By Georgia Henry GAICD
It starts in the boardroom
A director’s role in shaping organisational culture and ensuring psychosocial safety in their organisation has never been more critical.
Organisational culture and psychosocial safety in the workplace are closely intertwined, with culture creating the environment that will either mitigate safety risks or manifest hazards. This connection is multifaceted and has significant implications for employee well-being, productivity, and overall organisational success.
Proactively creating culture that supports psychosocial safety is a strategic imperative that is grounded in legislative compliance and obligations and will directly impact your company's bottom line and long-term success.
Directors’ obligations for psychosocial safety
Directors have specific legal obligations to ensure a psychosocially safe workplace. These obligations stem from recent changes to work health and safety laws across Australia, which now explicitly include psychosocial hazards and risks.
One of these obligations is a proactive duty of care. In relation to psychosocial hazards this means ensuring that they have done everything practicable to eliminate reasonably foreseeable psychosocial hazards in the workplace. The best way to do this is to build this into organisational culture and create an environment where hazards are proactively identified and managed.
The Strategic Value of Culture and Psychosocial Safety
Psychosocial safety, rooted in a robust organisational culture, is rapidly becoming a key differentiator in a highly competitive market for employees and volunteers. It's not merely about compliance or risk management; it's about creating a competitive advantage that attracts top talent, drives innovation, and enhances shareholder value.
Risk Management and Corporate Governance
Boards must incorporate the oversight and risk management of psychosocial safety as crucial components of corporate governance. It is not enough to manage psychosocial hazards as a ‘tick and flick’ reporting exercise.
At a board level, considering the impact of changes in structure, policies, resourcing, timeframes, and other decisions on the people within the organisation is a critical step in managing the key psychosocial hazards.
To improve oversight of psychosocial safety, consider integrating these key performance indicators into your reporting frameworks:
Employee engagement scores
Turnover rates
Absenteeism and presenteeism metrics
Psychological safety survey results
Time to hire (recruitment gaps)
Productivity
Claims – number, cause, cost, impact
Other identified areas of risk
Leadership's Pivotal Role
As directors, you set the tone from the top. Your actions and decisions ripple through the organisation, shaping its culture and, by extension, its psychosocial safety climate.
Similarly, all leaders within your organisation play a pivotal role in shaping both organisational culture and psychosocial safety. They uphold the standards of the organisation’s culture, and their actions are closely observed by employees.
When leaders model behaviours that promote psychological safety, such as encouraging open dialogue and valuing diverse perspectives, they contribute to a culture where employees feel secure in expressing their thoughts and concerns.
Experiences matter
All these elements culminate in the experiences of your employees and volunteers, your customers, and those you work with. The experiences of your employees are where psychosocial hazards show up. The culture and ways of working will influence the impact of these hazards on the experiences of your employees and the process for risk mitigation.
In an organisation with an openly supportive culture that encourages feedback, an employee who experiences a psychosocial hazard or event that impacts their psychological wellbeing, may be more inclined to seek help and work with leaders to resolve this.
In an organisation with a culture of fear, blame, or uncertainty, an employee in the same circumstances may chose to withdraw, become disengaged, make a claim against the organisation, or leave.
The impact of experiences is significant. As directors this is where you are able to monitor culture and ask questions about psychosocial safely. Tuning in to changes in metrics will indicate potential areas of risk.
Designing culture
Every organisation has a workplace culture that has been created either by default or by design. When considering the proactive obligations directors have and the risks associated with behaviours and ways of working it makes sense to proactively design culture.
HENRY REED developed their proprietary Model for Organisational Effectiveness (a visual guide to creating culture by design) to demonstrate the relationship between the board’s responsibilities, the elements within their control, and the impact of culture.
This model and HENRY REED’s culture design approach ensures boards are supported to meet their obligations and culture is optimised to achieve financial and non-financial results, mitigate risks including those from psychosocial hazards, and create a competitive advantage.
Understanding the core elements of culture design and what is most important to your organisation allows the continual development and adaptation of culture as ways of working change.
HENRY REED's
Model of Organisation Effectiveness
A visual guide to creating culture by design
The Culture Impact
As directors, your commitment to fostering a culture that prioritises psychosocial safety is not just an ethical or compliance imperative—it's a business necessity.
By recognising the intrinsic link between organisational culture and psychosocial safety, and taking decisive action to proactively create culture, you will strengthen your company for sustainable success in an increasingly complex business landscape.
A psychologically safe workplace isn't just good for employees—it's good for business.
HENRY REED is a highly regarded Culture & Leadership Consultancy supporting clients across Australia. Our partnership begins in the boardroom and supports every person in the organisation through culture audit, culture design, embedding culture, culture leadership, and turning potential into performance.
Contact Georgia Henry GAICD on 1300 266 995 for a confidential discussion about your culture needs, or book a time for an online meeting.