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Introduction
Organizational stress, commonly known as work stress, is one of the top reasons for stress among people. In a survey conducted by Pleiter, it was found that 64% of the stress can be attributed to financial problems and 60% of the stress can be attributed to organizational issues or work related stress (Pleiter, 2015). Organizational stress and its impact on employee productivity and organization’s profitability has been a topic of research for many decades. Causes of organizational stress and effects of organizational stress are very well understood. However, there is little consensus on mitigation actions to improve productivity and profitability by reducing stress.
Stress is defined by many in different ways. Bewell (2014) defined stress as “chronic complex emotional state with apprehension and is characteristic of various nervous and mental disorders” (Bewell et al., 2014). Among many life situations, organizational stress stands out simply because of the amount of time spent in a work setting. However, the current economic environment is not helping the businesses. Globalization and increased competition are forcing the organizations to cut down on cost and increase efficiency. If not addressed on time, worker stress can act as a major barrier to attaining organizational goals (Bewell et al., 2014). It is important for the business managers to identify organizational stress quickly by looking at the effects and use simple remedies to increase productivity, the well-being of employees and profitability of the organization. This paper mainly focuses on the effects or organizational stress on employee productivity, well-being and organizational profitability. The paper also focuses on the possible mitigation actions that can reduce stress and improve productivity and profitability. However, the causes of stress are not touched upon in detail in the paper.
Effects of Organizational Stress
There are many effects of stress. One of the most easily identifiable symptoms of stress is agitation. A stressed employee is easily agitated or is more argumentative that a normal employee. Stressed employees show behaviors such as heavy smoking and eating junk foods. Iqbal (2013) in his research found out a strong correlation between organizational stress and obesity.
Effects and Causes
Effects of organizational stress can be categorized into two broad categories, 1) Physiological symptoms and 2) behavioral symptoms. Physiological symptoms such as a headache, high blood pressure, and development of heart diseases are most common effects of organizational stress. Employees who are going through stress for a long period of time develop sleeplessness, depression, decline is job satisfaction and anxiety. At a behavioral level, employees develop behavioral issues such as proneness to mistakes, reduced productivity, taking more days off, higher probability of turnover and proneness to accidents.
Dar et al. (2011) in their study found that the stress in an organization is maximum among the lower level employees. Samnani, A. & Singh did a similar study on American organizations and found that lower the rank of an employee within an organization, higher the chance of developing cardiovascular disease or death from heart attack (Samnani and Singh, 2013). Hashemnia, Abadiyan and Ghorbani (2014) and later Pandita and Bedarkar (2015) found four major causes of organizational stress. Higher workload (46%) is the major cause of stress, followed by people issues (28%), balancing between work and family life (20%) and lack of job security (6%) (Pandita and Bedarkar, 2015).
Well-Being
The above behavioral and physiological effects impact the individual well-being as stressed employees tend to fall sick more often and take more sick days. In a survey conducted by Ekundayo in 2014, it was found that employees experiencing a higher level of organizational stress tend to take 6 additional sick days compared to employees that are not experiencing stress. An HBR study also found that in almost all cases, 60-80% of the workplace accidents can be attributed to workplace stress (Mohr, Young and Burgess, 2011). In a study conducted by Queens University, Canada on employees of over 300 organizations found that verbal abuse and yelling is 42% higher in high-stress companies than low-stress companies (Pleiter, 2015). 62% of the employees that undergo stress reported neck pain, 38% complained about hurting hands and 34% reported difficulty in sleeping in the same study (Pleiter, 2015).
Productivity
Workplace stress often results in worker rage and ultimately damage of equipment. 14% of the workers surveyed in a study conducted by Queens University said that they have damaged an equipment stopping the production line and that resulted in the loss of productivity. 19% of the stressed workers leave an organization compared to only 7% of workers that are not stressed in same timeframe. This results in loss of productivity as organizations need to find and recruit skilled workforce often at a premium salary. On the other hand, in a study conducted by Akkas et al (2015), found out that organizations that are engaged with employees and addresses stress related issues on a regular basis witness 26% less turnover, 20% less absenteeism, and 15% higher productivity (Akkas et al., 2015).
Profitability
There are many direct and indirect impact of organizational stress on employees. A review of American small and medium sized businesses found that businesses that have a highly stressed work environment end up spending almost 50% more on health care expenditures. Mohr, Young and Burgess (2011), found out that large American organizations that have a highly stressed environment spend almost $500 million more on an average on employee health care. Additionally, stressed workers tend to take 6 more sick days during a year than their non-stressed counterparts and stressed workers are almost 2.3 times more prone to leave an organization (Mohr, Young and Burgess, 2011). More absenteeism means direct impact on labor cost as the overall productivity goes down. There are other indirect evidence of increased profitability of an organization if the business is able to manage employee stress effectively. Manzoor (2011), in his study, found that there is a strong correlation between stock price increase and employee stress level. In fact, his study concluded that on an average stock price of less-stress organizations grow 65% more than organizations that are high-stress (Manzoor, 2011).
Masoumi and Shafiei (2014) did a study on recruitment and organizational culture. Their study found that organizations that are perceived as hard taskmasters (less employee friendly) get almost 100% less unsolicited applications. Less-stress organizations can employee skilled resources almost at 15% less cost than high-stress organizations (Masoumi and Shafiei, 2014).
Although the researches cited in the above paragraphs have different definitions and parameters for high-stress organizations but the overall pattern and outcomes are consistent and well established irrespective of most geographies and size of the organization.
Organizational Stress: Mitigating Factors for Employees and Businesses
As discussed in the previous paragraph, increased level of organizational stress not only negative affects employee well-being and productivity but also is responsible for the increased cost of business operation. Additionally, it is not established that less-stress can significantly increase employee performance and improve motivation, productivity, and profitability. In fact, all the present day organizational theorists suggest that a highly motivated and stress-free workforce can create long-term differentiation for any organization. However, the formula for increasing employee motivation or reducing employee stress is not well understood. In recent times, many types of research in this area have put some light on the subject.
Management of stress at an individual level is well established. Tranquilizer drugs, time management, meditation, body scanning, progressive relaxation techniques, music, exercise, prayers, jokes, weight control and the help of social institution are some of the most common methods recommended by doctors for individual stress reduction. Organizational stress has a different type of origin so apart from using the individual stress reduction technique organizations must employ techniques that reduce stress at workplace environment and can have an impact not only on individual stress but also have a positive impact on a group.
Create a Positive Environment: Basic principles
Ude (2012), in his study, concluded that stress can be reduced by one and only one thing only – positive work environment. However, Ude (2012) and Ekundayo (2014), both concluded that creation of a positive stress-free environment requires few basic principles in place. Mohr, Young and Burgess (2011) suggested 6 common principles for creating a positive stress-free organization. Most of these principles also appear in Ekundayo (2014) and Ude’s (2012) research as well. The following are the principles
Create and maintain responsibility for colleagues as friends
Provide support to others especially when others are struggling
Avoid blame and forgive mistakes
Inspire one another at work
Create a meaningfulness of the work
Treat others with respect, trust, and integrity
However, the main challenge is to foster these principles within an organization. In fact, there is no one success formula to inculcate these principles within an organization. However, there are some mitigating steps that seem to work for most of the organizations. Employers such as Google, Apple and GE have used some of these stress mitigating techniques to reduce employee stress level and increase productivity and improve profitability.
Motivators in Non- Crisis and Crisis Situations
In a normal non-crisis situation, one of the most effective way to reduce stress is to increase the motivation of employees. This can be achieved through proper personal and professional development plan for an employee and create an interesting job. In recent years, flexible working arrangements are seen as one of the major motivators for employees. This helps them balance between family and work in a better way which reduces stress.
However, if an organization is going through a crisis, then the employee stress cannot be mitigated through these motivators. For example, when Volkswagen declared that it has cheated the customers by selling them low-quality engines, simple measures like promotions and bonus were not enough to reduce the stress of the employees. In such cases, material motivators are more important. Motivational factors such as job certainty, fixed incomes, and assured benefits can act as a major stress reliever.
Create Social Connections
Iqbal (2013), in his study, empirically showed that positive social connections reduce organizational stress considerably. Organization in which employees are well connected has less employee stress. The study showed that people who are obese have 20% higher chance to die early, drinkers have 30% chance to die early, smokers have 50% chance to die early but employees with higher level or stress and lower level of social connection have a whopping 70% higher probability to die early(Iqbal, 2013). Social connection can be created through the creation of teams and through more lateral interaction. In a typical matrix organization or flat organization, social connections are more than a typical hierarchical organization. However, Ekundayo (2014) suggested that team-based organization structure is best for creating a strong social connection. Employees create a strong friendship with the team members in most cases.
Create Environment of Empathy
The relationship between the boss and subordinate within an organization is the second most common factor for increased employee stress in an organization. Therefore, it is extremely important that boss-subordinate relationship empathetic. In modern day brain imaging studies, it is found that un-empathetic behavior of the boss activates parts of the brain that triggers emotions such as stress, avoidance, and negativity (depression) (Naqvi et al., 2013). However, empathetic behavior from boss triggers positive attitude and increased level of connection and interaction. In fact, Dar et al. (2011) suggested that compassionate bosses not only generate positive energy among employees but also foster positive thinking and collective resilience when going gets tough (Dar et al., 2011).
Forum to Express Concerns without fear
Stress is generated every day but if the cause of stress is unaddressed or unexpressed the stress level goes up exponentially in no time. It is important for an organization to create an environment so that employees can express their grievances without the fear or retaliation from managers or others (Samadzadeh, 2013). If employees can express their concern then also the overall stress level goes down. If an employee believes that the leader has his/her best interests at heart, they will express their concern without fear. This type of environment reduces stress drastically and also fosters innovation and increases productivity. Most of the innovative organizations have a very open culture where all employees can talk to anyone within the organization (open door policy).
Conclusion
Organizational stress is a major cause of concern for employees as well as businesses. Organizational stress individually affects employees by increasing the chances of heart attack, increases blood pressure and can induce severe depression. However, organizational stress also negatively impact the performance of the company. Stress can negatively impact productivity. Stress also increases employee turnover and reduces motivation level. In a highly stressed work environment, innovation is unable to foster. All these factors directly or indirectly increase cost for an organization which reduces profitability.
In summary, a creation of a positive workplace should be the main goal for any business as it increases the well-being of employees and fosters positive emotions. Positive emotions are the main ingredient for a reduced level of stress. Positive workplace and a well-knit social connection among employees amplify the overall well-being of the employees. The positive environment also increases productivity as employees take less number of sick leave, productivity goes up and workplace conflict goes down drastically. Additionally, a positive environment makes employees more loyal to the organization and employee turnover goes down. If an organization is perceived as a low-stress employee friendly organization then the organization can reduce the recruitment, retention and training cost of resources significantly. Finally, by reducing organizational stress the overall organizational effectiveness and profitability go up through better customer satisfaction, employee productivity and motivation and engagement.
In modern day organizations, employees and managers are considered to be key assets over machines and equipment. If stress within an organization can be managed effectively and employees are motivated properly then employee wellbeing will go up, productivity will rise and organizational profitability will increase.
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