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The Cost of Workplace Stress: A Guide for Irish Employers

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stress-at-work-300x300Stress.  It seems pervasive.  It has gotten to the point now where we are taken aback when we encounter someone who doesn’t seem to have any.  But what is it?  And, in particular, what is it in the workplace?

The UK’s Health and Safety Executive defines work-related stress as “the adverse reaction people have to excessive pressures or other types of demand placed on them at work.”  That last “at work” is important as, according to our Labour Relations Commission in its Work-Related Stress Guide, “all manifestations of stress at work cannot be considered as work-related stress”.

An employee may be stressed at work because of something having absolutely nothing to do with the workplace.  It could be a wedding, a death, a new relationship, a relationship ending, etc.  The list goes on.  If there is something stressful going on in someone’s private life it is very difficult for them to flick a mental switch when they enter their workplace.  Or people can, of course, be stressed purely because of work.  That type of stress – the work-induced stress – is more significant from you the employer’s perspective – as you may be, in part, responsible for it.

How common is work-related stress?  It would seem that it is on the increase – and that it can occur for a variety of reasons.  Some of the reasons are timeless, for example, understaffing.  But the variety of reasons are increasing.  An October 2014 Paper from the Wharton School of Business says that “Global competition, downsizing and the constant state of being electronically tethered to the office are combining to create a perhaps unprecedented level of stress.”

Obviously, some causes of stress are beyond the control of the employer.  But definitely not all.  For example, an important deadline can cause stress from the pressure and effort required to try and meet it.  If such pressured deadlines are rare or isolated they’re generally considered to be acceptable.  And the stress they cause will dissipate quickly after the deadline has been met.  In contrast, some organisations can require such spikes of effort incessantly – even designing them into how projects are organised as a means of extracting unfair amounts of effort.  And imagine if the interval between these deadlines is shorter than the recovery time needed?

Work-related stress has a human cost for the employee suffering it – but it also brings with it a financial cost for the employer.

Perhaps the most obvious cost is that an employee suffering from stress will be less productive.  They will obviously be entirely unproductive if they are absent.  But they will also be less productive even if they are physically present.  A 2014 report from Towers Watson on a global survey they carried out says that “the research clearly shows the destructive link between high levels of stress and reduced productivity”.  In a new research-backed book – Performing Under Pressure by Hendrie Weisinger & J.P. Pawliw-Fry, the authors state that “People frequently perform far below their capability in pressure moments.”

A stressed employee could quit.  That brings with it the financial cost of a recruitment effort.  But it also brings with it other costs.  There is the lost productivity from the ex-employee no longer being available to carry out their responsibilities.  Then there is the cost of reduced productivity as the replacement goes through a learning curve.  And, while the new employee is going through that learning curve, there is the productivity loss on the part of the colleagues/supervisors/managers who are coaching/directing the new employee as the new employee acclimatises themselves to the new environment and learns the ropes.  There is also the potential increase in stress levels for the colleagues of the departing employee – they have to contend with the reduction in staffing levels during the transition period.

So there is a strong business case for effectively managing stress.  Presuming you value your employees, and if you don’t then that’s another issue, it is important for you to minimise, within reason, the stress caused to them by their work.  You have a duty of care towards them but they are also core to your business.  You want them to maintain their productivity.  And you want to retain them!

Keeping your valued employees and keeping them productive so as to avoid the aforementioned costs are legitimate endeavours.  There are, however, other considerations.  For example, imagine an employee suing you successfully for serious damage caused to their health through (alleged) workplace stress and its management (or lack thereof).  Costs in such cases can be over €100,000 if the case goes to the High Court and is won.

Or imagine if an employee doesn’t just quit – but also brings a claim for constructive dismissal.  The potential costs?  Substantial 5-figure sums are not uncommon – see this CPA article for some examples.  Now in such cases, the burden of proof is on the employee rather than on you the employer.  But that does not lessen the financial impact such a case could potentially have on your organisation.

So what is an employer to do?  Obviously, you should not deliberately impose unreasonable demands on people.  And, if you’re made aware of demands being unreasonable, you need to modify the demands.  If people are stressed, talk to them about it – informally at first.  Ask them what the problem is.  Consider whether you’re part of the problem.  Avoid dismissing their concerns.  Avoid getting defensive.

Above all else – listen.  This may be common decency but it’s also in your own self-interest to do so.  Without your employees, your business is sunk. And of course, you should also be cognisant of the need to avoid doing anything that provides ammunition for potential future litigation.

It’s in your rational self-interest to manage workplace stress.  You could be liable if your employee suffers a personal injury as a result of their employment.  And stress becomes an injury when the employee develops a recognised illness from work-related factors. For more detail on this read our article on “Handling Thorny Issues

Is your workplace unreasonably stressful?

Have you work practices that could potentially leave you exposed to constructive dismissal claims?

Have you the proper procedures in place to handle grievance claims by stressed employees?  Every business, whatever its size, should have a Grievance Procedure and a Dignity at Work Procedure in place.  Your Grievance Procedure should require the employee to set out in writing the nature of their grievance, e.g., a concern over feeling stressed because of work.  The procedure should also require you to deal with the grievance fairly and consistently.  As said earlier, it is good to try and deal with grievances informally initially.  But it is crucial for you to have formal processes in place in case the informal approach is insufficient.

However, simply having the procedures in place is necessary but not sufficient.   In the event of a grievance, you need to be able to demonstrate that you actually followed the grievance procedure.  For example, it is important that an employer notes and does not ignore any concern or complaint raised by an employee – however casual the manner in which it is raised.  There also needs to be a clear record maintained of concerns raised, actions taken and attempts to resolve complaints/concerns.  You may be relying on such clear and unambiguous records to defend a constructive dismissal claim or personal injury claim!

Finally, have you the skill level within your organisation to adequately deal with grievances in an expert and timely manner?  Could the potential size or complexity of grievances strain your in-house capacity or expertise levels?  It may be prudent to consider having such matters properly investigated by an external expert in workplace investigations – otherwise, you run the risk of leaving your organisation exposed to litigation!

This is a complex area and it is important to seek early advice if you become aware of a potential problem or if you simply want to reduce the risk of problems. To get expert guidance in the area of managing stress in the workplace call, Mary Cullen, Patrick Foley or Liam Barton on 056 770 1060 or email mcullen@insighthr.ie.

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