7.2 Stress in an Organization

Stress and the consequences of stress in an organization

Stress has become an ever-increasing focal point in the world of business. As an employee, you hear about it all the time. Downsizing at a company creates stress among the remaining workers when workloads, and time at work increase. Surveys show that employees often struggle to find a balance between job responsibilities and family responsibilities. Companies go out of business in this competitive environment, and because of that job security is not what it once was.

Understanding what stress is, where it comes from, and what it means to an organization are a manager’s first steps to alleviating some of the havoc it wreaks.

Learning Outcomes

  • Discuss various elements and types of stress
  • Discuss potential sources of stress
  • Describe the consequences of stress and its cost to an organization

What is Stress?

Like motivation, stress is a very individual experience. One person can feel extreme pressure and anxiety over a task that is looming, and another might look at the same task and see it as an exciting challenge. In spite of that, we’ve seen an overall jump in the number of people that report stress on the job, and we can see how it’s taking its toll.

Stress is a dynamic condition, and it exists when an individual is confronted with an opportunity, constraint or demand related to what he or she desires, and for which the outcome is perceived to be both uncertain and important.

Stress isn’t necessarily bad, even though it’s usually discussed in a negative context. There’s opportunity in stress, and that’s a good thing because it offers potential gain. For instance, consider Luke Skywalker, piloting his X-Wing fighter, trying to blast his torpedo into that small, little space that was the Death Star’s only weakness. There was plenty of stress, provided by stormtroopers and Darth Vader himself via bullets and explosions, but Luke concentrated, used stress to his advantage, and shot that torpedo right into the exhaust port.

Okay, maybe it was the Force, too. Athletes and performers use stress positively in “clutch” situations, using it to push themselves to their performance maximums. Even ordinary workers in an organization will use an increased workload and responsibilities as a challenge that increases the quality and quantity of their outputs.

Photograph of a person sitting on the ground covering their face with their hands. They are leaning against a couch.Stress is negative when it’s associated with constraints and demands. Constraints are forces that prevent a person from doing what he or she wants. Demands represent the loss of something desired. They’re the two conditions that are necessary for potential stress to become actual stress. Again, there must be uncertainty over the outcome and the outcome must be important.

Kevin, a student, may feel stress when he is taking a test because he’s facing an opportunity (a passing grade) that includes constraints and demands (in the form of a timed test that features tricky questions). Salomé, a full-time employee, may feel stress when she is confronted with a project because she’s facing an opportunity (a chance to achieve something, make extra money and receive recognition) that includes constraints and demands (long hours, time away from family, a chance that his knowledge and skills aren’t enough to complete the project correctly).

Stress is highest for those who don’t know if they will win or lose and lowest for those that feel that winning (or losing) is an inevitability. Even so, the individual can perceive the winning (or losing) as an inevitability, but if it’s important, the individual is still likely to experience a level of stress.

Practice Question

https://assessments.lumenlearning.com/assessments/13946

What does stress feel like? The symptoms of stress for a person are as individual as the conditions that cause it. Typically, when presented with stress, the body responds with a surge of hormones and chemicals that results in a fight-or-flight response. As the name would indicate, this response allows you to either fight the stressor or run away from it.

The general adaptation syndrome (GAS) describes the three stages that individuals experience when they encounter stressors, respond and try to adapt:

  • Alarm. The physical reaction one experiences when a stressor first presents itself. This could include an elevation of blood pressure, dilated pupils, tensing muscles.
  • Resistance. If the stressor continues to be present, the person fights the threat by preparing to resist, physiologically and psychologically. At first, the stressor will be met with plenty of energy, but if the stressor persists, the individual will start to experience fatigue in fighting it and resistance will wear down.
  • Exhaustion. Continuous, unsuccessful resistance eventually leads to the collapse of physical and mental defenses.

When stress is chronically present, it begins to do damage to a person’s body and his mental state. High blood pressure, higher risk of heart attack and stroke are just some of the physical ramifications. Anxiety and depression are the hallmarks of psychological symptoms of stress, but can also include cognitive symptoms like forgetfulness and indecisiveness. Behaviorally, a person suffering from stress may be prone to sudden verbal outbursts, hostility, drug and alcohol abuse and even violence.

Another result of chronic stress and overwork is burnout. The term “burnout” is tossed out by people quite a bit to describe the symptoms of their stress response, but burnout is an authentic condition marked by feelings of exhaustion and powerlessness, leading to apathy, cynicism and complete withdrawal. Burnout is a common condition among those who have chosen careers that serve others or interact heavily with other people—healthcare and teaching among them.

Stress is a significant issue for businesses. Now that we know what it is and what it looks like, let’s take a look at the most common causes.

Sources of Stress

If you poll a group of individuals about what their biggest stressors are, they’re likely to give you these four answers:

  • Money
  • Work
  • Family responsibilities
  • Health concerns

In most surveys on stress and its causes, these four responses have been at the top of the list for quite a long time, and I’m sure you weren’t surprised to read them. But managers should take pause when they realize that all four of these are either directly or indirectly impacted by the workplace.

Still, there are so many differences among individuals and their stressors. Why is one person’s mind-crippling stress another person’s biggest motivation and challenge? We’re going to attempt to answer this by looking at the three sources of stress—individual, organizational, and environmental—and then add in the concept of human perception in an attempt to understand this conundrum.

Chart mapping out the various factors of stress, individual differences, and how people experience stress. There are three types of factors of stress: Individual, Organizational, and Environmental. The individual factors of stress listed are family issues, financial issues, and individual personality. The organizational factors of stress listed are task and role demands, interpersonal demands, organizational structure, leadership, and organizational life stage. The environmental factors of stress listed are economic environment, political environment, and technology. The chart then lists individual differences, which impact how people experience stress. These differences are perception, job experience, social support, belief in locus of control, self-efficacy, and hostility. The chart then maps out different symptoms of stress, which are separated into three categories: physiological symptoms, psychological symptoms, and behavioral symptoms. The physiological symptoms of stress listed are headaches, high blood pressure, and heart disease. The psychological symptoms of stress listed are anxiety, depression, and less job satisfaction. The behavioral symptoms of stress listed are loss of productivity, absenteeism, and turnover.

Individual Factors

The first of three sources of stress are individual. Individuals may experience stressful commutes to work, or a stressful couple of weeks helping at a work event, but those kinds of temporary, individual stresses are not what we’re looking at here. We’re looking for a deeper, longer-term stress. Family stress—marriages that are ending, issues with children, an ailing parent—these are stressful situations that an employee really can’t leave at home when he or she comes to work. Financial stress, like the inability to pay bills or an unexpected new demand on a person’s cash flow might also be an issue that disturbs an employee’s time at work. Finally, an individual’s own personality might actually contribute to his or her stress. People’s dispositions—how they perceive things as negative or positive—can be a factor in each person’s stress as well.

Organizational Factors

There’s a plethora of organizational sources of stress.

  • Task or role demands: these are factors related to a person’s role at work, including the design of a person’s job or working conditions. A stressful task demand might be a detailed, weekly presentation to the company’s senior team. A stressful role demand might be where a person is expected to achieve more in a set amount of time than is possible.
  • Interpersonal demands: these are stressors created by co-workers. Perhaps an employee is experiencing ongoing conflict with a co-worker he or she is expected to collaborate closely with. Or maybe employees are experiencing a lack of social support in their roles.
  • Organizational structure: this refers to the level of differentiation within an organization, the degree of rules and regulations, and where decisions are made. If employees are unable to participate in decisions that affect them, they may experience stress.
  • Organizational leadership: this refers to the organization’s style of leadership, particularly the managerial style of its senior executives. Leaders can create an environment of tension, fear and anxiety and can exert unrealistic pressure and control. If employees are afraid they’ll be fired for not living up to leadership’s standards, this can definitely be a source of stress.
  • Organizational life stage: an organization goes through a cycle of stages (birth, growth, maturity, decline). For employees, the birth and decline of an organization can be particularly stressful, as those stages tend to be filled with heavy workloads and a level of uncertainty about the future.

Environmental Factors

Finally, there are environmental sources of stress. The economy may be in a downturn, creating uncertainty for job futures and bank accounts. There may be political unrest or change creating stress. Finally, technology can cause stress, as new developments are constantly making employee skills obsolete, and workers fear they’ll be replaced by a machine that can do the same. Employee are also often expected to stay connected to the workplace 24/7 because technology allows it.

Practice Question

https://assessments.lumenlearning.com/assessments/13947

As a side note, it’s important to understand that these stressors are additive. In other words, stress builds up, and new elements add to a person’s stress level. So a single element of stress might not seem important in itself, but when added to other stresses the worker is experiencing, it can, as the old adage says, be the straw that broke the camel’s back.

Individual Differences

icon of several people standing in a circle. One person is highlighted in orange.Those are the sources of stress, but differences within an individual determine whether that stress will be positive or negative. Those individual differences include

  • Perception. This is what moderates the individual’s relationship to the stressor. For instance, one person might see a potential layoff as a stressful situation, while another person might see that same layoff as an opportunity for a nice severance package and the opportunity to start a new business.
  • Job Experience. Because stress is associated with turnover, it would stand to reason that those employees with a long tenure are the most stress-resistant of the bunch.
  • Social Support. Co-workers, especially those who are caring or considered to be friends, can help protect a fellow employee against the effects of stress.
  • Belief in the locus of control. Those who have a high internal locus of control (those that believe they are in control of their own fate) are, unsurprisingly, not as affected by stress as those who feel they are not in control.
  • Self-efficacy. Self-efficacy is an individual’s belief that he or she can complete a task. Research shows that employees who have strong levels of self-efficacy are more resistant to the effects of stress.
  • Hostility. Some employees carry around a high level of hostility as a part of their personalities, and they’re often suspicious and distrustful of their co-workers. These personality traits make a person more susceptible to stress.

If those potential sources of stress sneak through the individual difference filters and manifest themselves as stress, they will appear in a variety of physiological, psychological and behavioral symptoms. We reviewed the physiological symptoms when we talked about the definition of stress. Add to that psychological symptoms, like tension and anxiety, but also job dissatisfaction and boredom, and behavioral symptoms, like turnover and absenteeism, and you can see how stress can become an organizational problem.

How much of an organizational problem is stress? Well, stress can cost an organization a lot more than money. We’ll take a look at that next.

Consequences and Costs of Stress

Today’s typical workplace expects quite a bit from its employees. In a climate of layoffs and downsizing, employees are typically expected to do “more with less”—that is, additional work for the same pay, often without updated resources and in a short amount of time. Demands for increased efficiency, quality and innovation can come at quite the cost, and employees are caving under the pressure.

A study conducted by Mental Health America (formerly the National Mental Health Association) suggests that stress costs US employers an estimated $500 billion dollars in lost productivity annually.

What does lost productivity mean? Let’s take a look at how employees responded to that 2017 survey, and talk about how it can directly (and indirectly) impact a company’s bottom line.

Absenteeism

Picture of a puzzle with a missing piece
What employees say according to Hellebuyck, Michele, et al. “Mind the Workplace.” Mental Health America, 2017,

  • A third of employees surveyed reported staying away from work at least two or more days a month because their work environments were so stressful
  • Of those that responded that they missed two or more days of work
    • 35% said they missed between three and five days a month
    • 38% said they missed six days or more

According to the US Centers for Disease Control and Prevention (CDC), absenteeism alone costs US employers $225.8 billion annually, or about $1,685 per employee. This cost, they say, comes from “Worker Illness and Injury Costs U.S. Employers $225.8 Billion Annually.” CDC Foundation, 28 Jan. 2015

  • Wages associated with unreported paid time off
  • High cost of replacement workers
  • Overtime pay for employees picking up their additional work
  • Overall administrative costs of managing absenteeism

It isn’t just the loss of productivity of the absentees, but their co-workers who are affected by this. In an article for BenefitsPro.com, Mental Health American CEO Paul Gionfriddo said, “Overstressed and unhealthy employees contribute to unhappy workplaces. This means that the indirect effects on everyone else—the people who dread coming to work—may not show up in the calculated productivity losses, but contribute to them nevertheless. Hellebuyck, Michele, et al. “Mind the Workplace.” Mental Health America, 2017,

Turnover

Here’s what employees are saying about the effects of stress on their workplaces:[1]

  • Two-thirds felt they worked in an unsupportive or even hostile environment
  • Two-thirds said they didn’t often trust their coworkers to support them at work
  • Two-thirds said their supervisor was unsupportive
  • More than eight in 10 said the stress at work directly caused stress with family and friend relationships
  • More than seven in 10 admitted they bad-mouth their employer outside of work

It’s easy to see why, considering these sentiments, that nearly three quarters of the employees surveyed are either actively seeking new employment or thinking of doing so.

The Work Institute’s 2017 Retention Report suggested that replacing an employee costs about 33% of that employee’s salary, meaning that the average worker making $45,000 a year will cost about $15,000 to replace, when you consider advertising, screening and testing applicants, training, and onboarding costs (among others). For some harder-to-fill positions, this cost could increase to 50% of the worker’s salary. Sears, Lindsay, et al. 2017 Retention Report. Work Institute, 2017

Turnover also lowers productivity in that there is a shift of work while the position is empty and even after when the new employee is learning her position, and the employee leaving takes with him knowledge of the company that may not be recaptured.

Sadly, the Work Institute’s 2017 Retention Report also captured data that led them to determine that roughly 75% of all turnover could be avoided. When surveying their 34,000 respondents, the top reasons for turnover were cited as career development, compensation and benefits…and then three that are directly related to stress: work-life balance, manager’s behavior and well-being.

Workplace Violence

Workplace violence is on the rise, and it is the third leading cause of death for workers on the job. Of course, some workplace violence, like an active shooter or even an angry retail customer who takes a swing, is not due to workplace stress. Still, this kind of activity takes a toll on businesses, adding yet another layer of stress and a price tag of about $55 million in lost wages for the 1.8 million work days lost each year due to workplace violence (according to a study by Lower & Associates, a risk management firm). Lowers & Associates. ” The Impact of Workplace Violence.” The Risk Management Blog. May 19, 2016. Accessed April 26, 2019.

Photograph of a person holding up a yellow square sign with an angry face drawn on itBut workplace violence rears its ugly head on a smaller level as well. “Desk rage” is a term used to describe extreme or violent anger shown by someone in an office, especially when this is caused by worry or a difficult situation. This can manifest itself in screaming and shouting, throwing or angrily destroying office equipment, or it can be more subtle, like damaging water cooler gossip, theft or abuse of sick time. The people who work with someone experiencing desk rage are as much victims of workplace stress here as the “desk rager.”

These are some of the results of stress that drive down productivity, but stress also affects the cost of health benefits and medical needs that an employer will pick up by providing health insurance. Stress factors into five of the six leading causes of death in the US, and a staggering number of medical office visits will, in part, address symptoms related to stress.

It’s no surprise to hear that a company like General Motors spends more money on healthcare than it does on steel. And (surprise!) workplace stress is responsible for up to $190 billion in annual US healthcare costs. Joel Goh, Harvard Business School associate professor, tackled the subject of healthcare costs and stress in his paper, “The Relationships Between Workplace Stressors and Mortality and Health Cost in the US,” co-authored with Stanford University professors Jeffrey Pfeffer and Stefanos Zenios.

The three researchers cited ten major factors of workplace stress and then mathematically examined their occurrences (and co-occurrences), concluding that workplace stress contributes to approximately 120,000 deaths each year. That, and additional healthcare expenses related to addressing stress related problems, accounted for $125 to $190 billion in healthcare costs, or about 5% to 8% of the nation’s total expenditure.[2]

Practice Question

https://assessments.lumenlearning.com/assessments/13948

The bottom line is that stress in the workplace has a huge effect on an employer’s bottom line.


CC licensed content, Original
  • What is Stress?. Authored by: Freedom Learning Group. Provided by: Lumen Learning. License: CC BY: Attribution
CC licensed content, Specific attribution
All rights reserved content
  • Burnout on the Job Is on the Rise. Provided by: Wall Street Journal. Located at: https://youtu.be/QsD91tX_piA. License: All Rights Reserved. License Terms: Standard YouTube License

  1. Ibid.
  2. Goh, Joel, et al. “The Relationship Between Workplace Stressors and Mortality and Health Costs in the United States.” Management Science, vol. 62, no. 2, 2016, pp. 608–628., doi:10.1287/mnsc.2014.2115.

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7.2 Stress in an Organization by Graduate Studies is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.