Last month, I wrote about the relation between workplace stress and job performance, and how owner/advisors can keep their performance near peak levels without falling into the downward spiral of too much stress (See "Stress for Success," Investment Advisor, August 2012). This month, I'll explore how firm owners can use the Yerkes-Dodson stress curve to help keep their employees near peak performance as well.
In our work with advisory firms, we've found that keeping employee stress at reasonable levels is one of the key elements for advisory firm success. Too little or too much stress will cause employee job performance to drop. To maximize productivity, owner/advisors need to be aware of the issues involved and take proactive steps to manage stress levels throughout their firms.
In case you missed it in the August column, the Yerkes-Dodson stress law states that when you're talking about either physical or mental performance, we all need some stress to motivate us to perform well, but too much stress will hamper our ability to perform. How this works can be seen in Figure 1 (see left): As stress increases, performance levels go up, too, but only so far. After that, increased stress levels cause performance to go down.
Unfortunately, once we get past our optimum stress level (which is different for everyone), a lot more than our performance can go down. Typically, when performance begins to decline, we try harder, which increases our stress and causes our performance to further fall off. The resulting frustration, fear of failure and fear of the consequences of poor performance can lead to all sorts of psychological issues from irritability and absenteeism to problems at home, breakdowns and substance abuse. In a business, it can also lead to high turnover rates, which is one of the biggest problems facing independent advisory firms today.
We've found that owner/advisors can take concrete steps to help keep employees off the back side of the Performance Stress Curve and happily performing at optimum levels. The first step, of course, is for owner/advisors to stay off the downside of the curve themselves. By far, the No. 1 cause of overstressed employees is overstressed employers.
The next step is to make sure that employees understand the relationship between stress levels and performance, and their own happiness as well. We find it's helpful to give each employee a copy of the Yerkes-Dodson graph and to talk to them as a group about the relationship between stress and performance. It's important to point out that your aim is to help keep them happy and productive, and to do that, it's important to stay on the front part of the curve. What's more, while peak performance is good, it's also very close to starting down the back side of the curve. Consequently, their goal should be a high level of performance that's comfortably near but not too close to the top. During periods when peak performance is necessary, it's very important that it should only be sustained for short periods, followed by allowances for reducing high levels of stress before they become a problem.
Examples, especially examples from the owner's own experience, of how stress affects their performance and what they do to manage it can be useful. It's also helpful to let the employees talk about stress and performance themselves, give their own experiences or what they might have observed in others, and to ask questions. The objective is to be sure they understand how stress can affect them, and that working together, they—and their employer—can manage their stress to keep it at a comfortable, productive level.
Then, still in a group setting, we make it real for them by asking them to put an X on their graph to show where they are on the performance curve. It's important to make clear that employees' self-assessments will not be used to evaluate their performance, rather to help both of you keep their stress at a reasonable level. At this point, our owner/advisors always ask, "How do I know they will tell the truth?" The answer is they won't: They'll lie. Yet, our experience has taught us that they'll only lie a little, and their obfuscation will be predictable.
