Turning up the Heat

Banks aren�t like that anymore. Many don�t even call themselves banks. They are financial services firms. They�re retailers of a wide variety of financial products (money market accounts, checking accounts, debit cards, loans, CDs, AMTs, IRAs, and credit cards) and services (financial planning and trust administration). If you have money, or if you need money, they�ve got a product for you.

The tellers we valued as clerks weren�t very helpful in these new financial-service retailers. These firms need sellers, not tellers. But that�s not a change that comes just by wishing for it.

How do you turn tens of thousands of tellers into sellers of financial products and services? That�s a story that�s being written right now in banks all over the world, and firms that successfully make the transition are providing lessons for everyone else. It was in one of these successful firms that Larry Hunter, from the University of Wisconsin-Madison, recently completed a study.

Hunter watched carefully between the years 1997 and 2000 as a large, national bank made the transition. New instructions were given, products and processes were centralized and standardized, job descriptions were revised, training was provided, sales performance targets for individual employees were created and repeatedly revised upward during these years, pay was tied more closely to sales performance, rewards were put in place for hitting sales targets with penalties for failing to do so, and a sales tracking system was created that measured clearly identifiable, objective sales performance for each person thereby allowing an employee to access his/her own performance data and also the performance data of any other employee at any time. Comparing performance was encouraged.

These changes substantially altered the psychological contract between employee and employer, and they created job stress: time pressure, anxiety, worry about correctly performing job tasks, and worry about losing one�s job.

Hunter recognized that the bank�s transformation, painful as it was, provided an excellent natural experiment. New employment conditions were created for a large number of employees. A careful observer could learn how people react to such changes. He decided to examine the effects of job stress on performance.

Hunter was guided by two theories. The first suggests that with increasing job stress people suffer negative effects: nervousness, tension, strain, and reduced strength. Paradoxically, this stress also positively affects performance. This positive effect occurs when people withdraw attention from trivial aspects of their jobs and redouble their remaining efforts toward critical duties. Overall, performance rises. Hunter found that this was true for these employees.

The second theory distinguishes between two kinds of job stressors: challenge job stressors and hindrance job stressors. Challenge stressors include high workload demands, time pressure, and expanding job scope. Hindrance stressors include working for supervisors you don�t like, policies and procedures that obstruct progress and slow work, contradictory instructions or impossible instructions (i.e. instructions that can�t be completed in the time allowed), role ambiguity, and organizational politics.

When Hunter examined the effect on performance of increasing job stress due to challenge stressors, he found improved performance for some but not others. Some employees� performance declined under these challenge conditions. Hunter found no improvement for hindrance job stressors. He investigated more closely.

Hunter and his team observed employees in five states over the three-year study, conducted numerous interviews, and administered several surveys. He concentrated on three job classifications: customer service representatives, financial representatives, and personal bankers. Each demanded sales performance, with customer service jobs demanding the least and personal bankers demanding the most. Under conditions of increasing job stress, Hunter found that knowledge and experience in the job made a difference. It allowed people to correctly distinguish critical from trivial aspects of the job so that diminished energy could be focused on critical functions and result in overall improved performance.

Hunter also found a difference for employees who felt a close identification with the firm and who were actively involved with it. For these employees, the values of the firm reflected their values, co-workers were friends, and the hopes of the firm reflected their hopes. These were emotionally committed people, and it made a difference when challenge stressors loaded them down. They stuck it out. They trimmed their efforts toward trivial functions and got the critical work done. They knew what to do, and they cared enough to do it.

Job knowledge and experience and emotional commitment. These were critical factors. For these employees, intense job stress resulted in improved performance. When these were missing, intense job stress reduced performance.

Business owners and supervisors have it in their power to turn up the heat, to load their people down with job stress. The decision to do so needs to be well informed. It needs to be made with the ability to predict how employees will respond. Thanks to Professor Hunter, we now have this ability.

Reference: Hunter, Larry and Sherry Thatcher (2007) Feeling the Heat: Effects of Stress, Commitment, and Job Experience on Job Performance. Academy of Management Journal, 50(4), 953-968. www.businesspsych.org

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