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I have a direct report who is chronically stressed out and always seems on edge. I've tried to lighten his load as much as possible. I highly encourage time off, including just cutting out early or showing up late. The position is salaried.

But no matter what I try he always seems to personalize every team responsibility. There's no end to what our team could do, so we should try our best ~40 hours a week and what we can't get done is okay.

Basically I'm looking for a prescription on how to best manage an over-worker. How can I lay out goals and expectations that encourage a balanced life? What kind of regular coaching can I do?

Regarding this question, that's about overtime and ultimately about the cost involved. The question even states:

If we could afford to pay them to for this overtime it would be great.

I'm in a distinctly different world where I do not want my salaried employee to be working burn-out hours. Money isn't an issue and overtime does not apply to exempt salaried positions (in my jurisdiction).

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    Sometimes people just... like overworking... I doubt there is much you can say to dissuade them. At most you could enforce obligatory PTO at some point, as some people have the tendency to skip their Vacation time. That or make other non-work activities with your workers, like a ping-pong tournament, going out for lunch together, etc... – DarkCygnus Nov 20 '17 at 16:11
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    This question is currently too broad to address. We can help you address specific problems, that arise out of the over working but we can not tell you how to manage them in a more general manner in anyway that is going to be more than guessing at what problems you are facing. – IDrinkandIKnowThings Nov 20 '17 at 16:12
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    @Dukeling it creates a workplace where others think that "dying for the company" is okay and more personally I feel like as this person's boss I don't want them to have a jacked up work/life balance. Even just selfishly it's not good for our team but more personally I want this person to be happier. – Eric Nov 20 '17 at 17:25
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    Possible duplicate of How can I discourage employees from working voluntary overtime? – Jim G. Nov 21 '17 at 11:33
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    After reading all the details and answers there seems to be something missing. What does the rest of the team think about the over-worker? Adulation of the heroic is a sure sign that there is poor project control. – MaxW Nov 22 '17 at 16:07
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It depends on why this employee feels the need to overwork. I've encountered several "types" and if I'm being honest have been at least one of them myself, if you can try and work out what their motivation is from their general behavior or attitude - failing that you ask them why they feel the need to be working so hard and go from there.

The Martyr

Some people (as crazy as it sounds) actually crave the image and attention that comes with being the one who is always working. They may even vocally complain about their workload but they usually seem to come up with spurious reasons as to why they absolutely have to do all that they do. These types are hard to "help" as it actually goes counter to what they are trying to achieve.

The Insecure

This type is so worried about their job-security or career progression that they feel the need to prove just how hard they work and how indispensable they are constantly. I've been guilty of this on more than one occasion and the best way to help them is to have an informal chat with them 1-1 about it. You need to reassure them that their contributions are are noted and that they are a valuable member of the team - and that both of these things will continue to be true even if they aren't working themselves to death 24/7. Try pointing out the very real danger of burnout to them and that their long term performance will be hurt if they don't take a more measured approach. The phrase "it's a marathon not a sprint" is one I've used to great success in the past (and it's one that has helped me too)

The Over-responsible

They genuinely worry that if they don't do everything that nothing will get done, it's not that they think badly of their co-workers or their competence they just look at the never ending workload and think that if they don't work to such insane levels that it will become overwhelming and the business will fail or something. Again the 1-1 chat is a good approach and you take the tack that really the world will keep spinning and that the work that doesn't get done today will get done tomorrow and nothing bad will happen. I've been this guy too - it didn't help that in my case I really was the only person in the company who could do the work in question but still I was getting blinkered into believing it was more important that it really was. In this case it ended up in my boss (who was the operations director) basically forcing me to take two weeks off, insisting that I turn my work phone off (I did get her to promise to call me on my mobile if it hit the fan) and practically banning me from the building for that time.

The Thriver

Some people genuinely thrive on the stress and pressure of being so fully-loaded. While I can't say I entirely understand it, if they are this way you might have to let them be that and take steps to protect their health where you can.

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To add to motosubatsu's answer (whose main premise - it depends on "why" - I agree with) - it could also be a couple of other situations:

The escapee

They are, indeed, as the question mentions, stressed. But it's not work that stresses them - it's Real Life. They use work as an escape, and/or as a stress relief valve. It could be an unresolved issue in their daily life, or it could be grief they are trying to drown out.

There's no good resolution to offer here, although - if you have a good rapport with them personally, outside of just managerial role - you may want to ask if that's the situation, and suggest counseling or whatever other services your company offers. That is not guaranteed to be recieved well as such people are often in denial about the situation.

The "my work is enjoyable" person.

Some people just genuinely enjoy doing what they do for a living. This is quite common among software developers; who code in spare time as a hobby.

If the work (especially coding) they do at work is something they flat out enjoy, as a challenge/craft, they may very well be intrinsically motivated to work extra, just for sheer exhilaration of it. I've pulled all-nighters before, and in all honesty only part of the reason was deadlines and show-offing. Part of it was, I truly, genuinely didn't want to stop working on a problem that was taunting me and teasing me.

There's really no good solution here, short of killing their drive by giving them boring &^&^ to do. Not a good managerial approach, if you ask me. A person like that is also ideal candidate for remote/flex-time work - they are intrinsically motivated already.

The cultural pressure

This is usually combined with some of the situations in motosubatsu's or my own answer; but is reinforced by the fact that the person was shaped by a culture of extra-hard work. Perhaps they grew up in Japan (which is reputed to heavily have such a culture). Perhaps just overly-conscientious parents raised them that way. Perhaps all their friends do this overworking because they are in start-ups or financial companies which both encourage it, rightly or wrongly; and they absorb these ideas from their life peers.

The approach here is to explain that your company culture differs even if this isn't what the person is used to.

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    From what I heard, Japan aren't known as specially hard worker, they're known to have a extremely strong culture & traditions & respect. One of them is that they have to be on work before the boss and leave after, however it does not mean that they have work to do, it is only about respecting the boss by being there when he is. – Walfrat Nov 21 '17 at 10:24
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    Yes, I recall a previous colleague who was unhappy with their family life and preferred to spend extra hours at work simply not to spend them home and having a socially acceptable excuse to do so. – Peteris Nov 22 '17 at 10:22
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I think the answers by motosubatsu and DVK are on the right track (identifying what it is about this person that's leading them to overwork despite your efforts to get them to take it easy). There's one more work "personality type" I would mention, though:

The perfectionist (aka the to-do list finisher)

Some people don't like leaving things half-done. They get a lot of satisfaction out of making a to-do list and then going through and crossing off every item before stopping for the day. In a lot of contexts, this is a great quality. But when you're working in an environment where, as OP says, "There's no end to what our team could do" this can lead to a constant feeling of stress and failure, and overworking to try to "catch up" when it's not really possible to do so.

If your report is this kind of worker, the best approach is to encourage him/her to create realistic, concrete goals which are attainable (or create them for him/her) and truly celebrate when each gets accomplished. The idea is to shift focus from the real albeit unattainable goal (e.g. "make a perfect piece of software that does everything for everyone and never breaks") to goals that can really get done (e.g. "resolve issue #11", "get 5 new customers this week", "update the documentation for X").

Important: For this to work, you really have to treat the incremental goals like they're what matter (and it's true that they do! That's how progress actually happens, after all). Your report should go home for the day when he/she finishes the day's goals and not have the lingering feeling that the "real" work is still waiting. To do this, be mindful when setting incremental goals (don't just come up with some random benchmarks), and treat the completion of incremental goals with the acknowledgement it deserves. Don't immediately shift focus to the next goal, take a moment to appreciate what's been done. Your report will learn to do likewise, and hopefully will take the obsessive overwork down a notch.

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    I know this is the (currently) lowest ranked answer but it's resonating with me because I really like the idea of clearly laying out my expectations and making sure I treat them as what matters, not letting all the other noise and ever-expanding-work be what's truly being recognized. – Eric Nov 21 '17 at 17:39
  • +1 Laying down most important expectations for the day is really something that should help the report work better. This is a simple yet awesome solution! – harkirat1892 Nov 24 '17 at 9:04
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You need to get the message across that overworking is unprofessional. You already have tried mild approaches, and that did not work.

What you could do now, is directly take over the responsibility that your over worker is unable to handle - time-management. You just do it for him for a little while, to show him how you want this done.

Have him report to you every morning what he plans to achieve during the day. If you think that is to much for ~8 hours, have him adjust it. Then have him report in the evening, 10 minutes before the end of his normal working hours, what he achieved. Thank him and send him home.

Tell him you can not tolerate unapproved overtime and he has to come to you and give good reasons when he wants to stay longer.

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    This would seem to be, by far, the best answer here. As I said in a comment, as with any team member problem. Explain the problem politely, clearly and decisively to the person and give them four weeks or let them go You can't have problems like this on a team, fix it or let the person go elsewhere. – Fattie Nov 21 '17 at 12:46
  • Did you mean "you can not tolerate unapproved unpaid overtime"? – miroxlav Nov 21 '17 at 14:09
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    @miroxlav: Does not matter if paid or unpaid. There is no right for the employee to do overtime at will. If their Manager just forbids him to, because he thinks it is unhealthy, he can do that. (And he should, in some jurisdictions you are, too a degree, held responsible for the well being of your subordinates) – Daniel Nov 21 '17 at 15:46
  • +1 I worked at place where overtime (1h and more) required some paperwork and confirmation of department supervisor. – Piro says Reinstate Monica Nov 22 '17 at 6:27
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    @James Hughes: I suggest you re-read the question. It´s not if overtime is good or bad, it´s how you prevent someone from doing unwanted overtime! I only tried to address that goal here. I am happy to discuss the feasibility of constant and massive voluntary and unpaid overtime with you in an appropriate forum. – Daniel Nov 22 '17 at 10:52
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Sometimes things that look like problems to be solved might not be problems. Is there a way to turn this into a strength? To squeeze more value from the employee while rewarding them for their extra effort? Whatever the psychological underpinnings, this is just how some people work, and it might be an uphill battle to try to change that.

Consider how you could utilize this trait to the advantage of your team and the broader organization. If there is no end to what the team could do then you should have no problem throwing more tasks and responsibility at the individual.

One thing to keep in mind, however, is that such individuals know that they work harder than others and, in spite of no overt cues to the suggest so, secretly may feel under-valued (i.e. under-paid/promoted). If they are not provided an avenue to move up in the organization, such individuals will sooner or later reach the threshold of patience and will start looking outside of the team/department/company for opportunities where they might be more likely to get ahead sooner.

If you can provide (with some certainty) a path for advancement for such an individual, by rewarding them not only with more work but also with more pay and higher-order responsibilities, they will likely see no reason to leave and will instead continue to perform at a high level which in theory should also make the team (and you) look good. Good luck!

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    To be clear, your answer to a chronically stressed out worker is to give them more work? :) – Pod Nov 21 '17 at 9:49
  • I really don't like this answer, not only you risk burning out this particular person but you also send the signal to the whole team that you expects people to work a lot more, (cf those "unlimited vacation" companies where employees don't take vacations), then everyone that doesn't feel like living at the office would be the ones to look for a new job. – polku Nov 21 '17 at 10:58
  • @Pod Indeed. From the OP description it sounds like incentivizing working less might not work with this individual, who chooses working more, not less, for themselves. In such a situation, when the workload is already not high but overwork still occurs, my recommendation is to create an incentive structure which rewards the behavior which is already being exhibited, rather than trying to force-change that behavior to fit some predetermined mold, which from the description has a low probability of working. You are welcome to write your own response, but I believe my position stands a chance. – A.S Nov 21 '17 at 12:41
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    @polku There is a difference between company-wide or team-wide policy and allowing a specific employee to carry on with a work style which is natural to them and works best for them, whatever the reason. You can either create a team that fits everyone into the same mold of work style, or a team that accommodates diverse work styles. – A.S Nov 21 '17 at 12:43
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    @polku You assume that when someone is working a lot more or harder than others, it bothers the rest. Not necessarily. The fact that working a regular workweek is the norm on this team suggests this particular workplace may be one where the majority are comfortable with moderate load. I doubt that a single overachiever will necessarily unbalance the status quo that the rest have no problem with. I would instead manage the risk of the inverse: unless a compulsive overachiever's efforts are acknowledged and rewarded, he will eventually burn themselves out and leave (unless that's an OK result). – A.S Nov 22 '17 at 1:42

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