Employers miss the stress signals: The cost to companies of staff buckling under strain runs into billions, but few are doing anything about it. This may change as employees sue, says Tom Maddocks

A DOZEN middle managers from Zeneca, the pharmaceuticals group, sit grouped in a semi-circle. Every muscle is tensed, each face wears a grimace. 'Now relax]' says a voice, and a dozen figures slump forward, all tensions released.

The scene is repeated regularly at a hotel conference room not far from the main Zeneca complex at Alderley Park in Cheshire. It is part of the company's stress management course, which 800 of the 4,000 local staff have now been through at a total cost of pounds 100,000. The aim is to make executives aware of occupational stress and enable them to deal with it in themselves and their subordinates.

Zeneca, which demerged from its parent ICI earlier this year, is one of only a few British companies to even try to come to grips with a problem that costs the country at least pounds 7bn a year in lost production and sickness payments.

Many more UK companies, however, may decide it is financially prudent to follow this lead. The penalties for allowing employees to become overstressed could become enormous. In some American states, workers often sue their employers when affected by stress at work. And some believe the trend is coming here.

The Health and Safety Executive is to produce guidelines for employers later this year to help them reduce the chances of stress occurring, and to deal with it sensibly when it does. The guidelines will not be mandatory but will set the benchmark against which companies' actions will be judged.

Mark Scoggins, a barrister with City law firm Davies Arnold Cooper, which acts for a number of insurance companies, believes claims could cost employers and their liability insurers tens of millions of pounds before the decade is out.

'There is no new legislation required,' he points out. 'The acts already in place put a general duty on employers to provide a safe place of work.' It only requires judges to decide that an avoidable mental injury is an industrial hurt in the same way as a physical injury. An employer with a system in place to deal with workplace stress will be much more likely to defend such a case successfully.

Many will scoff and say it will never happen. But Mr Scoggins points out that that is what they said a few years ago about asbestosis and deafness-at- work claims. These have now cost insurance companies hundreds of millions of pounds.

At present, stress often goes ignored or unrecognised. It has been linked with ulcers, heart disease and a host of other physical symptoms. If a worker has a week off, the doctor is more likely to put down 'flu' on the sick note than the occupational stress that may have been the underlying cause. There is also the problem of people who struggle in to work even when they are barely able to cope, then perform badly on the job.

'If people are under undue stress they make mistakes, and making mistakes in important contracts if they involve hundreds of millions of pounds worth of business can be very expensive indeed,' says David Friend, chief executive at Zeneca Pharmaceuticals.

A few years ago, Mr Friend even went as far as sending a memo to senior executives telling them not to work too hard if it was getting too much in the way of family commitments and hobbies - an attitude to make the average company boss rub his eyes in disbelief.

'We are saying, take a balanced look at your life. Don't let the work problem distort the way you live, because if that happens and you become ill because of it, then that doesn't help the business,' maintains Mr Friend, although he admits that when the heat is on, his people have to put in the hours as they do in any other company.

Cary Cooper, professor of organisational psychology at UMIST in Manchester and a world authority on the subject, believes that occupational stress is much on the increase - the flip side of the current obsession in both public and private sectors to make organisations 'leaner and fitter'. 'We have fewer people doing more work, and feeling insecure about whether they're going to be there in a year or two's time. From a corporate point of view, that is a major kind of stress factor at the moment.

'I think we have developed a culture of management by punishment. They don't realise that what is important in the work environment is to reward people, not to punish them.'

Despite the cost of stress, British companies have so far largely turned a blind eye to the problem. But that may not continue for much longer if overstressed employees start turning to the legal system for compensation and make it financially impossible for companies to ignore.

In a boardroom near you, the stress level is already rising.

Tom Maddocks reports on workplace stress for The Money Programme, on BBC2 tonight at 7pm.

(Photographs omitted)