How much does  employee stress cost to businesses

Most organizations have no idea how much the stress of employees costs their organization each year. A study from Princeton NJ (Foster & Co Higgins) reported that health costs the average business 45% of its net profits.

It seems that companies can’t afford to ignore that the health and stress of employees creates an expense. Not by chance, the European Commission for Health and Safety at Work has recognized occupational stress as one of the most important risk factors.

According to previous EU estimates, more than 41 million Europeans (almost 1 in 3) are affected by work-related stress, which translates into millions of days absent from work, loss of income and other difficulties. In this article, we will explore the depth and extent to which employee productivity and well-being are compromised by stress.

Some of the most serious consequences of stress are the following:

Absences

Employees are very often absent from work with various excuses for mental health reasons, using absence as a coping mechanism for stress because they can’t cope with the pressure of work. A recent study published in the American Journal of Health Promotion found that employees experiencing high stress were more than twice as likely to be absent more than five times a year. A costly consequence  for the business, because of reduced productivity and replacement costs imposed by absenteeism.

Litigation

Litigation is becoming an increasingly common occurrence not only in the employees' compensation system, but also in employer-employee relations. The sense of being powerless contributes significantly to employee pressure and to the desire for punishment. When people feel helpless, that they have no control over their lives, they are more likely to resort to extreme behaviors.

Complaints

Complaints are often a warning sign of organizational problems. On average, each employee complaint translates into about 80 hours a year of lost productivity.

Accidents

Stress causes reduced attention, restlessness and fatigue, things that can lead to occupational accidents. Employees who report high stress are 30% more likely to have accidents than those with low stress.

When employees face difficulties, they become absorbed in them and their performance decreases. Stress also impairs the thinking process and decision-making ability. This happens because a high amount of adrenaline is produced, which limits the ability to think and feel. This can lead to life-threatening and costly business errors.

Conflicts and interpersonal problems

Conflicts between employees and with management. Lack of cooperation to achieve a common goal, intense reactions to superiors.

Customer Service Issues

Exhausted and stressed employees create unhappy customers. This can have a very serious impact on the company's profits. According to a study of over 100 companies by Frederick Reichheld and W. Earl Sasser, published by the Harvard Business Review, a 5% decrease in customers translates into about a 10% decrease in company profitability. Thus, even a relatively small percentage of customers who are not completely satisfied with a company's services can lead to losses in profitability. The connection between satisfied employees and satisfied customers is obvious, yet often overlooked.

Resistance to change

Many attempts for organizational changes,  aimed at improving the company, fail due to employee resistance to change. Well-intentioned efforts for improvement  are sabotaged because there is an innate mental resistance to change even when we talk about positive change. This is something that businesses need to be aware of and not ignoring the connection between stress and fear of change. Human beings, like other mammals, are genetically programmed to want to stick to familiar habits and familiar conditions. People cling to old ways, even if they are no longer effective. Research shows that stress is linked to "neophobia" - the fear of novelty. Millions of euros are wasted by companies in attempts for organizational changes that are not implemented, because they don’t know how to manage the stress and resistance caused to employees.

The benefits of human resources management programs

Experts identify an organization's human resources as the key competitive advantage in the 21st century marketplace. Stress, reduced quality of work, low productivity are an expensive cost for businesses. Despite the fact that the cost of employee stress is staggering for businesses, it is not recognized by managements and spending to strengthen employees through support programs is not considered necessary.

Human Resource Support and Development Programs result in reduced absenteeism, lower employees' compensation costs, fewer complaints, more satisfied customers, reduced risk of accidents, higher productivity. Only organizations that are visionary, flexible, and responsive to market demands and customer needs will thrive.