Psychosocial Hazards Hurt Employees and Organizations

Australian workplaces are facing a serious mental health crisis. A growing number of employees are exposed to psychosocial hazards that increase their risk of developing work-related psychological injuries.

Mental health conditions contributed to an increasing proportion of work-related injuries and illnesses in Australia in 2021-2022, accounting for 9% of all serious work-related claims -- a rise of nearly 37% since 2017-2018. Psychosocial hazards create a toxic workplace environment that erodes colleague relationships and provokes harmful behaviors.

The effect of this is devastating. Nearly half of Australia’s workforce experienced workplace bullying, harassment or discrimination in 2023, according to an Australian Workers Union (AWU) study, resulting in a sharp rise in psychological injury claims.

In addition to the damaging effect on employees, the cost to the Australian economy as a result of rising psychological and psychosocial injury claims is estimated to be as high as A$39.9 billion annually. Further, lost productivity as a result of mental health injury claims is more than four times that of all injury and disease claims. Safe Work Australia’s 2024 Psychological health and safety in the workplace report found that the median time lost as a result of mental health conditions was 34.2 working weeks per serious claim, compared with 8.0 weeks per serious claim for all injuries and diseases.

Of course, toxic workplaces that engender psychosocial hazards exist everywhere, not just in Australia. More than one in five employees globally -- 23% -- have experienced some form of violence or harassment at work, according to a 2022 ILO-Lloyd’s Register Foundation-Gallup survey.

Psychosocial hazards are facets of the workplace that potentially cause psychological injury and undermine employee mental health. Sadly, these hazards are often part of the day-to-day employee experience and include things such as lack of role clarity, unrealistic job demands, poor manager support, harmful colleague relationships, inadequate reward and recognition, or a poor physical environment.

Leaders urgently need to address this mounting crisis. They and their organizations have both a duty of care and a vested interest in ensuring their workplaces promote psychosocial safety and enhance employees’ engagement and wellbeing. In addition to suppressing harassment and other abusive behavior, their organizations will benefit from improved employee retention and better collaboration, innovation and productivity.

Governments in Australia and other countries are acting to get in front of this issue by implementing workplace policies to ensure psychosocial safety in much the same way as physical health and safety. “Under model work health and safety laws, psychosocial hazards and risks are treated the same as physical hazards and risks,” says Marie Boland, CEO of Safe Work Australia, a government agency that has published its Code of Practice to help identify areas of risk that undermine psychosocial safety in the workplace.

But this is not just a compliance issue: It’s also an organizational culture issue. A healthy culture is essential for both psychosocial safety and performance.

So, what should leaders do?

Measure: Assess Cultural Risk

Culture is arguably an organization’s most valuable asset that competitors can’t easily replicate. Organizations should manage culture like they do other assets by regularly assessing its value, managing risk and ensuring it delivers a satisfactory return. Regularly assessing critical dimensions of an organization’s culture such as ethics, diversity, and inclusion; trust in leadership; and employee engagement and wellbeing will reveal areas of cultural strength and highlight factors that may be early warning signs of psychosocial risks in the workplace.

Gallup’s research on culture has identified 10 thematic dimensions that can be measured and benchmarked, promote workplace ethics and integrity, employee wellbeing, a culture of inclusion, and predict performance outcomes. Scanning culture across these 10 Culture Asset Index dimensions brings into sharp focus a precise picture of an organization’s cultural health and pinpoints where and in which dimensions there are potential risks an organization needs to address.

In addition to culture assessment and benchmarking, organizations should measure and manage crucial elements of psychological safety at the team level. Gallup’s Employee Engagement Index measures 12 workplace needs that are essential for high employee performance and engagement. These needs are linked to and help identify several psychosocial hazards such as lack of role clarity and poor manager support.

Assessing elements of the workplace that matter most to your people is essential to making effective data-driven decisions to manage risk and create a psychologically safe environment.

Drive Accountability for Leaders

Leaders are the de facto owners of their organization’s culture. Everyone in the organization watches leaders every action, so they must be role models of psychological safety and demonstrate desired behaviors to managers and frontline employees.

They should constantly ask themselves: Are our employees better off psychologically as a result of working here? If not, how can I be a role model for the organization to ensure they are? Leaders should understand how their teams perceive their strengths and style as they develop, engage and inspire performance.

Leaders’ words and actions carry great significance for the people in their organization and should clearly illustrate how they live and promote culture and values. For example, if a core value is ethics and integrity, leaders need to demonstrate ethical behavior and integrity in every action and decision. They also need to hold themselves and others accountable for adhering to the organization’s values and upholding psychological safety in the workplace.

Equip and Support Managers

Frontline managers are essential to team engagement, performance and wellbeing. They also play a substantial role in establishing an environment of trust and mutual respect within their teams. Employees need to feel their manager takes an interest in and cares about them -- both as a member of the team and as a person.

Managers can demonstrate this to their reports by having frequent, ongoing conversations with them about their individual concerns and ambitions. Simple, right? For some managers, this comes naturally, but many need training, tools and support to lead their teams more effectively.

One practical step that organizations can take is to support frontline managers in having weekly meaningful conversations with each team member. These conversations can start with three simple questions: “How are you doing?” “How’s your work going?” “What support do you need?” When managers take the time to connect regularly to have a one-on-one conversation with everyone on their team, it demonstrates they care and helps establish an environment of mutual trust -- an essential element of psychosocial safety.

By asking these questions, managers invite team members to share concerns about aspects of their day-to-day experience that are important to them such as workload, goal clarity, colleague relationships, or materials and equipment. This reinforces trust between managers and employees and allows managers to discover potential psychosocial hazards.

Create a Culture of Psychosocial Safety and Performance

It’s hard to overstate the impact of culture on psychosocial health and safety and why organizations must assess their culture to identify and mitigate risk factors. But the good news is that a culture of psychosocial safety also benefits organizations through higher employee engagement.

“Proactively managing psychosocial hazards at work not only protects workers,” says Safe Work Australia’s Boland. “It also benefits businesses by improving organizational performance and productivity.”