Report quantifies financial cost of workplace bullying

Many employers are aware of the psychological toll of workplace bullying, ranging from lowered staff engagement and morale to lost productivity and health issues but the financial implications may be harder to quantify.

The new ‘Bullying Bosses: A Full Cost Accounting’ report from management coaching firm Executive Confidante explores the financial costs of workplace bullying and the pervasive effect it can have across an organisation – from the wellbeing of staff right down to the balance sheet.

For instance, the research calculated that the turnover costs involved in replacing employees who leave due to bullying can amount to over 7 per cent of the company’s annual revenue. Executive Confidante notes that this represents a “conservative estimate”.

One of the main concerns with workplace bullying is the effect it can have on workplace performance and ultimately engagement. The report indicated that companies with highly engaged employees often outperform their competitors by almost 2.5 to 1, meaning that there is a huge loss in this area for organisations with disengaged workers.

The distress caused by bullying is also keeping workers away from the office, as the study found that days off due to anxiety and stress – often the products of workplace bullying – can be four times as many as the days taken off for injury and other illnesses.

Kalli Matsuhashi, owner of Executive Confidante and author of the study, said these consequences can be exacerbated if the bully is in a leadership position.

“Many companies have no idea of the full financial impact of abrasive leaders,” she explains.

“Often, these leaders are strong performers, and organisations are highly resistant to confronting these behaviours for fear that the individual will leave. The truth is, the hidden costs likely outweigh the financial benefit to a company’s bottom line.”

It is important to note that this U.S study focused largely on bullying behaviour by managers and leaders. Workplace bullying can also occur in an upwards direction and between colleagues at the same level. As the research was conducted in the United States which currently does not have specific legislation dealing with workplace bullying, it follows that the financial impact to organisations in Australia could be even higher when costs associated with legal implications are factored in.

To help lessen the risk of bullying issues within the workplace, employers must ensure that managers are trained to deal with inappropriate behaviour in their teams and that everyone within the organisation knows how to report bullying behaviour they experience or witness. Effective bullying and harassment training is clearly an investment that employers cannot afford not to make.