Watt was commenting on research by Bupa, based on a survey of 500 employees and 50 business leaders, that suggests managers admit to labelling employees with mental health problems as unpredictable (27%) and erratic (22%).
Worryingly, more than one-in-five (22%) managers avoid talking to employees who have experienced a mental health condition, while 47% say they "walk on eggshells" around them.
Further figures from the report show that 76% of employers understand that creating a mentally healthy workforce makes good business sense, with 88% attempting to encourage an open culture of discussion around the matter.
However, 70% of employees still don't feel they can speak candidly at work about these issues.
Watt told HR magazine it's time to move "from talk to action" on mental health in the workplace.
"We are still a considerable way from where we need to be," he said. "Businesses are talking about this but is the rhetoric having an impact? Sadly it appears it's not. It's time to stop talking about this and take action."
Watt added that the same principles that apply to gender and race diversity can be used to tackle prejudice around mental health.
"Educating managers and ensuring they can have good quality conversations with their staff around this is key," he said.