As the days go by in 2020, more and more businesses are expressing worry about the economy, and the ability to survive a recession. Unemployment stands at record highs, and workers are being furloughed, laid off, and reduced each day. Employers, while in this cost-cutting mode, might be tempted to scrimp on the response to workplace misconduct. That would be a costly mistake.
In 2008, there was a significant recession. Some might be tempted to think that when a recession occurs, workplace claims decline. Fewer people are working, those who are working are grateful to have the work, so fewer people would lodge complaints and sue their employers, right? That thinking is wrong. According to studies in 2008-2010, workplace claims rose significantly in several areas.
According to EEOC statistics, age discrimination claims rose during that period by 29%. This makes sense, given that there were many layoffs, and some might have perceived an adverse impact on older workers.
Many also tend to think narrowly and consider only sexual harassment claims when assessing what types of workplace misconduct claims should be investigated. But there are so many more types of claims that should be investigated and remedied. History teaches us that other types of workplace misconduct should be investigated, and without a resolution, can cost organizations substantial amounts. For example, in the last recession, there was a significant spike in whistleblower claims about fraud and waste. Without a credible investigation and resolution of such complaints, such misconduct could continued unabated, and cost organizations millions.
In addition, the types of claims seeing a significant spike included retaliation complaints. Retaliation is one of the highest reported types of claims at the EEOC. It is also one of the deadliest in terms of potential cost for the employer.
As another example, the current pandemic is giving rise to a whole new series of claims of discrimination and harassment, including racial and national origin harassment (Asian) and those types of complaints will need to be investigated as well. https://www.abajournal.com/web/article/how-can-employers-stop-discrimination-during-the-coronavirus-pandemic
When employers think about cost, they often consider only hard dollar costs like the cost of lawsuits and court judgments. Those costs can be significant. But the cost in terms of efficiency, morale, and other intangible costs can be more astronomical. In my book,Preventing Workplace Harassment in a #MeToo World, I dedicate Chapter 3 to The Business Case for Prevention.
I talk about the cost of workplace mistreatment in terms of employee morale, job-related illnesses and health outcomes, psychological harm to the victim of misconduct as well as co-workers, and other types of intangible harm. Businesses already understand the cost of not maintaining a safe environment to prevent on-the-job-injuries, but preventing misconduct that can be harmful to the workforce is just as important. Even more important, when misconduct is allowed to continue, it reduces the efficiency and effectiveness of the workgroup, thus further depleting the bottom line productivity. Just as one example, a study published in Health and Stress estimates that bullying and abusive behavior in the workplace costs organizations $300 billion annually in lost productivity, absenteeism, turnover, and increased medical costs. The business case for stopping such misconduct is compelling.
A good investigation of misconduct, allowing resolution, can prevent and/or reduce these significant costs up front. The biggest mistake that an organization could make during a recession is to choose to ignore misconduct and fail to investigate. Worse yet would be to try to cut costs by not bringing in a neutral third party investigator when the situation demands it. (Check out my blog post from February 15, 2019 below to see when an external investigation is needed.) Spending a few thousand dollars to conduct an investigation could save hundreds of thousands into the future.