The Costly Effects of Workplace Harassment

When I wrote my last post, #NoMore, my goal was to spark conversation within the HR community about how to help women feel safer at work, regardless of their job, industry, or zip code. Since then, my inbox has been blowing up from both HR professionals and companies looking to create a safe workspace for all marginalized groups, especially women. Organizations are implementing solutions that bring a full stop to this type of behavior, from box-store to boardroom; but we cannot ignore the steep price of sexual misconduct in the workplace. We may never be able to put a dollar amount to the physical and emotional damage caused by sexual harassment for a victim. For companies, settlements and the irreversible tarnishing of the brand and reputation can cost millions.

While we are only seeing the big names and large corporations on our newsfeed, this is affecting organizations of all sizes. The costs certainly serve as a deterrent and an additional motivator to make a culture change sooner than later. Here are some of the costs associated with workplace sexual harassment:

1)  Opportunity cost

The more expensive cost associated with workplace sexual harassment is the hardest to quantify. It’s the opportunity cost of devaluing women and other marginalized groups in the workplace. This results in lost talent, missed opportunities, decreased diversity, and ultimately lower profitability. The absence of a harassment-free workplace severely limits the growth and productivity of a company. Victims of workplace sexual harassment have repeatedly reported that their work performance decreased due to their unsafe work environment. It’s exhausting for anyone who experiences workplace harassment to carry around that secret while keeping things together at home and attempting to be a high-performer at work. Fear of retaliation, or loss of employment also sometimes prevent victims from coming forward to report wrongdoing, and this negatively impacts an employee’s productivity.
Some specific examples of opportunity costs include:

• According to the women’s law center, Equal Rights Advocates, 90-95% of sexually harassed women experience some form of stress reaction. Annabella Sciorra’s experience is a prime example; after the award-winning actress was assaulted by Harvey Weinstein, she didn’t work from 1992 to 1995. Weinstein is believed to have retaliated against her by spreading rumors that she was difficult to work with. This emotional toll led to depression, weight loss, and her sleeping with a baseball bat by her bed for 20 years.  Her career was booming, and then came to a screeching halt for a period of time because of Weinstein’s harassment and its aftermath.
• Careers can be cut short by the debilitating effects of workplace sexual harassment. One ex-employee of Vice infamously tweeted, “VICE took a year of my life from me. I quit journalism. I quit writing. A world like this was not safe for me. I felt like I was under water every day and no one could hear me scream, or they looked away. And—as my ex-colleagues know—I quite literally screamed about it. A lot… I’ve said this to several people over the years but VICE was my first big heartbreak. I could have become something, I had the gusto, I had the M.A. and 6 years of Russian studies. Instead, I was consistently reminded I would never amount to anything, all the while being harassed.”
• Sallie Krawcheck, chief executive of Ellevest, shared her story with The New York Times about having to leave multiple jobs because of sexual harassment and even having a job offer rescinded once they learned she had a child at home. More recently, she found herself in a room of 18 venture capitalists as the only woman, where the lead investor assumed he knew more about managing financial advisers than she did, simply because she was a woman. She went on to say that his assumption that he was more educated than her on a topic was due to “his ingrained view of women — a view that’s costing all of us.”

2) Financial Cost (Litigation, Settlement and Lost Revenue)

In 2016 alone, the U.S. Equal Employment Opportunity Commission (EEOC) received nearly 6,800 claims of sexual harassment, resulting in 1,713 charges and almost $41 million in direct settlements. These figures don’t include legal representation costs, which exist even in cases that don’t result in a settlement payout; nor does it include private settlements paid to alleged victims. What we do know is that these figures are almost guaranteed to increase for 2017 with the number of women who have recently come forward to speak their truth. Companies can end up making matters worse when they make the decision to pay settlements to fix what they consider to be a minor problem to protect the alleged perpetrator; this almost always continues the cycle of sexual harassment and creates a culture that minimizes the severity of workplace harassment. Individuals and organizations that have paid the price in dollars and cents include:

• Fox News – After the New York Times detailed settlements totaling $13 million made by either Bill O’Reilly or Fox News for alleged sexual harassment or inappropriate behavior, 60 companies pulled their advertisements from O’Reilly’s show, to distance themselves from the toxic situation. Since then, news of a $32 million dollar settlement payout has come to light.
• Vice Media – The New York Times also reported that Vice Media paid 4 sexual harassment settlements to employees, with the most recent settlement totaling $135,000. Of the 100 current and former employees that the New York Times spoke with, more than 24 women reported experiencing sexual harassment while employed at Vice.
• Weinstein Company – Harvey Weinstein (previously associated with Miramax before it was acquired) reached 8 settlements in the hundreds of thousands with women before he was fired from the company he co-founded. Weinstein Co. is now close to being sold, at a price so low that there would likely be no profit for Weinstein.

What Can Be Done?

Since Matt Lauer’s departure from the Today show, Inspire has been in overdrive helping organizations that fall in two buckets: reactive and proactive. Companies in reactive mode are immediately educating employees on how to prevent harassment, and ensuring that there are clear channels for reporting incidents that occur. Those in proactive mode are strategically implementing changes to create an inclusive culture, and identifying leadership roles for high-potential females to improve gender equality at the top of the house. Here are some specific suggestions on next steps your organization should consider:

• Bridge the gender gap; the imbalance of males and females in power created a space where workplace harassment more easily exists. Creating gender equality on leadership teams can change that. Research shows that diverse companies, specifically those with more women in leadership, experience greater innovation, higher returns on capital, and lower risk. First Round Capital reported that their investments in female-founded firms performed 63% better than their investments in all-male founding teams.
• Evaluate your company’s policies to ensure employees can report harassment that they experience, or witness others experiencing, without difficulty or fear of retaliation.
• Do a culture check. If your organization’s vibe does not clearly exude a zero tolerance policy for harassment, immediately act to change it. Applaud those who courageously come forward to report workplace harassment, especially men acting as a voice for those who fear speaking up, similar to the Corner of the Court program which features stories of men who have influenced a woman’s career or professional life, told by women.
• Train and educate employees on harassment and respect in the workplace. Prevention and zero tolerance are the best approaches for creating a safe workspace and avoiding the economic impact of sexual harassment at your organization. To learn more about how Inspire Human Resources can help your organization create a respectful and safe workspace for all, contact me at jaime@inspirehumanresources.com or (917) 612-8571.

Together, we can courageously confront this issue head-on, and bring an end to sexual harassment in the workplace.