With burnout remaining pervasive in Australian workplaces despite billions being spent on wellbeing programs, Professor Alex Christou of Monash Business School makes the case that poor leadership is the real problem underlying high levels of stress and low productivity.
By Professor Alex Christou of Monash Business School *
As we enter 2025, corporate Australia finds itself at a crossroads. Organisations have spent countless dollars on wellbeing programs aimed at reducing stress and boosting productivity. Yet the numbers tell a starkly different story: workplace dissatisfaction and burnout remain pervasive. The real culprit? Poor leadership. Without strong, empathetic leaders, no amount of wellness initiatives can address the systemic issues plaguing Australian workplaces.
Research consistently highlights leadership as the single most influential factor in employee wellbeing and performance. A 2022 Gallup study attributed 70% of team engagement variability directly to managers. Closer to home, Beyond Blue highlights that poor work design can add frustration and stress, impacting mental health. These findings align with global research that emphasises the crucial role of effective management in reducing workplace stress.
Leadership affects every aspect of organisational culture. Employees who report having supportive leaders are 1.5 times more likely to be engaged at work, according to a 2023 survey conducted by the Workplace Wellbeing Institute. This engagement translates directly to improved productivity and retention.
The cost of poor leadership in corporate Australia
Poor leadership has a tangible, measurable impact on Australian businesses. Stress-related absenteeism, a significant symptom of poor leadership, drains $10 billion from the economy each year, according to a PwC report commissioned by Beyond Blue. Additionally, research from McKinsey & Company found that disengaged teams—often a result of subpar leadership—are 37% less productive and 49% more likely to quit.
Beyond financial metrics, the human cost of poor leadership is equally devastating. Employees in toxic workplaces experience higher rates of anxiety, depression, and burnout, impacting their personal lives and professional trajectories. These environments often foster mistrust and internal conflict, further stalling productivity and innovation. Moreover, organisations that fail to address poor leadership risk reputational damage, particularly as online platforms amplify employee grievances.
Key leadership deficits driving workplace stress
- Lack of Empathy: Many leaders lack the emotional intelligence needed to understand and support their teams. Empathy is no longer a soft skill; it’s a leadership necessity in a post-pandemic workplace.
- Poor Communication: Vague instructions and inadequate feedback leave employees feeling undervalued and unsure of their roles. Clarity and transparency are crucial for reducing workplace stress.
- Micromanagement: Leaders who fail to trust their teams stifle creativity and create unnecessary stress. Empowerment is a cornerstone of modern leadership.
- Inconsistency: Unpredictable decision-making fosters uncertainty and frustration, particularly in times of organisational change.
- Resistance to Change: Leaders who fail to adapt to new technologies or workplace demands can exacerbate employee stress and hinder organisational progress. Agile leadership is more critical than ever.
The return-to-office dilemma: A leadership stress test
The debate over return-to-office (RTO) mandates has become a litmus test for leadership in 2025. As Australian organisations navigate hybrid work models, the challenge lies in balancing business needs with employee autonomy. Poorly managed RTO policies highlight key leadership deficits, such as inadequate communication and a lack of empathy.
A 2023 survey by PwC Australia revealed that 63% of employees preferred hybrid or remote work arrangements, citing improved work-life balance and reduced stress. Yet, many organisations enforce RTO mandates without adequately addressing employee concerns, eroding trust and engagement. This friction underscores the need for leaders to model transparency, adaptability, and active listening.
Organisations like Atlassian have embraced flexible work policies, reinforcing their reputation as a preferred employer. By contrast, companies rigidly enforcing RTO mandates risk higher turnover and diminished morale—outcomes that stem directly from leadership missteps.
Leadership excellence: Lessons from Atlassian
Atlassian is a standout example of leadership driving organisational success. The Sydney-based tech giant has embedded leadership development into its DNA, making it one of Australia’s most sought-after employers. Atlassian’s “Team Playbook” provides a framework for fostering psychological safety and collaboration within teams, empowering leaders and employees to navigate challenges effectively.
In 2024, the company reported a 90% retention rate—a testament to its commitment to creating a culture of trust, innovation, and adaptability. Atlassian’s leadership initiatives demonstrate the tangible benefits of prioritising employee wellbeing and engagement through thoughtful and consistent leadership practices.
A new approach: Leadership development as a risk mitigation strategy
To combat the risks associated with poor leadership, organisations must integrate leadership development into their core business strategies. Key actions include:
- Executive Education: Equip leaders with skills in empathy, communication, and adaptability. Workshops, simulations, and scenario-based training can ensure leaders are prepared to handle complex workplace dynamics. Effective training often includes follow-ups to ensure sustained learning.
- 360-Degree Feedback: Regularly evaluate leadership performance using input from teams. This not only identifies areas for improvement but also fosters trust and transparency. For example, another of the big four banks has successfully implemented feedback tools to enhance leadership accountability, resulting in notable improvements in employee satisfaction and retention.
- Accountability Metrics: Tie leadership outcomes to key performance indicators such as employee retention, engagement, and team productivity. Metrics-driven leadership assessments provide actionable insights for improvement.
- mployee retention, engagement, and team productivity. Metrics-driven leadership assessments provide actionable insights for improvement.
4. Support Systems: Provide leaders with resources to manage their own stress and improve resilience. These can include access to coaching, counselling, and peer networks. Leaders who prioritise their wellbeing are better equipped to support their teams. - Succession Planning: Develop a pipeline of future leaders equipped with the skills and mindset needed to sustain high performance and wellbeing. Leadership bench strength ensures organisational resilience and mitigates risks associated with sudden leadership transitions.
Psychological safety: The leadership imperative
Psychological safety—the belief that one can speak up without fear of retribution—is the cornerstone of a healthy workplace. Research from McKinsey in 2023 revealed that teams with high psychological safety were 67% more productive. Leadership is the linchpin of this dynamic; leaders who model vulnerability and openness set the tone for their teams.
In Australia, organisations like Telstra have adopted frameworks to embed psychological safety into their workplace culture. Through leadership training focused on active listening and inclusive decision-making, Telstra has significantly improved its team collaboration scores, driving better outcomes across projects. Similarly, BHP has leveraged psychological safety principles to improve performance in high-risk operational settings, highlighting the scalability of such strategies across industries.
The way forward: Investing in leadership to unlock potential
Corporate Australia can no longer afford to ignore the leadership crisis. The evidence is overwhelming: poor leadership undermines not only employee wellbeing but also organisational performance. By prioritising leadership development, organisations can transform their workplaces into hubs of innovation, engagement, and productivity.
The economic benefits of effective leadership extend beyond retention and productivity. High-performing organisations with robust leadership frameworks often report stronger market performance and stakeholder trust. In industries like finance and technology, where innovation drives competitive advantage, leadership effectiveness directly correlates with growth.
Moreover, embedding leadership into wellbeing strategies isn’t just a moral imperative; it’s a business necessity. Leaders set the cultural tone, and their behaviours shape how organisations navigate change, challenges, and opportunities. For businesses to thrive in 2025 and beyond, they must invest in leadership as their most valuable asset.
As Peter Drucker, considered the founder of modern management, famously said, “Culture eats strategy for breakfast.” In 2025, it’s time for Australian organisations to recognise that culture begins with leadership. The path to high performance starts at the top—and the risks of failing to act have never been greater.
High performance in 2025 will belong to organisations that embrace leadership as the cornerstone of their wellbeing strategies. By addressing poor leadership, corporate Australia can reduce risks, unlock employee potential, and secure sustainable success for the future.
Leadership is no longer just a function; it’s a fundamental driver of organisational health. By tackling the root causes of poor leadership, Australian businesses can create workplaces where wellbeing and performance thrive hand in hand.
*Professor Alex Christou is Director of Corporate Education, Monash Business School
