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The toll of COVID-19 on SME mental health

recovery growth recovery growth
Malavika Santhebennur 9 minute read

There has been a lot of coverage about how SMEs are managing the economic impacts of COVID-19 on their businesses, but what about the impacts on their mental health? We take a look at the toll this crisis has had on employees’ mental health, and the support that is available for small businesses to foster mental wellbeing among staff.

Coronavirus pandemic. Lockdown. Social distancing. Economic hibernation. Closure of small businesses.

These terms and phrases have become a part of our lexicon in 2020, as Australia and the globe tackles the COVID-19 crisis, and its economic impacts.

In Australia, small-to-medium enterprises (SME) have borne the brunt of the government-imposed economic hibernation to curtail the spread of the coronavirus, with the federal and state governments shutting down many businesses, particularly in the hospitality, food, accommodation, and the arts and recreation sectors.


It should come as no surprise then, that many business owners and employees are saying that they have been experiencing a mental health condition for the first time, according to one report.

SuperFriend (an organisation that designs and provides mental health initiatives for the workplace), released The Indicators of a Thriving Workplace 2020 report during Mental Health Week in October.

It surveyed 10,338 people who worked and/or received a JobKeeper payment between March and June 2020 (inclusive), across various industries, role types, and locations. Just under half the respondents were in the SME sector.

The report found that 24 per cent of business owners and 16 per cent of workers in mid-sized organisations (employing 20 to 199 staff) experienced a mental health condition for the first time since the COVID-19 crisis emerged.

Commenting on these findings, SuperFriend CEO Margo Lydon tells The Adviser that it is important to recognise that these trends have occurred during the pandemic.


“Obviously, there are increased stress levels and a range of other factors that are contributing to that increase and it is higher than what we expected,” she says.

While the report did not delve into whether those who experienced a mental health condition for the first time worked in sectors that have negatively impacted by COVID-19, Ms Lydon says it is plausible to conclude that those who have had to face tougher conditions in 2020 would have seen a deterioration in their mental health condition.

“We know that, for instance, there are really strong linkages between financial hardship, job insecurity, relationship breakdowns, and a whole range of things that do contribute to poor mental health or mental illness,” Ms Lydon says.

Connectedness in small businesses

For SuperFriend’s report, respondents were asked to evaluate their current workplace environment.

Respondents were asked to rate their workplace on 40 characteristics that SuperFriend has identified are the indicators of a mentally healthy workplaces. These are broken down into five segments: connectedness, culture, capability, leadership, and policy.

According to Ms Lydon, SMEs achieved higher index scores across every domain except for designing tangible mental health policies for their business.

SMEs achieved lower index scores in designing policies because they may not have implemented policies in writing, Ms Lydon explains.

“Big businesses always do, hence they always have a higher score for policies,” she says.

However, SMEs have compensated for this by scoring well in domains like connectedness (creating positive, high-quality interpersonal connections for effective teamwork and collaboration, and having a shared vision) and leadership (with leaders who work with their teams using a strengths-based and coaching mindset).

For smaller businesses (with two to 19 people), the connectedness score was 72.7 out of 100, compared to 69.5 in businesses with 20-199 staff, and 68.3 in organisations with over 5,000 personnel. The leadership score for businesses with two to 19 people was 66.8.

“What that speaks to is that sense of connectedness and belonging; that sense of family that often is created inside smaller businesses,” Ms Lydon says.

Financial services an essential service

As SMEs face one of their toughest periods during the COVID-19 crisis, one of the bright spots in the survey was the performance of the financial and insurance services sectors, whose workplace mental health and wellbeing index score not only increased in 2020, but the sectors surged from sixth place in 2019 to second in 2020.

The sector scored 67.6, while the information media and telecommunications industry clinched the top spot, with a score of 71.6. The overall national wellbeing index score increased by 2.4 points from 2018 and 2019 in 2020 to 65.1 out of 100.

Ms Lydon attributes this improvement to the sense of purpose and meaning that was felt by those working in these sectors during the pandemic, as consumers and borrowers looked to financial advisers and mortgage brokers for guidance with their finances, mortgage repayment deferrals, and JobKeeper applications.

“I think when people are facing adversity and have a genuine need for support, there is nothing quite like [the] feeling [of] helping that person because [you've] got the knowledge and expertise, but actually helping them when they really need it,” Ms Lydon says.

Furthermore, with the financial and insurance industries being inherently risk-averse, these organisations have the wherewithal to mitigate and minimise risk, and support staff during periods of crises, she adds.

Barriers to a mentally healthy workplace

On the other hand, according to the report, small businesses were found to have been taking the least number of tangible actions, at only 41 per cent.

Some of the barriers small businesses cited to investing in workplace mental health (which Ms Lydon emphasises are valid reasons), were that businesses are facing more pressing and important issues, while some are struggling to survive.

Some respondents told SuperFriend that “being a small business, there isn’t a lot of room for the business to invest in mental health services”, Ms Lydon says.

Support is available, action can be taken

While SMEs might justifiably be reluctant to invest in mental health initiatives at a time when they are at risk of shutting shop due to the economic ramifications of the COVID-19 crisis, Ms Lydon points out that there is a range of resources, tools, and information available for SMEs and individuals, including websites.

More tangible support came in the 2020-21 budget, with the federal government’s $4.25 million commitment to rolling out a new mental health program for small business owners.

Mental health organisation Beyond Blue will deliver the NewAccess for Small Business service, which will provide SME owners with access to free one-on-one telehealth sessions with specially trained mental health coaches.

Small business participants can access six one-on-one sessions with their designated coaches, who will use evidence-based cognitive behavioural therapy to support SMEs.

Commenting on the measure, Ms Lydon says: “This is mental health coaching for small business that would be fantastic to help business owners and business leaders to better understand what they can be doing to further strengthen their own mental health and well-being and that of their people.”

The Australian Small Business and Family Enterprise Ombudsman Kate Carnell also threw her support behind the government’s initiative, stating that mental health could be the next challenge to mount amid the COVID-19 crisis, particularly in the business community.

“Small business loans are often secured against the family home, so if they lose their business, they could lose their home. It means the stakes are incredibly high and that is understandably taking a huge toll on small business owners’ mental health,” she said.

Ms Carnell added that the ASBFEO is working in partnership with Beyond Blue to promote NewAccess and connect SME owners with the services through its call centre and assistance team.

Ms Lydon says it is vital to recognise that SMEs have different needs, and different resources at their disposal, compared with larger organisations. She emphasises that a lack of tangible mental health policies does not mean that SMEs do not care for and nurture their employees.

“I think it is about how we help small businesses that are time poor, sometimes resource poor, have mentally healthy workplaces for themselves as business owners as well as the people who work with them,” she concludes.

The toll of COVID-19 on SME mental health
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Malavika Santhebennur

Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.


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