The Impact of the Great Recession on Workplace Stress

Several months after the official onset of the Great Recession in December 2007,[i] Elizabeth Bernstein, writing in The Wall Street Journal, observed that “as the economy falters and layoffs sweep certain industries, many people are more worried than ever about job security¾in addition to fretting over the value of their homes, the cost of college and a host of other issues. Making matters worse: Stressed-out bosses and co-workers tend to pass tension on to others.”[ii] Moreover, as observed by Angela Scappatura, writing for the Canadian HR Reporter, when “[t]here is a lot of uncertainty in the workplace ¼[,] [i]t is important for the organization to focus on eliminating anxiety among employees because heightened emotions can be detrimental to the workplace.”[iii]

“Put your ear to the ground nowadays and you hear a steady rumble of ‘stress-stress-stress-stress’, like a herd of bison in the distance. Whether it’s a consequence of recessionary cost-cutting and downsizing or the ever more cut-throat pace of change in the global marketplace, ¼ huge chunks of the workforce seem to be stressed out by their jobs¾and it’s getting worse.”[iv] Numerous reasons are cited for these elevated stress levels: lack of job security, shrinking pensions, micromanagement and over-control of employees, de-skilled jobs, routine abuse by ill-informed and ungrateful customers, long work hours, and virtually non-existent support from management.[v]

One of the common corporate solutions for dealing, at least partially, with the impact of the Great Recession has been downsizing. Although downsizing can help companies with cost reductions, such an action also has substantial negative impacts on employee attitudes. Employees perceive the layoffs as a rupturing of the employer-employee contract; and those who survive the layoffs typically suffer from low morale and lack of trust in and loyalty to their employer.[vi] Yet all too often employers do not understand the impact of employee stress on companies’ success¾particularly the overall customer experience and attainment of overall business objectives.[vii]

Hiring and salary freezes, layoffs, and bonus reductions¾all in an attempt to cut costs¾can lead to an increase in employees’ workloads and adversely affect their ability to deal with work-related stress.[viii] Paula Allen, vice-president of organizational solutions and training at Shepell-fgi in Toronto, Canada, says that with the increased demands on employees, many of them are not taking care of themselves with respect to taking stock of the situation and solving problems or even with regard to getting enough sleep and relaxation. She continues, “ ‘[t]here’s always the feeling, if things are rough, [that] you should be working 24 hours a day. If you are doing that, it’s going to take a toll. You’re going to build resentment, fatigue.’ ”[ix]

Commenting in October 2010 after the official end of the Great Recession in June 2009, [x] Sarah Dobson, writing in the Canadian HR Reporter, expressed a view shared by many people in North America: “The recent recession was grueling, no doubt, and it’s not over yet. So it’s no surprise employees are complaining of higher stress and heavier workloads.”[xi] According to Carole Spiers, an occupational stress consultant, the Great Recession created dangerous, new levels of workplace anxiety. “People are more insecure in their jobs, so they’re putting up with things they otherwise wouldn’t necessarily put up with ¼ . As a result, employers are not getting the best out of their employees.”[xii] Spiers also observes that when employees do not feel they are valued by their employers, or employees are working long hours or feel as though they are treated like numbers, those employees will not be loyal to the organization. In addition, employee performance suffers, and company productivity and profitability declines.[xiii]

Discussion Questions

How has the Great Recession directly affected the magnitude of stress that people experience?

How have the responses of businesses to the Great Recession affected employees’ stress levels?

How can the Yerkes-Dodson law help in understanding the impact of the Great Recession on people’s stress levels?

Drawing on your answer to the preceding question, explain what individuals could do to deal effectively with their stress levels.

Drawing on your answer to the third question, explain what employers could do to help employees deal effectively with their stress levels.