Creating a Mentally Healthy Workplace: Practical Steps for Small Businesses

by Lashay Smith
May 13, 2025

Explore Categories

Running a small business means juggling a lot—from keeping customers happy to managing day-to-day operations. But an important area that’s often overlooked is the wellbeing of you and your employees. While larger companies often have dedicated HR teams or employee wellness programs, small business owners may be working on tight budgets and limited knowledge. The good news is that creating a mentally healthy workplace doesn’t require a large budget or sourcing experts. It begins with intention, awareness, and simple, practical steps.

At PIDC, we know that small businesses are the backbone of Philadelphia’s economy, so we’ve put together some key actions you can take to foster a mentally healthy workplace. 

What Is Mental Health?

Mental health includes our emotional, psychological, and social well-being. It influences how we think, feel, and respond to everyday situations. Good mental health doesn’t mean you’re always happy or never feel stressed. It means you can cope with life’s ups and downs, bounce back from challenges, and enjoy life.

Why Does Mental Health in the Workplace Matter for Small Businesses?

In the workplace, mental health plays a critical role and when our emotional state is affected, it can create a domino effect. Stress or anxiety can quickly lead to distraction, reduced focus, and a drop in overall job performance. By prioritizing mental health, small businesses can create a positive workplace culture where employees feel supported and empowered to perform at their best. A mentally healthy workplace doesn’t just benefit your employees, it strengthens the business as a whole.

“Wellbeing isn’t about meditation apps or nap pods. It’s about building a business strategy for hiring, managing, and compensating people in a way that helps them function at their best, stay longer, and drive stronger outcomes.”

-Anna Greenwald, Founder & CEO of On the Goga

Mental Health Challenges Employees Face

Mental health challenges in the workplace do not exist in isolation, as PIDC’s corporate wellness provider and client On the Goga Founder and CEO Anna Greenwald said, “We don’t have a “work brain” and a “home brain.” We have one brain, and it’s shaped by everything we carry with us, both inside and outside of work. That means sometimes mental health challenges that originate outside of work can show up at work, and sometimes the workplace itself contributes to those challenges.”

For small businesses, understanding the most common challenges is the first step toward meaningful support. Common mental health challenges that employees face include: 

Burnout

The physical and emotional toll of prolonged, unmanaged work stress.

Anxiety

A natural human emotion that, when persistent, can disrupt productivity and morale.

External Stressors

Personal challenges like financial stress or family issues that bleed into the workplace and impact focus, mood, and performance.

Low Emotional Intelligence (EQ) in Managers

When managers lack empathy, self-awareness, and communication skills, it can lead to micromanagement, unclear expectations, lack of recognition, or even subtle forms of disrespect or bullying. Over time, these behaviors can erode trust, increase anxiety, and drive disengagement.

Steps Small Businesses Can Take to Prioritize Mental Well-Being

For small businesses, prioritizing your team’s mental health doesn’t have to cost thousands of dollars. “It’s important to remember: small businesses aren’t expected to solve everyone’s mental health challenges,” said Greenwald. “But they are responsible for building a culture where people can thrive. That means creating an environment where stress is managed thoughtfully, mental health isn’t taboo, and people feel supported”.What matters most is strategy. 

“Wellbeing isn’t about meditation apps or nap pods. It’s about building a business strategy for hiring, managing, and compensating people in a way that helps them function at their best, stay longer, and drive stronger outcomes.” 

Greenwald recommends implementing a few high-impact, low-cost strategies to help businesses prioritize mental health for employees:

Invest in manager development 

If you’re a CEO, founder, or manager of a small business, consider enrolling in courses or joining a well-being group designed specifically for leaders. These programs can help you better understand the emotional and mental demands of leadership, while also giving you the tools to recognize signs of stress or burnout in your team. Investing in your own awareness and growth is a powerful first step in creating a healthier, more supportive workplace.

Facilitate group learning 

Group learning creates an opportunity to better understand your employees, their needs, preferences, and challenges. It’s not just a tool for skill-building; it also opens the door to meaningful conversations about mental health and team dynamics. These sessions can help build trust, strengthen collaboration, and give you valuable insight into how your team works together, supporting a more connected and resilient workplace.

Audit your policies

Most work-related stress doesn’t come from lack of resilience. It comes from operational inefficiencies. Review your policies around time off, workload, and communication. Are they helping people protect their mental health, or accidentally undermining it? Often, small shifts in clarity, expectations, or scheduling can make a big difference.

Review Workloads and Expectations

Regularly check in with your employees about their workloads to ensure expectations are realistic and manageable. These conversations help prevent burnout and disengagement while reinforcing that their well-being matters. When employees feel seen and supported, they’re more likely to thrive, both professionally and mentally, contributing to a healthier, more productive workplace. If you’re not often on-site, consider adjusting your schedule to be present at least two days a week. Your presence alone can make a meaningful difference in morale and connection.

Creating a mentally healthy workplace starts with leadership—especially in small businesses where the owner’s presence and decisions have a direct impact on team culture. “Leaders can’t, and shouldn’t, be responsible for managing every individual’s mental health, “ said Greenwald. “That’s a deeply personal experience that each employee has to navigate for themselves. But leaders are responsible for creating the conditions that make it possible for people to succeed.” While you can’t control every aspect of your employees’ personal well-being, you can shape the environment they work in every day. That’s why your approach to leadership matters more than you might think.

“Think of it this way: if someone’s pushing a car with no gas up a hill and your business depends on that car reaching the top, what’s more effective—yelling at them to move faster or stopping to fill the tank?” 

More Business Tips

Find how you can manage your business and more here!

Explore Categories