To put it mildly, times are tough.

• Americans in general are more stressed than ever, according to a Report by the American Psychological Association. And that stress has consequences. People are reporting headaches; lack of motivation; and feelings of fatigue, anger, depression, or sadness.
• As the economy worsens, anxiety in IT specifically has grown. IT budgets are being slashed and layoffs are beginning, according to an exclusive CIO survey. Increasingly, projects are being postponed, and job reqs are being frozen.
• IT staffs are feeling increasing stress as workloads grow heavier, the pace of technology change increases and office politics grow worse, according to a Survey by Robert Half Technology, an IT staffing and consulting firm.

During such times, you may want to lock yourself in your office, head down while you plow through work, only to emerge at some mythical time when things get "better." But isolating or shutting down is a big mistake, says Maureen Moriarty, executive coach and founder of Pathways to Change, a leadership and team performance consultancy. You may find that being attuned to your emotions and the emotions of your staff is not your forte, but people do not check their stress—or its attendant effects—at the door of the workplace, and the costs of ignoring your staff's pain is high.

Consequences include the dramatic. Terry Childs holding captive San Francisco's data network. But even if your staff doesn't resort to such dramatic actions, you can bet that worries over job security, unrealistic expectations, and the ubiquitous too-much-work-too-few-people combo has your staff simmering in their cubes on the verge of a meltdown. Moriarty reports that in her consulting work she sees more highly placed and company-crucial executives "on the verge of imploding."

Of course, you're not a shrink and you're not a babysitter. And there's truth in some managers' attitude that your staff is "lucky to have a job." But there's a reason office politics and conflicts grow worse during times of stress, as per the Robert Half survey. And underappreciated and disgruntled employees can have such ill effects as compromising security or intentionally sabotaging the workplace. On a more pervasive level, they cannot work with the enthusiasm, creativity, and teamwork that will make your company its most competitive. And despite layoffs and all the rest of it, "your staff is still your company's competitive differentiator," says Moriarty. Ignoring staff and morale problems, and treating them callously is quite simply risky business.