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The Cost of Workplace Bullying

The Cost of Workplace Bullying

(Source: http://noworkplacebullies.blogspot.com/2009/07/cost-of-workplace-bullying.html - by Catherine Mattice, Orlando Business Journal)

The Orlando Business Journal cited an estimated cost of $180M in lost time and productivity to American businesses each year. The Workplace Bullying Institute estimates between turnover and lost productivity a bully could cost a Fortune 500 company an astounding $24,000,000; add another $1.4 Million for litigation and settlement costs.

  1. Direct income loss is very real when it comes to a workplace bully. Here are some items to consider when calculating the cost of the bully in your organization:
  2. Absenteeism and turnover (30% of the bullied will quit, and 20% of witnesses will follow)
  3. Anger management, communication, leadership and other training
  4. Distraction from tasks on the part of the victim, bully and witnesses
  5. Health insurance and workers compensation costs as a result of stress
  6. Legal costs for counsel
  7. Loss of motivation and energy at work from victims and witnesses
  8. Lost customers who were victimized the bully and took business elsewhere
  9. Lost customers who heard about the bully from unhappy former customers and took their business elsewhere
  10. Management burnout, leading to decreased commitment and increased stress
  11. Stress induced psychological and physical illness
  12. Pertinent information not provided to victims in order to do their job effectively and efficiently
  13. Possible impaired mental ability
  14. Prolonged bullying turns victims into bullies
  15. Reduced psychological safety and associated climate of fear
  16. Settlement fees and successful litigation by victims
  17. Settlement fees and successful litigation by bullies (e.g., wrongful termination claims)
  18. Time spent at work looking for different work
  19. Time spent at work talking about being bullied instead of working
  20. Time spent at work by others gossiping about the bully and his or her behaviour
  21. Time spent by other employees and management calming and counselling victims
  22. Time spent by management appeasing, counselling or disciplining bullies
  23. Time spent soothing victimized customers, suppliers and other key outsiders
  24. Time spent reorganizing departments and teams
  25. Time spent interviewing, recruiting, and training replacements for departed victims, witnesses and bullies

(Note: A portion of this list was taken from The No Asshole Rule by Robert Sutton, PhD, professor atStanfordUniversity.)

Here is an example of how to calculate total costs of a bully in your organization.

Figure out time spent by:

  • Bully’s direct manager counselling bully: 80 hours, $8,000
  • Victim’s direct manager counselling victim: 150 hours, $15,000
  • Witnesses counselling victim: 100 hours, $6,000
  • HR talking with managers, bully and target: 10 hours, $1,500
  • HR talking with Executives about the problem:5 hours, $1,500
  • HR recruiting and training replacement of victim employee; $40,000
  • Team and department members training new employee: 160 hours, $10,000
  • Actual costs (advertising, temp agency): $1,000
  • Estimated total cost of bully: $83,000

 

Costs of Bullying

(Source: White Paper: The Cost of Your Workplace Bully: Civility Partners, LLC)

Bullying costs your organization money. For starters, it causes lots of very bad things to go up, and lots of other important things to go down:

UP

  • Depression
  • Anxiety
  • Discouragement
  • Absenteeism
  • Presenteeism
  • Turnover
  • Vengeful activities
  • Workers comp claims
  • Health insurance costs
  • Litigation costs

DOWN 

  • Quantity of work
  • Self-esteem
  • Job satisfaction
  • Company loyalty
  • Customer satisfaction
  • Number of customers
  • Company reputation
  • Relationships
  • Communication
  • Ability to meet goals

 

Bottom line

Bullying “is quite costly, in that it (a) refocuses employee energy from productivity to self-protection, (b) results in staff turnover and burnout, (c) intensifies the use of sick leave, (d) increased medical and workers’ compensation claims due to occupational stress, (e) results in hiring costly consultants… and (f) leads to out of court settlements, legal fees and litigation. Additionally, communication and teamwork break down, and organizations lose credibility and suffer loss of good reputations” (Lutgen-Sandvik, 2003).

The costs of bullying can be devastating to employees and employers alike. According to Dr. Gary Namie of the Workplace Bullying & Trauma Institute, severely bullied workers may experience conditions such as clinical depression, high blood pressure, cardiovascular disease, impaired immune systems, and even symptoms consistent with Post Traumatic Stress Disorder. Many of these individuals are faced with life-altering decisions about whether to stay in or leave a job.

On an organizational level, a 1992 study by human resources expert Emily Bassman found that abusive work environments result in “fear and mistrust, resentment, hostility, feelings of humiliation, withdrawal, play-it-safe strategies, and hiding mistakes.” This quickly impacts the bottom line. In 2002, the Orlando Business Journal reported on a study of 9,000 federal workers indicating that 42 percent of female respondents and 15 percent of male respondents had experienced bullying-type behaviours over a two-year period, “resulting in a cost of more than $180 million in lost time and productivity.”

Research also indicates that high turnover, absenteeism, poor working relationships, and acts of retaliation may result from such environments. A 1998 study byUniversityofNorth Carolinamanagement professor Christine Pearson of 775 targets of workplace incivility and aggression found that “28 percent lost work time avoiding the instigator,” “22 percent decreased their effort at work,” and “12 percent actually changed jobs to avoid the instigator.” Severely bullied employees sometimes must seek workers’ compensation or disability benefits because they can no longer expose themselves to the stress of the abusive work environment. In some cases, bullying can prompt violent behaviour. Joseph Kinney, the founder of the National Safe Workplace Institute, reported that “there have been numerous instances where abusive supervisors have baited angry and frustrated employees, pushing these individuals to unacceptable levels of violence and aggression.

Costs can be broken into five separate categories:

Distraction from Tasks

  • The bully wreaks havoc on the organization, and as a result everyone, not just the target, are distracted from getting work done. Some of the things that keep them from working are:
  • Reduced psychological safety and increased climate of fear
  • Loss of motivation and energy
  • Stress induced psychological and physical illness
  • Impaired mental ability
  • Decreased work quality and quantity
  • Decreased loyalty to the organization
  • Management burnout, leading to decreased commitment and increased stress
  • Time spent looking for different work
  • Time spent gossiping about the bully and his or her behaviour
  • Time spent by others consoling the target

Time Lost

Of course anytime you have to deal with employee issues it costs time and money to do the following types of activities:

  • Employees and management calming and counselling victims
  • Management appeasing, counselling or disciplining bullies
  • Soothing victimized customers, suppliers and other key outsiders
  • Reorganizing departments and teams
  • Interviewing, recruiting, and training replacements for departed victims, witnesses and bullies

Tangible Costs

  • Tangible costs include:
  • Lost customers who were victimized by the bully
  • Lost customers who heard about the bully from unhappy former customers
  • Anger management, communication, leadership and other types of training
  • Absenteeism and turnover
  • Unemployment insurance
  • Increased health insurance costs
  • Workers compensation

Bad reputation in the industry and community

With regard to absenteeism and turnover, 30% of targets quit, and another 20% of witnesses, or people who do not believe they are bullied but are bothered by the behaviour they observe nonetheless, follow them (Rayner, 1997). An additional 46% of targets also consider leaving the organization on a regular basis (Vartia, 1996). Targets also report that each year, they take seven days more sick leave than someone not being bullied. You already know absenteeism and presenteeism is costly, and in fact can cost between 25 and 65% of that particular position’s annual salary. Ouch.

Legal Costs

Of course, if somebody sues for harassment, intentional infliction of emotional distress, hostility, or wrongful termination, it is going to cost you in legal costs for counsel, and settlement fees and successful litigation by victims and bullies.

Communication Breakdown

If you don’t like someone, do you go running to them for answers to questions? Probably not. What if you are intimidated by someone? The likelihood of you running to them for stuff goes down exponentially. But let’s take it a step further. Your organization has goals in place, whether to make a certain amount of money, expand customer base by some number, or create some product by the end of the year. It has goals, and it needs employees to communicate with each other to meet those goals.

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