In a recent interview I was conducting as part of the Great CEOs Podcast, one of my guests brought up an interesting topic. He mentioned that an integral part of his role as CEO was to manage the stress of the organization. Huh?

The key, this CEO told me, was to find that Goldilocks zone where you have just the right amount of stress in the organization: Not too much or too little. He believed that stress was a performance enhancer and he was right.

1. Provide a Calming Effect.

Many people think all stress is bad, and when we redline on stress, performance can decay. There can be times when an excessive stress level inside an organization becomes toxic. People might be working super long hours trying to close an acquisition, or find new sales opportunities in the middle of a global pandemic. The risk here is that people can burn out, which is where the CEO can step in and try to ease the stress level down a notch or two.

Now, you might think he's alluding to providing stress balls, soothing music, and meditation rooms. And maybe those can be options depending on your culture. What he really means is that a good leader will recognize when stress is uncomfortably high and find ways to assure the organization that everything is going to be okay. They might even award a few mental health days to employees who might be particularly struggling. Think of it like keeping an engine from overheating by adding a bit of coolant to help maximize its performance.

But there's another side to stress, a positive one.

2. The Upside of Stress.

Consider a story the famed historian Arnold Toynbee once shared about what he learned from research he conducted along the docks in London. Over time, Toynbee watched dozens of fishermen work and documented how they went about their business. He noticed that one fisherman consistently sold his codfish at higher prices than the others. Why? Because more of his fish were alive when he sold them to merchants, which meant they could be shipped further inland before going bad. This was in the days before refrigeration, so getting a few more good days from the fish was incredibly valuable.

Curious, Toynbee asked this fisherman what his secret was. Turns out that he did everything the same as everyone else, in terms of how he caught the cod and how he stored them in a barrel after he caught them. His secret, it turned out, was that he put a catfish, the natural predator to the cod, into the barrel along with his catch. That meant that the cod needed to constantly swim around to stay alive even after they had been caught. In other words, adding stress to their environment kept them alive longer. The catfish literally chased the cod back to the dock.

I'm not advocating dropping man-eating tigers or scorpions into your workplace to keep everyone on edge. But I think we all know cultures that function more like country clubs, with a complete lack of any stress or conflict. Everything is just chill, and their results reflect that same attitude.

This can be situations where adding some stress as a leader can actually increase performance. Maybe it's creating a stretch goal with a tight deadline, or developing new metrics to track--anything to encourage the team to ramp up their performance.

3. Finding the Right Balance.

The lesson here is that stress on its own isn't necessarily good or bad. It's understanding when you have too much, or too little, stress that creates opportunities for you as the leader to step in--and either add stress or remove it to find the right balance for your team to perform at their optimal level.