Stress about personal finances may make leaders abusive in workplace

New research shows that workplace leaders who are financially stressed are more likely to be abusive toward their subordinates – particularly if the leader is a man.

The findings, published in the Journal of Occupational Health Psychology, provide insight into leader behavior due to a common source of stress. Using data collected through surveys of both leaders and subordinates, the paper shows that financial stress is associated with abusive supervision, and that relationship was stronger for men than women. The paper further explores potential reasoning for that dynamic, including societal gender expectations, and discusses implications from the findings for supporting employees.  

Financial stress – the perception that you do not have sufficient resources to meet your needs – is common in America and leads to a feeling of individual lack of control. According to a survey by the American Psychological Association (which Alicia and I belong to), stress about money in 2022 was at its highest level since 2015. In the workplace this sense of not being in control manifests as hostile verbal and nonverbal behaviors by leaders towards their employees. It is not a well-researched area.

What the researchers say: “Financial stress is becoming increasingly common, but we are still learning what it can do to an organization and leader who is in a unique position to influence not only their own work, but the work of others,” the lead author said. “Research has so far focused on adverse outcomes like burnout, disengagement or even injuries due to abuse by leaders. Our work here aims to offer a more comprehensive view of the ways this manifests, and the costs to an organization that does not address or prepare for it, such as lost productivity.”

He explained that financial stress can be described as the fear that you will not be able to make ends meet. He is careful to note that this is not specifically about income levels but is instead related to perceptions about one’s ability to fulfill financial obligations and an associated sense of loss of control. Abusive supervision in the form of bullying a subordinate as a response, for example, offers a potential path to regain some sense of agency.  

He added that managers may be more predisposed to financial stress because of a lack of available options to improve their situation, such as overtime pay.  

The research team was able to show that a leader’s gender played a large part in how they chose to respond to financial stress. Because men experience added gendered societal expectations to generally be in control, they may be more susceptible to pressures from financial stress. Meanwhile, similar societal expectations may also limit women from pursuing abusive supervision as a response to financial stress, as they are often punished socially for what is perceived as “aggressive” behavior.  

“We expected men to be more sensitive to loss of control that then resulted in abusive supervision, and that is consistently what we found,” the researchers said. “However, we also found that leaders who are women experienced the same stress and do exhibit abusive behaviors, but just less than men. Our work also shows leaders, regardless of gender, can also respond by supporting or strengthening their social networks and displaying empathic leadership – both of which are positive reactions.”

“There are negative effects and consequences associated with this kind of abuse – not only for workers who see it or receive it – but even for the supervisors doing it,” the researchers concluded.

So, what? Financial stress will increase over the coming years, especially as government-sponsored safety nets are pared back and employment—even for business leaders—becomes more uncertain. This means that bullying—at all levels—will increase.

Financial stress is not just the fear of not being able to afford the essentials of life, however. Being able to purchase non-essential items adds to a person’s sense of status, and hence safety. When this status/safety is threatened the natural reaction of a human—of any gender—is to try to make up for the loss of perceived status by exercising control over others.

There is also a more fundamental DNA aspect to this. Bullies, authoritarians and aggressive leaders share a certain set of genes which predispose them to react abusively to a perceived loss of status. Financial stress—or any stressor which limits their ability to be “in control” of certain aspects of their lives—will cause these genes to dictate the person’s behavior.