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The Cost of Poor Leadership in Australia
The Cost of Poor Leadership in AustraliaEarlier this year,…
A 2024 report by the World Health Organisation revealed a startling fact: toxic work environments cost the global economy an estimated $1 trillion annually in lost productivity. This isn’t just about financial loss; it’s about the human cost. When a workplace becomes toxic, it erodes trust, stifles innovation, and damages the mental and emotional well-being of employees.
The key to counteracting this is fostering psychological safety.

We investigate what toxic workplace behaviours look like and provide actionable strategies for building a culture of psychosocial safety. We’ll examine the critical role of leadership and how using the right tools can help create a healthier, more productive organisational culture.
A toxic workplace is more than just having a bad day at the office. It’s a persistent pattern of negative behaviour that disrupts work and undermines employees. These behaviours can manifest in several ways:
These actions directly threaten an employee’s sense of belonging and security, making it impossible for them to perform at their best.
To counteract toxicity, organisations must actively cultivate psychological safety. This is an environment where employees feel safe to voice their opinions, ask questions, and make mistakes without fear of punishment or humiliation.
Key strategies include:
Leaders are the architects of organisational culture. Their actions, words, and decisions have a ripple effect across the entire team. Effective leadership is therefore the most powerful tool for preventing toxicity.

Developing leadership skills is essential. Leaders need to be trained in active listening, empathy, and constructive conflict resolution. They must learn to give feedback that empowers rather than demeans and to recognise the contributions of every team member. A leader who fosters trust and shows genuine care for their team’s well-being is the strongest defence against a toxic environment.
How can you be sure your leadership is on the right track? This is where assessment and profiling become invaluable. Using validated leadership assessment tools provides objective insights into a leader’s strengths and areas for development.
These tools can measure key competencies like emotional intelligence, communication style, and decision-making capabilities. By identifying potential blind spots, organisations can provide targeted coaching and support to help leaders grow. This data-driven approach moves beyond guesswork, allowing for strategic interventions that build a stronger, more resilient leadership team.
Creating a psychologically safe workplace is not a one-time project; it’s an ongoing commitment. It requires continuous effort, regular assessment, and a willingness to adapt. By identifying and addressing toxic behaviours, investing in developing leadership skills, and using assessment and profiling tools, organisations can build a culture where everyone feels valued, respected, and empowered to succeed.
This foundation of psychosocial safety both reduces costs associated with turnover and absenteeism, and unlocks the full potential of your greatest asset: your people.
