The Counterintuitive Effects of Stress on Performance.
(and something about Metallica)
Stress can be both good and bad, and the truth is that it’s impossible to minimize it to zero. Instead, it must be optimized.
Research in psychology shows that as stress increases, performance increases because you become more motivated and alert. But, at some point, you maximize your performance, and, after that threshold, performance deteriorates. You choke under the pressure.
The map of this stress-to-performance curve is called the Yerkes-Dodson (YD) curve or law.
As a leader, you must manage stress across three dimensions:
your own,
your employees’, and
your organization’s.
The YD law is useful across all three. It’ll help you decide:
How ambitious to make goals and targets to maximize performance.
When to crank up the pressure and when to slow down.
How to adjust stress or pressure levels based on whether a job requires concentration or is simple to execute.
Essentially, the YD law seeks a goldilocks level of stress. Activation isn’t a bad thing. You need to operate in the intermediate range—the top of the U curve—that’s optimal for cognitive (or athletic) performance.
Optimal Stress Levels and Task Difficulty
Researchers also found that the optimal stress level depends on task difficulty.
Difficulty, however, doesn’t just mean easy vs. hard or simple vs. complex. The key is concentration. If you need more concentration, your performance will peak at a lower stress level.
Beyond managing your own stress, this has profound implications for leadership.
Try to avoid giving hard deadlines to teams that need to solve complex problems.
Don’t push your research team too much with productivity metrics and hard deadlines. Instead, focus on accountability and autonomy, which, as we’ve discussed, are strong long-term motivators.
If you manage employees involved in simple, repetitive, operational tasks, however, it’s quite possible that if you (gently) increase the pressure and set more aggressive targets, performance will increase.
Putting it another way, if I blast Metallica over loudspeakers and poke you in the ribs with a stick, you won’t like me, but you’ll probably still be able to calculate the answer to 2 + 3 at about the same speed as if you were sitting quietly at your desk.
But if I ask you to calculate 349 + 1,134? That may be harder, especially if I play “Master of Puppets.”
Of course, I don’t mean that you should put undue pressure on people. There’s a skillful way to do this, using metrics and short-term rewards to get the team in flow, and fostering a fun and friendly competitive environment.
Optimal Stress Levels Vary Between People
It's also important for leaders to understand that different people have different optimal stress levels. You must adjust how you manage employees based on their stress tolerance. (And organizations, too, have an optimal level of stress.)
Some people perform their best at the higher end of the stress curve, while others get
overwhelmed quickly.
Unless they seek and respond to treatment, many people with clinical anxiety struggle to handle even minimal stress. In clinical situations, extreme anxiety and panic attacks can be triggered by the body itself with minimal—if any— external stimulus.
At the other end of the spectrum, some people function optimally when they’re living on
the edge: base jumpers, tightrope walkers, and the like. My brother-in-law is an expert rock
climber, mountain biker, and kite surfer. When I went mountain biking with him, I slowed him down and he was bored out of his mind.
Ask yourself where does your optimal functioning lie on the YD curve? And as a leader, do you understand your organization’s curve? Does the team function better under a bit of pressure?
Yerkes-Dodson and You
YD curves help you learn about yourself and calibrate your goals. In an effort to avoid some of the common pitfalls of pop psychology, there are some valid critiques of the YD law that I explore in my book The Psychology of Leadership.
The bottom line is that the YD law is a valuable tool. You’ll find it in most psychology textbooks, and practitioners like Zimet use it to coach world-class athletes. Without a shadow of a doubt, I perform better in tasks when my stress (activation) level rises, up to a point. Don’t you?
I hope you enjoyed reading this,
Seb
Bonus content: Check out my appearance on the Art of Charm podcast.
When he decided to write a book on leadership and self-improvement, Sébastien Page was rejected by over 200 literary agents.
He was asked, “Why would a finance expert write about leadership?” He was told to stay in his lane.
Sébastien has more than two decades of leadership experience. As an author, he believes breakthroughs often happen when experts venture outside their field. That is why, in "The Psychology of Leadership," he went beyond finance and economics to study research in psychology.
He is currently Head of Global Multi-Asset and Chief Investment Officer at T. Rowe Price. He oversees a team of investment professionals actively managing over $500 billion in assets under management.
Sébastien won research paper awards from The Journal of Portfolio Management in 2003, 2010, 2011, and 2022 and the Financial Analysts Journal in 2010 and 2014. In addition to The Psychology of Leadership, he is the author of Beyond Diversification: What Every Investor Needs to Know About Asset Allocation (McGraw Hill, 2020) and the coauthor of Factor Investing and Asset Allocation (CFA Institute Research Foundation, 2016).
Sébastien is also a member of the editorial boards of the Journal of Portfolio Management and the Financial Analysts Journal, and the Board of Directors of the Institute for Quantitative Research in Finance (Q Group). He regularly appears in the media, including Bloomberg TV and CNBC, and was recently named amongst the 15 Top Voices in Finance by LinkedIn.