Managing stress: The business case for a stress prevention strategy

Section three of the Personnel Today Management Resources one stop guide to managing stress, covering: stress management and the bottom line; assessing the economic impact of work-related stress; and case study on the business case for stress management work in practice. Other sections.

Why develop a business case?

One of the most fundamental tensions created by the problem of work-related stress is between that of the top management team, which is responsible for the financial performance of the organisation; and the staff, who are under growing pressure to perform to increasingly stringent performance targets.

There will always be a difficulty in achieving top management commitment to providing resources to fund stress prevention activities unless it can be shown to be worth it. This is true regardless of being in the private sector, where managers are responsible to shareholders for ensuring a healthy return on investments; or in the public sector, where managers are responsible for the careful use of public funds.

Historically, there has been little hard data to show that investing in the health and well-being of staff improves key performance indicators of a business. There have been few reputable published case studies that establish a strong business case, and virtually no well-established economic models showing the improvements in business indicators that flow from well-being interventions.

Businesses that have already invested in wellness interventions have done so because of an intuitive assessment of the pay-off. These investments were made under the auspices of concepts such as corporate social responsibility, employer of choice, sustainable development, ethical trading, and social justice. Others have used links to improved productivity and the improved retention and attraction of staff.

Recently, some evidence has emerged, through economic modelling, of the effect of investment in people management on business performance. An important study, The Employee-Customer Profit Chain at Sears published in the Harvard Business Review in 1998 (see Section 7 ), showed a verifiable link between employee behaviour and profitability in a large retail group.

Stress, absence and the business case

One of the most important annual surveys of absence and the causes of absence in the UK is carried out by the Chartered Institute of Personnel and Development (CIPD) (see Section 7 ). This survey shows how absence remained fairly static between 1999 and 2004, with an average absence rate varying between 3.8% and 4.4%. Stress-related absence has been increasing steadily over the past 15 years, and in the latest report from the CIPD, more than half of the employers questioned reported an increase in stress-related absence.

The cost of stress-related absence is one of the most robust measures used in assessing the economic impact of work-related stress. It is by no means the only one. Presenteeism is another indicator of the economic impact of work-related stress. Presenteeism refers to the condition in which an employee is suffering from stress that is seriously affecting their work performance, but who chooses not to go absent for a variety of reasons. Presenteeism has a damaging effect on business productivity, but it is notoriously difficult to measure.

Length of absence

Short-term absence (up to five days) is highest among private services organisations, such as consultancy, financial services, hospitality, telecoms, IT services, legal services, retail and wholesale, media, and transport. Long-term absence is highest in the public sector, accounting for 30% of the total. The CIPD data shows that stress is the major cause of long-term absence in non-manual workers.

Somerset Case Study

During October and November 2001, Somerset County Council commissioned a stress audit. The survey instrument used in the audit was 'ASSET', a self-report questionnaire examining the key sources of pressure facing staff as well as their levels of physical and psychological health and commitment.

The changing nature of public service required considerable personal adjustment from the workforce. Working life within public service experienced a level of transition more usually associated with the private sector. For example, the introduction of government-initiated Best Value reviews and more recently a significant change agenda in the areas of social services and education. Having to make such personal changes can significantly affect people's quality of working life.

Somerset County Council has not avoided facing court action (eg, Barber v Somerset County Council - see Section 2 ) and has actively sought to learn the lessons from this experience in practical terms.

Why did the council want to do a stress audit?

Rates of absence

The number of full-time equivalent (FTE) working days lost per employee due to sickness absence is one of several performance indicators prescribed nationally for 'Best Value for Local Authorities' by the Government. In 2000-2001, the national upper quartile target number of days lost to sickness absence stood at 9.1 days. The Government set this target for authorities to achieve within the following five-year time frame. The rate of absence in Somerset prior to the project was 10.75 days absent per person per year.

The project was managed by a representative project team:

This team was responsible for constructing the council's corporate action plan and supporting the development of directorate action plans in response to the audit findings.

As well as reporting to the county personnel officer, the directorate HR managers have direct lines of communication to their respective heads of services and are accountable to them for service delivery. This direct line of communication has been important in securing their buy-in to the ongoing process. There were comprehensive communications from this team to all staff across the organisation. The survey was distributed to 13,938 people. The response rate was 47.7%.

Following the outcomes of the audit, action plans were compiled. These were the preventative measures that were to be introduced having identified the problems using the audit. The audit provided information about hotspots that enabled the council to target initiatives in a cost-effective manner.

Audit action plans

The council's full action plan was posted on its intranet site to make it available to all staff. In some cases, service directorates also published their individual action plans on their part of the intranet site. This provided a way of both gathering feedback during the consultation stage and publishing the final outcome.

The council's full action plan contained more than 50 separate actions. The consultation process helped to ensure that, as far as possible, the items were realistic and appropriate to the area. Of crucial importance was the manner in which the action plans were integrated into existing directorate activities. Buy-in to well-being appears to have been more readily secured by embedding the action plan components into other existing directorate activities.

Some interventions were funded from existing resources. However, the council's elected members did allocate new funds.

In several cases, the action planning process showed that some interventions were required across the whole council. Accordingly, funds were retained centrally and the intervention organised centrally. Conversely, however, some interventions were directorate-specific. In these cases, when resources could not be found from within existing directorate budgets they were required to bid for funding. In all, the Council spent £390,000 on new initiatives.

Why was the Somerset project so successful?

The case study evidence indicates that the Council has implemented its Quality of Working Life (QWL) initiative in a way that closely follows the Beacons of Excellence Good Practice Model. The council is identified in Jordan et al's 2003 report as being an example of good practice. So why was the project so successful?

1. Top management commitment

The council's elected members, strategic management board, and successive tiers of management across the council have all been involved in the well-being initiative. Funding approval has been gained at the highest levels on an ongoing basis. The well-being initiative is to be included in the council's comprehensive people strategy.

2. Risk analysis

The QWL audit at the end of 2001 represented a formal psychosocial risk assessment using a scientifically tested, valid and reliable instrument. The results of the audit provided an understanding of the starting position and will, therefore, enable the organisation to gauge achieved benefits when a subsequent survey is conducted.

3. Stress prevention strategy

The results of the QWL audit were used to help construct an action plan addressing the aims, responsibilities, resources and timeframes for resolving the problems identified. These have been updated and kept fresh by individual directorates that have taken responsibility for implementation at a local level. The central corporate department has taken responsibility for initiating council-wide solutions.

4. A participative approach

The council's QWL project team consisted of representatives from all major stakeholders, including trades unions representation. Middle managers and employees were consulted in the process of constructing the action plan and ideas used where relevant.

5. Interventions concentrating on individuals, teams and the organisation

A broad mixture of interventions has been introduced aimed at each of these three groups. Individual interventions have included skills training to help staff cope with incidents involving aggression and conflict from members of the public. At a team level, managers have been trained to more effectively manage stress in themselves and their teams. At an organisational level, training for both managers and staff in the council's revised performance review and development system is aimed at both developing people to deliver higher performance standards and also reduce the opportunity for performance management creating workplace stress, if undertaken inappropriately.

Centrally provided stress prevention interventions

FTE absence levels have fallen from 10.75 days in 2001-02 to 8,29 days in 2003-04. In monetary terms, this reduction represents a total saving (excluding education directorateand schools) of £1.93m over the past two years.

The total investment of new money was £390,000. therefore the total monetary saving is £1.54m