Written by shared value and corporate responsibility consultant, Hugh Foley
Mental ill-health creates a tremendous financial burden on society, and companies are not immune – with an estimated $13 billion cost to business each year.
So why isn’t there greater private sector investment and innovation around the prevention of this challenge?
Part of the problem lies with the way companies – and their key decision-makers – consider the issue of mental ill-health. Understandably, they are viewing the problem through a risk mitigation lens; given its threat to long-term business profitability and productivity.
While risk management is important, it also has its limits. Companies will not invest more than required to mitigate risk, or to adhere to their compliance obligations.
And while there may be some small (and likely fleeting) economic advantage for companies that can meet those standards more quickly or efficiently, this alone is not enough to compel the type of investment required to actually address a challenge as complex and significant as mental health.
Therefore, we must look beyond risk to understand the opportunity of addressing mental ill-health at scale. Our framing needs to evolve from simply raising a shield to the fire, to tackling it head-on in a new and commercially viable way.
Embracing commercial advantage
Implicit in this shift is a fundamental acceptance that companies can – and should – seek to gain from investments that improve mental health. It means moving beyond risk mitigation and actively pursuing the creation of new forms of value.
The pursuit of value and profit prompts a different approach from companies. They invest time and resources to develop new products and foster new ideas. They recruit new talent and explore new markets to build capability that will help them to land opportunities from which value will flow.
To unlock these investments, we need to encourage companies to realise and embrace the commercial advantage of responding to mental ill-health – an issue which impacts one in five Australians.
This not only applies to businesses’ employees, but their customers and communities too. Profit doesn’t have to be a ‘dirty’ word – it can be a means to fulfil a greater purpose.
This doesn’t mean that companies should be released from their responsibility to employees and the broader community, nor that we can assume that all aspects of our nation’s mental health crisis can be solved with a business case, but it means we need to expand our current view.
When Professor Michael E Porter and Mark Kramer of Harvard Business School introduced the concept of creating shared value, they highlighted the commercial and strategic opportunity for companies to engage with society’s challenges in a different way.
According to Porter and Kramer, tapping into a company’s appetite to establish sustained competitive advantage presents one of the most powerful ways to compel investment and deliver impact. And while the concept of deriving profit by addressing society’s problems isn’t unfamiliar, the shared value approach does provide some guidance on how companies can realise that opportunity.
Shared value: A mutually beneficial tool
Shared value prompts companies to consider how they can re-conceive the design and function of their products and services, how they can invest differently in their value chain (including both their own company operations and those of their suppliers and distributers), and how they can benefit through investments that improve the condition of their communities. The challenge of mental ill-health presents significant opportunities across each of these domains.
A new report released by the Shared Value Project, in partnership with IAG, NAB, AIA Australia, SuperFriend and PwC explores how companies can do more by applying this theory. The analysis is based on a foundation of well-established research on the economic cost of mental ill-health in Australia – at $60 billion per year.
What sets it apart, however, is its perspective on how business can reduce the root cause of mental ill-health through shared value – a profitable business strategy designed to solve social issues.
Alongside the imperative for companies to meet their health and safety obligations to employees, the report seeks to establish areas ripe for investment and innovation. For example, where companies can go beyond employee wellbeing programs to consider the mental health and wellbeing of customers and the communities in which they operate as a strategic priority, including the commercial rationale for doing so.
While the analysis includes some emerging examples of good practice (particularly in the employee space), one striking aspect of the work is the unrealised opportunity for investment in and innovation around customers’ and communities’ mental health and resilience. The scope for companies to do more – and to benefit more – is significant.
One area of opportunity described is the potential for insurers to mitigate their exposure to long-term claims by doing more to improve the mental health and resilience of their customers, well before the claim is made.
Another describes how data analytics – a fast-developing capability within many large corporates – can be applied to better understand the link between customer behaviours and depression, and what companies can do to incentivise positive behaviours that prevent the condition.
While there is a clear acknowledgement that the resilience of customers and communities’ mental health represents a material financial concern for companies, and the examples in the report are promising, the case for greater investment is clear.
Reconceiving partnerships to create shared value
Of course, this opportunity sits alongside the in-principle company commitment to improving mental health that we typically see through generous philanthropic gestures and partnerships with mental health organisations. Indeed, the high-level of company participation in fund-raising for mental health charities and promoting mental health awareness suggests that there is interest in being involved.
But, like the limitations on risk, we need more than corporate sponsorship, fundraisers and good intentions. We need companies to approach this issue with the same appetite for investment and value creation that they would in pursuit of any other investment.
In this way, the report encourages companies to consider and invest in community partnerships differently. Companies aren’t traditionally equipped with the skills or expertise to respond to social challenges like mental ill-health. Clearly, they can’t do it alone and must work closely with partners in the government and non-profit sector.
And yet, while the importance of cross-sector collaboration isn’t particularly new, these partners must engage in a different way. Too many corporate – non-profit partnerships are stuck in the realm of corporate sponsorship, based on a transaction around brand affiliation. Companies and community organisations must work harder to identify where their objectives (and abilities) intersect, and form investments that serve the mission of the community partner and the business objective of the company.
Companies spend millions of dollars in the development of products and services that meet the needs of customers or reduce costs. In many cases, these investments are speculative. Given the well-evidenced (and quickly growing) economic impact of mental ill-health on employees, customers and communities, it seems strange that companies are not investing more.
Of course, not every mental health challenge can be solved with a business model; but as the significance of this social challenge grows, and the economic implications deepen, so too does the business case for companies to invest meaningfully in solutions.
Hugh Foley consults to companies and non-profits on shared value and corporate responsibility strategy, and is Sessional Lecturer with the Centre for Social Impact at UNSW.