The real cost of psychosocial safety at work

myosh - HSEQ Management Software

By Janine Nicholson and Sarah O'Leary
Friday, 10 February, 2017


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A new report by Safe Work Australia explores the importance of psychosocial safety at work, focusing on the financial impact it can have on businesses.

The cost of untreated psychological health problems within Australian organisations is approximately $10.9 billion per year, due to absenteeism, presenteeism and workers compensation. Psychologically healthy workplaces, on the other hand, have been shown to achieve a return on investment (ROI) of $2.30 for every $1 spent on improving individual skills and resilience.

A psychosocial safety climate, or PSC, is ‘the shared belief held by workers that their psychological safety and well-being is protected and supported by senior management’.

Improving productivity therefore creates a situation where one has increased outputs without the need for additional inputs. Loss of productivity occurs when workers are absent or when they are at work but not performing at their usual capacity (presenteeism). A key point is that poor employee psychological health leads to reduced productivity.

Safe Work Australia’s report examines Australia’s current decline in productivity, with statistics suggesting that progress has stalled in the past 10 years after a boom throughout the 1990s.

The study found:

  • Low or poor PSC in the workplace is related to higher absenteeism and presenteeism. Workers take 43% more sick leave per month and have a 72% higher performance loss at work. They cost an average of $1887 more per year than those in environments where there is a positive PSC.
  • Depression is related to higher absence due to illness and poor performance. Those with severe depression take 20 times more sick days and had 270% higher performance loss than those without depression. The total cost of depression to Australian employers is estimated to be approximately $6.3 billion per annum.
  • Psychological distress is related to higher absenteeism and presenteeism, resulting in four times more employee sick leave; 154% higher performance loss at work; and an average cost of $6309 per year (for mild to severe psychological distress) more than those without psychological distress.
  • In contrast, higher engagement with employees is related to lower sickness absence and presenteeism. Employees in companies with poor PSC were taking 12% more sick days than those with a positive PSC. Also, the average performance loss for those with low engagement was 8.1%, costing an average of $4594 per year. Conversely, those with high engagement had no measurable performance loss. The total cost of low employee engagement to Australian employers is estimated to be approximately $5.4 billion per annum.

Employers can take steps to address mental health issues, particularly via consultation with all key stakeholders to understand the specific psychosocial issues in the workplace and how best to mitigate them. Employers should also monitor the company’s PSC and psychosocial risk levels, while job structuring should be revised to minimise work conditions that influence poor psychological health, such as excessive demands, work pressure and insufficient support, control and power.

Leaders should demonstrate commitment to a mentally healthy workplace, with policies and procedures for the prevention of unreasonable behaviours such as bullying, aggression or violence, managing work-related fatigue and a process for consultation with workers.

At an organisational level, possible controls may include designing safe systems of work, workforce planning to ensure the balance between work demands and time pressures, role clarity, independence, recognition and reward, and flexible work arrangements. Organisational KPIs could also include PSC.

Employers are legally required to manage mental wellbeing in the workplace and workers are also required to take reasonable care for their own health and safety. Despite this, a recent beyondblue survey of 1126 Australian workers revealed that approximately half the workers surveyed believed that their workplace is not mentally healthy.

The health and safety of workers at work can be achieved with the assistance of effective control measures and systems such as the myosh Wellbeing Platform. This enables management to identify, engage and manage the mental wellbeing of employees.

The cloud-based solution provides managers and employees with resources and strategies to reduce risk, improve productivity, promote a positive working environment, raise awareness and reduce stigma.

Image credit: ©Angelo.Gi/Dollar Photo Club

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