Managing Psychosocial Hazards in the Workplace

In the past five years or so, there has been a growing awareness around mental health in the workplace. The focus around mental health has seen Australia making significant progress in this matter, with the creation of a Work Health and Safety Strategy by Safe Work Australia.

One of the key priorities in this strategy is psychological health and safety at work. According to Katherine Taylor, Director of Psychosocial and Consultation at Safe Work Australia: “On average, work-related psychological injuries have longer recovery times, higher costs, and require more time away from work. We know that psychological injuries continue to rise in number and severity.”

Managing psychosocial hazards in the workplace is now a necessary part of any business. Let’s explore why and what you can do about it as a business owner.

What are psychosocial hazards?

Psychosocial hazards are aspects of work which have the potential to cause psychological or physical harm. These can include but are not limited to:

  • Poor organisational justice
  • Job demands
  • Low job control
  • Poor support
  • Lack of role clarity
  • Poor organisational change management
  • Inadquate reward and recognition
  • Traumatic events or materials
  • Remote or isolated work
  • Poor physical environment
  • Violence and aggression
  • Bullying
  • Harassment including sexual harassment
  • Conflict or poor workplace relationships or interactions

These 12 psychosocial hazards are ones that Safe Work Australia have identified to cause stress in workers and negatively impact their performance in the workplace.

The rise of mental health claims in the workplace

In February 2024, Safe Work Australia released a report about work-related psychological injuries in Australia. This report draws from 3 main data sources, including: the Safe Work Australia National Dataset for Compensation-Based Statistics; the National Return to Work Survey; and the People at Work risk assessment survey. Overall, the report looks at trends in psychological health in Australian workplaces.

There were 10,000 serious mental stress claims in 2021-2022 and 52.2% of those were due to work-related harassment or bullying and work pressure. In that year, mental health conditions accounted for 9% (11,700) of all serious workers’ compensation claims and 7% of all work-related injuries and illnesses.

It’s especially concerning as this represents a 36.9% increase in claims since 2017-2018. Why is there such a dramatic increase?

There could be several causes behind the increase in claims, but it’s entirely possible that destigmatisation and an increased awareness of mental health conditions could be some of the reasons around the increase in mental health claims (Safe Work Australia, 2024).

3 impacts of psychosocial hazards on the business

Lack of business productivity and absenteeism

When the workforce suffers, so does the business as whole. Mental health conditions are also associated with a greater time away from work. The median time lost for mental health conditions over the same period was 34.2 working weeks per serious claim compared to 8.0 working weeks per serious claim for all injuries and diseases (Safe Work Australia).


Financial losses

The cost of mental health workers’ compensation claims tend to be much higher than claims due to other work-related injuries or conditions (Safe Work Australia). In 2020-21, the median compensation paid for mental health conditions was $58,615 per serious claim compared to $15,743 per serious claim for all injuries and diseases.

In relation to the above point, a report by Frost & Sullivan found that workplace absenteeism has cost Australian businesses $14.1B in lost productivity in 2021.


Lack of job satisfaction

In today’s increasingly competitive hiring landscape, businesses feel the pressure to retain employees more and more. Workers who feel the pressures of unhealthy working environments are more likely to leave their jobs in search of workplaces that don’t tax their mental health. Businesses ultimately suffer when losing staff and needing to retrain new workers.

How can businesses promote good mental health and reduce psychosocial hazards?

The first step is to ensure that management or leaders are aware of what psychosocial hazards are and how to identify them in the workplace. Engaging in training for leaders and business owners around psychosocial hazards, as well as their impact on employees and the organisation as a whole, is a huge step in the right direction.

Secondly, don’t underestimate the power of Employee wellbeing programs. Whether a business has five staff or 500, it can always benefit from having the appropriate programs in place. Employee wellbeing programs can be as simple as having an employee feedback process in place, to promoting mental health awareness initiatives, to offering Employee Assistance Programs managed by an outsourced mental health professional team.

Lastly, analyse your team culture. Consider asking questions like: “Are we promoting a mentally healthy attitude at work? Do we have any practices in place that we think are normal, but could be placing strain on people’s mental wellbeing?”

Managing risks and maximising opportunities for businesses

Managing psychosocial risks isn’t only about minimising damages to a business. It’s also about maximising opportunities for employees to thrive—which benefits an organisation in the long run.

Dealing with the effects of psychosocial hazards in the workplace can be costly to any business owner, employer, or manager. Consequences can range from legal implications and claims against a business, to financial impacts that may damage them in the long run.

Identifying and addressing psychosocial hazards in the workplace can be complicated and tricky when you’re a business owner. Whether it’s in proactively training your leadership team or helping you with current employee issues relating to psychosocial hazards, our team can give expert advice and assistance. Contact us now. 

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