Bad for Business – Respect In Hospitality

Bad for Business: The Cost of Workplace Sexual Harassment

Workplace sexual harassment isn’t just a violation of rights, immoral and illegal — it’s also a major financial burden on businesses. Beyond the personal impact on victims, harassment can have severe consequences for workplace morale, productivity, and costs. In 2018 alone, workplace sexual harassment cost Australia an estimated $3.8 billion, with the majority of these costs borne by businesses.

How Workplace Sexual Harassment Impacts Businesses

Sexual harassment in the workplace creates a ripple effect that harms overall business performance. The key consequences include:

Decreased Productivity

In 2018, decreased productivity due to workplace sexual harassment cost businesses an estimated $1.82 billion. When employees feel unsafe or uncomfortable, their ability to focus and work efficiently is severely impacted, which can drag down overall team performance.

Increased Absenteeism

Decreased job satisfaction as a result of harassment can lead to greater absenteeism, where employees feel disengaged or too uncomfortable to continue working. This can lead to a high rate of withdrawal from the workplace, causing disruptions in operations and continuity.

Increased Staff Turnover

When sexual harassment is prevalent or poorly addressed, workers are more likely to leave the company. High staff turnover means businesses spend more resources on recruitment, onboarding, and training new employees, leading to increased operational costs.

Costs Associated with Investigating and Responding to Complaints

In addition to the immediate impacts, businesses also incur significant costs in responding to and investigating sexual harassment complaints, including:

Time and Resources

Handling investigations, compensation claims, and resolving disputes can absorb significant time and organizational resources.

Increased Workers’ Compensation Premiums

The financial burden of claims related to harassment can lead to an increase in workers’ compensation premiums.

Reputational Damage

Harassment incidents can damage a business’s reputation, both internally and externally. This can result in a loss of trust among employees and customers, impacting the company’s share market value.

Emotional Strain and Legal Costs

Managing harassment cases also puts emotional strain on management and HR teams, consuming time that could be spent on other critical business activities. In cases where legal action is pursued, businesses face additional costs for legal representation, court proceedings, and potential compensation payments.

Workplace sexual harassment is not just a moral or legal issue—it’s bad for business. Addressing it proactively, through robust policies, training, and effective reporting mechanisms, can protect your company from significant financial loss and help foster a safer, more productive work environment for everyone.