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Strategies to Reduce Psychological Claims in the Workplace: Exploring the Link Between Mental Health, Performance Management, and Psychosocial Risk

A modern workplace can have bean bags and ping pong tables, but creating a successful workplace requires more than offering these popular benefits. This article looks at how prioritising mental health, along with effective performance management and preventive psychosocial risk management, can result in a more mentally healthy workplace.

The Triple Link: Mental Health, Performance Management, and Psychosocial Risk

Let’s start by taking a look at Max, a fictional character but could very well be that dedicated project manager at your workplace. Max's workload has recently increased substantially, leading to heightened stress levels. As Max’s mental health deteriorates, performance inevitably suffers. These aspects are linked - if one worsens, others also suffer.

The link between mental health, performance management, and psychosocial risk requires a delicate balancing act. Poor mental health can deplete an employee's productivity, while poor performance management can amplify stress, creating a vicious cycle of declining mental wellbeing. Psychosocial risks, such as overwhelming job demands, insufficient support, and the instability of organisational transition, can further complicate this dynamic.

In a study published in the Annual Reviews, researchers Bakker and Demerouti (2023) found that high job demands and low control over work were significantly associated with increased employee stress and burnout. This, in turn, led to higher absenteeism and lower productivity. In addition, the study highlighted that supportive leadership and a positive work environment could mitigate these risks, promoting better mental health and enhanced performance.

Could there be Psychosocial Risks present in your workplace?

Psychosocial risk factors are invisible risks in the workplace that silently harm employees' mental health. Let’s explore these workplace risks:

1. Job Demands

Employees who face never-ending heavy workloads and deadlines can reach a point of burnout and chronic stress that could result in fatigue. For instance, a software developer who works under constant pressure and stays up late may eventually suffer from severe mental and physical exhaustion.
Safe Work Australia referred to Australian Bureau of Statistics (ABS) data in their May 2024 newsletter, which showed that long working hours are common in Australia, with 12.4% of workers doing 50 hours or more a week, and some doing more than 80 hours.

How does this affect your health?

The World Health Organisation (WHO) and International Labour Organisation (ILO) have revealed in their Joint Estimates of the Work-related Burden of Disease and Injury report that working 55 or more hours a week increases your stroke risk by 35% and your risk of dying from ischemic heart disease by 17%, compared to working 35‑40 hours.

2. Lack of Support

A lack of support from bosses or colleagues can make employees feel isolated, exacerbating their stress and anxiety. Consider a customer service representative who feels unsupported by their manager when dealing with upset consumers, which causes greater stress.

3. Organisational Change

The constant flux of changes in structure, policy, or duties can create uncertainty and dread, destabilising the workforce. For example, a marketing team that is frequently restructured, causing anxiety and lowering overall team morale.

Managing these risks necessitates a proactive approach by identifying and addressing the issues that contribute to poor mental health. For instance, balancing workloads by conducting a job task analysis, cultivating a supportive culture through a culture development program, and equipping leaders on change management by keeping open communication during transitions can all help mitigate these risks.

Finding Balance:  How to Promote Mental Health and Performance Management in the Workplace

Performance management is a powerful tool—but it can also backfire if used inappropriately. To make the most of it while protecting the health and wellbeing of team members, consider these guidelines:


1. Set Clear Expectations

Ensure employees know what’s expected of them, providing clarity and direction. For example, Max, the dedicated project manager, could be less likely to experience work fatigue due to increased workload if Max is given an outline of specific milestones and deliverables to reduce ambiguity, and tasks are equitably distributed to other team members. This is where a job task analysis or a work design or redesign could be beneficial not just for Max but for all the team members.

2. Deliver Constructive Feedback

Regular feedback is a key factor in employee engagement, according to a 2021 Workleap global study, which found that "96% of employees said they want to hear feedback regularly."

Emphasise strengths and opportunities for improvement, giving concrete examples and helpful suggestions. A good way to do this could be a quarterly review that showcases both successes and areas for development.

3. Encourage Open Communication

Create a safe space for employees to voice concerns and seek help without fear of reprisal. A team leader might hold regular one-on-one meetings to discuss any issues privately.

4. Support Development

Invest in employees’ professional growth through training and development opportunities. This could involve sponsoring attendance at industry conferences or providing access to online courses.


1. Avoid Excessive Criticism

Persistent negative feedback can discourage employees and increase stress. Instead of only pointing out mistakes, a balanced approach that includes positive reinforcement is more effective.

2. Neglect Individual Needs

Recognise that each employee is unique, with different needs and challenges. Personalised development plans can cater to individual strengths and weaknesses.

3. Ignore Work-Life Balance

Encourage employees to maintain a healthy separation between work and personal life to prevent burnout. Flexible working hours or remote work options can be beneficial.

4. Overlook Recognition

Regularly acknowledge and celebrate employees’ contributions to boost morale and motivation. Simple acts like an Employee of the Month program can have a significant positive impact.

Leaders in the personal injury industry can use these strategies to lower psychological claims. They can make their workplaces better for mental health by showing they care about their employees and giving them the support they need to do well.

Mental health, psychosocial risk, and performance management seem hard to deal with for employers, but they can make their workplaces more productive and mentally healthy by managing these issues well. They need good performance management, supportive environments, and teamwork to lower psychological claims and make their workforce stronger. By looking after their employees' wellbeing, they also improve their productivity and their happiness.

Empower your workforce and boost productivity with Altius Group!

As a business leader, you understand the importance of a healthy and productive workforce. Altius Group offers premium end-to-end health and wellbeing services that are available nationally. Our services are designed to help you manage mental health, psychosocial risk, and performance management in the workplace, resulting in a more balanced and efficient work setting.

Contact us to learn more about how we can help you reduce psychological claims and improve outcomes, improve productivity and enhance the overall wellbeing of your workforce.

Take the first step towards a stronger, more resilient business with Altius Group.
Call 📱 1300 307 912 today!

This article was written by Sharon Richens, an insurance industry professional with over 25 years of experience as a physiotherapist, wellbeing consultant, and a mediator, specialising in personal injury, workplace health, safety, and resilience strategies. She is currently the Head of Customer at Altius Group, and a thought leader who speaks at industry conferences and features in the Insurance Business Elite Women special report 2024.

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