The #MeToo movement has heightened awareness of sexual harassment in the workplace, bringing this pervasive issue to the forefront of public discourse.
While the focus has rightly been on supporting victims and holding perpetrators accountable, less attention has been given to how sexual harassment in the workplace impacts businesses.
It’s not just a human issue; it’s a costly, reputation-damaging, and morale-eroding problem that employers can’t afford to ignore.
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Sexual harassment lawsuits are rising, and they’re far from inexpensive. The 2022 "Sexual Harassment in Our Nation's Workplaces" report by the Equal Employment Opportunity Commission (EEOC) revealed the organization had recovered $300 million for victims of sexual harassment in the workplace between FY 2018 and FY 2021. This is a significant increase from earlier years, reflecting both growing awareness and a willingness to report misconduct.
Legal fees to settle or defend against a harassment claim can range from tens of thousands to millions of dollars, depending on the case's complexity and duration. A single lawsuit can devastate a small business.
Even without a lawsuit, companies may face substantial costs conducting internal investigations or offering severance packages to resolve disputes.
Organizations embroiled in harassment claims often suffer reputational harm. The negative publicity surrounding sexual harassment in the workplace can tarnish a company's image, making it harder to attract customers and top talent.
A McKinsey study found that about 80% of Gen Z consumers refuse to buy goods from companies involved in scandals. This erosion of trust doesn’t just hurt in the short term—it can have long-lasting effects on brand value.
Sexual harassment in the workplace and its aftermath disrupt employee productivity. The stress of dealing with or witnessing harassment can distract employees, lowering morale across the organization. Victims may experience psychological distress, leading to absenteeism and reduced focus, while other employees might disengage due to workplace tension.
Managers and HR teams must spend significant time handling investigations, which detracts from their primary responsibilities. If a claim escalates to legal proceedings, depositions and hearings can further disrupt business operations.
High employee turnover is a hidden but significant cost of sexual harassment in the workplace. Victims may leave their positions without filing formal complaints, fearing retaliation or disbelief. Others might quit if they feel management didn’t handle allegations adequately. On the flip side, accused employees are often terminated in line with zero-tolerance policies, creating further turnover.
Employee replacement costs—including recruiting, hiring, and training—can amount to 50% to 200% of the departing employee’s annual salary. These indirect costs, coupled with diminished employee trust and loyalty, can take a heavy toll on a company’s bottom line.
Learn more about zero-tolerance policies in this blog post >>
Employers must take proactive steps to prevent harassment and respond effectively if claims arise. Some strategies include:
Develop and enforce clear anti-harassment policies, including zero-tolerance provisions. Ensure policies are widely communicated and easily accessible.
Provide regular training for employees and managers to recognize, prevent, and address harassment.
Establish safe reporting channels and protect employees from retaliation.
Investigate complaints swiftly and fairly, taking appropriate action to address misconduct.
Foster a workplace culture that prioritizes inclusivity, respect, and accountability.
Sexual harassment in the workplace is a serious issue that affects everyone—not just the individuals involved in a claim. By taking proactive measures, businesses can protect their employees, preserve their reputations and avoid costly legal battles.
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Managing the complexities of sexual harassment in the workplace can feel overwhelming for small and mid-sized businesses. Axcet HR Solutions is a certified PEO that provides comprehensive outsourced HR services to help protect your company.
Our expert team offers tailored solutions, including liability management training, to ensure your leaders and supervisors understand employment laws and foster a compliant, respectful work environment.
Partnering with Axcet means having a dedicated team by your side—helping you build a safer workplace and focus on growing your business.
Learn more about how we can support your HR needs today. Schedule a consultation today.
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