Business impact of employee stress

Updated: Nov 14 2005, 05:38am hrs
The business impact of employee stress is now an acknowledged factor. Studies in America have proved that the annual cost of employee stress in terms of loss to productivity is more than a staggering $300 billion. Unmanaged stress has a debilitating impact on the organisation, the consequences vary from loss of individual productivity to increased absenteeism to rise in employee attrition. Team morale and productivity is also adversely affected. But is it possible to create a stress-free workplace Probably not, it is indeed an integral part of our personal and professional life, but the solution lies in creating an environment that reduces its impact.

The fact that employee stress is a subjective matter cannot be overlooked. What might appear as a stressful situation for one might be taken as a normal work routine by another. Monisha Advani, CEO, EmmayHR agrees that most organisations tend not to act at all or appropriately to prevent situations of unmanaged stress. "The unfortunate perception lies in assigning responsibility for stress. Is it the employee's personal look out or is it the employer's Where does one draw the line The definition of workplace stress can be easily misconstrued as it varies from case to case." Advani points out that drawing up policies to address workplace stress in a direct form can expose an organisation to red herring claims from employees. Hence, the tentativeness from employers to own up to the responsibility or demonstrate documented proactivity to control workplace stress.

Consequences of unmanaged stress

Stressful working conditions have a direct negative impact on the mental and physical well-being of the workforce. A disgruntled workforce obviously under-performs and under-delivers, leading to an impact on the bottomline. "In a more precautionary sense, unmanaged stress can be very infectious in large-sized organisations with workforces that are inhabited together. As a nation, we have spent the last two decades trying to eradicate cohesion of employees in a formal context (unions, associations) in the workplace from disrupting business. Unfortunately, such scenarios are completely fuelled by intangible conditions like unmanaged stress. In addition, a company can easily suffer external image damage from being perceived as a hot bed of a stressful work environment, limiting its talent acquisition strategies, among other things," adds Advani.

Stress undermines an employee's ability to think clearly, to work well with others and to perform his or her best. Seth Appel, Director, Talent Transformation Group, OfficeTiger, focusses on the obvious consequences: poor decision-making, absenteeism, burn-out, attrition, unnecessary and wasteful inter-personal conflict.

Measuring the business cost

Calculating the business cost of employee stress has led to many research and studies being conducted globally. Eileen Sweeney, Senior Vice-president, Global HR, Lionbridge Technologies, lists the key indicators:


Health costs


Lowered productivity and increased costs.

Appel advises that one way to measure the cost of stress is to make a measured judgement based on employee exit interviews, on what percentage of attrition is due to stress. "When the cost to recruit, train and develop a new employee is accounted for, we can arrive at a general cost that the company is incurring due to stress. Unfortunately, it is very difficult to measure the other less tangible by-products of stress. Managers who engage in needless bickering instead of working together, employees who return home and spend their free time worrying about work and return the following day tired instead of energised. Also the team members who are too anxious to speak openly at a meeting and therefore deprive the company of their good ideas. All of these are unwanted and wasteful by-products of stress that are hard to quantify."

It can also be measured in terms of productivity gains or losses and hence resulting in enhanced revenues. "A correlation can be seen in the roles vis-a-vis stress, specially in the IT and BPO sectors where in typical measurements like line of code/day or average call handling time, number of calls taken, etc. have a direct bearing on the stress levels of employees," says Madan Padaki, Co-founder and Director, Business Development, MeriTrac Services.

Preventing/managing stress

It is believed that one should work at preventing stress than managing it. Interestingly most experts seem divided over the fact. Aiming to 'prevent employee stress' is not a realistic goal, asserts Appel, adding that it is also, arguably, not even a desired goal. He explains why, "Modern psychology often makes the mistake trying to create a stress- and worry-free world.

This is a very misguided aim as stress and worry play very important functions in our day-to-day lives. Worry is a way our brain forces us to focus on important problems.