Employees are much happier when their company does this regularly

They say that if you enjoy what you do you’ll never work a day in your life. There’s certainly an element of truth to that anecdote, but even the most lucrative of dream jobs will probably still come along with some stress. As nice as it would be, a life completely devoid of stress is akin to a jacuzzi on a desert island for the vast majority of working adults.

That being said, a new study from Ohio State University has discovered that employees tend to deal with much less stress when their employer conducts itself in a financially transparent manner. The team at OSU reports employees feel much less work-related stress/distress if their company is upfront about financial internal matters like budgets and profits.

When all employees in a company, from the CEO to the intern in the mailroom, have access to that type of information the entire workforce feels more secure in their positions, loyal to their employer, and report better relationships with upper management.

“Transparency in disclosing financial information may substantially reduce job distress, particularly by smoothing relationships between workers and managers,” says lead study author Hui Zheng, an associate professor of sociology at OSU, in a release.

The link between financial transparency and lower employee stress levels held up across a variety of other potentially influential factors, such as hours worked, company position, education level, gender, and race.

Notably, study authors say employees not covered under a CBA (collective bargaining agreement) tend to place extra importance on financial clarity from their employers.

“Workers covered by collective bargaining agreements may expect that their union representatives are looking out for their best interests, so they don’t have to pay as much attention to what the company reveals,” explains study co-author Vincent Roscigno, professor of sociology at Ohio State. “But if your workplace is not unionized, workers feel more stress if their companies don’t disclose financial information. They may be worried about getting laid off if the company is not doing well financially or wonder if they’re being treated fairly as far as their wages are concerned.”

No one wants to report for work each day and feel like the sword of Damocles is hanging over their head. Financial transparency with all employees goes a long way toward easing workers’ worries regarding stability. Besides just being the right thing to do, this can also have a trickle-down effect on productivity. Less stress means more relaxed, capable employees. Stress isn’t exactly conducive to getting things done.

To reach these conclusions the research team analyzed a dataset from the United Kingdom including 15,747 employees working at 2,500 companies. Job-related stress/distress was measured by asking each worker to rate using a five-point scale how regularly over the past few weeks their job had made them feel a variety of negative emotions (tense, depressed, worried, miserable, etc). Then, each worker recorded how diligently their managers kept them informed on financial matters at the company using the same five-point scale (one indicating “never,” and five indicating “all the time”).

Study authors say even they were surprised by just how influential financial transparency is when it comes to reducing job stress.

“Workers at companies with the highest levels of financial transparency had stress level scores about 15 percent lower than workers at companies with the lowest levels of transparency,” Zheng comments. “That was a bigger effect on stress than gender or income.”

Among the benefits of being upfront with employees regarding money matters, improved managerial relationships stood out as the most significant upside. 

“Even though financial transparency is about disclosing budgets, profits or other financial matters, the way it reduces job distress is not mainly about the money. It is about the relationships, especially with managers,” Zheng notes.

Companies often spend enormous budgets and pay for superfluous advice from third-parties on how to foster more positive worker-manager relationships. Adopting a more open approach to financial matters is an effective and simple way of achieving that goal.

“The workplace is a major source of stress in modern society. Our findings show an important way that companies can reduce some of this distress and improve manager-employee relations,” Zheng concludes. “It comes down to being more transparent about financial information.”

The full study can be found here, published in Social Science Research.