consideration of future researchers in this field.

Psychological health

The term psychological health describes optimum human functioning and experience. Well recognised signs of optimum functioning include selfmotivation, curiosity and active involvement in the social environment (Ryan and Deci, 2000), positive affect (Diener and Seligman, 2004), happiness (Ryan and Deci, 2001), flourishing/thriving (Fredrickson, 2001; May et al., 2004), ingenuity (Kim and Mauborgne, 2015), and resilience (Fredrickson et al.,

2003) . From an employer’s perspective, these are all desirable attributes because workers with these qualities are creative, voluntarily share their ideas, and are productive, thereby enhancing organisational gains (Kim and Mauborgne, 1998, 2015).

According to Ryan and Deci’s (2000) self-determination theory (SDT), desirable personal resources are not developed in isolation, but within structurally supportive social contexts (e.g., family and work). At the centre of SDT, competence, autonomy and relatedness are acknowledged as basic psychological needs, which when satisfied, enable people to succeed, thrive and contribute their best thinking and efforts to their organisations. Therefore, the effective managements of supportive workplaces recognise that workers’ psychological health is essential to organisational prosperity (Dikkers et al.,

2004) . It is only when people are enabled to function at an optimum level, that they are actively engaged, doing their best work, eagerly advancing organisational goals, and thereby enabling strategic organisational advantage over commercial competitors (Kim and Mauborgne, 1998, 2015).

Why should organisations be interested in workers’ psychological health?

The short answer as to why organisations should be interested in their workers’ psychological health is an economic one. The costs of a chronically mentally unwell workforce are considerable, and unfortunately, are steadily increasing. Occupational stress (workplace mental ill health) claims by employees, organisational mental health insurance premiums, and other indirect costs attributable to occupational stress alone, cost industrialised countries billions each year. Recent estimates, for example, suggest occupational stress costs the Australian economy approximately AU$15 billion per annum (Safe Work Australia, 2013). International estimates are comparable to these Australian figures, demonstrating that occupational stress remains a global predicament: Canadian work stress annual costs equate to AU$11 billion, Netherlands AU$23 billion, and UK AU$46 billion (EU, 2014). In a recent review, Hassard et al. (2018, p. 1) described occupational stress as (still) being a “sizeable financial burden on society”. Lost productivity specifically attributable to employee absenteeism, caused by the physical and mental health impacts of occupational stress, costs Australian organisations approximately AU$5 billion per annum (PricewaterhouseCoopers, 2014). Recent calculations also indicate that approximately 6% (AU$890 million) of the annual costs of depression experienced by employed Australians, is specifically attributable to occupational stress (Cocker et al., 2017).

We acknowledge that these economic costs of psychological health are influenced by national legislation, which defines an employer’s legal responsibilities for their workers’ mental health. Where such legal responsibilities are breached, workplace mental ill-health claims by employees seeking financial

Employees’ psychological health 37 compensation may be submitted. For countries without this national legislation, economic costs are estimated primarily by employee work withdrawals (examples include low productivity, absenteeism, presenteeism, sick leave, turnover), and the costs of staff replacements, including employee recruitment and training costs. The costs to an organisation for not being suitably interested in their employee’s good psychological health are therefore, considerable, regardless of the national legislative context.

For organisational scholars, the measurement of work engagement provides an efficacious snapshot of employees’ psychological health and wellbeing within the social context of work (Bakker and Schaufeli, 2008; Downey et al., 2015; Timms et al., 2015b). The construct captures a sense of positivity that is characteristic of thriving workplaces (Salanova and Schaufeli, 2008; Schaufeli and Bakker, 2003) as well as people (May et al., 2004). It also contributes to the collective phenomenon of morale (Hart et al., 2000), and a demonstrable impression of cohesiveness, cooperation, vibrancy and enthusiasm that is immediately obvious to any visitors to the worksite (Dinham et al., 1995). Employees who are engaged in their work find it energising, challenging in a satisfying way, are proud of the work they do, and report that their work time passes quickly (Schaufeli and Salanova, 2014).

There is, therefore, a strong business case for organisations to pay attention to employee wellbeing. Harter et al.’s (2013) meta-analysis established substantial relationships between workers’ engagement and performance. Harter et al. (2013) found positive relationships between work engagement and customer loyalty, productivity and profitability. They also reported negative relationships between work engagement and negative workplace events such as employee turnover rates, accidents, absenteeism, theft, mortality and product defects. This suggests that strategic planning for productivity gains must necessarily consider the psychological health of workers. Traditional paradigms (which assume that the two driving forces within organisations are economic concerns and self-interest (Kim and Mauborgne, 1998, 2015)) are misleading and essentially destructive in terms of organisational prosperity (see also, Harter et al., 2002). Unfortunately according to Schein (1996), a lack of alignment between different work levels (e.g., management, middle management and workers) can lead to internal differences in organisational culture, thereby subverting innovation and hindering the potential for growth (see, for example, Biggs et al., 2014). It seems that the misalignment described by Schein (1996), has led to frustratingly flat-footed responses by organisations to strategies designed to accommodate the needs of the modern workforce.