Recent findings from Colorado State University suggest that leaders experiencing financial distress are more likely to mistreat their subordinates, with this tendency being more pronounced among male leaders.

The research, detailed in the Journal of Occupational Health Psychology, was spearheaded by Assistant Professor Keaton Fletcher from the Department of Psychology and Associate Professor Trevor Spoelma from the Anderson School of Management at the University of New Mexico. By analysing responses from surveys filled out by both leaders and their subordinates, the study established a clear link between financial stress and abusive supervision. This association was significantly stronger in men than women, possibly reflecting societal expectations about gender roles.

The paper delves into the reasons behind these dynamics, suggesting that traditional gender norms may explain why men are more likely to react to financial stress by becoming abusive. The implications of these findings are significant, underscoring the need for organisations to understand and mitigate the impact of economic stress on employee relations.

Financial stress, defined as the worry that one’s financial resources are inadequate to meet one’s needs, has risen in the United States. A 2022 survey by the American Psychological Association indicated that economic stress was at its highest since 2015, and the impact of this stress on workplace behaviour has not been extensively studied until now. Fletcher pointed out that while financial stress is a growing concern, our understanding of its effects on organisational dynamics and leadership behaviour is still evolving. Previous research has concentrated chiefly on adverse outcomes such as burnout or disengagement. Still, the current study offers a broader perspective on how financial insecurity influences leadership behaviour and the overall health of an organisation.

Fletcher explained that financial stress is often not about actual income levels but rather the perception of one’s ability to meet financial obligations and the associated loss of control. This lack of control can lead leaders, especially men who feel pressured by societal norms to be in control, to engage in abusive behaviours as a way to regain some sense of power.

Interestingly, the research also highlighted that women leaders, while also affected by financial stress, were less likely to resort to abuse, possibly due to social penalties for aggressive behaviour traditionally seen as uncharacteristic for women. Despite these differences, the study found that leaders of both genders could counteract the adverse effects of stress by fostering more robust social networks and demonstrating empathetic leadership, which are seen as positive responses to stress.

Looking ahead, Fletcher and his team plan to explore how different demographic variables and life experiences, such as childhood poverty, affect leaders’ responses to financial stress. This future research aims to provide deeper insights into the complex interplay between personal history and leadership behaviour.

In terms of practical applications, the study discusses various strategies organisations can adopt to support stressed employees and prevent abusive behaviours. These include offering better compensation, childcare support, and preemptive measures such as mindfulness training and financial education. By addressing these issues proactively, organisations can improve workplace relations and mitigate the broader impacts of stress-induced behaviours.

Overall, the research underscores the importance of addressing the root causes of financial stress within organisations. It highlights the potential for negative and positive outcomes depending on how leaders handle stress. This complex issue requires careful attention and action from researchers and practitioners in organisational health.

More information: Keaton Fletcher et al, Financial stress and leadership behavior: The role of leader gender, Journal of Occupational Health Psychology. DOI: 10.1037/ocp0000387

Journal information: Journal of Occupational Health Psychology Provided by Colorado State University