What is poor mental health costing Australian businesses?

$15 billion. That’s the minimum estimated cost per year of workplace-related mental illness and injury in Australia (The Australia Institute and Centre for Future Work). 

But the true impact of mental health concerns may be going undetected in your organisation. Employees are less likely to disclose a mental health condition, seek help for themselves or offer support to others in workplaces considered mentally unhealthy (TNS and beyondblue). 

With 43% of Australians aged 16-85 years experiencing a mental disorder at some point in their life (ABS), it’s just as important for employers to create a mentally healthy workplace as it is a physically safe one.

While these statistics are sobering, they’re also a call to action. As a HR consultant and Mental Health First Aider, I’m passionate about helping business leaders create mentally healthy workplaces by optimising existing strategies and implementing new cost effective solutions. 

But before we explore how organisations can best support their workers’ wellbeing, here’s a closer look at the causes and effects of poor mental health in the workplace. 

What are the key contributors to mental health issues in the workplace? 

Since the start of the COVID-19 pandemic, there’s been a 25% increase in anxiety and depression worldwide (WHO). 

Unfortunately, work-related stressors have played a role, with up to 45% of mental health problems experienced by employed people attributable to their workplace conditions (The Australia Institute and Centre for Future Work). 

These psychosocial hazards include: 

  • High job demands, resulting in a sense of overwhelm, longer hours, fewer breaks and a risk of disconnect between effort and reward
  • Low job control, limiting an employee’s ability to decide how and when to do the work
  • A lack of role clarity and support, making it more difficult for an employee to perform their job effectively
  • Reduced staff numbers, placing greater load on remaining employees
  • A sense of isolation, lack of connection and limited support network due to an increase in remote working arrangements
  • Less distinction between work and home, making it easier for working hours to bleed into personal time
  • Perceived job insecurity, with Australians of all ages concerned about the long-term future of their roles 
  • Workplace conflict, including bullying, discrimination and sexual harassment

What’s the impact of mentally unhealthy workplaces?

A survey of 26,000 workers by the Australian Council of Trade Unions reported 61% experienced poor mental health because psychosocial risks weren’t effectively managed by their employer (Black Dog Institute).

This can manifest as:

  • Absenteeism, when employees take unplanned leave from work
  • Presenteeism, when employees attend work when they’re unwell, which can result in reduced productivity, worsening health, longer recovery time and future sickness absence
  • More sick leave
  • Poor individual and team performance 
  • Reduced employee satisfaction 
  • Higher staff turnover 
  • Increase in compensation claims

Mental health injury is the fastest growing compensable claim, with Safe Work Australia estimating 43% of claims relating to psychological injury to be due to workplace stressors (Black Dog Institute). 

Additionally, more than 90% of workers now say their wellbeing is just as important as their pay (Swinburne University of Technology and Deloitte) and 62% consider work-life balance as the most important factor in choosing an employer (Randstad). 

These figures highlight that if organisations don’t prioritise mental health, they may find it more challenging, and more costly, to retain and recruit employees. 

What can employers do to improve employee mental health and wellbeing? 

Reducing the stigma of mental health through open communication is just the start. Under Australia’s Work Health and Safety laws, employers must protect their workers’ physical and psychological health in equal measure.

Business leaders can effect positive, lasting change to employee satisfaction, performance and retention by:

  • Identifying possible triggers of poor mental health in the workplace and minimising or eliminating these risks
  • Increasing the availability, awareness and use of mental health support services in the workplace
  • Ensuring the psychological safety of employees experiencing a mental health concern in the workplace
  • Supporting the recovery and return to work of employees experiencing a mental health condition
  • Supporting the general wellbeing of your employees for a happier, healthier workforce

And the proof is in the numbers, with job control programs showing a minimum return of $1.30 for every dollar invested, and return to work programs returning $4.70 per dollar invested (Mental Health Australia and KPMG). 

Where business leaders will see the greatest value is in designing a mentally healthy workplace and building a culture of psychological safety. To be successful, strategies need to be championed by executives, implemented by managers and easily accessed by employees.

How can Radford HR help with mental health in the workplace?

An integrated and sustained approach involving risk assessment, data gathering, strategic planning, preventative action and progress tracking will ensure mentally healthy practices are embedded within your workplace. 

It would be a pleasure to explore ROI driven solutions for your organisation that support a more engaged, productive and mentally healthy workforce. Please don’t hesitate to contact us for a confidential discussion. 

Stephanie Rascoe

Owner & Head of HR Advice, Radford HR