Peeling the mandarin: organisational change and mental health

By Shannon Jenkins

June 24, 2019

Source: Getty Images

Staff reduction and organisational change is a common occurrence in the public sector, with the most recent of blows dealt by this years’ state budgets.

Thousands of jobs will be cut over the next year across the nation, all in the name of efficiency. 

But how does the mental health of those who escape the money-saving measures fare?

Professor Stephen Teo, an expert in issues around public sector management, says such changes can have a long-term impact on the wellbeing of workers. This is especially true when they are treated as “just a number” and efficiency is perceived as more important than the mental health of those at the receiving end.

Teo argues the recent NSW state budget — which announced a cut of up to 3000 NSW public sector jobs — could harm the people who have to keep up a business-as-usual approach while others lose their jobs.

“Especially with the forthcoming public sector change in NSW, wholesale cuts like this can and most likely will produce significant adverse mental health impacts on the remaining public service workforce in NSW and then have an ongoing impact on public service capacity,” Teo told The Mandarin.

“Paradoxically like most governments, the NSW government’s rhetoric is focused on job creation at the same time [they’re] cutting public sector jobs.”

READ MORE: NSW a ‘jobs powerhouse’ — but not for public servants

Teo became curious about how workers cope with organisational change after plans to cut thousands of WA public servants were announced as part of WA’s 2018 budget.

With researchers from Edith Cowan, Curtin University, and RMIT, Teo surveyed commonwealth and state public servants who had experienced some form of organisational change in the 12 months prior to the survey.

The 312 employees (240 full time, 56% female, 57% state public service, 30% commonwealth) identified four main types of change: restructure, changes to processes, changes to job and services, and mergers and change in office relocation.

Frequency of change leads to more perceptions of a “psychological contract breach” and an increased risk of insomnia and depression, the survey found.

“The people that are still there felt betrayed,” Teo said.

“…the use of humour at work by managers and supervisors around times of organisational change often leads to negative mental wellbeing in employees”

The survey also revealed that the use of humour at work by managers and supervisors around times of organisational change often leads to negative mental wellbeing in employees. Teo said this particular finding highlights that Australia’s cultural value of ‘larrikinism’ can cause us to forget that “there’s a human sitting on the other side of the table”.

Long-term changes are needed to address this, such as training senior managers to look for signs of stress, to be more ethical, responsible and respectful, according to Teo.

Encouraging those in charge to appreciate that changes can have psychological impacts, and a focus on implementing change in a “humane” and “respectful” manner can also benefit, Teo said.

While senior management should be held accountable, they are not immune to stress.

“They never talk about how to be a better person, and it’s hard. Management is not easy,” Teo said.

So what advice does Teo give to anyone feeling the pressure?

“They should put their hand up and speak.”

“If they don’t talk about it…that’s going to eat away at their psychological wellness.”

The changes so far:


Up to 3000 jobs will be cut in NSW, but not front line roles. The Berejiklian government expects to cut “back-office” employees and lower expenditure on contingent workers.

The government also planned to abolish bonuses for department executives and reduce long-service leave from five to three months per 10 years of service.

However, they’ve had to abort the latter plan after Labor, the Greens and the Shooters, Fishers and Farmers united against the plan when it went to the Upper House on Thursday night.


The Queensland government has also decided to rein in public sector expenditure, but without forcing public servants out the door, and is putting a central-agency taskforce in charge of finding the savings instead of leaving it up to individual agencies.

There’s no talk of efficiency dividends and forced redundancies are off the table in the sunshine state. Instead, the Palaszczuk government has set “reprioritisation targets” of $200 million in savings to be found across government over 2019-20, and $500m each year after that.

Queensland Treasury is establishing a new Service Priority Review Office in partnership with the Department of the Premier and Cabinet to find the savings in agency budgets and specific programs, with health and education excluded. The new unit’s name has echoes of the Western Australian government’s big public-sector reform project, suggesting a targeted approach to cost-cutting.


Down in Tassie, unions are battling with the government to get a higher pay rise for public servants.

The state government originally offered a “modest” 2% pay rise for public servants in its budget, which unions opposed with a demand for 3%.

Since then, the unions have lowered their request to 2.5%, while the government has upped its offer to 2.1%.

Tasmanian Premier Will Hodgman said he and the Treasurer will meet with union leaders to negotiate the pay rise and quell “threats of industrial action”.

“To date, there have been 113 formal meetings with unions on public sector wage negotiations, and it is extremely disappointing that union leaders have recently sought to undermine the established negotiation process,” Hodgman said in a statement last week.

“I would encourage the unions to re-engage in good faith negotiations rather than attempt to further delay public servants receiving their long-awaited wage increase.”

The Tasmanian budget was released last month, signalling a review of all aspects of the public service to make it as “efficient and effective as possible”.

“This Government will always live within its means and this Budget introduces a modest efficiency dividend of three quarters of 1%…This modest measure will not impact on the provision of frontline services. Rather it will come from expenditure such as consultants, travel and advertising, as well as targeted vacancy control and natural employee attrition, without affecting essential services,” Treasurer Peter Gutwein said in his May budget speech.


The public service must find $1.8 billion in cuts over four years but forced redundancies are a last resort, according to the state budget released last month.

The departments get to decide how cuts will be made, and will be overseen by the secretaries of the Department of Premier and Cabinet, and Treasury and Finance.

An increased efficiency dividend and a reduction in indexation of expenditure growth were introduced to save money for priority areas. The indexation change is expected to save $200 million over four years.

READ MORE: Victorian budget: the big spend and the efficiency dividend


There will be 1,588 less full-time South Australian public sector jobs in the next year, while front line roles including teachers will grow to keep up with increasing enrolments in government schools and medical services.

To make up for the ballooning front line, South Australian Treasurer Rob Lucas hopes to reduce more back-office positions, the Financial Review reported.

Lucas planned to cut 4013 public servant roles in last year’s budget, but only about half of that was achieved.

“Certainly from our viewpoint we see there’s scope for more reductions,” he told Financial Review.


Back in March, it was reported that Northern Territory public service chief executives were told to cut 300 people over the coming year to help alleviate their increasing debt.

NT Treasurer Nicole Manison said the public service would be capped to 2018 average staffing levels to save the budget $30 million.

Since then, the state government has decided to cut 52 full-time executive positions, freeze the wages of 25 politicians and 600 executives, and increased the total job cuts to 472 positions over the next four years.

However, 21,207 out of the NT’s 247,940 people are public servants — almost 9% of its population. According to ABC news, this little statistic might make implementing the changes rather difficult for those up top.


A cap of $1,000-per-year on public sector wage increases was announced by the WA government in 2017 and their most recent state budget has not changed this.

The government won’t budge on its money-saving decision, as salaries remain at a standstill for Members of Parliament, Judges and senior public servants. 

Treasurer Ben Wyatt insists the policy is here to stay, despite possible retaliation from unions.

“The Premier and I have made clear time and time again that our policy around wages was always a four-year policy,” Wyatt told the West Australian.


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