Costing workplace bullying

Last week, former PricewaterhouseCoopers partner Christina Rich settled a much publicised sexual harassment claim against her employer out of court. This week, former Perpetual general manager Fiona Dunn has lodged a $1.2 million claim with the Federal Court alleging she was bullied by the company while pregnant and on maternity leave.

These cases potentially represent the tip of the iceberg of bullying at work. While trade unions and organisational management consultants have long debated the cost of bullying to workplace productivity, companies can now place a dollar figure on the cost of litigation.

Employers will need to develop bullying at work policies and challenge existing cultures in order to manage this emerging risk to shareholder value.

When the Harvard Business Review asked academic Robert Sutton to contribute "breakthrough" ideas for the publication they could not have expected that his article, "The No Asshole Rule," would be one of the most popular ever to be produced by the HBR. So popular, in fact, it was spun into a book – "The No Asshole Rule: Building a Civilised Workplace and Surviving One That Isn’t" – that, according to Publishers Weekly, went on to sell over 115,000 copies in the US in 2007.

Sutton’s book argues that the modern workplace is beset with "assholes," defined as those who deliberately make co-workers feel bad about themselves and who focus their aggression on the less powerful. Their impact is to decrease productivity, induce employees to quit and create a poisonous work environment.

The success of Sutton’s book indicates that there is widespread concern about workplace harassment and bullying in corporate life. High profile court cases in the US, and now in Australia, mean that companies can no longer brush these issues under the carpet. In addition to damaging corporate reputations at a time of skill shortages, litigation has a very real cost to corporate profits, not just in actual payouts, but in lost management time.

How much could bullying at work cost?

According to research conducted by Dr Paul McCarthy of Griffith University, 350,000 people are subjected to long term bullying in Australia, while 2.5 million experience some aspect of bullying over the course of their working lives.

If even a fraction of these workers take to the courts, corporations – and their senior management – may find they end up spending long periods of time defending their actions to judges.

In addition to individuals resorting to litigation, the trade union movement, which identified workplace bullying as a real issue as part of its workplace campaigning over five years ago, is likely to be emboldened by the success of litigation to take forward its own cases.

For corporations, developing bullying at work policies and challenging existing corporate cultures is now no longer just a human resources function: it is a risk management function that needs to involve corporate boards. For investors, bullying at work is becoming a key risk that needs to be monitored in order to protect shareholder value.

Gordon Noble is principal of Responsible Investment Consulting

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