I recently read the results of a study, CEO Stress, Aging, and Death. The researchers estimated the long-term effects of work-related stress on the mortality and aging of 1,605 CEOs of large, publicly listed U.S. firms. The results were scary…stress can indeed shave years off your life.
Since 2020, there has been a much larger focus on stress in the workplace. We know it has a negative effect on employee performance as well as employee health – and CEOs are no exception.
This particular study that looked solely at CEOs found that CEOs who serve under stricter governance die significantly earlier. The researchers found that for every year of less stringent corporate governance, mortality rates were reduced by up to 5%.
What I liked most about this article is that it focused on how CEOs must be careful about how much stress we place on our teams and how we motivate employees. While incentivizing employees motivates them to work harder, it may also be costly to their health as they work to achieve the incentive. The message isn’t to not incentivize them, but to keep workload levels and attainability in mind as incentives are designed.
One of the researchers, Wharton finance professor Marius Guenzel, stated, “All of us can think of a time when we were very stressed out. I don’t think that was a time when we performed at our best. Stress not only has long-term effects, but it also affects your immediate productivity – it’s no longer that clear if you’re really performing well if you’re too stressed and burned out. Designing incentives where employees are happy with their work and not always stressed out might not only have long-run health benefits for them, but they might also affect firm value or value creation.”
At ASE, we work with our teams to develop goals and carefully design incentive programs to be attainable with various levels of success and reward. We understand that bandwidth and personal stress levels vary by employee.
Using the SMART method can help keep goals and incentives attainable without undue stress:
- Specific – Be as precise as possible. Instead of "submit more proposals," the goal should be something like "submit 30% more proposals than last year.”
- Measurable – Develop a way to measure success. "Get leads" isn't measurable; "bring in 30 leads" is.
- Attainable – If there's no way the employee can reach the goal, you're setting them up for failure and stress. "Triple our client load" isn't likely attainable if you’ve never in the life of the business done that.
- Realistic – Your goal should stretch the employee, but not necessarily be easy. "Reduce all errors to zero" may be less realistic than "reduce errors by 10%.”
- Timely – Set a clear time frame in which you want the goal reached. Deadlines set a clear goal for completion and allow for set checkpoints.
It’s been a stressful time for everyone, from CEOs to management to everyday employees. I highly recommend watching the Burnout to Resilience webinar ASE hosted back in September and sharing it with your employees. You can view it here.