3.6 Business Excellence: What it Means, What it Looks like, How it is Achieved

3.6 Stress: arguably the biggest killer of strategic decision making and personal health. Balancing stress for optimal performance; the Inverted-U Hypothesis in the modern workplace

In today's fast-paced corporate world, and the world in general for that matter, the pressure to perform and deliver exceptional results, or adopt the latest "five-step framework" for rapidly becoming that aspirational superhuman performer, has never been higher. However, this relentless pursuit of excellence comes at a cost. Our DNA has not kept pace with the rapid changes, leaving us in a perpetual state of survival mode. This drive for excellence can foster innovation and growth, but it also places employees in a high-energy state of negativity.

As mentioned in previous articles, constant stress releases cortisol and adrenaline— hormones originally intended for short-term, life-and-death survival scenarios. However, in the modern management environment, these hormones are triggered continually, leading to significant repercussions for decision-making and overall health.

The impact of chronic stress on decision-making cannot be overstated. When cortisol and adrenaline flood the body, they impair the prefrontal cortex, the brain region responsible for critical thinking, problem-solving, and emotional regulation. This diminishes our capacity for logical thought and increases the likelihood of impulsive, short-sighted decisions. In a management context, this can lead to strategic misalignment, miscommunication, and even a toxic work culture. Furthermore, there is often a disconnect between the decisions made in the "heat of battle" and the poor performance outcomes that may take months or even years to manifest. This means the root cause of many ailing company environments is often obscured by time.

Continuous exposure to elevated cortisol levels is linked to numerous health issues, including cardiovascular diseases, diabetes, and weakened immune function. Prolonged adrenaline release can lead to conditions such as hypertension and anxiety disorders.

Drawing from my personal experience as an athlete, I understand the impact of stress on performance. Even though my athletic days are behind me, the athlete in me lives on. I often volunteer for highly stressful activities and deliberately put myself in challenging situations. This drive gets me out of bed in the morning and fuels my need for high proficiency. When managing people, this "secret ingredient" of appropriately using stress can lead to great performance and sound decision-making.

To mitigate these detrimental effects, we need to strike the right balance by taking people's feedback and allocating assignments accordingly. The Yerkes-Dodson Law, formulated by psychologists Robert Yerkes and John Dodson in 1908, describes the relationship between arousal (stress) and performance. I first encountered this law in the early 1980s while studying sports psychology, where it was referred to as the "Inverted-U Hypothesis." According to this law, performance improves with increased arousal, but only up to a certain point. Beyond this optimal level, additional stress leads to a decline in performance. Essentially, a moderate level of stress can enhance focus and efficiency, while too little or too much stress can hinder performance.

This principle is widely applicable in the business world, where maintaining the right balance of stress is crucial for optimal productivity and decision-making. The optimal level of stress differs from individual to individual and is closely aligned with proficiency. For example, a beginner tennis player might be overwhelmed by having a few friends watch their initial attempts at hitting the ball over the net, while a highly ranked professional player might not even contemplate getting out of bed without the prospect of a packed arena and substantial prize money.

In the workplace, understanding and applying the Inverted-U Hypothesis can help managers create environments that foster optimal performance. By ensuring that employees are neither under-stimulated nor overwhelmed, businesses can improve overall productivity and workplace happiness.

Here are three simple techniques to assess where employees stand on the stress-performance curve:

1. At the beginning of every meeting, ask, "On a scale of one to 10, where one is overwhelmed and stressed out, and 10 is highly energized and happy to be getting the big things done, how would you score yourself right now?"
2. At the end of every meeting, ask, "On a scale of one to 10, where five is neutral, one is feeling totally negative and de-motivated, and 10 is feeling highly energized and eager to tackle the next task, how would you score yourself right now?"
3. Conduct quarterly performance appraisals focused solely on progress toward key improvement initiatives relevant to the individual's contribution to the company's strategy. Resist the temptation to bring up negative feedback during these appraisals. Corrective feedback should be given as soon as the behaviour occurs, and balanced with positive reinforcement. I am not a fan of scoring sub elements or required characteristics in performance appraisals as it often leads to disagreements over numbers rather than expectations. The overall feedback should be based on both the employee's and employer's perspectives, leading to a discussion about differences in perception and their relation to meeting the company's strategic expectations. A possible evaluation mechanism could be:

i. Not met expectations

ii. Met most expectations

iii. Achieved all expectations

iv. Achieved most expectations and exceeded some expectations

v. Achieved all and exceeded some expectations

vi. Exceeded all expectations

vii. I have outgrown my current role

Combining these techniques with the principles of positive psychology, such as recognizing and articulating emotions, can further enhance the work environment. While the drive in early sports psychology was to control emotions, the new thinking emphasizes acknowledging and labelling emotions, at least to oneself, is a good first step. Evidence suggests that this approach significantly addresses negative states often driven by organizational pressures.

These strategies cannot eliminate all anxiety-inducing environments, but reducing the number of perceived life-and-death events can help the environment flourish. Ultimately, applying the Inverted-U Hypothesis can help businesses cultivate a resilient, high-performing workforce capable of navigating modern work complexities while maintaining well-being.

Thanks for reading, and I look forward to next week, where I’ll explore how we can develop the culture of overall wellbeing and how performance will follow.

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Bibliography:

1. Yerkes, R. M., & Dodson, J. D. (1908). "The relation of strength of stimulus to rapidity of habit-formation." Journal of Comparative Neurology and Psychology, 18(5), 459-482.
2. Sapolsky, R. M. (2004). "Why Zebras Don't Get Ulcers: An Updated Guide to Stress, Stress-Related Diseases, and Coping." Holt Paperbacks.
3. Lupien, S. J., McEwen, B. S., Gunnar, M. R., & Heim, C. (2009). "Effects of stress throughout the lifespan on the brain, behaviour and cognition." Nature Reviews Neuroscience, 10(6), 434-445.