Research shows stress about personal finances may make leaders abusive in workplace

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New research from Colorado State University 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.

The research was led by Assistant Professor Keaton Fletcher in the Department of Psychology in partnership with Associate Professor Trevor Spoelma in the Anderson School of Management at the University of New Mexico. Using data collected through surveys of both leaders and subordinates, the paper shows that financial stress is associated with abusive supervision, and that the 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. According to a survey by the American Psychological Association, stress about money in 2022 was at its highest level since 2015. However, the ways the associated feeling of lack of control from it leaking into the workplace as hostile verbal and nonverbal behaviors by leaders towards their employees are not well researched, said Fletcher.

“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,” he 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 address or prepare for it, such as lost productivity.”

Fletcher said 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,” Fletcher 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.”

Fletcher said future work would likely aim to further unpack relationships and better understand context-specific interactions related to demographic variables. In particular, the team is planning to explore how socioeconomic experiences such as living in poverty as a child may change responses to financial stress as a leader later in life.

The paper also discusses practical implications for the research, including ways to support employees experiencing such stress and limiting its impact on teams. In addition to increased pay, Fletcher said organizations could invest in programs that limit costs for childcare for employees as one option. They could also get ahead of abusive situations before they occur by offering training on mindfulness or fiscal education.

“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,” Fletcher said.