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The cost of ignoring the mental health and wellbeing of your workforce

The evidence continues to pile up telling us that investing in a mentally healthy workplace is not only good for individuals and society but good for business too.  With a cost to the Australian economy estimated at $60 billion per year[1], $12.8 billion associated with workplace mental ill-health[2] and increasing pressure on organisations and the workforce to do more with less, why are we not more focused on understanding and investing in our people leading to better outcomes and a better business?

Perhaps it is the perceived cost, the stigma around mental illness and the challenge to show a traditional return on investment that challenge organisations to invest in the wellbeing of their people.

Workers’ compensation costs increasing

Workers’ compensation mental health claims average 17 weeks of lost time and a median total cost of $27,700 for serious claims, compared to $10,700 for serious physical injury claims[3].

A recent study by Allianz on workers’ compensation claims in Australia showed a concerning trend that secondary mental health conditions (a physiological condition developed as a result of an original physical injury) were increasing faster than primary claims.  And they found that the average cost of a claim with a secondary psychological condition is four times more costly than a primary psychological claim and likely to lead to three times more time off work.

To provide some context, this is eight times more time off work than a primary physical injury claim[4]. This not only has a direct impact on an organisation in terms of absenteeism but also on their workers’ compensation premium and the scheme as a whole.

How long can organisations afford to not invest in the wellbeing of their workforce?

Return on investment – the numbers add up

A recent report into the return on investment (ROI) for employers showed that the right interventions could save Australian businesses $4.5 billion per annum, a ROI ranging from $1.30 (against each dollar spent) for essential job control interventions to $4.70 for psychological conditions and their return to work programs[5].

Do you understand the psychosocial risks in your workplace, which ones have the biggest impact or how to effectively manage them?

For too long organisations have focused on the physical hazards in their workplaces without realising the psychological hazards until it is too late and one of their people sustain a psychological injury. Understanding the psychosocial hazards in your workplace is a good place to start. Employers have the opportunity to use existing data with a different lens to see where hazards may be present in the workplace and then see if current safety and mental health strategies are addressing these.

Mental health risks are complex and inherently more difficult to identify and manage than physical risks. It is important that an organisation’s psychosocial risk profiling is updated regularly to proactively identify and manage the biggest psychosocial risks.

Do you know where to focus?

Reduce the stigma

The same Allianz study found that employees still felt it was easier to report to line managers that they had a cold rather than suffering from mental health symptoms.  There is still much negativity and fear around mental health conditions and symptoms and a lack of knowledge and understanding around how to create a positive, inclusive and safe environment.  

People who receive positive support from their employer are up to five times more likely to return to work, but only 30% of people with psychological injuries report a positive experience.  Combine this with the costs associated with psychological conditions and we can’t afford to not address the wellbeing of our workforce.

What is the experience that people have in your workplace?

Three simple initiatives that will help reduce the stigma:

  1. Sharing facts around mental health and mental illness
  2. See the person, not just the condition and know that there are many successful people with mental health conditions from CEOs, Chairman to Partners[6]
  3. Think about the language used -not labelling or inadvertently judging

It’s time to take a step back and look at the health, safety and wellbeing of workforces through a much wider lens. Once an understanding of the psychosocial risks and hazards in the workplace is gained, it’s time to put a plan in place. Having a strategic approach to mental health and wellbeing, as part of an overall workplace safety program, can set an organisation on the path towards supporting the physical and psychological health and wellbeing of its workforce and reducing the negative impacts.

When it comes to developing and implementing a strategic mental health plan remember:

  1. Make it practical
  2. Embed as business as usual practices that are actually lived – don’t “set and forget”
  3. See it as an opportunity – create a workplace where people thrive.


[1] Royal Australian and New Zealnad college of Psychiatrists, 2016

[2] Mental Health Australia & KPMG, May 2018

[3] Safe Work Australia, 2018

[4] Allianz Australia Insurance Limited, 2019

[5] Mental Health Australia & KPMG, May 2018

[6] Inside Out, 2019