Why should your business address psychosocial risks?

Since June 2021, when ISO45003 was first published by the International Organisation for Standardisation, a light has shone on psychosocial workplace hazards and risks. While ISO45003 is a standard and does not require compliance, it provides a global template for best practices and direction on managing psychosocial hazards and advancing wellbeing at work. If you need a refresher, check out our recent blog that explored ISO45003 and psychosocial risks. 

In Australia, on April 1, 2023, new amendments were made to the Work Health and Safety Regulations 2011. It now states that a person conducting a business or undertaking (PCBUs) is required to implement control measures for psychosocial risks. There have also been changes made by individual states and territories that businesses need to be aware of. Sonder provides an overview of current state and territory legislation for those seeking further guidance. 

In this blog, we will explore why businesses should start identifying and addressing psychosocial risks and the positive impact it can have on employees and an organisation as a whole.  

First, a quick recap: managing psychological health and safety within your business involves identifying, assessing, and managing psychosocial hazards & risks that can lead to employee mental health issues. These risks can include workplace stress, burnout, harassment, discrimination, and other factors that can negatively impact an employee's mental health.

Since 2017 psychological claims have increased by 80% in Australia, and psychological injury claims are 4x higher than physical injuries. So suffice to say that psychological injuries are already costing Australian businesses and the economy money and will continue to do so without intervention.  

Let’s start with the financial implications.

Legal and regulatory compliance

Employers have a legal and regulatory obligation to provide a safe workplace for their employees. This includes protecting them from psychological harm. Failure to comply with these regulations can result in legal action, fines, and damage to a business’s reputation. For example, in NSW, if a company is found to have failed to eliminate psychosocial risks so far as is reasonably practicable, they may be subject to enforcement action by SafeWork NSW. 

Reputational damage

As public awareness of mental health issues grows, the reputational damage of failing to address psychosocial risks is also likely to increase. Businesses that neglect these risks may face criticism from employees, customers, and other stakeholders, leading to long-term damage to their brand and bottom line.

Costs associated with absenteeism and turnover

Absenteeism and turnover can be costly for businesses. A recent report by NSW Government stated workers with physical injuries on average lose six weeks of work, while psychological claims lost on average 20 weeks. Also, employees who experience mental health issues may take more sick days or may leave their jobs altogether. There can be huge costs that come with high employee turnover, such as interviewing, hiring and training. By managing psychosocial risks and supporting employees, employers can help reduce the likelihood of these outcomes and save on associated costs. 

While legal requirements and financial costs can be detrimental, many positives can arise when businesses address psychological health and safety and invest in their employees' mental wellbeing at work.  

Improved productivity and performance

When employees experience high levels of stress or burnout, they may struggle to focus on their work and be more prone to errors or accidents, which in turn can also result in physical injuries. By identifying psychosocial hazards, factors such as poor job design can come to light and improvements made.  Well-designed jobs can lead to higher productivity, quality of work, and job satisfaction. 

Enhanced employee well-being 

Employee wellbeing is increasingly recognised as a critical factor in organisational success. Happy, healthy employees are more likely to be engaged, productive, and innovative. Investing in psychological health and safety management demonstrates a business’s commitment to employee well-being, which can help to attract and retain top talent and foster a positive workplace culture. 

Improved morale and engagement

When employees feel supported and valued by their employer, they are more likely to be engaged and motivated in their work. Psychologically safe work environments mean employees feel supported and able to speak up and share thoughts, opinions, and ideas without fear of repercussions. Creating an inclusive culture where people feel valued and empowered can ultimately encourage better problem-solving, thinking outside the box and innovative solutions to issues that arise.

While legal implications are a strong motivating factor, there are also huge benefits for companies that take a proactive approach to managing psychosocial hazards & risks. Ultimately investing in creating a psychologically safe environment at work can boost morale, lead to better company performance and a culture of safety.  

If you would like any more information or assistance on how your business can use Lucidity to manage psychosocial hazards and risk, please speak to your dedicated account manager or contact us at contact@lucidity.io.