The Real Cost of Poor Culture in Construction

By Angela Hucker, Founder and CEO, EPIC

I want to start with a number that should be on the wall of every boardroom in this industry.

$288,542.

That is the average cost of a psychological injury claim in Australia right now. Not a decade ago. Right now. Back in 2019-20 the average claim sat at around $146,000. It has nearly doubled in five years.

And here is the part most leaders have not sat with yet. Psychological injury claims make up roughly 12% of workers compensation claims, but they account for around 38% of the costs. A small slice of the claims. A massive slice of the bill.

I have spent thirty years inside the construction industry. Site based roles, FIFO environments, executive leadership. I have watched this industry treat culture as the soft stuff. The fluffy stuff. The thing you get to once the real work is done.

This article is about why that thinking is costing companies more than almost any other decision they make. Not in feelings. In dollars, in people, and in businesses that no longer exist.

The issue: we keep treating culture as a luxury

Walk onto most construction sites in Australia and you will find a safety system that is genuinely impressive on paper. SWMS. Inductions. Toolbox talks. Prestart checklists. Hazard registers. We have engineered the physical safety side of this industry to within an inch of its life.

Now ask a different question. What is the system for making sure a worker can speak up when something is wrong without being punished for it? What is the plan for the supervisor who is quietly drowning? What happens to the apprentice who is being belittled every day in the smoko shed?

In most businesses, the honest answer is that there is no system. There is a poster. Maybe an EAP number nobody trusts. And a culture that quietly teaches everyone the same lesson: keep your head down, get on with it, do not make a fuss.

That is the gap. And everything in this article flows out of it.

When I interviewed 50 construction leaders from around the world for the EPIC Construction Leadership Report 2026, the same themes surfaced again and again, unprompted. 91% raised mental health and burnout as a critical and growing issue. 88% said psychological safety is absent or inconsistent on their sites. 84% described safety culture as theatre. A persistent gap between the documented system and the lived reality.

These were not junior voices. These were leaders with a combined 1,354 years of experience. When that many independent people land on the same problem, it stops being anecdotal. It becomes evidence.

The evidence: what poor culture actually costs

Let me lay the numbers out, because the case is overwhelming once you put them side by side.

Psychological injury claims are exploding

Psychological injury claims have increased by more than 161% over the past decade. The average claim is now $288,542, up from around $146,000 in 2019-20. And the recovery picture is worse than the cost picture. Only around 50% of workers with a psychological injury return to work within a year. For physical injuries, that figure is roughly 95%.

Think about what that means operationally. A physical injury usually gives you your worker back. A psychological injury, half the time, does not. You lose the person, their knowledge, their relationships on site, and their years of experience. Then you pay to replace them.

Safe Work Australia has been tracking the growth of psychosocial harm for years, and the regulatory environment has now caught up. Psychosocial hazards, including excessive workload, poor support, bullying, and low role clarity, are now regulated and enforceable obligations in every Australian jurisdiction. The law no longer treats culture as optional. Some businesses have not received that memo.

Every departure costs $67,000

Infrastructure Australia has estimated the cost of every skilled worker who walks out the door at around $67,000 once you account for recruitment, onboarding, lost productivity, and lost knowledge. Now hold that against the retention picture in this industry.

Workers are not leaving construction because the work is hard. They knew the work was hard when they signed up. They leave because of how the work makes them feel. Because of the bullying that never gets addressed. Because of the supervisor who leads through fear. Because they raised an issue once and learned never to do it again.

A company with poor culture is paying the $67,000 exit fee over and over, and booking it as a recruitment problem instead of a leadership problem.

The human cost is the worst number of all

Australia loses one construction worker to suicide roughly every two days. A construction worker is significantly more likely to die by suicide than in a workplace accident. New research from the University of Western Australia published this year found that 11% of WA construction workers reported suicidal thoughts in the previous twelve months, and identified loneliness as the single most critical risk factor, ahead of workload and financial stress.

Loneliness. On sites full of people.

That finding should stop every leader in this industry cold. We have built workplaces where someone can be surrounded by a crew all day and still be completely alone. Where nobody checks in. Where struggle is invisible because the culture punishes visibility.

If you want to understand what poor culture costs, start there. Organisations like MATES in Construction exist because this industry’s culture became lethal, and the demand for their work has never been higher.

Companies are collapsing, and culture is part of the story

The 2025 financial year saw 3,596 construction business collapses in Australia, the worst result ever recorded. Much of that is financial: fixed price contracts, material costs, fuel shocks, slow payments. But culture sits inside that story more than most people admit.

Businesses with poor culture lose their best people first, because the best people have options. They carry higher absenteeism, higher rework, higher conflict, and lower discretionary effort. When margins are already razor thin, culture is often the difference between a business that bends and a business that breaks. And when a business breaks, the cost lands on the people in the boots. The apprentice who shows up Monday to a locked gate. The subcontractor who never gets paid.

The attrition cycle nobody names

Here is the cycle I have watched play out for thirty years.

A site has a culture problem. Nobody addresses it. Good people leave. The remaining team carries more load. Pressure rises. Behaviour deteriorates further. More people leave. The company hires in a hurry, often compromising on fit. Culture worsens. Eventually the site is staffed by whoever will tolerate it, performance falls, and leadership concludes they have a workforce quality problem.

They do not. They have a culture problem they let compound, the same way unpaid interest compounds.

I once wrote about a friend running a FIFO project with a 50% attrition rate. Three people, every single day, walking off site and not coming back. Nobody asked why. They just kept refilling the bucket and wondering why it never stayed full.

The solution: treat culture like you treat physical safety

Here is the good news. This industry already knows how to fix systemic problems. We have done it before.

Decades ago, physical safety was treated as a personal matter. If you got hurt, you were careless. Then the industry decided that was unacceptable, built systems, measured outcomes, trained leaders, and held people accountable. Fatalities and injuries fell. Not because workers became more careful, but because leadership changed what was tolerated.

Culture needs exactly the same treatment. Not a poster. A system. Here is what that looks like in practice.

1. Make psychological safety a leadership KPI, not a wellbeing initiative. What gets measured gets managed. If your leaders are accountable for programme and budget but not for whether their people can speak up safely, you have told them what matters. Run a culture pulse the way you run a safety audit. Ask workers directly: can you raise a problem here without it costing you?

2. Train your frontline leaders properly. Most supervisors in this industry were promoted for technical skill and never taught how to lead. They inherit conflict, fatigue, mental health struggles and team dynamics with zero preparation. That is not their failure. It is the company’s. Structured, practical leadership development, like our EPIC Elevate program and the RISE program, exists precisely to close this gap with tools built for construction realities, not corporate theory.

3. Respond to the first incident, not the fifth. Every toxic culture I have ever seen was once a single unaddressed behaviour. The bully who was too productive to confront. The comment that got laughed off. Culture is just the sum of what leadership tolerates. Move the intervention point earlier.

4. Close the loop on speaking up. When someone raises an issue, they are testing the system. If nothing happens, or worse, if it comes back to bite them, you have taught the whole crew the real rules. Acknowledge, act, and report back. Every single time.

5. Count the real numbers. Put psychological injury claims, turnover costs, absenteeism, and rework on the same dashboard as your safety stats and your margin. The moment boards see culture in dollars, the conversation changes. I have watched it happen.

None of this is soft. It is operational discipline applied to the human side of the business. The companies doing it are not doing it out of charity. They are doing it because they have run the numbers.

One of the leaders I interviewed for the report described turning around a group of companies in the Middle East that had been recording multiple fatalities and suicides every year. He did not start with the safety system. He started with how people treated each other. Within two years, no fatalities and no suicides. And on a single $6.8 million project, the approach generated $2.8 million in additional profit. Culture did that.

Where to from here

If you are a leader in this industry, my challenge to you is simple. Stop asking whether you can afford to invest in culture and start counting what poor culture is already costing you. The claims. The turnover. The absenteeism. The people you never hear from until the resignation lands.

The bill is already being paid. The only question is whether you keep paying it blindly or start paying it down deliberately.

If you want to see the full evidence base, download the EPIC Construction Leadership Report 2026. It is free. Fifty leaders. 1,354 years of experience. And if you are ready to do something about it inside your own business, get in touch or explore our training programs. This is the work we do every day.

Be Kind Always.

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Frequently Asked Questions

What is the average cost of a psychological injury claim in construction?

The average psychological injury claim in Australia now sits at approximately $288,542, nearly double the 2019-20 average of around $146,000. Psychological claims represent roughly 12% of workers compensation claims but around 38% of total claim costs, and only about half of affected workers return to work within a year.

Are employers legally required to manage workplace culture?

Increasingly, yes. Psychosocial hazards such as bullying, excessive workload, poor support and low role clarity are now regulated under work health and safety law in every Australian jurisdiction. Employers must proactively identify and control these hazards in the same way they manage physical risks. Visit Safe Work Australia for jurisdiction-specific guidance.

How does poor culture affect staff turnover?

Poor culture drives your most capable people out first, because they have the most options elsewhere. With each skilled departure costing an estimated $67,000 in recruitment, onboarding and lost productivity, a culture problem quickly becomes a compounding financial problem disguised as a recruitment problem.

What is the connection between culture and suicide in construction?

Australia loses approximately one construction worker to suicide every two days. Recent research identified loneliness as the most critical risk factor for suicidal thoughts among construction workers, ahead of workload and financial pressure. Cultures that punish vulnerability and discourage connection directly feed this risk. If you or someone you know is struggling, contact MATES in Construction on 1300 642 111 or Lifeline on 13 11 14.

Where do I start if my company’s culture needs work?

Start by measuring honestly, training your frontline leaders, and acting on the first incident rather than the fifth. EPIC works with construction businesses across Australia on exactly this. Explore EPIC Elevate, the RISE program, or contact us for a conversation about where your organisation stands.