The Longer You Wait to Deal With Workplace Harassment, the More It's Going to Cost

Post Bonus: In our new report, we lay out the ways that harassment tolerance can sink your business, highlighting major figures on brand risk, employee turnover, and more. Get our research on the costs of sexual harassment here.

What are the costs of sexual harassment?

Companies have long known that sexual harassment can lead to costly lawsuits valued at up to $7.6 million per case. However, since the explosion of #MeToo and the fall of Harvey Weinstein, the costs of misconduct have escalated further. Today, harassment is no longer just a cultural or legal issue but a financial and brand issue that affects every corner of the company. This means that no matter how effective your training and reporting may be, they are no longer sufficient.

Story after story has shown that when a brand loses authenticity over sexual harassment, it also risks losing its hard-won earnings. For instance, Uber has lost nearly 15% of its market share over two years of harassment scandals. After it was revealed that Steve Wynn had received multiple allegations of sexual harassment and assault, Wynn Resorts lost $3.5 billion in company value.

Now, the sheer force of the #MeToo movement and the costs of sexual harassment allegations are changing how company boards make decisions, leading to more protections being put in place to mitigate the impact of the next big scandal. In particular, we are seeing two unprecedented changes:

1) Boards are firing faster and speaking louder

‍Board members have become deeply concerned about the costs of sexual harassment and are moving more swiftly and transparently to lower the stakes. According to new studies in crisis management, boards are firing executives accused of misconduct at record speed and are less euphemistic about executive departures than ever. CEOs are now being removed three times faster than during the Weinstein accusations, and in 2018, at least eight times the number of CEOs will be explicitly fired for misconduct compared to the previous year. This indicates that for boards, #MeToo is now a genuine business risk.

2) Boards are taking back money from toxic workplaces

‍Sexual harassment can inflict so much damage that lawyers have added "Weinstein clauses" to merger agreements, allowing buyers to reclaim their money if revelations of wrongdoing arise. Lawyers in the billion-dollar corporate merger world have stated that, due to its reputational and financial costs, sexual misconduct is now considered a risk on par with foreign government bribes and IP fraud. The material consequences of sexual harassment have risen, and companies that are not doing everything possible to protect their culture will face a disproportionately high risk of financial loss.

The costs are clear, and companies that wait will pay
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The fact that boards are firing faster, speaking louder, and enforcing stricter measures shows that the costs of sexual harassment are not just noteworthy; they are seismic. As public perception of a company becomes increasingly tied to its financial outcomes, the way you prevent and address toxic employees is now inseparable from that perception and your bottom line.

Your company should be armed and prepared to deal with toxic behavior and the brand damage that results from it. Companies are taking responsibility and acting more swiftly than ever when CEOs misuse their power. If you turn a blind eye to identifying and preventing toxic behavior, you risk more than just legal fees and turnover; you risk irreparable damage to your market share, merger outcomes, and reputation.

How’s your harassment tolerance? If you’ve given tacit permission for your employees to face workplace harassment and discrimination, know that consumers, businesses, and even boards are responding with their wallets, making it clear: the longer you wait to address sexual harassment, the more it will cost.

Get the whole picture: We’ve broken down how sexual harassment in your company can damage the bottom line in our new report, featuring studies from leading institutes on risk and employment law. Download the Cost of Sexual Harassment here.