Stress is bad for individuals, affecting both their work and home lives. It can be insidious, creeping up on its victims, undetected, and bringing with it a cumulative, negative impact. It is also bad for businesses and organisations. Quite how bad is actually measurable in economic terms.
Estimating the Costs
Just as businesses want a measurable return on investment, so they can estimate the costs of work-related stress.
“The Chartered Institute of Personnel and Development (CIPD) has extensively examined the business case for stress-management,” explains Charlotte Gallagher of P3 People Management in Hale. “It has produced guidelines to enable organisations to estimate the costs of work-related stress.”
There are key areas where stress impacts on business. These are:
- Sickness absence
- Other costs – including accidents, injuries, workplace conflicts and employee relations.
“In each of these areas, CIPD recommends ways in which businesses and organisations can work out the cost-impact of stress,” Charlotte explains. “For example, with sickness absence you first estimate the proportion that is stress-related. Then you estimate the annual cost of sickness absence per employee. Finally multiply these two figures together then multiply the combined figure by the number of employees in the company.”
“The key here is to understanding the actual, financial impact, in business terms, of stress,” Charlotte states. “Managing workplace stress isn’t just about being ethical or compassionate. There is actually a business imperative to do so.”
The Effects on Productivity and Turnover
Stress isn’t simply an issue about individual wellbeing, though obviously businesses have a duty of care to their employees. It’s also about organisational wellbeing. When it comes to presenteeism, or productivity loss, clearly there is the possibility of long-term economic impact.
Similarly, there can be a marked effect on turnover. “High staff turnover, with increased recruitment costs, is one of the most common business consequences,” Charlotte points out.
If a workplace culture exists where staff do not have the confidence to seek their employer’s help, they may feel they have no choice but to leave. This is bad for the individual and bad for the company, both in terms of turnover and reputation.
“As with sickness absence, businesses can calculate the cost of stress in these areas, and assess the overall impact,” Charlotte concludes. “It has clear economic consequences if it is not addressed at an organisational level.”
If you would like to discover the best ways to manage stress in your business, please call P3 People Management on 0161 941 2426.