The Cost of Stress: 3 Things Every Company Should Know

Work can be stressful. A recent list of the most stressful jobs in 2013 shows some that we might expect: Military personnel, police, firefighters, airline pilots, taxi drivers, journalists, reporters, and some corporate executive roles. These jobs tend to involve major stressors such as physical danger, separation from family, long hours, or intense public scrutiny.

But there’s much more to stress at work than you might have guessed. In this article, I describe 3 major insights from recent research.

1. Most people are stressed about work, and it hurts productivity

The American Psychological Association (APA) has been conducting an ongoing series of large-scale studies to track stress levels and their effects in the US over the past 6 years. Consistently the most pervasive source of stress identified is work, negatively affecting the health and wellbeing of about 70-75% of Americans (and varying only slightly across year, region, and demographic characteristics). The survey also consistently finds that Americans experience greater levels of stress than they think are healthy, and are more likely to perceive their own levels of stress as increasing, rather than decreasing, over time.

  • The majority of employees report reduced productivity at work because of stress—1 in 3 workers lost up to 10% of their productivity to stress, and 1 in 5 lost up to 25%.
  • Nearly 60% of employees report recently quitting their job, or considering a new job because of stress.
  • Another recent large-scale study provides evidence that stress contributes to a range of more specific negative workplace outcomes such as difficulty concentrating, poor work quality, conflicts with coworkers, and tardiness or absenteeism.

2. Money matters

The above outcomes are unfortunate for everyone involved, so it might be important to consider where this stress comes from in the first place. The APA studies find that the leading cause of stress at work is low salary, and the second-leading cause of overall life stress among Americans is money (only slightly less than work itself).

This suggests a potentially important new way of thinking about employee compensation. Simply paying employees more money can itself increase productivity on the job. Not because the money is greater compensation for greater productivity per se—but rather because the employer has effectively alleviated the most prevalent source of stress on the job and in life more generally. The payoff could be similar, or even greater, than the old way of thinking.

Providing employees with greater financial and job security can create an atmosphere that supports another well-known but elusive benefit: employees who are not afraid to “speak up” at work when they see problems or have potentially important ideas. There is a ton of great research in this area , so I will just suggest this book by the late, great J. Richard Hackman as a starting point; he cites lots of references in the book if you want to dig deeper.

3. Motivation is very easily undermined

This point may seem obvious, considering everything we have learned so far. But there’s something even more insidious. What about companies that benefit the most from employees who are passionate, creative, and innovative? These things describe the competitive edge increasingly coveted by more and more companies.

Let’s consider a classic study that was surprisingly somehow able to make a group of young children (ages 3-5) uninterested in drawing with crayons. How they did it was simple: Give each child praise and a reward every time they drew something. That’s all. While coloring with crayons is usually a very popular activity, the group of children that received praise and rewards showed little or no interest after that. Even as young children, we know the difference between doing something just because we want to, and doing something because there is a reward. We want to do things that we want to do, because they are the things that we want to do. External rewards in general are very weak motivators and in fact, they often hurt performance or discourage us from wanting to do something at all. If the wrong kind of reward can make a small child uninterested in something they usually enjoy like coloring with crayons, just imagine what the prospect of a substantial financial bonus, a raise, or such can do to the motivation of adult employees!! (This book by Daniel Pink provides an accessible layperson’s overview of theory and research in this area, and his TED talk is definitely worth watching. His description of the disconnect between “what science knows and what business does” is fantastic).

The way around each of the problems that I have discussed are quite similar to what I have already suggested above. Just pay employees well up-front. Consider it an investment in the employee, and their future performance. The evidence suggests that this investment will pay off down the line.

  1 comment

  1. Avatar Angela   •  

    Do you find stress to be related to how strict/relaxed a workplace is? For example, from what I’ve noticed, a lot of start-ups are flexible as long as employees don’t take advantage of it and get their work done; however, friends working corporate jobs have little to no flexibility with their work schedules. My friends at start-ups seem generally happier and less stressed than those who work at corporate companies.

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