Today, more than half of divorced employees felt that when they went through their divorce, they did ... [+]
Nearly 30 years ago, a notable research project once estimated that $6 billion is lost by American businesses due to decreased productivity stemming from marriage and relationship difficulties. A divorce might be a personal event in a team member’s life, but it ultimately costs their employer. Today, more than half of divorced employees felt that when they went through their divorce, they did not receive the required support from their employers. This is unfortunate, because:
Divorce impacts mental health. In the workplace, untreated—or incorrectly treated—preventable women’s health conditions lead to financial consequences for employees and employers. Untreated maternal mental health disorders are estimated to cost the U.S. $14.2 billion annually. NSC and NORC at the University of Chicago found organizations spend an average of over $15,000 annually on each employee experiencing mental health issues.
Divorce impacts physical health. Divorced women face a 20% increase in breast cancer and a significantly higher risk of advanced uterine cancer, and divorced men suffer higher levels of acute myocardial infarctions, lung, bladder, pancreatic and colorectal cancer. As purchasers of health insurance plans, employers are expected to provide healthcare solutions for their team members, including cancer care. Additionally, 23% of divorcees reported absenteeism or increased sick leave as a direct result of their relationship breakdown. These health issues cost companies in higher insurance premiums and healthcare expenditures.
Divorce creates new expenses. The median cost of a divorce in the U.S. is $7,000, while the average is between $15,000 and $20,000. Divorce aside, many Americans don’t currently have the cash to pay for emergency expenses, medical bills, or to save for retirement. Subsequently, employees going through a divorce might ask for a raise. Also, if the employee resigns for greener pastures (which 10% of divorcing employees do), it could cost their former employer up to 150% of their annual salary to replace them.
Divorce impacts company culture. Researchers estimate that every ten divorcing employees cost a company more than $83,000 annually in lost productivity. This assumes a decline in work performance and time off spent dealing with legal, financial, and psychological issues related to divorce. But it’s not just the team member- this figure also includes an estimated loss of supervisor productivity as a result of time spent dealing with issues of performance and productivity for employees affected by divorce.
Here is a math example to show a fraction of the economic impact on an organization. In the U.S., of every 1,000 people who get married, approximately 25-30 people will divorce. These figures don’t include people thinking about a divorce, planning a divorce, going through a divorce. Directionally, let’s assume each of these 25-30 people have an average annual household income of $70,784 and all work for the same company. If 10% of those divorcing employees resign from their positions, this means their company needs to allocate approximately $106,176 per employee towards rehiring costs for their positions. This directional figure doesn’t even take into account the additional $8,300 per employee in lost productivity for companies.
Vicky Townsend is the president of Divorce Right, a divorce coaching company. Divorce Right is just one of the companies in an $18 billion U.S. industry that helps employers offer alternative wellness benefits. Divorce Right provides divorce awareness and sensitivity training designed to teach executive teams, HR professionals, and people managers how to assist and manage employees going through a divorce. They help employees develop a roadmap specific to their unique situation, including discerning when they need outside help (e.g., divorce coach, mediator, financial analyst, lawyer). Lastly, the company offers employers blueprints, 1:1 or group coaching calls, downloadable books, workbooks, interactive videos, and a custom family transition leave policy.
When employees know that their job can remain secure after seeking help for serious relationship issues, they are more likely to utilize corporate wellness benefits. When considering the major time and financial expenses of replacing a divorcing employee, it is cost-effective for organizations to provide professional services such as divorce coaches.
Townsend measures success from not only the employee's but the employer's perspective as well, reducing the time of high-conflict and complex divorce cases by up to a year. Divorce Right has navigated divorce issues for the LGBTQIA+ community, special needs families, and religious and cultural divorces. “Currently, employers may offer discounted legal services or mental health counseling in their employee assistance programs, but these are not targeted divorce solutions,” Townsend explains. “By the time an employee has completed our proprietary program, they already have a financial strategy, a basic structure for a parenting plan, and will know if their case can use a mediator or other manner to get divorced, which benefits their mental, physical, emotional, and financial health.”
Townsend believes that while companies understand the implications of divorce on productivity, they’re missing the financial implications mentioned above. She also believes they don’t understand how it impacts their C-suite. “67% of second marriages and 73% of third marriages end in divorce. This is significant because typically, those employees divorcing for the second or third time are middle management, seasoned, and highly compensated. They are high-level decision-makers and irreplaceable subject matter experts that hold a company’s intellectual capital and institutional knowledge in their heads. These are employees to hold on to.”
