COMMON THEORIES ON STRESS MANAGEMENT AT WORK PLACE

These are the theories that support job stress, below are different school of thoughts that postulated several theories on job stress with concentration on those models that have been influential in past theorizing and empirical research.

 

             The Transactional Stress Model

One the most prominent models which on stress process is the transactional model by Lazarus ,1966; Lazarus & Folkman, 1984. Lazarus and Folkman define psychological stress as “a particular relationship between the person and the environment that is appraised by the person as taxing or exceeding his or her resources and endangering his or her well-being”. Thus, Lazarus and Folkman assume that cognitive appraisals play a crucial role in the stress process. Appraisal processes refer to an individual’s categorization and evaluation of an encounter with respect to this individual’s well-being.

Specifically, primary and secondary appraisal can be differentiated. By primary appraisal, encounters are categorized as irrelevant, benign-positive or stressful.

 

Stress appraisals comprise harm/loss, threat, and challenge. By secondary appraisals, individuals evaluate what can be done in the face of the stressful encounter, they tax their coping options. On the basis of primary and secondary appraisals, individuals start their coping processes which can stimulate reappraisal processes.

2.4.2    Systemic Stress – Selye’s Theory:

The popularity of the stress concept in science and mass media stems largely from the work of the endocrinologist Hans Selye. In a series of animal studies he observes that variety of stimulus events (e.g., heat, cold, toxic agents) applied intensely and long enough are capable of producing common effects, meaning not specific to either stimulus events. According to Seyle, these non specifically caused changes constitute the stereotypical i.e. specific response pattern of systemic stress. Selye (1980) defines stress as a non specifically response of the body to any demand, whether it is caused by or results in, pleasant or unpleasant conditions. Selye identifies three stages of adaptation which a person goes through in his General Adaptation Syndrome 1936.They are Alarm, Resistance, and Exhaustion. These stages are associated with particular biological markers such as changes in hormone patterns and the production of more “stress hormones” and the gradual depletion of the body’s energy resources.

 

 

             Psychological Stress – The Lazarus Theory:

Lazarus states that stress is experienced when a person perceives that the  “demands exceed the personal and social resources the individual is able to mobilize." this is called the 'transactional model of stress and coping.' According to Lazarus stress is experienced when a person perceives that the “demands exceed the personal and social resources the individual is able to mobilize.” This called the transactional model of stress and coping. Neither the environment event nor the person’s response defines stress, rather the individuals perception of the psychological situation is the critical factor.

 

According to Lazarus, the effects that stress has on a person are based more on that persons feeling of threat, vulnerability and ability to cope than on the stressful event itself. He defines psychological stress as a “particular relationship between the person and environment that is appraised by the person as taxing or exceeding his or her resources and endangering his or her well being. According to his theory there are two things that a person thinks when they are faced with a situation. These are called the primary appraisal and the secondary appraisal.

             THEORIES OF MICROFINANCE

            Microfinance Theory

The first wave of theoretical work on microfinance formulated by Greg Fischer and Maitreesh Ghatak focused exclusively on joint liability. The term joint liability can be interpreted in several ways which can be lumped under two categories. First, under explicit joint liability, when one borrower cannot repay her loan, group members are contractually required to repay in her stead. Such repayments can be enforced through the threat of common punishment, typically the denial of future credit to all members of the defaulting group or by drawing on a group savings fund that servers as collateral. Second, the perception of joint liability can be implicit, that is, borrowers believe that if a group member defaults, the whole group will become ineligible for future loans even if the lending contact does not specify this punishment. One form in which this can happen is if the microfinance organization itself chooses to fold its operations when faced with delinquency.

Ghatak and Guinnane (1999) review the key mechanisms proposed by various theories through which joint liability could improve repayment rates and the welfare of credit-constrained borrowers. These all have in common, the idea that joint liability can help alleviate the major problems facing lenders among which are screening, monitoring, auditing, and enforcement by utilizing the local  information and social capital that exist among borrowers. In particular, joint liability can do better than conventional banks for two reasons which are:

i)             Members of a close-knit community may have more information about one another i.e. each other’s types, action and states than outsider.

ii)          A bank has limited scope for financial sanctions against poor people who default on a loan, since by definition, they are poor. However, their neighbor’s may be able to impose powerful non-financial sanctions at low cost.

 

Broadly speaking, subsequent theoretical work on microfinance has gone off in other direction asides joint liability among which are “frequent repayment” and “sequential lending”.

Microfinance organizations often use high frequency repayment. Borrowers are typically required to repay their loans in regular installments, beginning soon after the loan is given out. This aspect of the repayment schedule is usually explained as inducing “fiscal discipline” among borrowers. Jain and Mansuri (2003) argue that an alternative rational for this loan repayment structure lies in the difficulty of monitoring borrower’s action. The potential for moral hazard leads microfinance institution to use innovative mechanisms such as regularly scheduled repayments which indirectly co-apt the better informed informal lenders. Conversely, this installment repayment structure allows informal lenders to survive. Furthermore, they show that this linkage cannot only expand the volume of informal lending but may also raise the interest rate in the informal sector.

 

Another mechanism often used by microfinance organizations is “sequential lending”. Loans are typically not given to all borrowers simultaneously. For example, in a two-member group, one member gets a loan only after the previous member has paid a number of her installments properly. This creates an additional stake for the member who comes in later to monitor the previous one. Indeed, with simultaneous lending, borrowers will under monitor but sequential lending avoids the problem. In his model, Row (2005) implicitly assumes that there is an escrow such that part of the first-round borrower’s revenue is taken away from her and returned to her only if the second-round borrower repays. This is a form of collateral creation which if practically feasible could indeed overcome one of the key underlying problems that generate credit constraints.

In conclusion, consider the interaction of joint liability and frequent payment. One potential cost of joint liability is that it might sometimes lead to default by the whole group because one borrower might not be able to pay-off her own loan (Besley and Coate, 1995). With frequent repayment and smaller repayment amount, this constraint would be relaxed.

 

2.3.2  Theory of Economic Development

The theory of economic development by Ranis is a theory taking the peculiar economic situation in developing country into account: unemployment and underemployment of resources (especially labour) and the dualistic economic structure (modern versus traditional sector). This theory is a classical theory because it uses the classical assumption of subsistence wage. Here it is understood that the development process is triggered by the transfer of surplus labour in the traditional sector to the modern sector to which some significant economic activities have already begun. The modern sector entrepreneurs can continue to pay the transferred workers a subsistence wage because of the unlimited supply of labour from the traditional sector. The profits and hence investment in the modern sector will continue to rise to fuel further economic growth in the modern sector. This process will continue until the surplus labour in the traditional sector is used up, a situation in which the workers in the traditional sector would also be paid in accordance with their marginal product rather than subsistence wage.

 

The existence of surplus labour gives rise to continuous capital accumulation in the modern sector because:

a)     Investment would not be eroded by rising wages as workers are continued to be paid subsistence wages and

b)    The Average Agricultural Surplus (AAS) in the traditional sector will be  channeled to the modern sector for even more supply of capital (e.g. new taxes imposed by the government or savings placed in banks by people in the traditional sector). It can be said that savings and investment are driving forces of economic development. The importance of technological change would be reduced to enhancing productivity in the modern sector for even greater profitability and to promote productivity in the traditional sector so that more labour would be available for transfer.