Impact Of Workplace Stress On Organizational Performance Psychology Essay

23 Mar 2015

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Stress in the workplace is a new phenomenon in modern life and has become an increasingly one of the most discussed topic over the past decade. Workplace stress can be defined as the change in one's physical or mental state in response to workplaces that pose an appraised challenge or threat to that employee (Thomas W. Colligan, 2005). It is already established that the stress in the workplace represents threat not only for physical health of one worker, but also for the health of all labour collective. As a result, it does not only affect the employees' performance, reduces their work efficiency but also may have huge impact to an organisation's performance and can lower an organisation's profit (Ton, Huckman, 2008).

Statistical figures indicate stress is a bigger problem than people give it credit (Ornelas and Kleiner, 2003). According to survey which was conducted by Health and Safety Executive in 2006, one in six working people in the UK believed that their job was very or extremely stressful (Bupa's health information team, 2010). There are many factors that can cause stress in the working place. Most known factors are work overload; job insecurity; long working hours; insufficient training; poor work organisation and etc. Workplace stress has been proved to lower productivity, increase absenteeism, and create pervasive patterns of dysfunction in the workplace (Anderson & Puluch, 2001; Levin-Epstein, 2002).

Finally, in modern day most of the organisations understand very well that one of the main reason of unwanted expenses of the organisation are the costs caused by stress - according to the Health & Safety Executive (HSE) in the UK, work-related stress, depression or anxiety accounted for an estimated 13.5 million lost working days in Britain in 2007/08. This makes stress an extremely expensive loss for businesses: the HSE estimates that British industry loses £370 million a year due to stress (UK HSE stress statistics). Although, most organisations spend a lot of time, money and efforts to prevent or control the stress, unfortunately in most cases these efforts are not effective. Therefore organisations need to develop new ways to deal with increasing stress in working place.

Scope of study

This paper aims to explain an aspect of organizational performance that has not been extensively examined - the impact of stress on organizational performance. The paper attempts to make an emphasis on how impact of stress in organizations can be perceived and understood, and it also argues that the stress is an important element in the theory and practice of organizational performance.

Research will be carried out using both secondary data and primary data in the forms of interviews and questionnaires with organisations.

Specific Research Questions

Do the organisations really take the impact of stress seriously and how they intend to deal with it?


H 1: In spite of rising expenses, organisations will still ignore impact of stress as 'useless knowledge".

H 2: Having realized the impact of stress organisations will develop new "mechanism" in minimising and controlling stress.


O 1: To identify main factors behind workplace stress

O 2: To evaluate the costs which are caused by stress at a workplace and how they impact on the organizational performance?

O 3: To establish workable stress management techniques for managing the workplace stress.

Literature review

This chapter will critically analyse the stress development process and its impact to organisational performance. The literature review is structured into two sections. The first section - the theory of organizational stress examines the theory of stress development and the main factors of the organizational stress. The second part reviews the impact of stress to an organisational performance and suggests ways how to manage it.

Theory of organizational stress

According to Cote S. & Morgan LM (2002), stress is basically a form of unpleasant emotion and has got the potential to increase employee turnover. But other authors such as Hart and Cooper (2001) point out that the scientific community still has not reached an agreed position on the meaning and definition of occupational stress.

In the past three decades, a lot of studies have been carried out in order to explore the main factors of organisational stress and to find out link between employee job stress and organizational performance. The studies have been conducted in a various organisations. The early studies indicate deadline pressures, job dissatisfaction, job insecurity and repetitive work (Kasl, 1973) as the main factors of organisational stress. More recent studies have explored some others factors such as inadequate feedback regarding performance, lack of training and lack of control (Doby & Caplan, 1995).

The lack of opportunity of interaction with other workers or in other words isolation is another important factor in increasing workplace stress (Wachtel, 1989). The feeling of isolation does not only involve machinery or assembly line jobs, it may also take place in boring or repetitive jobs such as computer data entry which tend to increase employee stress levels (Karasek & Theorell, 1990).

Impact of stress to an organisational performance and how to manage it

Stress at workplaces is on rise which in its own turn results higher rate of sickness (absenteeism) among employees, reduced productivity and overall, having negative impact on the efficiency of organisational performance. Managing stress and its attendant health and productivity consequences may be one of the biggest challenges facing organizations in the 1990s (Murphy, 1995).

In the article, "Management: Principles and Practices" written by Holt D. H. (1990), the author suggests that in order to manage job stress effectively, two conditions should be met. First, the individual worker must be able to recognize causes of stress and realize their consequences and second, organizations must develop stress prevention and stress reduction techniques.

The book "Managing workplace stress" written by Susan Cartwright, Cary L. Cooper (1997) can be considered one of the best book in the field of organisational stress. The book on the one hand provides detailed information about the source of stress at a workplace, examines the cause of the rise in work-related stress; on the other hand, it proves clearly the important role of organisational culture in stress managing process.

According to Nelson & Quick (1996) excess stress has direct impact in lowered individual and organizational performance, as a result both production and quality suffering. In other words, stress is a main factor that causes organizational inefficiency, absenteeism because of sickness, increased costs of health care and decreased job satisfaction (AbuAlRub, 2004).

Meantime, both field and laboratory studies are always carried out to find out the best ways to reduce work-related stress. Some findings have been proved very effective. One of them is involvement of employee in decision making process that significantly lowers job-related stress (Landy, Quick and Kasl, 1994). Another finding is the measures developed by authors like Khanka (2000) and Cole (2002) which can be adopted to reduce workplace stress. The measures require the organisations to set up clear objectives that will assist to minimize job and role ambiguity; to maximize employees job fit through careful screening and selection.

Specific questions to focus on in the study

This study seeks to answer the following research questions:

Objective 1:

Identify what stress is and main factors behind stress at a workplace?

Is there a relationship between impact of stress and organisational performance?

What is role of stress in organisational productivity?

What are the roles of the modern technologies in rising workplace stress?

Does stress have always negative impact or can it have positive impact to organisational performance as well?

Objective 2:

Why is it important to manage causes of work-related stress?

Apart from financial cost, what affects have stress on organisational performance?

What is best strategies and techniques for preventing job stress

What is role of organisational culture/climate in reducing stress?


The section will assess all available research methods and choose most suitable methods in order to accomplish the proposed tasks. Main aim of the section is to find out how seriously is taken the impact of stress by organisations.

5.1 Approaches to research

For all objective of this study the author will be using a scientific approach. The author intends to use statistical data throughout the research to support the analysis.

5.2 Research Design

Multiple method of data collection will be used for this study. The reason for this is that using mixing modes will maximise responses as the author plans to take interview from some respondents face-to-face, from others by mail. In addition, a structured questionnaire will be used to collect data from the respondents on the variables of the study.

5.3 Sampling

Sampling is a fundamental method of inferring information about an entire population without going into any trouble or expense of measuring every member of the population (White, Wilson & Pfoutz, 2006). As this study will be carrying out survey, random sampling technique will be used in the sample selection. Sampling will be conducted in both interview and questionnaire forms.

5.4 Data collection

Though, the study includes both primary and secondary data, the author will mainly use primary data for this study. Face-to-face interviews will be carried out with representatives of a number of organisations. Because of time and physical constraints, questionnaires will be sent via e-mail. Secondary data will be gathered from different online libraries and databases.

5.5 Evaluation of primary research methods for this specific study

Surveys and questionnaire will be used in the study in order to gather primary data. Main purpose of surveys are to assess the distribution of some variables such as proportion of the population of different age groups, sex, religion, castes and languages, knowledge, attitude and adaption of practices about particular issues, and other information of similar nature about the population (Commonwealth of Learning, 2000).

5.6   Possible Conclusion to research objective

From this study, it can be concluded that stress can have both negative and positive impact on organisational performance. Organisations can encourage productive stress by assisting employees to build challenge into their work, can organise stress-reduction workshops and also can change element of stress by redesigning jobs to reduce role conflict and role ambiguity.

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