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Why Businesses Shouldn't Underestimate the Cost of Stress

Posted On: 23/07/2016

While individuals and organisations can have problems understanding stress, it’s clear that stress can have significant organisational consequences, far beyond its immediate impact on the individual.

Businesses like to be able to see and measure a return on investment. In fact they can also obtain clear estimates of the cost of stress. This is important, because it highlights the fact that stress is more than a people issue.

Organisational Consequences and Costs

There are good, sound economic reasons for businesses to tackle stress in the workplace. Whereas there is an ethical imperative, and a duty of care towards the wellbeing of staff, businesses should also be aware of what stress, if left unchecked, can actually cost them in monetary terms.

The key areas where businesses are affected by stress are: sickness absence, productivity and staff turnover. For each of these there is a formula that CIPD recommends for estimating the cost of the effects of stress.

For example, for sickness absence: estimate the proportion of stress-related sickness absence; estimate the annual cost of sickness absence per employee; multiply these two figures then multiply this total by the number of employees in your company.

It’s not always straightforward to come up with the estimated costs to do the calculations, particularly in the case of presenteeism, but employee surveys are a good way of gathering pertinent information. In fact employee engagement is a key way of both measuring the effects of stress and taking action to deal with it.

Taking a balance-sheet approach is a useful exercise: it doesn’t mean you shouldn’t care about the wellbeing of your employees, but it does illustrate the stark, economic consequences of not combatting stress in the workplace.

The economic argument for tackling stress is always a persuasive one because while stress as a condition is sometimes hard for people to detect, diagnose and even define, the figures themselves tell a story.

Businesses recognising the need to have policies and procedures in place to deal with workplace stress and to give employees the right level of support are advised to seek professional guidance.

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