How to Manage Workplace Stress as a Measurable Business Risk in 2025

Workplace Stress Is a Core Business Risk, Not an HR Problem

Workplace Stress Is a Core Business Risk, Not an HR Problem

For decades, many organizations viewed work-related stress as a personal challenge for employees, often leaving the management of this stress to human resources through mental health programs or stress management workshops. However, this approach is outdated and fails to address the widespread stress issues in today's workplace. The reality is that work-related stress represents a significant risk to businesses and requires the same management attention as financial or operational risk. The continued view of stress as a secondary component rather than an integral component of business strategy represents an important oversight.

A recent Deloitte survey highlights this disparity, revealing that while 94% of senior executives recognize the importance of being a health leader, 68% admit that not enough is being done to protect the health of employees and stakeholders. This gap between awareness and implementation is further illustrated by Aflac data: More employees felt their employer cared about their mental health in 2024 than in 2023 (54% vs. 54%). These data suggest that current investments in employee well-being are not effectively addressing specific stress-related needs.

A major reason why these investments fail to yield the desired results is companies' inability to accurately measure and quantify stress. As companies strive to measure financial, operational, and reputational risk, it is important to measure and manage stress as a quantifiable business risk. Through this proactive approach, organizations can change the way they understand and address employee well-being.


The Real Cost of Stress at Work: An In-Depth Study

Stress at work not only causes discomfort to individuals but also places a significant financial burden on organizations. A recent study of 1,005 full-time employees in high-intensity industries in the US and UK found that high stress levels add $5.3 million in annual costs per 1,000 workers. These costs are reflected in three main areas: cost control, risk reduction, and sustainable performance. Understanding these areas specifically helps organizations understand the direct impact of stress on their bottom line.

Cost Control: Financial Stress Due to Stress

One of the most direct financial impacts of high stress levels is increased health care costs. Highly stressed employees submit two and a half times more health insurance claims than their less stressed counterparts, placing a direct financial burden on self-insurance companies. This adds to the problem of rising health insurance costs, which Mercer's 2024 People Risk Report identified as the biggest threat to businesses worldwide. The urgency to address this cost threat is heightened by the significant increase in the cost of insurance premiums per employee in the United States, which will rise 28 percent between 2020 and 2024, an average annual increase of 6.5 percent. By proactively managing workloads, organizations can better control these rising costs.

Risk Mitigation: Protecting Your Business from Failure Due to Stress

In addition to direct financial costs, workloads pose significant risks to operational integrity and compliance. The survey found that 12% of employees admitted to making mistakes, missing deadlines, or taking shortcuts in ways that could jeopardize regulatory compliance. Even more alarming, employees experiencing high levels of stress were 11 times more likely to engage in such behaviors. Financial penalties for non-compliance can be devastating, but perhaps more difficult is the damage to stakeholder trust and reputation that can lead to pressured failure. Therefore, effective risk mitigation strategies must address workload as a key factor in protecting financial stability and brand integrity. Understanding risk mitigation in this context means working proactively to prevent errors and reputational damage caused by stressed employees.



Sustained Performance: A Silent Drain on Productivity

Chronic stress puts a significant strain on workforce productivity. Highly stressed workers take eight times more sick days and are four times more likely to quit work than their less stressed peers. The combined costs of absenteeism (not showing up for work), unproductive presenteeism (being at work instead of being productive), and employee turnover (employees leaving the company) result in an average of $12,000 in lost productivity for a highly stressed employee. This represents a silent but significant drag on profitability.

Stress-related business accounts for the largest share of these costs, estimated at $3.5 million annually. Based on the conservative assumption that one-third of employees who plan to leave will do so within one year, the turnover cost is assumed to be 100% of salary. According to Gallup, absenteeism costs employers $1 million annually, equivalent to 18% of the productivity loss associated with severance pay. Finally, stress-related absenteeism is estimated at $778,000 annually, driven by six additional sick days per year for highly stressed workers. These data emphasize the urgent need for strategies that promote sustainable performance by reducing stress.


The Stress Exposure Scale: A New Framework for Measurement and Practice

To effectively manage stress risk, the first and most important step is proper measurement within the organization. Many leaders view stress as a highly subjective or personal issue that is difficult to measure. Traditional tools, such as employee surveys and pulse measurements, often provide snapshots of sentiment and rarely link stress directly to business outcomes that executives prioritize, such as productivity, cost control and risk exposure.

To address this issue, a new framework called the Stress Risk Scale has been introduced. Developed as a method for analyzing research studies, this tool provides a systematic and incremental assessment of employee stress. When a significant portion of the workforce moves into high-stress areas associated with measurable risk, it enables leaders to adjust their interventions, prompting the development of specific strategies. It shifts the focus from identifying stressors to understanding their true impact on the business.

Begin Stress Risk Assessment

Organizations can assess their risk of internal stress with a simple but powerful question: "How often do you feel stressed, anxious, or overwhelmed at work?" This question can be asked every 6-12 months, with employees choosing options such as "never," "rarely," "sometimes," "often," or "always."

These responses allow leaders to divide their workforce into three distinct stress zones: low, medium, and high. It is important that this information is collected anonymously, maintained in the strictest confidence and reported at the team or department level, not individually. Transparency about what is measured, how the data is used and the benefits for employees is also important. The overall goal of this tool is not to monitor employees, but to provide leaders with insight into where structural changes are needed to address the root causes of stress, ultimately leading to improved health and performance.

Lowlands: Employees in this region rarely or never experience stress. They operate on a consistent performance basis with minimal operational risk. Research shows they take less sick leave, file fewer health claims and collaborate more effectively. Organizations with a large number of employees in this region have more focused, agile and engaged teams. In a recent study, this group accounted for 14% of employees surveyed.

Middle Zone: Employees in this category feel stressed "sometimes". Without adequate rehabilitation they can be productive, persistent, moderate stressors but can impair focus, creativity and teamwork. Over time, this category can become a source of hidden performance risk, increasing the risk of breakups, strained relationships, and health problems. This category generally comprises about 41% of the workforce.

Mountain area: This situation represents a crisis zone where stress is persistent or so severe that it can affect workers chronically, significantly increasing risk. Employees report feeling stressed "often" or "all the time." Compared to their low-stress peers, workers in this region exhibit significantly more negative behaviors: eight times more sick days, 3.7 times more likely to leave sick, four times more likely to quit, 11 times more likely to make compliance errors (an important aspect of workplace safety), and 2.5 times more likely to report health disputes. Co-workers: This group comprises about 45% of the workforce.

After identifying areas of workforce stress, companies can analyze how these areas relate to existing operational data, such as revenue, non-compliance, and customer satisfaction. This involves comparing samples to see if departments with higher levels of stress experience more defects or lower customer ratings. The goal is to determine whether greater stress is concentrated in areas associated with key business outcomes and whether this stress is associated with increased risk or decreased performance. It provides an in-depth understanding of the costs of workplace stress and areas that require intervention.

Practical Application: Building Resilience

A multinational client successfully implemented the Stress Risk Score framework to assess how different levels of stress relate to resilience in an organization broken down by department and region. After administering the initial stress survey, the client administers a follow-up survey that asks questions such as, "How confident are you in your ability to manage stress effectively?" To evaluate the tensile elasticity. Resilience analysis helps understand employees' ability to recover and maintain performance under stress, particularly by providing an assessment of readiness for future risk and leadership roles.

The company discovered that managers also showed high resilience despite facing significant stress. It emphasizes the importance of equipping future leaders with stress management skills. The survey also identified company-wide risk areas, such as chronic absenteeism, reduced productivity and lack of confidence in managing stress. These insights were shared in leadership meetings, leading to strategic interventions such as scheduled movement breaks and healthy habit-building campaigns. These initiatives demonstrated significantly higher engagement than previous wellness efforts, with 54% of interventions successfully reducing immediate stress. Based on these findings, a common habit-building program was designed, tailored to each region and department, and a central leaderboard was created to encourage participation in these stress-reducing program

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Formalization of Stress in Risk Management

To achieve effective management, stress management needs to involve the entire organization as a core responsibility. Integrating stress into a formal risk management framework ensures regular assessment, reporting and discussion at leadership and board level. Highly effective organizations combine the efforts of HR, finance and risk management teams to reduce the risk of stress and break down traditional barriers to protect, equip and motivate their workforce. Combining HR's understanding of employees with analytical rigor enables organizations to develop sophisticated methods to track absenteeism trends, performance fluctuations and other early warning signs of disengagement. Formalizing this collaboration ensures that financial and operational risks are also reviewed at the leadership level.

For example, a global commercial law firm has integrated mental health and stress into its broader risk management framework, in accordance with ISO 45003, the global standard for managing mental health and burnout in the workplace. The firm created leading and lagging indicators, aggregated data from insurers and brokers, and linked them to cost and performance metrics. This enabled him to demonstrate the return on investment (ROI) of existing mental health interventions. This evidence-based approach enabled more targeted action, promoted psychological well-being (an important aspect of workplace safety), and provided a strong, multidisciplinary rationale for sustainable investment in mental health.

Building organizational resilience is not just program implementation. It involves embedding an integrated system into how organizations lead, manage and develop. This requires a shared commitment: employees need support to develop sustainable healthy habits, while organizations need to take responsibility for creating an environment that reduces stress and promotes psychological well-being. Regular use of workplace stress data is critical to reevaluating policies, practices, and cultural norms to prevent employee stress from becoming a chronic and costly concern. By embedding resilience into the fabric of an organization, leaders can reduce the likelihood of disruption, protect the health of their workforce, and unlock a long-term competitive advantage. This holistic approach to managing workplace stress demands is a strategic move for any forward-thinking organization.


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