We recently uncovered a staggering statistic that’s been reported over the past decade about the cost of stress for businesses in the United States.
The American Psychological Association lists stress as a $300 billion-a-year liability on organizations.
That number might seem incredibly high—until we think about all the time people waste as their stressed out brains force them to stare blankly at a computer screen. Think about the sick days missed. Think about the endless meetings, which never get to the point because stressed out workers don’t communicate well.
Taking another look at the numbers, is the $300 billion actually a low figure?
It turns out that it is. The APA number comes from a 2001 paper which cited “absenteeism, turnover, diminished productivity and medical, legal, and insurance” as the costs of stress. Bringing those categories up to date, today’s numbers would look much more like the $576 billion Forbes reported workforce illness costs US businesses. The kicker is that the Forbes number doesn’t include turnover cost.
Add in employee turnover, which costs organizations 40% to 400% of the employees annual salary, and if even 1% of the US workforce leaves their jobs because of stress (totals average is 2-3% a year across industries), that means 1.55 million workers at a cost of $18,000 to $180,000 based on the $45,000 cost of an average worker.
The cost of replacement could add $28 billion to $280 billion to the damage stress does to US business organizations.
Combining these totals, stress burdens businesses a mind-boggling $604 billion to potentially over $850 billion a year.
And it gets worse. The hidden costs of stress, not included in these statistics, revolve around what doesn’t happen at work when stress hijacks employees’ and managers’ brains.
Stressed people typically can’t think clearly. Research with victims of traumatic stress like war and incarceration find that once a person experiences extreme stress, they live with a higher level of stress hormones in their body every day. The hormones are released when primitive areas in the brain such as the amygdala, the alarm, signal the body to go into survival mode. The brain also goes into survival mode, with the primitive areas running the show and the higher areas such as the frontal lobes, the thinking center in the brain, unable to rein in the stress response.
That’s why stressed people don’t think clearly. They may be highly intelligent, but their brains' resources have been hijacked by primitive areas that are only concerned with survival, not with mature or effective thinking.
A poorly functioning thinking center makes innovation, creativity, and clear communication impossible.That’s what happens when business people make costly decisions they later regret on impulse. Or, when they fail to act because of fear or anger.
They weren’t really thinking; the alarm in their brains made the choices for them.
The brain’s primitive alarm areas react to keep us safe and they don’t do what’s best for the organization. Organizational productivity depends on creative productive interactions. When the alarm is in high stress mode we see the classic “fight, flight, or freeze” reaction, which is neither creative nor productive. Fighting with people at work, chasing people at work, or trying to get information from a person too stressed to talk wastes hours and costs businesses big time.
Executives, leaders, and managers need to know that not only does stress have measurable hard costs like sick days and turnover, stress profoundly inhibits what employees can contribute to the organization's creativity and productivity.
Many studies with people who have experienced the worst stress, traumatic stressors, show that a person who pays attention to their level of stress and thinks clearly about what matters most to them is best able to recover from the anxiety, depression, and other symptoms of posttraumatic stress. The improvement can happen in weeks and months, not years.
The same is true at work. When employees know leaders are paying attention to the core values and goals that inform their work, their stress levels go down. When leaders talk about why a team’s work matters, this reduces stress. Even more importantly, when leaders explore why the work they do is important to each employee, it activates the thinking center of each teammate and lowers the stress level in the entire business.
As the statistics show, the cost of not paying attention to stress inside an organization can be one of the greatest threats to any business. And, the value of paying attention to stress is that when business people recognize their own stress reactions—the times when their alarms hijack their brains—they can restore the clear thinking that is essential for the results every business needs.