The Hidden Costs of Harassment

When a high-profile harassment case disrupts the workplace it often leads managers and executives to revisit their personnel management standards and practices to ensure they have a good defense against litigation. But by focusing only on legal liability, managers are ignoring the larger problem: an office culture that enables discrimination. Most cases stop short of the courts or simply go unreported; still the hidden costs are high.

In the federal government, only 3 percent of harassment charges lead to administrative findings of discrimination, about one-third are settled, and the remainder are withdrawn or dismissed. Regardless of the outcome, settlements and investigations cost employers a great deal of money. While agencies scour their budgets, processes and business structure to eliminate waste and inefficiency, rarely do they look for these often significant and easily remedied costs.

When managers narrow their focus to whether or not workplace conduct is legal, it blinds them to the operational toll of behavior that technically might be legal, but is imprudent, unnecessary and avoidable.

Unreported allegations can cost employers a great deal. A female employee at the Library of Congress, for instance, filed suit against her employer alleging that she and several other female employees had been subjected to 20 years of inappropriate conduct, including stares, touches and sexual innuendo. The case was settled in 2010, and the employee received a $250,000 payment. Even if she had never come forward, the settlement pales in comparison to the setbacks associated with two decades of unhappy and unproductive employees.

These situations sap productivity because they have a direct impact on how people approach their job. The costs are significant, not only in terms of investigating, defending and resolving allegations, but also in defusing charged situations that could have been avoided. There also are pernicious hidden damages when individuals say nothing but remain distracted.

More often than not, harassment and discrimination claims, baseless or otherwise, are a product of the workplace environment. Executives should view the letter of the law only as the foundation for their human resources standards and practices. They need to build a strong, values-driven ethos on top of that foundation. It’s more than just communicating a list of rules and regulations or a mission statement to managers and workers; it’s instilling a culture of civility, inclusion and professionalism.

There are three simple, immediate steps managers can take to foster a civil workplace:

• Lead by example. If a supervisor is rude or demeans an employee, then he cannot expect his employees to behave any differently. Of all that goes on in the workplace, a manager’s attitude will have the single greatest impact on his employees’ efforts.
• Open the door. Managers must be receptive to complaints, and react to conflicts or concerns in a thoughtful and decisive manner. It’s rare that employees call a lawyer the first time they feel harassed or discriminated against; make sure every worker knows there is an effective avenue to deal with such issues before they boil over.
• Transcend the check-the-box mentality. Workplace training must influence behavior, not just communicate concepts -- it must go beyond simply meeting a minimum legal standard and moving onto the next topic. For training to be effective, it must be simple and concise, yet speak to the audience both intellectually and emotionally. A lecture explaining the history of the most important cases associated with sexual harassment law, for example, might meet the legal standard for relevant workplace training, but such lessons are tedious and forgettable. In stark contrast, a straightforward account of real-life inappropriate workplace behavior, coupled with an open dialogue about the likely consequences of such actions, will keep an audience engaged, and ensure they do not soon forget what they’ve learned.

Whether dealing with a workforce of 10 or 10,000, every manager should ensure, instill and display a culture of compliance and professionalism in the workplace. It’s not just the right thing to do, it happens to be cost-effective as well.

Stephen M. Paskoff, founder and president of Employment Learning Innovations Inc., is a former trial attorney for the Equal Employment Opportunity Commission.