When Stress Becomes an Enterprise Risk
When Stress Becomes an Enterprise Risk
by James Porter
If you missed our monthly webinar yesterday with Joni Kovac, who recently retired as the Chief Human Resources Officer for Mitsubishi Capital in Norwalk, CT, you missed a really good one! Over the next 4 installments I’m going sum up the most important points for you, one slide at a time. She makes a very strong case for why delivering stress management resources to employees literally pays benefits and save your organization thousands, if not hundreds of thousands of dollars.
Most companies think about workplace stress as an employee wellness issue.
Joni Kovac thinks companies should think bigger.
Kovac recently retired as Executive Vice President and Chief Human Resources Officer of Mitsubishi Capital in Norwalk, Connecticut. During a recent presentation, she put a slide on the screen with a provocative title:
Make Stress an Enterprise Risk.
At first, I wasn't sure what she meant.
Then she explained it from the perspective of someone who had spent years running HR for a large financial organization.
A company like Mitsubishi Capital operates in an environment filled with compliance requirements. Compensation is one of the biggest areas of responsibility for HR, but it is hardly the only one. There are rules governing employment practices, financial controls, reporting, privacy, benefits, regulatory requirements and countless other areas where getting something wrong can have serious consequences.
And companies don't simply assume they're getting it right.
They get audited.
Kovac described regular audits by Deloitte and Touche and the level of scrutiny that comes with operating in a highly regulated financial environment. A mistake in one of these areas isn't simply an inconvenience. Depending on the nature of the error, it can result in financial losses, regulatory problems, legal exposure, reputational damage and an enormous amount of time spent correcting what went wrong.
Then she made the connection I had never thought about quite this way:
What if stress itself increases the likelihood of making those mistakes?
Think about what happens to a person who is overwhelmed, exhausted, distracted or worried. Stress doesn't simply make someone feel bad. It can affect attention, concentration, working memory, decision-making and the ability to regulate emotions. And when a job requires employees to handle complicated information, meet deadlines, follow precise procedures and make decisions where mistakes matter, those effects can become a business problem.
This changes the conversation about workplace stress.
We usually talk about stress in terms of absenteeism, burnout, employee morale or turnover. Those are important. But imagine an employee whose job involves processing compensation, approving transactions, reviewing contracts, monitoring compliance or handling sensitive financial information.
What is the cost of an error?
And what happens if stress makes errors more likely?
Suddenly, stress isn't just an HR problem.
It's an enterprise-risk problem.
This doesn't mean that every workplace mistake is caused by stress. It doesn't mean that eliminating stress would eliminate errors. Human beings make mistakes for countless reasons.
But it does mean that stress belongs in the risk conversation.
Companies routinely identify risks associated with technology failures, cybersecurity, fraud, regulatory changes, supply chains and financial markets. They create policies, controls and procedures to reduce those risks.
Perhaps they should also ask a simpler question:
Are we creating conditions in which our employees are more likely to make costly mistakes?
That question changes the role of stress management.
It moves stress management out of the wellness corner of the organization and puts it where senior executives and boards already understand how to think about problems: risk, performance and the bottom line.
That question changes the role of stress management. It moves stress management out of the wellness corner of the organization and puts it where senior executives and boards already understand how to think about problems: risk, performance and the bottom line.
Kovac’s insight is simple but powerful. If stressed employees are more likely to make mistakes, then reducing unnecessary workplace stress isn’t just about making employees happier. It may be another form of risk management.
Erica Tuminski
Author