High Stress Levels, Low-Quality Decisions?
How stress impacts the quality of our decisions
Workers on the ground for humanitarian organizations often face stressful situations. They have to act within dangerous conflicts and during pandemics, and they bear witness to horrific events, during which they are expected to respond quickly to avoid any additional harm. It goes without saying that such work and stress go hand in hand. A new study from WHU – Otto Beisheim School of Management and the INSEAD Business School now shows that a high level of stress does, indeed, negatively influence the quality of one’s decision-making. But it also showed that some stress can be beneficial.
From food crises and Ebola outbreaks to earthquakes and military conflicts, humanitarian organizations are always on the front line, working to reduce human suffering and improve people’s living situations. Workers on the ground are continuously under pressure and often suffer from trauma—trauma that may be caused by an unsafe working environment, violent attacks, or exposure to illness. And, depending on the situation in which they find themselves, the level of intensity of their stress can fluctuate. With human lives hanging in the balance, and their actions having a direct impact, these workers must be able to make the right decisions quickly, even in stressful situations.
It is for this reason that humanitarian organizations must efficiently manage both their limited resources and the logistics within the crisis zone. With an ever-increasing number of crisis zones, these organizations have to justify to donors the ways they utilize the resources available to them, which they now have to manage in a more efficient manner. In our experiment, we took a close look at how stress impacts the quality of one’s decisions—and found what the world of management can learn here.
What effects does stress have on the quality of our decisions?
In our experiment, various volunteer groups were tasked with making decisions while under duress, striving all the while for the best results regarding the provision of resources. Stress, within this context, means that the participants had to contend with time pressure, emotionally charged images, or distracting noises. The experiment revealed that the noises had little influence on the quality of decisions made. By comparison, the participants showed noticeable and measurable stress reactions when confronted with time pressure and the emotionally charged images. The more the level of stress increased (e.g., when there was need for split-second decision-making), the worse the quality of the decisions made, leaving the fictional resources allocated less optimally.
Notably, the experiment revealed that a certain level of stress can also have its advantages. A moderate level of stress caused by a small amount of time pressure even led to better decisions being made in some cases. This effect, however, rapidly swung in the other direction as that time pressure, and therefore the level of stress, increased. The participants then made poorer quality decisions regarding the allocation of resources than they had under only a moderate level of stress.
The results were clear: A high level of stress leads to suboptimal decisions—something true of both the participants of the experiment and the workers at humanitarian organizations. Yet, if people are able to acclimate themselves to certain stress factors, any negative consequences will lose their effect over time. People develop a certain level of resistance to some stress factors (e.g., time pressure), which leads to their once suboptimal decision-making to improve. For this reason, generally speaking, it would behoove humanitarian organizations to have their employees avoid extraordinarily high levels of stress so that they may make sound decisions and not put their own health at risk. Consistently high levels of stress can lead to depression, anxiety, or post-traumatic stress disorder.
What can the world of management take away from these lessons?
Stress in and of itself is not necessarily problematic. Rather, it’s the level of intensity that is the deciding factor. For solid stress management at a company or organization, it is imperative that managers figure out which stress factors, whether structural or personal, are weighing on the employees’ minds. To give employees the best chances of making sound decisions on a consistent basis, managers should be sure to eliminate any structural factors within the company that are major stress makers.
Proper training and preparation can help make sure that employees don’t get too stressed out in the event of an emergency—and that goes both for humanitarian organizations and businesses alike. If the appropriate training measures (e.g., offering practice scenarios or simulations) are taken within a timely manner, employees will come out ahead and learn how to maintain composure during stressful situations and make the right decisions.
Tips for practitioners
- Spare your employees unnecessary stress by eliminating any structural stress factors in your company. Otherwise, both the employees’ health and the quality of their decisions will suffer.
- A little stress can have a positive effect on one’s decision-making process. Be careful to ensure that your employees’ stress levels do not exceed a moderate level.
- Proper preparation can help your employees handle particularly stressful tasks. Offer trainings early enough to minimize your employees’ stress levels in the event of an emergency. Virtual reality simulations (i.e., practice scenarios) can offer a cost-effective solution here.
Literature reference and methodology
This experiment saw 154 bachelor and master students work in four randomly assigned groups, tasked with making decisions under varyingly stressful workloads. Stress levels were then measured using physiological data and the participants' own reports.
- Burkhardt, M./Nitsch F. J./Spinler, S./van Wassenhove, L. (2023): The effect of acute stress on humanitarian supplies management, in: Production and Operations Management, März 2023. DOI: 10.1111/poms.13993
Dr. Maximilian Burkhardt
Dr. Maximilian Burkhardt is Director of Supply Chain at Lekkerland SE, part of the REWE Group. He graduated summa cum laude from WHU – Otto Beisheim School of Management, where he earned his doctoral degree from Professor Spinler’s Chair of Logistics Management. For his dissertation, Dr. Burkhardt researched the effects that stress can have on one’s decision-making, particularly as it pertains to humanitarian efforts. Another of his projects, conducted in conjunction with the World Food Program and Help Logistics, focused on the optimization of food warehousing for school meals in Bhutan. Before starting at Lekkerland, he worked for several years as a consultant at McKinsey & Co.
Dr. Felix Nitsch
Felix Jan Nitsch is a Postdoctoral Researcher in the Marketing Area at INSEAD Business School, where he studies how consumers behave while under stress. Dr. Nitsch focuses on transformative consumer research, i.e., how stress and mental well-being affect consumption (e.g., dietary decision-making and status seeking) and what beneficial interventions and nudges exist to support consumers in their decisions. To this end, he uses behavioral and psychobiological methods, integrating insights from the fields of marketing, psychology, and neuroscience. Before joining INSEAD, Dr. Nitsch graduated summa cum laude from the Heinrich Heine University in Düsseldorf, where he earned his doctoral degree in Experimental Psychology.
Professor Stefan Spinler
Stefan Spinler holds the Chair of Logistics Management at WHU – Otto Beisheim School of Management. His research focuses predominantly on the areas of supply chain sustainability and the corresponding risk management. All of his research activities are conducted in conjunction with leading logistics service providers and industrial companies. Professor Spinler has also served as an adjunct professor at the Massachusetts Institute of Technology (MIT) and The Wharton School of the University of Pennsylvania.
Professor Luk Van Wassenhove
The work of Luk Van Wassenhove, Professor Emeritus at INSEAD and Chairholder at the Henry Ford Chair in Manufacturing, currently focuses on the alignment of business models and new technologies (e.g., closed-loop supply chains, circular economy, and disaster and health logistics) for the United Nation’s Sustainable Development Goals. Professor Van Wassenhove is Fellow of the Production and Operations Managements Society (POMS, 2005); Distinguished Fellow of the Manufacturing and Services Operations Management Society (MSOM, 2009); and Honorary Fellow of the European Operations Management Association (EUROMA, 2013). Additionally, in 2006, he was the recipient of EURO’s Gold Medal. In 2018, he was elected Fellow of INFORMS and received an honorary doctoral degree from the University of Thessaloniki. He currently leads INSEAD’s Humanitarian Research Group and its Sustainable Operations Initiative.