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Balancing act: Why a dual approach to workforce mental health is critical for organisational resilience

As organisations grapple with multiple challenges, ranging from talent shortages and burnout to economic uncertainty, the need for a multifaceted, integrated approach to mental health has never been more urgent.

23/09/2025 · 6 minute read

In today’s complex landscape, workforce mental health is no longer just an HR concern, it’s a strategic imperative. As organisations grapple with multiple challenges, ranging from talent shortages and burnout to economic uncertainty, the need for a multifaceted, integrated approach to mental health has never been more urgent.

The Growing Challenge of Workforce Mental Health in Australia

Australia’s workforce is navigating unprecedented challenges. The Mercer Marsh Benefits 2024 People Risk Report highlights a sharp rise in mental health claims, with nearly 1 in 5 Australians experiencing a mental health condition each year1. Meanwhile, funding mechanisms for mental health claims are being pushed to the limit, raising questions about who bears the cost —government, employers, employees, or insurers, and how organisations can proactively manage these risks.

As this challenge continues to gain momentum, employers must do more to support their people and protect their business. While the workplace isn’t the sole cause of poor mental health, it often pays a price for poor employee mental health.

Understanding cause, impact and opportunities

Unsafe work is one of many potential causes of employee mental health deterioration. Other potential contributors include biological factors, stressors like financial hardship or a relationship breakdown, social factors like isolation and substance abuse, and many more. As an employer, you can’t effectively mitigate these personal risks for your people. But there’s plenty that you can do.

No matter what triggered an individual’s mental health to worsen, the fact that they’re experiencing poor mental health is likely to impact their work. The impact can be significant, with talent shortages and burnout pushing organisations to the brink. The Australian Bureau of Statistics reported a 15% increase in employee stress-related absences over the past year2.

So while work may not always be the cause of mental health deterioration, it will be impacted. Which is why employers need to grasp the opportunity to take a dual approach to better mental health. This requires protecting employees from potential psychosocial harm at work and providing mental wellbeing support that meets diverse employee needs.

The foundation: Building Psychosocially Safe Workplaces

Most organisations are now familiar with their obligation to provide a psychosocially safe and healthy place to work, with directors able to be held personally liable for non-compliance. The regulators are active in this space, issuing improvement notices to organisations that are not effectively assessing and managing psychosocial hazards.

The easiest way to understand psychosocial risk is to compare it to physical risk. In physical safety, hazards include being up high on a building site or being exposed to dangerous chemicals. While these risks can’t be entirely removed, they can be managed. An employer needs to put controls in place, like safety harnesses or personal protection equipment, to effectively mitigate these risks.

In accordance with jurisdictional Work Health and Safety Regulations, psychosocial hazards must be risk managed in the same way we have approached physical hazard in the past.

An example of a psychosocial hazard is exposure to occupational violence and aggression. While an employer can’t control the general public, they can introduce controls to mitigate the risk of occupational violence and aggression causing harm to their employees. Examples of controls include lockable spaces in the case of retail, where employees can remove themselves from aggressive customers, or de-escalation training to equip workers with the ability to reduce the intensity of a conversation. A different example of a psychosocial hazard is lack of role clarity, where employees have unclear, inconsistent or frequently changing roles and responsibilities. This risk can be controlled by ensuring that position descriptions are clear and accurate. As employee roles shift (or creep) descriptions should be updated in consultation with the employee.

While regulatory compliance is a vital reason to prioritise psychosocial safety there are many compelling reasons to get this right. A safe and supportive environment that prioritises mental health leads to a more resilient, innovative, and engaged workforce. Think of psychosocial safety as the essential foundation for a healthy, productive and resilient organisation. These benefits can be amplified with the addition of a robust, impactful mental health strategy.

The next step: a robust mental wellbeing strategy

Traditionally, Australian employers have supported employee mental health by providing an Employee Assistance Program and focusing on awareness days, like RUOK?Day and World Mental Health Day. For an organisation that is just getting started, combining these initiatives with an effective communication strategy may be enough. For most organisations, this needs to be taken further with a comprehensive wellbeing strategy that meets the needs of a diverse workforce.

At Mercer Marsh Benefits we recommend that our clients bring key stakeholders together to capture the organisation’s current state and strategic priorities, then develop a mental wellbeing strategy and roadmap to bridge the gap between where you are today and where you’ll be in the future. While your strategy and roadmap need to be tailored to your organisation, you can start by working through this stepped guide:

  1. Draw on external data, your organisational data and employee insights to better understand relevant issues and opportunities.
  2. Define your current workforce and the workforce you’ll need 3-5 years from now. Consider workforce demographics and talent requirements.
  3. Design a multi-year roadmap that builds organisational maturity over time. Common initiatives include engaging communications that signpost to existing services and building leaders’ capability to support employees’ mental wellbeing.
  4. Consider the diverse needs of your people. For example, do you have programs aimed at prevention, early intervention and support? Do you have a range of offerings to appeal to different life stages? It’s essential to offer a range of initiatives, so that each employee can find something that resonates with them.
  5. Investigate funding opportunities to help bring your roadmap to life. You may have access to funding through insurance partners, or you could achieve cost-savings by changing program providers.
  6. Incorporate program governance including provider management and program success measures.

Bridging Risk Management and HR: A Strategic Partnership

It's important to remember that effective mental health strategies require a closer alignment between risk management and HR functions. By integrating these disciplines, organisations can develop comprehensive solutions that address both compliance and individual wellbeing.

The Path Forward: Organisational Resilience Through Integrated Mental Health Strategies

In a world of ongoing uncertainty, organisational resilience depends on a balanced approach, one that places equal value on creating a safe work environment and supporting individual wellbeing. Organisations that embrace this dual focus will not only mitigate risks but also foster a sustainable, engaged workforce capable of thriving amid adversity.

Are you ready to elevate your mental health strategy?

Partner with Mercer Marsh Benefits to develop a customised, integrated approach that safeguards your organisation’s most valuable asset — your people.

Contact us today

To learn how we can help you build a resilient, mentally healthy organisation.

Get in touch

References:

1 Mercer Marsh Benefits 2024 People Risk Report

2 Australian Bureau of Statistics, Employee Stress and Absenteeism Data, 2024

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This webpage is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy.  Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors.

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