vPsychology for Business


We are dedicated to bringing out the best in you and your employees

Volume 5, Number 9                                                            April 23, 2004


Psychology for Business is an e-mail newsletter written by  Dr. John Weaver, business psychologist and independent consultant, provided to you at no charge. It is published bi-weekly. You’ve received this newsletter because you’ve subscribed to it or it was forwarded to you by a friend or colleague. To subscribe sign up at our website, http://www.psychologyforbusiness.com/. If you wish to cancel your subscription, please see the end of this e-mail for easy instructions

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 by Dr. John Weaver, Business Psychologist and Executive Coach

  1. 85% of human resource professionals are concerned about voluntary resignations (Society for Human Resource Management, 2001)

We have been through a difficult period in the economy over the past 3 years. The signs of an economic recovery have been mixed with few jobs being created and unemployment staying at high levels. In the past months there are some indications of an improvement in the job outlook. Two major components of the workforce will benefit first. Those who have been laid off will have a better opportunity to find jobs that match their skills and they will be looking.

The other component of the job market that will benefit will be the best employees you have. They will benefit because they can change jobs.  Their skills are valuable and they can compete well in a market where jobs are opening. If they are not satisfied with their current work environment they will (and are) looking for better opportunities. Many very talented workers chose to stay where they were in the past three years because of the recession. They will be among the first to move when they are able to find new jobs and they will be among the most sought after because of their skills.

That leaves the workplaces that have not attended to creating a psychologically healthy workplace with the workers who are average to slightly below average because they will not be able to move to another company in a competitive labor market.


  1. To replace an employee, it is estimated to cost 33% of their salary. (U.S. Department of Labor)

This is a difficult statistic to verify for a number of reasons. The more important the position for the company, the more expensive it is to replace that individual. Executive level employees can cost far more than one year’s salary to replace and can leave a company at a competitive disadvantage for a long time.

There are some hard dollar figures that can be tallied to figure the cost of replacing an employee. The time a position remains open and the tasks that are not done or need to be done, associated with that position (and must be assumed by someone else who has to add that to his or her duties) can be calculated directly. Costs for listing the position and recruiting for the position can be tallied. Costs for the time spent interviewing and assessing the individual (I hope you are using valid psychological assessments for positions at supervisor or above) are also added into the total costs.

But other less direct costs are also involved. When a new person is hired, it frequently takes time for that individual to learn enough about your organization to be effective. When someone leaves a company (whether by voluntary resignation or layoff) co-workers often experience grief and/or become afraid that they will also lose their jobs. Morale may be adversely affected, and it is one of the most important factors in worker productivity. Many individuals also have significant relationships with customers who may follow that individual or who may lose a sense of connection to the organization when he or she is gone. These factors are costly to the company but difficult to calculate with precision.


  1. There was a 20.3% increase in the year 2000 in the number of days anxiety, stress, and neurotic disorders took employees away from work. (U.S. Bureau of Labor Statistics)

There is a tricky balance that companies must achieve. When productivity rates are low or an organization has more employees that justified by the work levels, there is an inefficiency that is created that costs the company money.

Yet when companies are too “lean and mean” employees get “burned out.” The workforce is not machine-like.  Employees are human beings and have complex lives apart from the work setting. The rise in anxiety, stress and other psychological problems appears to coincide with ill-advised attempts in many businesses to ignore the human realities.

A “burned-out” employee will take a long time to recover and will probably need professional help to do so. This not only costs the company in missed work but in higher health insurance costs.


  1. 2/3 of both men and women say that work has a significant impact on their stress level and 25% of Americans admitted they have called in sick or taken a “mental health day” as a result of work stress. (American Psychological Association, 2000 national public opinion poll)

Stress and depression are the most expensive health-related costs in business today. Even if you argue that it shouldn’t be that way because workers have it better than they used to and the employer has given and given without receiving appreciation, the reality is still the same. People are feeling more stressed in work settings than ever before.

We can and should begin a dialogue about how to increase awareness in the average worker about the benefits they accrue from working. That dialogue does not substitute for creating a psychologically healthy workplace where there is a commitment to seeing workers as people who work for this company rather than as a commodity to be used and replaced.


  1. In 2002 unscheduled absenteeism cost companies $789 on average per employee, up from $755 in 2001. Stress accounted for 12% of all absenteeism. (2002 CCH Inc. Unscheduled Absence Survey)

A psychologically healthy workplace does not eliminate unscheduled absenteeism, but it certainly mitigates the effects. When I have interviewed employees at healthy companies I have been told that employees do not want to miss work. Others talked about how they try to arrange a replacement when they are away. Still others described how they pick up duties for co-workers because they know that the favor will be returned.

As costly as absenteeism is, there is also a phenomenon called “presenteeism.” This is a problem that is encountered when workers are present and drawing paychecks but doing no more than the minimum that the job requires. These workers are impossible to manage because you cannot give them instructions detailed enough to cover every circumstance. They are also very difficult to fire because they do what they are told – but not any more than the least.


  1. High job stress was reported by 45% of full- or part-time workers in 2002, up from 37% in 2001 and 26% in 1999. (Yankelovich Monitor annual study of consumer attitudes and lifestyles)

This is important because workers under high stress perform more poorly than those who are more comfortable in their work settings. Specifically individuals who are under stress tend to feel isolated and act as if others in the organization are unimportant (and may even act as if customers are unimportant!). This means that there is poor coordination of activities and skills. Stressed out workers also demonstrate degeneration of their own skills. Complex skills are lost first. Highly stressed workers will make many more errors.

This is also a loss of the ability to see the big picture. When companies have workers who are constantly complaining about little annoyances, seemingly without the ability to understand why policies and procedures are necessary, it may be a stressed out employee who cannot see the big picture. Stress also affects communication. When a person is under stress it is more difficult to deliver the needed information that will guide a company in an intelligent direction. That means that the leadership begins to make decisions with only part of the information.


  1. There was a 14.7% increase in corporate healthcare costs in 2002. (2002 U.S. Mercer Survey of Employer-Sponsored Health Plans)

One of the most perilous developments in competitive business is the continuous and dramatic increases in health care costs. As long as the costs increase, there are no really good solutions. If the organization picks up the tab, it threatens the profitability of company. If the cost is passed on to the employees, those who can find a better place to work (see reason # 1, the best employees will be able to leave) will be increasingly dissatisfied and begin to look at other companies.

The only good solution is to hold down the costs. The most effective way to do so is to create psychologically healthy workplaces and demonstrate the benefits to the insurer. Bringing in wellness consultants or consulting with a business psychologist may be an effective way to begin to gain control of these costs.


If you would like to nominate a your Wisconsin company (or you know of a worthy organization) for next year’s award, please visit the Wisconsin Psychological Association website at http://www.wipsychology.org/displaycommon.cfm?an=1&subarticlenbr=5. If you know of a great company outside Wisconsin you can email me at jweaver@psychologyforbusiness.com and I will help you find out if there is an award program in your state and put you in touch with the right people. I am available to help organizations that are interested in developing a psychologically healthy workplace.

Did you know that executive coaching is not geographically limited?  Coaching by telephone is effective.  It is also an efficient use of time and resources.  You never need to leave your office to travel, nor do you need to pay travel expenses for your coach. We offer coaching either onsite or by telephone. To find out if coaching is right for you, contact us to schedule a 1/2 hour consultation at no charge.  Or request a price sheet to determine the best value for your organization.  Call us at: (262) 789-2728 or email us at mailto:jweaver@psychologyforbusiness.com.

About the Author

John Weaver, Psy.D. is a licensed psychologist with 25 years’ professional experience working with organizations, groups, and individuals. He has experience leading groups and creating teamwork in organizations. His areas of expertise include executive coaching, conflict resolution, coaching teams and individuals to improve performance under stress, assessing employees and potential employees to ensure the right person for the right job, and training in stress management and "The Vitamin C’s for an Emotionally Healthy Workplace."  He is an experienced professional speaker and published author.

Based in Waukesha, WI, Dr. John Weaver is available for consultation or executive coaching by phone, e-mail or in person. He may be reached at (262) 789-2728 (office) or (414) 491-8719 (cell), by e-mail: mailto:jweaver@psychologyforbusiness.com or: 

John Weaver, Psy.D. 
Psychology for Business
2717 North Grandview Boulevard, Suite 303
Waukesha, Wisconsin, 53188

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Dr. John Weaver
Psychology for Business
2717 N. Grandview Blvd. #303
Waukesha, WI 53188

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