By Calvin Gower, Trüpp.

Harassment claims have long-term consequences

Anyone who has been paying the slightest attention over the last few years knows that a single cry of discrimination or harassment will send your organization’s reputation into a tailspin. No matter how quickly and thoroughly you respond, the repair to your reputation will not be as simple as terminating the offending employee and paying out the associated legal fees. Even if it’s just one “bad apple,” it will have a long-lasting impact. Harassment claims not only tarnish your company’s image, they reduce your ability to hire and retain employees and are costly to your bottom line. Let’s take a closer look at these three unfavorable effects companies experience when facing a harassment claim.

Company Reputation

Building a positive brand reputation takes time and effort, but all that can be destroyed by one incident. The modern-day public conversation occurs at a much faster pace and broader scale with social media and the overall ease of access to information. Even some job boards create an immediate, transparent look into an organization’s culture, where one opinion or experience can alter the view of the majority.

Harvard Business Review recently conducted a study that shows the impact a claim can have on the way people view an organization. The study found that a single sexual harassment claim is seen as a sign of a cultural problem and rarely as a one-time situation. The perception of a company’s gender equity also becomes an immediate concern. With one claim, the general fairness of treatment between men and women is challenged, including hiring and promoting from within. People also tend to view a claim of this nature as much worse than other types, such as financial misconduct.

Moreover, people want to see a responsive initiative on a companywide scale. The general public adopts a higher set of standards, expecting a timely response that is informative and considerate towards the victim in the process. This set of expectations can even extend to pushing a company to start hiring more women than men and having more women in positions of power.

Hiring and Retaining Talent

A company’s reputation has a direct impact on hiring and retaining talent. In today’s job market, a company’s ability to hire qualified talent relies heavily on brand image, culture, and the treatment of employees. Candidates want to know who they will be working for and what that entails. While this creates a healthy, transparent job market, it does not bode well for a company facing a harassment claim. Job seekers will avoid a company if they feel a claim wasn’t responded to appropriately. And even if the company does respond favorably, the brand could be tarnished to the point of no return. All it takes is one public case, a questionable review on Glassdoor, or a cultural problem spreading through word-of-mouth to deter a high-quality candidate.

Retaining employees after a harassment case also becomes a challenge. Turnover rates increase due to stress over cultural problems coming to light and all the associated distractions that take resources and support away from employees. The reality is that the average employee doesn’t want to work for a company known for having a harassment problem.

Revenue Generation

Another recent study assesses how workplace harassment affects a firm’s value. The results show that companies with the highest rates of sexual harassment cases took significant financial hits. Those with the highest incidences experienced a 4.2% decline in Return On Assets (ROA) and a 10.9% decline in Return On Equity (ROE). While these numbers aren’t representative of a company facing a single harassment claim, the results show there is a very real financial impact on an organization. Financial losses are inevitable due to loss of productivity, increased labor costs, increased employee turnover, and loss of prospective clients.

Avoiding the negative impact of a harassment case

The best defense is to be proactive and prevent harassment cases from happening. Focus on the protection of your employees and investing in tools that empower your team to maintain a culture of respect. Businesses that operate with the best intentions for their employees are taking preventive steps by modeling a respectful work environment from the top down and implementing ongoing employee training that reinforces this commitment. An effective training program not only encourages respectful behavior but equips employees with the tools they need to handle discrimination and harassment appropriately. In addition, supervisors should receive specialized training for recognizing behaviors that require action, understanding their legal responsibilities, addressing a claim, and gaining a clear understanding of your organization’s relevant policies and procedures.

Resources for facilitating a culture of respect

Here are some practical resources to help reinforce your commitment to a respectful work environment:

Discrimination and harassment training from Trupp