Stress and Organizational Impact

Updated June 17, 2024

Stress, both work and non-work-related, can have a profound effect on an organizational climate and morale. For most people, a moderate amount of stress can be beneficial (positive stress). But when pressure and stress reach a level where an individual struggles to cope, both mental and physical changes can occur. There are numerous negative stressors impacting today’s workforce.  Things like job security fears, increased workloads and extended work hours can all result in negative pressure.

Some of the outcomes of stress on an organization can include employee job dissatisfaction, employee turnover, absenteeism, reduced performance and lack of productivity and efficiency.

How Stress Affects Organizations

For most organizations, great attention is paid to employee morale and workforce engagement levels. If the majority of employees are experiencing negative levels of stress, things like teamwork and effective communications suffer. Many companies conduct yearly employee opinion surveys to measure engagement. There is usually significant correlation between the current climate in an organization and survey scoring. During times of uncertainty (business optimization initiatives resulting in layoffs), not surprisingly, scores in areas like motivation and company commitment are very low.  Conversely, during positive times (company reaches financial targets resulting in incentive payments for staff); survey scores are considerably more favourable. Overall, manageable levels of stress in an organization will translate into higher employee morale and job satisfaction.


Stress and Organizational Impact

Regarding stress and employee absenteeism from a disability management standpoint, the duration of absences due to stress is often much greater than absences from other causes. Employees often return to work four weeks after breaking a bone while employees on stress leaves can be absent for months.  Stress can also manifest itself in suppressed immune function resulting in susceptibility to viral and bacterial infections.

The negative impacts resulting from worker absenteeism are far-reaching. In the customer service industry, there seems to be a vicious circle when it comes to individual pressure impacting team stress, which in turn impacts strain on the customer.

Employees working short staffed due to employee absenteeism are under pressure. Being short staffed can cause employee irritability and conflict and increased delays in customer service for customers. This in turn results in lower customer satisfaction levels which ultimately negatively affect the company’s bottom line. Stress can therefore significantly impact the profitability of an organization.

Reduced Performance

Management representatives routinely observe lowered individual performance due to stress which subsequently negatively affects the overall team performance. Stress causes memory impairment, less effective decision making and from a health and safety standpoint, increased accidents in the workplace.

Employee situations requiring discipline to improve performance can cause stress resulting in the opposite effect. If an employee is facing a suspension or termination due to repeated offences, you often see even poorer performance as employees feel the impending discipline looming over their head. Many companies have identified that as an organization, they need to focus on coaching and positive reinforcement to give employees every opportunity to be successful. Stress management is essential to improve overall organizational performance.

Lack of Productivity and Efficiency

Another impact of stress on an organization is reduced productivity and efficiency. Although the effect of absenteeism is obvious, reduced productivity and efficiency can also result when a workforce is experiencing negative stress and pressure. Employees under pressure are much less inclined to channel energy into continuous improvement initiatives or creative problem solving pursuits. While in self-preservation mode when dealing with stress, individuals tend to spend their time and energy doing the bare minimum to keep up. As well, an over-strained team will have less energy to begin with as studies have shown that stress depletes energy stores and a person’s physical and mental capabilities.

Often greater demands are placed on workers in today’s competitive marketplace. For example, in the customer service and entertainment industry, there is no shortage of options for people to spend their disposable income. And in today’s economic climate, companies are expected to try to do more with less. Although profitability is the focus, this pursuit can not be to the detriment of the workforce. Putting too much pressure and strain on staff to perform will ultimately have the opposite affect (i.e. burn-out, conflict and incidents of workplace aggression).

Stress and Organizational Impact

In Conclusion

Stress management is a reality in today’s organizations. Successful organizations today realize the importance of not only monitoring workplace stress but implementing vehicles to reduce strain for all employees. Time and money can be spent by a company creating programs and initiatives to address stress related issues (i.e. flex time, job sharing, childcare, health and fitness and team building activities) or a company can spend their money battling absenteeism, employee turnover and rising benefit costs. The intelligent choice should be clear.

Author: Chris Dugas

Chris Dugas Author Human Resources Tips

Chris is the managing director of London, Ontario based ZOO Media Group a full-service marketing and web development agency. He and the ZOO team have extensive experience working with Human Resources departments on projects ranging from employee recognition programs, virtual job fair sites, employee handbooks, and communications for new-hire orientation programs.

ZOO helps HR departments develop impactful and engaging materials that both attract new hires and connect with current employees. They also provide custom website and intranet website development, search engine optimization and digital marketing services to companies throughout North America.

This article was originally written in 2005 and has since been updated.