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Great Recession Impact on Workplace Stress Case Study

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Updated: Jun 23rd, 2020


The recession that occurred between 2007 and 2009 had significant negative effects on businesses in various parts of the world. Some companies had to collapse, whereas others suffered huge losses because of the recession. This paper will discuss the effect of the recession on the magnitude of the stress that people experienced. It will also identify and discuss the strategies that can be used to manage stress effectively. The thesis of the paper is that stress is both a cause and a consequence of poor performance at the workplace.

Effect of the Recession on the Magnitude of Stress

The recent recession directly increased the level of stress that people experienced in the US and other countries in the following ways. To begin with, the recession had a negative impact on demand in various industries in the country. As demand reduced, businesses had no option but to reduce prices in order to sell their products.

This exposed business owners to the risk of making losses, which in turn stressed them as they looked for alternative ways of saving their companies. The stressed business owners passed the tension to their managers who in turn passed it to employees (Debra and Campbell 271). This involved putting managers under pressure to improve the performance of their companies to prevent losses. Employees also experienced increased stress levels due to unmanageable workload.

The recession also increased the level of stress by reducing the value of properties such as homes (Debra and Campbell 271). A reduction in the value of homes causes a lot of stress since purchasing a house is one of the most expensive investments that an average person makes in his lifetime. In this case, the stress results from the losses associated with the reduction in the prices of houses. The recession also increased stress through its negative impact on the cost of living. The people whose incomes reduced during the recession became stressed because they were worried of being unable to pay for expenses such as college fees.

Effect of the Responses of Businesses

The responses of businesses to the recession affected employees’ stress levels in the following ways. First, downsizing was one of the main responses to the recession (Debra and Campbell 271). The employees who lost their jobs experienced high levels of stress because they had no alternative sources of income. Undoubtedly, loss of income is a major source of stress since it directly threatens the survival of an individual by denying him/ her access to basic needs such as food (Olpin and Hesson 59-96). The employees who retained their jobs also experienced high stress due to lack of job security. In this case, the uncertainty associated with lack of job security caused anxiety and fear, which led to a significant increase in stress and poor performance among employees.

Second, some businesses responded to the recession by reducing salaries and benefits. This strategy is considered a win-win solution since it enables employers to reduce losses, whereas employees retain their jobs (Rayner and Rumbles 47-83). In this respect, employees who were concerned about job security rather than salaries did not experience high stress. Nonetheless, the loss of valuable benefits such as pension contributions led to increased stress among employees.

Finally, long working hours increased employees’ stress levels. Some businesses increased working hours in order to improve their financial performance during the recession. However, long shifts had negative effects on employees since it denied them the opportunity to attend to personal issues such as caring for their families. In addition, long shifts often lead to fatigue and stress, which in turn reduce performance at the workplace.

Yerkes-Dodson Law

The Yerkes-Dodson law states that the ability of a human being to perform a give task increases with arousal. However, the performance begins to fall after a certain level of arousal is exceeded (Olpin and Hesson 23-45). The factors that determine the effect of arousal on performance include skill level, personality, trait anxiety, and task complexity. Before the recession, most individuals’ stress levels were likely to be low, especially, if they had not suffered any catastrophic loss. Thus, they were likely to perform well in their jobs even if they had low skill levels.

At the beginning of the recession in 2007, some businesses were able to report positive financial results. This shows that the stress levels at the beginning of the recession were optimal since it enabled some companies to increase productivity and avoid losses. However, in 2008 and 2009 most companies made huge losses. The losses were attributed in part to poor performance among employees. Specifically, stress coupled with low morale reduced employees’ performance (Debra and Campbell 271).

According Yerkes-Dodson law, individuals with weak personalities such as introverts are less likely to excel in high-pressure situations. In addition, people who are not confident are likely to fail when subjected to stress and high pressure. Stress also leads to poor performance in situations where the task to be performed is very complex. In this case, stress causes underperformance by limiting an individual’s ability to think and develop innovative solutions.

The aforementioned determinants of performance in stressful situations are likely to have led to the poor financial results reported by companies during the recession. In this context, the dismal performance of employees and their companies means that the recession increased stress levels beyond the optimal point. Moreover, poor performance was a cause of stress since it exposed the employees who were not able to achieve their targets to the risk of losing their jobs.

Managing Stress at Individual Level

According to the Yerkes-Dodson law, individuals can manage stress effectively by taking the following actions. First, the individual should be able to identify his overload point. In this case, the overload point refers to the level of arousal beyond which individual performance declines. Apart from performance, symptoms of stress such as headaches, sleeplessness, and loss of appetite indicate that the overload point has been exceeded (Olpin and Hesson 93-95). Once the overload point is identified, the individual should avoid exceeding it by setting realistic targets or goals to prevent stress. Those who are already stressed should learn to relax by doing what they enjoy to reduce stress.

Individuals can also reduce stress by improving their personality traits. For instance, introverts can reduce stress by learning to interact and share their problems with others. This helps in easing tension and finding solutions from third parties. Developing a positive attitude is also an important strategy for managing stress at the individual level. A positive attitude is likely to motivate an individual to find an effective solution to the problem that causes stress (Olpin and Hesson 97). For instance, a positive attitude can increase the probability of making a sale during an economic downturn. Generally, individuals with positive thoughts are likely to have enough confidence to solve their problems, thereby avoiding or reducing stress.

Managing Stress at the Company Level

Employers can help their employees to avoid stress in the following ways. First, employers should focus on improving their employees’ skills to enable them to avoid stress (Rayner and Rumbles 78). Employees with the right skill set are likely to avoid stress by excelling in high-pressure situations. Thus, employers should introduce relevant training and staff development programs to improve the skills and knowledge of their employees.

Second, employers can help employees to deal with the stress and anxiety associated with lack of confidence. One of the ways of dealing with anxiety is to introduce mentorship programs that allow employees with weak personality traits to access assistance from their experienced counterparts. Mentorship can boost employees’ confidence and self-esteem, thereby improving their ability to cope with stressful situations.

Finally, employers can eliminate stress at the workplace by reducing task complexity. This involves redesigning various tasks to make them simple to employees. In addition, employees should be assigned tasks that match their skills to avoid the stress associated with performing very complex tasks in high-pressure situations.


The great recession directly increased people’s stress levels. The increase was attributed to the economic difficulties that were created by the recession. These included reduction in the value of properties such as houses and lack of adequate funds to pay for personal expenses. Businesses responded to the recession through layoffs, wage cuts, and increasing working hours. These strategies had negative effects on employees’ financial stability and lifestyles. As a result, employees in different industries experienced increased levels of stress. This led to poor performance among employees. In addition, poor performance exacerbated the stress by exposing the employees to the risk of losing their jobs. This shows that stress is both a cause and a consequence of poor performance at the workplace.

Works Cited

Debra, Nelson and James Campbell. Organizational Behavior: Science, the Real World, and You, New York: Cengage Textbook, 2012. Print.

Olpin, Michael and Margie Hesson. Stress Management for Life, New York: Cengage Learning, 2012. Print.

Rayner, Charlotte and Sally Rumbles. Organizational Behavior, New York: John Wiley and Sons, 2012. Print.

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