Counting the costs of workplace harassment scandals


It’s a well-known fact that any company’s reputation can be easily damaged by a report of bad behaviour. It can have a significant impact on the organisation’s bottom-line and cause pain and suffering to the people involved as well as bystanders. 

In fact, a US study conducted by finance professor, Yik Au, at the University of Manitoba looked at 1.5 million Glassdoor reviews from 2011 – 2017 and the findings were extraordinary. 

“If you’d invested in these sexually harassing firms, you would have actually suffered a loss of around 20%, compared to an increase of about 150% for regular firms,” Au said. “We’re looking at underperformance of about $2 billion dollars per year. “

Professor Yik Au, University of Manitoba

Delving into company financial reports, the researchers concluded that a culture of sexual harassment and discrimination drives labour costs up and operating profitability down.

Harassment casts a wide shadow

Sexual harassment in the workplace casts a wide shadow. It’s well documented that harassed employees are more likely to experience mental health concerns such as anxiety, PTSD, insomnia and depression. But Professor Au’s research demonstrates there is a much wider ripple effect extending to bystanders, employees, customers and shareholders.

Prevention is better than cure

So, what can a company do to prevent this from happening? 

Strong policies

The first step is to have a strong and effective HR policy in place that addresses bad behaviour like sexual harassment and other forms of workplace misconduct. This policy should be communicated clearly to all employees, with regular training provided to ensure that everyone is aware of their responsibilities.  

Transparent reporting

The second step is to have a clear and transparent reporting system in place. Employees should feel comfortable coming forward with any concerns they may have, and they should be assured that their confidentiality will be respected. 

Swift action

The third is to take swift, consistent and decisive action when an allegation is made. 

First, offer all affected employees support and resources (see person-centred approach, below).

Then, employers should conduct a thorough and impartial investigation in a timely manner. This means listening carefully to all parties involved, including any witnesses, and gathering all relevant information. It’s essential to ensure that the investigation is conducted in a manner that is respectful and supportive of all individuals involved, and that any potential biases or conflicts of interest are avoided. 

If the investigation finds that sexual harassment has occurred, the company must enforce consequences. This could involve disciplinary measures, such as suspension or termination. It’s important to communicate these actions openly and transparently to all stakeholders, including employees, investors, and customers, to show the company takes these issues seriously and is committed to stamping them out.  

Person-centred approach

From the moment an issue is raised, it’s essential to prioritise employee wellbeing by providing support to anyone who has been affected by the allegation, including:

·       The employee who has made the allegation

·       The alleged perpetrator

·       Bystanders 

This support includes counselling services, legal advice, and any other resources that are needed to ensure that everyone involved is able to be heard, recover and move forward.

Build a safe, respectful & inclusive culture

But the most important step is to create a safe, respectful and inclusive culture that prevents these types of issues from occurring in the first place.

This means:

·       Educating all employees, contractors and volunteers so everyone understands what behaviour acceptable and unacceptable in the workplace, and that poor behaviour is not tolerated.

·       Role-modelling appropriate behaviours and calling out poor conduct.

·       Supporting employees to speak up through a variety of communication channels that foster an environment where everyone feels heard and valued. This can include traditional modes, such as reporting to HR or a line manager, or alternatives such as anonymous speak up hotlines and online reporting.

·       Capturing issues in real-time across the whole of the organisation, rather than waiting for the annual employee survey to surface issues.

·        Using insights gleaned from past cases to train employees on what is and is not okay behaviour.

By taking a pro-active approach, employers can reduce the risk of bad behaviour and demonstrate to employees, customers and investors that they care about the wellbeing of their people.

It’s time for all employers to take these issues seriously and to make a commitment to creating a safe, respectful and inclusive workplace. Allegations of bad behaviour can have a devastating impact on any company. By proactively taking steps to prevent workplace issues from occurring, and by responding appropriately if they do, companies can protect the wellbeing of their employees, build a strong reputation and preserve shareholder value.

Book a demo and see how Rely helps you prevent, detect and respond to workplace issues and build safe, inclusive and respectful workplaces.

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We are proud to share an insightful article co-authored by Nathan Luker and the team at Culture Amp, originally published on their website. This piece delves into the creation of a supportive "speak up" culture within organisations, highlighting the significance of encouraging employees to voice concerns about sexual harassment without fear of backlash. It offers practical advice for leaders on fostering psychological safety and outlines steps to empower individuals to report misconduct. A must-read for any organisation committed to a respectful and open workplace culture.

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