Tuesday, May 11, 2010

How much does workplace bullying really cost an organization?

The cost of bullying will vary at every organization, so before going into how you can determine those costs specifically, here are some general estimates about bullying and stress in the workplace:

 • Leymann, the researcher who brought bullying into scholarly research, estimated a bully can cost a single business up to $100,000 per year per target.
• A survey of 9,000 employees cited by Dr. Michael H. Harrison of Harrison Psychological Associates in the Orlando Business Journal estimated a cost of more than $180 million in lost time and productivity.
• The Corporate Levers Survey estimated the cost of unfairness to American businesses during the past five years to be $63,738,884,783.
• The American Psychological Association estimates job stress costs American businesses $300 billion a year in absenteeism, diminished productivity, employee turnover and medical and legal costs.
• The American Psychological Association also estimates that 50% to 70% of visits to primary care physicians are for physical issues stemming from psychological factors such as stress.

These 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
• 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 behavior
• Time spent by others consoling the target

Time Lost
Of course any time you have to deal with employee issues it costs time and money to engage in the following types of activities:
• Employees and management calming and counseling victims
• Management appeasing, counseling 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 who leave the organization

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

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 behavior 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.

One cost that is intangible is a bad reputation, something the Internet makes easy for you to acquire. Websites like eBossWatch, where employees can go to report and publish their horrible experiences for anyone to read, should keep you focused on building a positive workplace. The Corporate Leavers Survey also indicated that 50% of respondents said the unfairness with which they were treated led them to discourage others from purchasing products or services from previous employers.

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 obtaining counsel, and in settlement fees and successful litigation by victims and bullies.

Communication Breakdown
This category is hard to monetize, but think about this: If you do not like someone, do you go running to them for answers to questions? Probably not. Now, what if you are intimidated by someone? The likelihood of you seeking them out for information goes down exponentially. If you are not asking the questions you need answers to in order to do your job effectively, then there is a problem.

Your organization has goals in place, whether to make a certain amount of money, expand your customer base by 50%, or create a new product by the end of the year. It has goals, and it needs employees to communicate with each other to meet them.

The objective of internal communication, then, is to problem solve, innovate, give constructive feedback to employees, gain insight from customers, train and share knowledge, and meet customer needs. All of these communication activities lead to meeting organizational goals.

Since communication is imperative to meeting goals, it necessarily follows that strong interpersonal relationships are also crucial to meeting goals. In other words, communicating well is about building relationships –healthy interpersonal relationships made up of understanding, empathy, conflict management, listening, leadership, and social intelligence allow you to meet organizational goals.

When relationships are on fire, however, or not working properly, organizational goals also go down in flames and up in smoke. This would be like forcing your organizational goal to jump through a ring of fire; and why would you do that?

In sum, bullying causes everyone, not just the targets of the behavior, to lose motivation, lose loyalty to managers and the company, stop caring about quality of work, live life in fear, become anxious and even depressed, and stop coming to work. As a result your business processes will suffer and your bottom line will too.

Relationships among employees are the key to your success. Without them, people are not talking to each other, being innovative, making the right decisions, or focused on the right activities to maximize their productivity.

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