August 13, 2018  

Why Sexual Harassment Prevention Is Now a Top Business Priority

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What are the costs of sexual harassment in the workplace?

Companies have long known that sexual harassment can lead to costly lawsuits, which are now valued at up to $7.6 million per case. But since the explosion of #MeToo and the accusations against Harvey Weinstein, the costs of workplace misconduct have grown even further. Today, harassment is no longer just a cultural or legal issue, but a financial and brand issue that reaches every corner of the company.

Story after story has shown that when a brand loses credibility over sexual harassment in the workplace, they also risk losing their hard-won earnings. Uber has lost nearly 15% of its market share over the two years of its harassment scandals. After it was announced that Steve Wynn had received multiple allegations of sexual harassment and assault, Wynn Resorts lost $3.5B in company value.

Now, the sheer force of the #MeToo movement and the cost of sexual harassment allegations have made sexual harassment in the workplace a top concern for company boards. How do we know? We have historical and numerical data that demonstrate two unprecedented changes.

Here's why sexual harassment prevention is a top priority

1) Boards are firing accused executives faster than ever before

Board members have become deeply concerned about sexual harassment, and are finally moving more swiftly and openly to lower the stakes. According to new studies in crisis management, boards are firing executives accused of misconduct at record speed, and less euphemistic about why an executive is leaving the company than ever. CEOs are now being removed 3x faster than during the Weinstein accusations, and this year, an estimated 8x the number of CEOs will be fired for misconduct compared to the previous year. This indicates that for boards, sexual harassment is now a genuine business risk.

 Bloomberg’s data visualization of a new study on time to fire. Interact with the data  here .
Bloomberg Media Group’s data visualization of a new study on time to fire. Interact with the data here.

2) Boards are taking back money for revelations of sexual harassment

Sexual harassment can inflict so much damage that lawyers have added ‘Weinstein clauses’ to merger agreements, stipulating that buyers have the right to take back their money if revelations of wrongdoing arise. Lawyers in the world of billion-dollar corporate mergers have said that due to its reputational and financial costs, sexual misconduct is now in the same category of risk as foreign government bribes and IP fraud. The material consequences of sexual harassment have risen, and companies that aren’t doing everything in the power to protect their culture will have a disproportionately high risk of financial loss.

The cost of sexual harassment is skyrocketing

The fact that boards are firing faster and speaking louder about sexual harassment shows that the costs of sexual harassment aren’t just noteworthy—they’re seismic. As the connection between a company's culture and its finances are tied closer than ever, the way you deal with toxic behavior in the workplace, including sexual harassment, is now inseparable from your organization's bottom line.

Companies are owning up to faults and taking action faster than ever when CEOs misuse their power. If you turn a blind eye to identifying and preventing toxic behavior, you’re risking more than legal fees and turnover—you risk damaging your company's 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 speaking with their wallets, and what they're saying is loud and clear: the longer you wait to deal with sexual harassment, the more it’s going to cost.

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