News & Updates

Why Addressing Psychosocial Risks is Critical: The True Cost of Workplace Turnover

Dr. Angie Montgomery

October 1, 2025

Australian businesses are hemorrhaging talent—and the culprit isn't what most leaders think. While companies scramble to offer better salaries and perks, the real driver of turnover remains hidden in plain sight: psychosocial hazards. New data reveals that up to 70% of employee departures stem from excessive workload, workplace conflicts, poor leadership, and toxic cultures—issues that cost Australian businesses billions annually and expose organizations to serious legal risks. This isn't another article about employee engagement. It's about understanding the invisible forces quietly driving your best people away—and what you can do about it before it's too late.

Our comprehensive analysis shows that psychosocial factorsaccount for approximately 50-70% of employee turnover in Australian companies, representing billions in direct and indirect costs thatforward-thinking organizations can no longer afford to ignore.

The evidence is clear: safer, better work starts withunderstanding and managing the psychological health and safety risks that aresilently driving your best people away. This isn't just about compliance—it'sabout creating workplaces where people thrive, productivity soars, andretention becomes a competitive advantage.

The Hidden Magnitude of Psychosocial-Driven Turnover

When employees leave, the reasons often point to the sameunderlying issues: excessive workload, workplace conflicts, poor leadership,and toxic cultures. The Australian HR Institute's comprehensive 2025 surveyof 600+ senior HR professionals¹ provides the most direct measurement ofthis crisis, revealing that 66% of employee exits relate to psychosocialfactors:

Excessive workload (26%) - the leading cause of departures
Workplace conflicts and poor relationships (21%) - often stemming from inadequate management of interpersonal dynamics
Unattractive roles due to workplace culture (21%) - reflecting deeper organizational health issues
Inadequate learning opportunities (19%) - indicating poor job design and development pathways

This data aligns precisely with what we see at InCheq:organizations struggling to understand why their retention strategies aren'tworking, not realizing that the real issues are often invisible psychosocialhazards that traditional surveys miss.

The Compliance Imperative: Legal and FinancialConsequences

Since the Work Health and Safety Amendment Regulation2022 came into effect, Australian employers have explicit legal obligationsto identify and manage psychosocial hazards. The consequences of non-complianceextend far beyond regulatory penalties—they manifest as devastating turnovercosts.

Safe Work Australia's latest data²,³ reveals thescale of the problem:

Mental health conditions account for 9% of all serious workplace injury claims
52.7% of these claims stem from workplace harassment, bullying, and work pressure
Mental health claims have increased 36.9% since 2017-18 (compared to 18.3% for all injuries)
These claims carry 3.7 times higher compensation costs than physical injuries
Median recovery time is 34.2 weeks versus 8.0 weeks for physical injuries

But here's what the official statistics don't capture: forevery formal compensation claim, there are dozens of employees quietlystruggling with psychosocial hazards who simply choose to leave rather thanreport the issue.

The True Economic Impact: Beyond Replacement Costs

The financial implications of psychosocial-driven turnoverextend far beyond the commonly cited 20-50% of annual salary replacement costs.Untreated mental health conditions cost Australian businesses $10.9 billionannually¹², with $4.7 billion in absenteeism and $6.1 billion inpresenteeism. Each employee with workplace mental illness costs employers anestimated $3,200-$5,600 annually in reduced productivity before theyeven decide to leave.

When we factor in the ripple effects—knowledge loss, reducedteam morale, increased workload on remaining staff, and the time investmentrequired from managers and HR teams—the true cost of psychosocial-driventurnover often exceeds 100% of the departing employee's annual salary.

Industry Patterns: Where the Risk is Highest

Our analysis reveals significant sector-specific differencesin psychosocial-driven turnover:

Healthcare and social assistance generate the highest number of mental health compensation claims²
**Big four consulting firms report turnover rates exceeding 33%**¹¹ with stress and burnout as primary drivers
Public sector experiences 23% turnover compared to 13% in private sector
Women experience 31.1% more harassment and bullying claims compared to 22.6% for men

These patterns highlight the critical need for targeted,data-driven approaches to identifying and managing psychosocial risks—exactlywhat our Workplace Psychosocial Hazard Assessment is designed to deliver.

The Global Context: Australia as Part of a WorldwideMovement

International benchmarks confirm that Australia's challengereflects a global trend toward recognizing and addressing workplace mentalhealth:

UK research found 61% of employees⁷ who left jobs cited poor mental health as a factor
Over one-third of US employees⁸ report leaving jobs partly due to mental health concerns
European Union data⁹ shows 27% of workers experience stress, anxiety, or depression caused or worsened by work

The 2021 release of ISO45003 established globalguidelines for managing psychosocial risks, positioning Australia within aninternational movement toward creating psychologically safe workplaces.

Why Traditional Approaches Fall Short

Most organizations rely on annual engagement surveys or exitinterviews to understand why people leave. But these approaches miss thecritical early warning signs of psychosocial risk. By the time someonecompletes an exit interview citing "workload" or "managementissues," the damage has already been done—not just to that individual, butpotentially to their entire team.

The challenge is that psychosocial hazards are ofteninvisible, complex, and interconnected. An employee might cite"workload" as their reason for leaving, but the real issue could beunclear role expectations, inadequate supervisor support, or poor changemanagement—all of which require different interventions.

The InCheq Solution: Proactive Risk Identification andManagement

This is why tools like InCheq are becoming essential formodern organizations. Our Workplace Psychosocial Hazard Assessment isspecifically designed to:

Identify the 16 psychosocial hazards outlined in Australian Work Health and Safety regulations
Provide real-time insights into psychological health and safety risks before they drive turnover
Deliver actionable, AI-powered recommendations for addressing identified hazards
Enable targeted interventions based on department, location, and demographic data
Create a baseline for measuring improvement over time

As one of our clients from Campari noted: "Thesoftware acts as a 'source of truth' now that continues to drive mental healthas a cultural priority."

From Data to Action: Preventing Turnover Through EarlyIntervention

The power of proactive psychosocial risk management lies inits ability to address problems before they become resignation decisions. When LaTrobe University implemented our assessment, they reported "animprovement in our workplace culture, with a heightened awareness of mentalhealth and a collective commitment to fostering a safe and respectfulenvironment for all."

Hepburn Shire Council's success demonstrates theimpact possible: their comprehensive approach to psychological health andsafety led to recognition at the Victorian WorkSafe Awards 2024, withour assessment completing 89% faster than traditional organizationalsurveys while delivering deeper insights.

The Methodology Advantage: Academic Rigor Meets PracticalApplication

Our assessment is designed by specialist workplacepsychologist Dr. [Name], ensuring alignment with both regulatory requirementsand evidence-based best practices. Unlike generic engagement surveys, our tool:

Measures specific hazards linked to turnover risk in academic literature⁶
Provides confidential, anonymous feedback that encourages honest responses
Generates segment-level insights to identify high-risk areas before they become turnover hotspots
Delivers comprehensive hazard assessment reports that guide targeted interventions

The Return on Investment: Quantifying the Benefits

Organizations using proactive psychosocial risk managementtypically see:

Reduced turnover costs through early identification and intervention
Improved compliance with Work Health and Safety regulations
Higher engagement scores as employees feel heard and valued
Lower absenteeism rates as workplace stressors are addressed
Enhanced employer brand as word spreads about positive workplace culture

When we consider that preventing just onepsychosocial-driven departure can save $50,000-$150,000 in direct and indirectcosts, the investment in comprehensive risk assessment becomes self-evidentlyworthwhile.

The Future of Workplace Safety: Psychological Health asCore Business Strategy

The data is unambiguous: psychosocial workplace factorsdrive approximately 50-70% of employee turnover in Australian companies.Organizations that continue to treat mental health and psychological safety as"nice-to-have" initiatives rather than core business imperatives willface escalating costs, declining performance, and increasing regulatoryscrutiny.

The organizations thriving in this new landscape are thosethat recognize psychological health and safety as fundamental to their success.They're using tools like InCheq to transform reactive crisis management intoproactive risk prevention, creating workplaces where people genuinely want tostay and contribute their best work.

As our client from WorkCover Queensland observed: "Theability to download reports, graphs and tailored data contributed to thepositive experience" of creating a comprehensive approach topsychosocial risk management.

The question isn't whether you can afford to invest inpsychosocial risk management—it's whether you can afford not to. Every daywithout proper assessment and intervention represents potential talent lossthat could have been prevented with the right insights and actions.

References and Data Sources

Australian Government and Official Sources:

Academic Research Sources:

International Comparative Data:

Industry and Professional Association Data: