Canadian HR Reporter

CANADIAN HR REPORTER OCTOBER 2019 10 NEWS Université Laval in Quebec, and co-author of the study. "It seems intuitive that firms would do a lot of things to prevent it, but... some firms are somehow doing half-hearted attempts to prevent it, either because they don't think sexual harassment is pervasive or because they think it's too costly… so this is our at- tempt to show pure economics [and] economically motivate these people to say, 'Sexual harassment has some very significant conse- quences, economically speaking, and, therefore, that's yet another reason why you should prevent it.'" Background The researchers searched the anonymous comments of em- ployer review sites Indeed and Glassdoor for words such as "sex," "sexual," "abuse," "assault," "mis- behaviour," "harass" and "harass- ment." Examples included "e store has a lax policy for sexual harassment and disrespectful management" or "I quit due to sexual harassment and discrimi- nation from my branch manager that was not dealt with after mul- tiple complaints." The final sample involved 1.65 million reviews, covering about 1,100 firms. e research- ers counted the number of times these comments appeared in company reviews over the course of the year, divided that by the to- tal number of reviews and then turned that into a percentage to figure out which of the companies had the most harassment, says Au. "We were then able to sort them into really bad sexual harassers and people who probably aren't that bad or have no reports of sexual harassment. After dividing those people into those groups, we were basically able to do some portfolio analysis where we take these bad companies or the high sexual ha- rassment firms and put them into one portfolio and normal firms or regular firms into another port- folio. And then we compare the returns over time," he says. "If you look at the normal port- folio, it does great; it earns like 30- or 40-per-cent returns. It's very impressive. If you look at the high sexual harassment firms, basically, it doesn't even go up — it actually falls by about 10 to 20 per cent over the course of that period. So, we're talking about a large gap." Stock returns are affected by a variety of known factors or char- acteristics, such as company size, whether it's a growth company or a value company, speed of growth and types of profitability, says Au. "Even after controlling for all those known characteristics that affect stock returns, this effect still remains in a large, substantial basis. Most of our calculations are showing roughly a 20-per- cent decline in firm value after we control for all the risk factors." e researchers controlled for a lot of factors, says Tremblay. "For example, we control for past profitability, we control for employee satisfaction, for em- ployee treatment, unionization, the age of the firm, the size of the firm, and so on… And the stock return performance of the worst offenders still remains significant- ly lower than the rest of the firms." 'Culture of permissiveness' e issue is not necessarily how much harassment an employer has but how it is dealt with, says Au. "ere seems to be some sort of culture of permissiveness or a culture of denying sexual ha- rassment. And that lets the rot spread," he says. "It's not about one or two people [who are] re- ally causing the issue; it's the fact that these individuals are all over the company and people aren't helping them. And then, on top of that, the sexual harassers learn that they can actually continue on the behaviours and that spreads throughout the company and causes them a lot of problems." e results speak very loudly to CEOs or other people who are more numbers-driven, says Tremblay. "People might say, 'Well, yeah, it would be nice, but the cost ben- efit trade-off is not worthwhile for our firms; we have to respond to our shareholders.' But… if we do crunch the numbers, actually, these issues, they are important, not only for the profitability or the numbers, per se, or the market capitalization, the stock returns, but also because your productiv- ity, your negative consequences, they do have an impact. So, it's re- ally just quantifying this impact. Because, too often, people are ignored or shuffled away… it's not properly dealt with." e study should also help HR and management when it comes to building a business case for greater investment in preventing harassment, she says. "You cannot ignore it, basically. If, until now, you've ignored it for whatever reason — because the arguments about the negative consequences were not compel- ling enough — then the economic argument, I think, is yet another view to make the point or make the case that investing in preven- tion is important." Having this kind of research can help with the cause, accord- ing to Ryan Wozniak, senior vice president of legal and operations at Peninsula Employment Ser- vices in Toronto. "In the business context, a posi- tive financial outcome is always a good motivator and tends to trig- ger change and adaptation," he says. "If you operate a business that makes a concerted and proac- tive effort to stamp out workplace harassment and foster a culture of productivity and employee har- mony, you are very likely to experi- ence — in the long run — financial benefits as a result of that, in the form of less or lower direct costs, in the form of legal fees and absence and employee attrition costs, and probably better brand recognition and better brand power." Most businesses treat work- place harassment as a serious issue that has to be proactively tackled, and that has a direct fi- nancial benefit in the long run, says Wozniak. "It fosters a culture of productiv- ity and collaboration and employee harmony," he says. "And that's very important, especially in larger businesses where you have teams working together, teams working on large projects across different divisions — it's very important that people are able to collaborate, are able to get along and able to work comfortably and peacefully. And, it also helps you keep top perform- ers and helps you keep good em- ployees. Nobody wants to work in an environment that's toxic or plagued by belligerence or harass- ment or bullying." Long list of consequences Other costs of harassment include legal claims — such as compen- sable claims for chronic mental stress or for intentional infliction of mental distress, says Wozniak. "When you're hit with a legal claim, there's obviously the direct costs you incur by way of legal fees and legal representation — if that's what you require — as well as the additional cost that may come in the form of a judgment or fine or remedial order." en there are employee ab- sences that may involve workers' compensation claims or lost-time injury claims, along with disrupt- ed service levels or temporary staffing costs, he says. "[ere are some] individuals who may claim, for example, con- structive dismissal because of an untenable workplace might pur- sue a civil claim on the basis that they've been harassed to the point of their existing work relationship not being tenable." Another issue involves the Health and Safety Act in Ontario, says Wozniak, which says an em- ployer that fails to investigate or conduct a reasonable investiga- tion of an incident of workplace harassment can be required to hire a third-party investigator at its own cost. Aside from having policies to address incidents of harassment — including a process for inves- tigating and adjudicating and, if necessary, taking disciplinary action — there should be various training platforms, both under ap- plicable health and safety legisla- tion and provincial legislation, but also within their own cultures and work environments, he says. "By promulgating a culture of confidentiality, of disclosure and of proactivity, employees, in turn, trust their employer, and that open communication chan- nel will then allow the business to, in the long run, go a long way to eliminating or greatly reducing the amount of workplace harass- ment that occurs." HR can build business case for greater investment HARASSMENT < pg. 1 Google has promised to overhaul its sexual misconduct policies after employee protests over its treatment of executives accused of sexual harassment. Credit: Uladzik Kryhin (Shutterstock) ipm Institute of Professional Management 2210-1081 Ambleside Drive, Ottawa, ON, K2B 8C8 Tel: (613) 721-5957 Toll Free: 1-888-441-0000 valid until November 15, 2019 Corporate Group Subscription O er IPM's Online Management Encyclopedia & Workplace Today™ Details at : www.workplace.ca/CanHR-Reporter.html $240 regular $800 ... save $560! 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