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UpdatesJun 04, 2018

Psychological wellbeing can unlock productivity gains

It’s an age-old question – how can my business increase productivity without having to replace my existing equipment or hire more staff?

By Lauren Drummond

It’s an age-old question – how can my business increase productivity without having to replace my existing equipment or hire more staff?

The answer could be found in a report published by the Asia Pacific Centre for Work Health and Safety that details how creating a workplace that prioritises the mental wellbeing of workers can increase productivity and growth for the organisation.

The report – Psychosocial safety climate and better productivity in Australian Workplaces: Cost, Productivity, Presenteeism, Absenteeism – suggests there is a significant financial impetus for action on employee psychological health.

Psychosocial safety climate (PSC) measures an organisation’s priorities and commitment to the protection of workers’ psychological health and wellbeing.

The assessment of the level of PSC in a workplace is broader than just an inquiry into the organisation’s health and safety practices. It focuses on four key areas:

  1. Management’s commitment to employees’ psychological health.
  2. How management prioritises health and wellbeing issues.
  3. Communication regarding health and wellbeing issues.
  4. Employee participation in shaping the policy and practices of the workplace.

According to the report: “PSC is essentially the shared perception of employees that senior management has prioritised their mental wellbeing by creating a psychologically healthy workplace”.

Negative consequences of low PSC

On the flipside, the report finds that low PSC workplaces have higher rates of absenteeism and presenteeism, i.e. employees attending work while ill. Data from the 2014-2015 Australian Workplace Barometer report indicates that workers in low PSC workplaces took 43% more sick days per month and had a 72% higher performance loss at work.

This equates to costs to employers of $1,887 per employee per year. Nationally, the authors of the report estimate the total cost of low PSC to Australian employers is approximately $6 billion per annum.

A common issue for many Australian employers that struggle to find new ways to increase output without the need for additional input is productivity growth decline.

What doesn’t work

Common approaches for many organisations seeking to increase their productivity are to place additional pressures on workers to increase their output and reduce job rewards for employees such as bonuses or salary increases.

The report highlights that this approach is likely to have a counterproductive effect on the workplace’s productivity, as any short-term gain received by the business is counteracted by the physical and mental strain placed on employees.

Overworked and underappreciated employees are likely to experience burnout in their jobs, heightened fatigue and emotional stress. This can lead to increased absences from work, and in some cases, resentment towards the business. These problems contribute to a loss in productivity.

3 ways to improve PSC in your workplace

The report identifies several practical steps you can take to improve PSC in your workplace:

1. Ensure your managers value the health of your employees

Having managers who value and understand the importance of their workers’ psychological health will mean that they will design jobs that reduce excessive demands on employees and provide them sufficient access to resources to adequately perform their role.

2. Communicate with employees about psychosocial risks

Aim to foster a working environment that encourages employees to have open dialogue about factors at work that affect their mental wellbeing. This could be achieved by nominating a contact officer for employees to send their concerns to or holding regular meetings where employees can raise their concerns.

3. Monitor PSC and look for early indications of risks of poor PSC

High levels of employee absenteeism and turnover, as well as a decline in productivity, can all indicate that your organisation has poor PSC.


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