Stress has been a constant feature of the Covid-19 pandemic, not least among employees who are fearful for their jobs.  New research from Ohio State University reveals that employee stress is reduced if companies are open and transparent about their financial health.

The researchers examined data from a number of UK companies and found that in firms that were transparent and open about their finances, employees not only felt more secure in their jobs but were also more committed to their employers and had better relationships with their bosses.

The link was found to stand up even when factors such as income, superiority, gender, race, and academic qualifications were considered.

“Transparency in disclosing financial information may substantially reduce job distress, particularly by smoothing relationships between workers and managers,” the researchers explain.

Knowing the score

The importance of financial transparency was especially important for people who were in a precarious and vulnerable position, such as those who weren’t in a trade union or otherwise covered by collective bargaining arrangements.

“Workers covered by collective bargaining agreements may expect that their union representatives are looking out for their best interests, so they don’t have to pay as much attention to what the company reveals,” the researchers explain.

“But if your workplace is not unionized, workers feel more stress if their companies don’t disclose financial information. They may be worried about getting laid off if the company is not doing well financially or wonder if they’re being treated fairly as far as their wages are concerned.”

Stressful times

The researchers analyzed data from the Worker and Employment Relation Study, which covered over 15,000 workers from approximately 2,500 workplaces across Britain.

The survey aimed to understand job-related stress, including the number of times in the past few weeks their work had made them feel depressed, worried, tense, uneasy, or miserable.  The answers were provided on a five-point scale ranging from “never” to “all the time”.

The participants also rated how well their managers did at keeping them informed about the financial wellbeing of the firm, with the answers again rated on a five-point scale (from very poor to very good).

Lessening our worries

The researchers were somewhat surprised by the power of financial transparency in lessening any job-related stresses the workers were feeling.

“Workers at companies with the highest levels of financial transparency had stress level scores about 15 percent lower than workers at companies with the lowest levels of transparency,” they say. “That was a bigger effect on stress than gender or income.”

Those workers in the transparent organizations also reported feeling more secure in their jobs and therefore more committed to their employer.  What’s more, those workers also had a significantly better relationship with their managers.

“Even though financial transparency is about disclosing budgets, profits or other financial matters, the way it reduces job distress is not mainly about the money. It is about the relationships, especially with managers,” the researchers continue.

It’s a finding that the researchers believe will have important implications for workplaces as the Covid-19 pandemic rumbles on and on.

“The workplace is a major source of stress in modern society. Our findings show an important way that companies can reduce some of this distress and improve manager-employee relations,” they conclude.  “It comes down to being more transparent about financial information.”