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Costs to Organizations

How to calculate costs

Workplace bullying and harassment have tremendous costs to targets, witnesses, families, communities,societies, AND organizations. These costs to organizations create a strong business case for employers to take steps to eliminate workplace bullying. 

Within organizations, bullying leads to increased turnover, absenteeism, health care costs, litigation, industrial accidents, sabotage, and even workplace violence. 
 

According to the Society for Human Resources Management’s (SHRM) 2019 literature review on the costs of toxic workplace cultures and the benefits of positive cultures, the cost of turnover due to workplace culture is $223 billion in the past 5 years. That’s a big number, and here are some of the costs for individuals and their employers:

 

  • According to a survey of 800 workers who’ve been on the receiving end of incivility: 48% intentionally decreased work effort, 38% intentionally decreased their quality of work, 63% lost work time avoiding the offender, and 66% said their performance declined. In other words, “targets of incivility often punish their offenders and the organization...”  (Harvard Business Review).

  • Targets of workplace bullying take an average 7 more sick days per year than those who are not bullied nor witness bullying (Hoel & Cooper).

  • In a survey of 3,500 people, researchers found that 20% of respondents had taken sick leave as a direct result of bullying, 60% considered leaving, and 15% did leave (O'Connell, Calvert, & Watson).

  • The cost of turnover - including recruiting, administrative costs, lost productivity for those who take on work and train the new employee, and productivity loss while a new employee grows to reach the same level of performance as those who’ve left - is estimated to be 6-9 months of the position’s salary. Employees making $60,000/year will cost an organization between $30,000 and $45,000 when they leave, for example (SHRM). 

  • The average cost to defend a harassment lawsuit is $250,000; the average jury award is $600,000, and; the average annual hidden cost of harassment is between $300 and $1,000 per employee (Legal Risk Management).

 

 

Catherine Mattice, MA, SPHR, SHRM-SCP

(1) See SHRM's Culture Report 2019 @https://pages.shrm.org/2019culturereport?_ga=2.149772277.253690447.1611002450-900144291.1593625157

(2) Porath, C., & Pearson, C. (2013). The price of incivility. Harvard business review, 91(1-2), 114-121.

(3) Hoel, H., & Cooper, C. L. (2000). Destructive conflict and bullying at work. Manchester: Manchester School of Management, UMIST.

(4)  O'Connell, P., Calvert, E., & Watson, D. (2007). Bullying in the workplace: Survey Reports 2007.

(5)  See Essentials of Employee Retention @https://lrshrm.shrm.org/blog/2017/10/essential-elements-employee-retention

(6)  See Palmer @http://www.winbeforetrial.com/the-financial-costs-of-harassment.html