The Costs of Sexual Harassment at Work

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The Costs of Sexual Harassment at Work

Any form of sexual harassment has significant impacts on victims. Several studies showed that their overall well-being is affected / Photo by: vchalup via 123RF

 

In 2018, Les Moonves, the CEO of media company CBS, stepped down after 12 women came forward and accused him of unwanted sexual advances and misconduct. On the same year, American television journalist Charlie Rose was accused by more than 30 women of sexual misconduct. Three of them sued Rose, as well as CBS for allegedly not doing anything to intervene. They revealed that the journalist and managers at the network sexually harassed them.

These are only a few examples of women standing up and holding their abusers accountable. Sexual harassment is still very much a reality in the workplace even with the rise of the #MeToo movement. A 2018 survey conducted by Edison Research, a company that conducts market research and exit polling, and provides strategic information for businesses and media organizations worldwide, reported that 21 percent of Americans say they have experienced sexual harassment in the workplace. 

The findings of the study titled “Sexual Harassment in the Workplace: #metoo, Women, Men, and the Gig Economy” showed that 27 percent of women and 14 percent of men reported experiencing workplace sexual harassment. Of those who participated in the survey, 50 percent of women and 64 percent of men agreed that harassment in the workplace has negative impacts on their career. About 52 percent of them pursued another job because of it. However, only 25 percent of women who have experienced workplace harassment strongly agreed they could report an incident to their employers without fear.

Any form of sexual harassment has significant impacts on victims. Several studies showed that their overall well-being is affected. This also restricts women’s access to opportunities that can advance their career. For instance, another 2018 study found that women in the academic sciences, medicine, and engineering who experienced harassment dropped out of major research projects, gave up tenure opportunities, or stepped down from leadership opportunities just to avoid the perpetrator.

Workplace sexual harassment also affects companies. According to an article by the Institute of Women’s Policy Research, an organization that aims to meet the need for women-centered, policy-oriented research, sexual harassment at work can result in substantial costs to them. This includes costs related to employee turnover, legal costs if there are formal charges of harassment, and costs related to lower productivity from increased absences, team disruption, and lower motivation and commitment.

The Cost of Workplace Sexual Harassment to Businesses

With the rise of the #MeToo movement and other campaigns that encourage women to speak out against sexual harassment, more and more women are finding the courage to go up against high-profile personalities and companies that have done them wrong. While it can be devastating to employees, companies should also be worried. A recent study titled “Me Too: Does Workplace Sexual Harassment Hurt Firm Value?” discovered that workplace sexual harassment significantly impacts the bottom line of the companies where it’s happening. 

According to an article by Phys.org, an internet news portal that provides the latest news on science, the researchers gathered more than 1.65 million reviews of over 1,100 firms to identify reported instances of sexual harassment. They examined and analyzed the sexual harassment incidence rate of each firm, and combined it to profitability and the stock market performance of publicly traded companies. The findings showed that business with the highest incidences underperforms in the US stock market by over 19.9 percent.

The #MeToo movement and other campaigns encourageS women to speak out against sexual harassment and more women spoke against the harassment done against them by the company executives / Photo by: Katarzyna Białasiewicz via 123RF

 

This accounts for an average loss of $2.1 billion in market capitalization per firm. All the identified worst companies when it comes to sexual harassment cases had a combined market capitalization of $1.1 trillion, translating to a total loss of $212.2 billion every year. 

For two consecutive years, there has been a decline in return on assets (ROA) and return on equity (ROE) in those companies with 4.2 percent and 10.9 percent, respectively. The study also revealed that the labor costs of these firms have increased by an average of 7 percent over that same period. This showed that the costs of sexual harassment in companies are larger than the direct compensation awarded to affected employees. 

The Economic Impact of Workplace Sexual Harassment

Victims of sexual harassment at work often leave their companies and pursue another job. This not only impacts them and the companies but also the whole economy. There are consequences with every woman who never gets a chance to reach her full potential at work. The impacts on victims are lost to human capital. As has been proven, the more capital that’s invested into an economy, the more robust it will be.

In 2017, it was reported that “new ideas are getting hard to find” because the productivity of companies to market has tumbled. Ideas are important for innovation, growth, and prosperity. However, these ideas are affected by power, which can either liberate or limit them. Too often, men are the ones who are heard more in a patriarchal society. As Harvard Business Review, a general management magazine published by Harvard Business Publishing, noted: “Could it be that institutionalized patriarchy—the system in which men predominantly hold the power and women are largely excluded from it—is itself the key turnstiles, slowing economic progress?”

Victims of sexual harassment at work often leave their companies and pursue another job. This not only impacts them and the companies but also the whole economy / Photo by: catalin205 via 123RF

 

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