Imagine what your company could do with an extra $100,000. How would you spend it? You could purchase a sophisticated piece of equipment. You could upgrade your showroom, or hire two new full-time employees, or fund an advertising campaign, or buy dozens of new computers… The possibilities are endless.

Or, you could spend that $100k settling a workplace harassment claim out of court. That’s right—according to Workforce Magazine, employers can expect to lose between $75,000 and $125,000 defending a case through discovery and a ruling on a motion for summary judgment. (By the way, that’s assuming the employer wins; otherwise, the total typically ranges from $175,000 to $250,000—but may even surpass $150 million.)

Harassment is unethical. Harassment is illegal. And for the organizations that allow it to occur, harassment is really, really expensive.

And these are only the costs we can calculate. There’s more—much more—to the story than settlements, fines, legal fees, and turnover. Consider the employees who dread coming to work, the consumers who boycott after reading negative press coverage, and the untold numbers of smart, talented people who leave an industry—or decide not to enter it in the first place—as a consequence of their and others’ experiences of harassment.

All told, the combined, immediate and interrelated impact of harassment is difficult to imagine. But that hasn’t stopped the Equal Employment Opportunity Commission from addressing it. In the EEOC’s Select Task Force on the Study of Harassment in the Workplace June 2016 Report, co-chairs Chai R. Feldblum and Victoria A. Lipnic write that the business case for stopping harassment “extends far deeper” than the sea of legal expenses.

The Direct Costs of Harassment

At a glance:

• In 2015, the EEOC secured $125.5 for employees alleging harassment.
• 76 harassment charges are filed with the EEOC daily.
• For small and mid-sized companies, an estimated 19% of employment disputes result in defense and settlement costs, averaging $125,000 per claim.
• Internal resolution of claims that do not result in legal fees takes an average of 275 days.
• In 2012, the total cost of harassment settlements and awards surpassed $356 million.

In addition to these statistics, the EEOC points out the “precious time, energy, and resources” organizations expend on handling harassment claims—whether or not they result in legal defense or a settlement.

The fees associated with harassment should be sufficient motivation for any organization to take the problem seriously. The indirect costs of harassment, however, dwarf anything we can clearly calculate.

The Indirect Costs of Harassment

At a glance:

• Employee turnover may represent the largest single component of the overall cost of sexual harassment.
• Reports of harassment negatively affect consumers’ and clients’ perceptions of a brand.
• Harassment frequently leads to job dissatisfaction and low productivity—not just for the people who experience it, but those who observe it happening to others.
• Victims of harassment may suffer from myriad, negative psychological consequences, such as depression, anxiety, PTSD, eating disorders, and substance abuse.
• A decade’s worth of studies have linked sexual harassment to numerous physical health issues such as headaches, exhaustion, sleep problems, gastric problems, nausea, and weight loss or gain, as well as respiratory, musculoskeletal, and cardiovascular issues.

Harassment drags down an organization’s bottom line. The claims management and investigation process siphons departments’ time and resources. Victims and bystanders often report difficulty concentrating on and engaging with work. Employee engagement and teamwork plummets while rates of tardiness and absenteeism increase.

Harassment leads to turnover. Faced with instances of harassment and a culture that permits misconduct and incivility, employees tend to “exit the scene.” In fact, some researchers contend that turnover constitutes “the largest single component of the overall cost of sexual harassment,” amounting to hundreds of millions of dollars per year. The reverse is also true: employers who take broad, holistic steps to reduce harassment tend to retain employees for longer than their competitors.

Additionally, harassment hurts an organization’s reputation and ability to attract new business. Perceived misconduct and incivility towards workers turns away not only current and potential employees, but current and future clients and customers. These associations with a brand may last for years.

Don’t wait until a claim surfaces to address this dizzying array of direct and indirect costs.

Develop a comprehensive harassment prevention initiative that harnesses technology, best practices, and the concerted efforts of your workforce to maintain a harassment-free workplace.

About the Author

Kynzie Sims serves as Compli’s Legal Content Product Manager. Her credentials as an attorney and Certified Compliance and Ethics Professional coupled with her experience in HR, employment law, and software compliance platforms provide the background necessary to make her effective in her role as our resident workforce compliance expert. To learn more about how to stop harassment in the workplace and see a demo, contact Complì. EMAIL: [email protected]