“The client is always right” is a philosophy that many businesses subscribe to.
Widely attributed to American retailer, Harry Selfridge, the adage insists that businesses prioritise their customers’ needs and demands, no matter how unreasonable.
But unreasonable clients are a potential psychological hazard in the workplace that employers now have a legal duty to manage, under Australia’s bulked up Work Health and Safety Act.
The new Code of Practice and Regulation on Managing the risk of psychosocial hazards at work is behind the proliferation of signs in retail stores warning customers that abusive behaviour will not be tolerated.
In advice land, clients are generally pretty happy. This is due, in part, to consistently strong investment returns, but how would clients behave if markets tumbled and the value of their portfolio halved. What if they had a life insurance claim rejected?
Are teams properly set up and supported to deal with irate clients in such scenarios?
Other potential workplace hazards cited in the code include unrealistic job demands, poor support, and lack of role clarity.
The code’s aim is to improve the psychological safety and wellbeing of employees by minimising the risk of harm, such as stress, depression and burnout. This should be the desire of all business leaders.
Not only is building a safe workplace and taking care of employees the right thing to do, it also makes commercial sense.
According to research by the Oxford University Said Business School, safe and happy workers are 13 per cent more productive. They’re also easier to manage and less likely to leave.
On the flipside, a 2023 global employee survey by Gallup, estimated unhappy, disengaged and stressed employees cost the economy US$8.8 trillion ($13.4 million), or 9 per cent of global GDP, due to absenteeism, high turnover and mental health-related insurance claims.
In short, people who feel safe and valued perform better; and when people perform better, businesses perform better.
This is especially pertinent for service companies, including professional advisory firms, where people are their biggest asset.
It is even more pertinent for professional services businesses that are focused on growth and productivity, which are the majority according to a recent Professional Planner roundtable.
High growth firms typically have ambitious goals and targets making them vulnerable to burnout, if not actively managed.
Those expanding through a combination of organic growth and M&A have additional risks to consider such as poor organisational change management and cultural misalignment, leading to conflict or poor workplace relationships and interactions.
Tips for psychological safety
For businesses concerned about falling foul of the new regulations, there is nothing to fear as long as their focus is on looking after their people.
The code is not unreasonable and it provides practical guidance on how to achieve the standards required under the new law.
When it comes to managing psychosocial risks, the most important factor is arguably the tone from the top.
Business leaders must embrace the code and treat it as an opportunity to demonstrate genuine care. This should spark more meaningful and regular conversations around how people are feeling at work. Managers should actively listen to employees and act on any grievances and concerns. This could mean reassessing expectations, extending deadlines, and offering greater flexibility.
Leaders should also spend time identifying key risk areas.
A company’s organisational chart is a good place to start to ensure the right people are in the right roles, and the business is adequately resourced.
Across the board, businesses are struggling to find good people, due to a local skills and talent shortage.
Last year, the government’s employment commission, Jobs and Skills Australia, listed 332 occupations in short supply including, for the first time, financial investment adviser.
As demand for professional advice rises, many businesses are doing more with less.
Yet, one of the biggest causes of psychological harm in the workplace is burnout, due to excessive hours and unreasonable job demands. Managing this risk will require greater innovation and creativity.
Advice businesses will need to dial up their use of technology, automation and AI.
By automating repetitive and routine tasks, people can be freed up to focus on more challenging and enjoyable work.
Businesses can also leverage AI technology to perform higher value jobs that traditionally required human intelligence such as taking meeting notes, writing emails and letters, and even decision making.
Both will play an increasingly important role in driving productivity in a safe and sustainable way, and managing the risk of psychological harm.
Outsourcing is another lever businesses can pull to gain additional resources and protect against burnout.
Over the past five to 10 years, advice businesses have ramped up their use of outsourcing, particularly for paraplanning, administration and IT support. Some businesses have built sizeable teams and delegated a broader range of responsibilities.
The human and financial cost
The biggest risks in the workplace are no longer physical hazards like dangerous equipment and machinery, toxic chemicals and materials, and exposure to extreme cold and heat.
They are not even overt psychological hazards like bullying, discrimination and sexual harassment.
They can be as covert as excessively long hours, poor communication, and inadequate recognition.
For the longest time, these subtle psychosocial hazards have been part of the job but their human and financial impact can’t be ignored.
Mental health-related workers compensation insurance claims have skyrocketed and life insurance companies are experiencing a mountain of mental health claims linked to the workplace.
On average, these psychological injuries take longer to recover from.
Advisers know this all too well.
They are helping their clients assess and manage risk every day including personal and business financial risk, investment risk and longevity risk.
This understanding of the importance of managing risk strongly positions advisers to meet their new duties under the law and build safe and healthy workplaces.
Merilyn Speiser is the founder and managing principal of Catalina Consultants which is part of the AZ NGA Group.
