Stress hijacks our ability to make good decisions. Here’s how leaders can help

In today’s high-stakes business environment, stress isn’t just an individual challenge—it’s a force that shapes careers and organizations. The U.S. Department of Labor finds that 83% of workers suffer from work-related stress, and 54% say that work stress affects their home lives.

In my coaching work with hundreds of professionals annually, I’ve witnessed firsthand how impossible it is to separate stress from career trajectories; they are intertwined, each influencing and shaping the other. Stress can derail even the most carefully planned career paths, yet we often treat career decisions as purely rational, despite the fact that our psychological state profoundly influences the choices we make. I’ve practically tested these insights with individuals and leadership teams.

Here are five key theories that can help us make better decisions at work—and how leaders can set up their teams for success:

1. Cognitive Load Theory

It’s well known that when stress increases, it causes our mental bandwidth to shrink dramatically, and it’s harder to weigh risks and rewards objectively. According to the American Psychological Association’s 2024 Work in America survey, 77% of U.S. workers experience work-related stress, with 36% reporting cognitive fatigue. I’ve seen that cognitive overload can be a recurrent theme in high-stakes professions like healthcare, finance, and emergency services.

Muscle memory can’t necessarily be depended on, as each case demands fresh analysis rather than routine responses. That results in errors with vast consequences, including profound ones like death. It can also be a trend with early-career professionals who must juggle skill acquisition with performance expectations and show higher rates of burnout and worsened mental health.

Example: A high-performing individual contributor, overwhelmed by multiple deadlines and an unexpected project, starts working longer hours, missing crucial meetings, and making uncharacteristic errors in financial reports, as their mental resources are depleted.

What leaders can do: Think of managing cognitive load like tending a garden by creating space for growth, pruning unnecessary meetings, and protecting blocks of time for deep work. Task prioritization tools can also reduce decision fatigue and encourage breaks, allowing minds to refresh and ideas to flourish. Remember, a well-rested team will outperform an exhausted one every time.

2. Dual-Process Theory

Cognitive psychologists Peter Wason and Jonathan St. B. T. Evans suggested the dual-process theory in 1974. The theory identifies two distinct thinking systems: fast, intuitive reactions and slower, analytical reasoning. Under stress, we are more likely to default to the quick-response system, bypassing careful analysis and consideration. Being mindful of stress levels helps prevent impulsive career decisions that may not align with long-term goals.

Example: After receiving tough feedback during a performance review, a team leader immediately volunteers for three high-visibility projects and begins working weekends, making reactive decisions that further compound their stress.

What leaders can do: If you work in a fast-growing startup with demanding client relationships or a company in volatile markets, your cultural environment may be problematic for dual-process thinking. When characterized by rapid decision cycles and high-stakes outcomes, these environments can push professionals into reactive thinking patterns.

In our rush to make decisions, we often forget the power of pause. Take a look at the past quarter’s major decisions to see if you can spot patterns of reactive thinking. It can also be a good idea to help foster mentor relationships that offer fresh perspectives and openly share your journey from reactive to responsive decision-making. If teams see thoughtful choices modeled, it helps them trust their analytical minds over their impulses.

3. Affect Heuristic

This psychological principle demonstrates how emotional states act as mental shortcuts in decision-making. Under stress, our emotional filters become increasingly dominant, often distorting our professional judgment. 

I frequently observe how bias impacts how we make decisions when fatigued and how it manifests in the daily activities of leaders. For instance, one tech leader admitted to me that they had recently realized they had been hiring people who reminded them of themselves. Tired brains naturally gravitate toward what is familiar and comfortable, yet stress-induced emotional decisions often amplify biases, leading to overlooked talent and missed opportunities.

Example: A product manager, experiencing pressure from stakeholders, makes sweeping product changes based on a single negative customer review, disrupting the product roadmap and team morale.

What leaders can do: Start each week with a gentle emotional temperature check of your team. Ask each person to share one word that captures their current mindset. When doing so, watch for red flags like short, clipped responses, unusual irritability, or typically vocal team members falling silent.

You can also use open-ended simple questions that reveal hidden work-related stress, such as “What’s taking up the most space in your mind right now?” or “Is there anywhere that you feel stuck?” When team members default to “fine” or “okay,” go beyond surface-level responses and gently probe deeper with questions like “What does fine look like for you today?” 

If you notice patterns of responses hinting at exhaustion or hear words like “overwhelmed” or “drained” from multiple team members, be mindful of making major decisions. This quick emotional weather report allows you to read your team’s emotional state, meaning you get better at spotting when someone is frustrated, overwhelmed, or excited—even when it’s not explicitly stated, preventing teams from making unsound choices.

4. Self-Determination Theory

The self-determination theory includes three fundamental psychological needs: autonomy, competence, and relatedness. When stress compromises these core needs, decision-making becomes reactive and short-sighted. I’ve witnessed this being especially critical in modern hybrid and remote work environments, where traditional support structures take on virtual forms.

Example: Feeling isolated and disconnected, a remote worker begins to disengage from team projects, miss key deadlines, and secretly apply to competitors without making an attempt to resolve their frustrations about their current job.

What leaders can do: While building a rewarding career requires self-motivation on behalf of the employee, as a leader, picture yourself as an architect of autonomy, designing spaces where people shape their work while staying connected to the larger mission. If you’re not already creating opportunities for meaningful connection in both virtual and physical realms, now is the time to do so. When people feel genuinely supported, they thrive.

5. Career Construction Theory

An employee’s professional identity is the story they tell about themselves at work, whether they’re the Excel wizard or the one who always gets things done. When organizations undergo significant changes, like switching to entirely new software systems, reorganizations, or new management, these identities can suddenly feel shaky or irrelevant to your team members. 

Stress can also fragment these personal narratives, making maintaining a coherent career vision challenging. When you’re stressed, it’s harder to articulate your thoughts and “sell” yourself, a product, or an idea. Couple that with productivity anxiety, and you can see why there’s an organizational need to support the skill of building a personal brand.

Example: During organizational restructuring, an early-career professional becomes fixated on worst-case scenarios, exhibits less diverse thinking, and finds it hard to articulate the impact of their work. 

What leaders can do: Research from Deloitte indicates that 40% of Gen Z employees report feeling stressed most of the time, which impacts decision-making, confidence in their career narratives, and the time and energy to upskill in their career. Yet, every career tells a story, and helping shape the narratives of those at high risk of burnout is perhaps leadership’s most subtle art. 

Suppose your team isn’t surpassing its potential, engagement is dipping, and you can’t name two to three of your employees’ “non-work-related” strengths. Bring in support to holistically bolster employee brands (and the companies, too).

By understanding these frameworks and taking action, you can help create environments that support rational decision-making and emotional well-being. The future belongs to organizations that recognize stress management isn’t just about individual coping mechanisms—it’s about building systems that help people think clearly and choose wisely.

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