The cost of sexual harassment is much higher than you’d think

Written by Jemima Lovatt.

Behaviours shift because human beings are social animals and so we follow each other. This is most evident when it comes to money. If you can buy a product or service cheaper somewhere else then the vast majority will move to the new supplier or provider. This applies to politics just as much as to commerce. When trying to win American votes as campaign strategist to Bill Clinton, James Carville identified one core strategy: “the economy, stupid!”

This is why one of the main behaviour shifts and social changes we need to see in addressing abuses of power and sexual harassment is an understanding of what these issues cost our economy. You might find this an odd connection; what does someone putting their hand on someone else’s knee actually cost anyone in terms of pounds and pence? We can quite easily see the moral cost to the individual’s credibility but is there really a financial cost as well?

I’m afraid the answer is yes. Here I have explored some of the biggest costs to business and the public purse.

1) Sexual harassment lawsuits

The cost of defending or settling a sexual harassment claim can run into the thousands and sometimes millions of dollars. The Equal Employment Opportunity Commission (EEOC) records a cost of $195 million paid out in public penalties by private companies as a result of sexual harassment cases between 2010–2017. This figure does not include the cases settled privately. The average harassment claim settled outside of court will typically run an organisation anywhere from $75,000-$125,000.

2) Taking out insurance

One development in response to increasing sexual harassment claims is for employers to take out Employment Practices Liability Insurance. In 2016 alone, U.S. companies spent an estimated $2.2 billion on such insurance policies.

3) Attracting top talent

Many will not pursue careers where they feel there is a likely chance that they will experience harassment. Thus these industries and businesses lose out on the best talent and miss the many benefits of a diverse workforce.

4) The cost of absences, losing employees and low productivity

There is a dire lack of research on this topic. In fact the last study conducted was back in 1988. It estimated that the average Fortune 500 company loses $6.7million per year due to sexual harassment. This includes time taken off by the victim and alleged perpetrator in relation to the harassment itself as well as time taken by employees across the organisation to attend court.

Women feel disgusted and will leave the organisation. Research produced by the blog ‘Work In Progress’ showed some analysis of the percentage of working women who change jobs between 2003–2005. Of those who were targeted for harassment, 80% changed jobs. Of those who were not targeted for harassment, 54% changed jobs. In relation to impact on recruitment and retainment of talent, there are many anecdotal tales of women who feel that they could not change the culture and so would rather work elsewhere.

5) Progression and career development

Sexual harassment will often knock the victim off course and nearly always at a formative stage of their career. They want to get out and so will accept any job even one that pays less. Even if they do stay within the organisation, many find themselves ostracised and face career stagnation. A 2015 EEOC studyestimates that 75% of all workplace harassment claims go unreported mostly because victims feel shame or fear. An EEOC study from 2003 found 75% of employees who spoke out against sexual harassment experiences retaliation when they spoke up.

6) Cost to the public purse

Bob Filner was Mayor of San Diego from December 2012 to August 2013. He resigned amid multiple allegations of sexual harassment and later pleaded guilty to the charges. In more recent times, Michael Fallon and Damien Green resigned amidst similar allegations. What San Diego, the Ministry of Defence and the Department of Work and Pensions all have in common is that they all lost out as a result of the drain on resource that simply firefighting allegations and the press will cause.

When I began my research, I stumbled across an article published on 1 August 1996 in the Foundation for Economic Education entitled ‘The Economic Costs of Sexual Harassment’. I was two years old when that article was published and yet, all these years later, here I am making the same arguments that the author, Elizabeth Larson, made then. I hope business leaders and politicians wake up and smell the money.

So here are the societal shifts and changes that businesses and governments should be implementing in order to save the moral and financial costs of sexual harassment and abuses of power.

1) Prevention is better than cure

Business and government should be acting as allies to galvanise social change. Every organisation must have a zero-tolerance policy on sexual harassment at work that is followed through with a fair process for dealing with complaints. Where there are consequences, behaviours will change.

We need a cultural shift in how companies deal with the problem. Don’t spend millions on lawsuits or insurance; spend a much smaller amount of money educating your workforce and putting the checks in place to ensure harassment doesn’t happen in the first place. Not only will this see a reduction in the number of claims against a business but it will also stand in your favour should one outlier case occur. Furthermore, it will significantly improve the experience of working for your business.

2) Speaking up and calling out abuses of power

In 2015 The New York Times reported that Harvey Weinstein was questioned by police after a 22 years old woman accused him of touching her inappropriately. The woman was Ambra Gutierrez. For her, speaking out and cooperating with the New York Police Department meant putting her career on the line. Given the connections and protection Weinstein enjoyed, her claim was very likely to be squashed along with her chances as a model. Speaking up and calling out abuses of power is much easier said than done.

Even now after so many allegations have been made, those who speak up are subject to an intense level of scrutiny. I support innocent until proven guilty but it applies to the accuser too. So often it is they who face having their name dragged through the mud before any apology is made.

Kate Maltby is an excellent example. She is accused of being a self-promoting and desperate individual who is prepared to attack a family friend, Damian Green, of sexual harassment at work. Somehow it is totally unacceptable that she is making this claim because her parents were friends with Mr Green. Take a moment and apply some logic to the situation. My parents would not be happy if a family friend made a sexual advance on me when offering career advice. In fact, they would not consider that person to be a family friend any longer. And Miss Maltby’s parents spoke out to that effect. If anything, the context makes it even worse on the part of Mr Green who was not only taking advantage of position and power but also of a perceived protection afforded by the nature of their familial connection.

It’s all very well telling people to speak up and call it out but it simply isn’t that easy for most of us. Businesses should appoint an independent advocate for ending sexual harassment to whom any employee can raise a concern. There should be clear processes in place for raising a complaint.

3) Supporting women in leadership roles across organisations

Role models within organisations are essential if women, of any age, are going to feel comfortable at work and come to expect a shared recognition of what behaviour is and is not acceptable.

Businesses are keen to say the right thing when it comes to gender equality. I work for an organisation that offers thought-leadership on precisely this issue to the legal sector. Yet our entire Executive Leadership Team is male and only two people on our Senior Leadership Team is a woman. We’ve had a handful of women elected as our President whilst the vast majority are men. Men make great Presidents but this doesn’t reflect a sector which has nearly a 50.2% female presence.

3) The role of young people in building a sustainable and inclusive future

Young people offer a huge amount of hope for the future. Millennials and Generation Z have experienced more equality and therefore don’t fear bringing their whole selves to work and this includes all elements of being a man or a woman. Leadership is no longer about being the first up the mountain; it involves bringing everyone up with you. It’s not just about making it but also about how you get there. What you do and how you do it matter equally to the next generation of leaders and followers.

Inspiration for the future

There are some fantastic examples of young people taking action to achieve gender equality such as:

Eldine Chilembo — Eldine is a maritime professional promoting the participation and engagement of women in the male-dominated maritime sector in Angola. Eldine co-founded the Angolan Chapter of the Women in Shipping and Trade Association (WISTA-Angola). She is actively working with the Angolan Women’s Maritime Association and Women in Maritime Africa (WIMA) to enhance oopportunities and break down barriers to increase opportunities for women in the transportation sector.

Ludy Tatiana Piraban Guiterrez — She is the CEO of Fundacion Somos uno por Casanare which fights for gender equality in Colombia. She has helped approximately 100 women in the last 2 years who have been victims of Colombia’s conflict by holding workshops and networking events to help them develop business and leadership skills. She has also been promoting the creation of a female empowerment policy for the past 3 years.

Abhinav Khanal — He is the co-founder and CSO at Bean Voyage, a venture that supports female coffee farmers in communities around the world — women are currently doing 70–80% of the work in the coffee farming sector. Abhinav specifically works with women in Nepal and Costa Rica. Bean Voyage ensures that female coffee farmers receive a fair price for their product, assists women in scaling up their projects through a microcredit system and organises workshops for local communities.

Sally Hasler — She is the International Engagement Manager for the Department of Premier and Cabinet in Melbourne, Australia with gender equality as a major focus of her work. Formerly a Senior Manager at The Women’s Foundation Hong Kong, she led the Foundation’s women on boards strategy that aimed to position Hong Kong as a leader for board diversity and managed the launch of the 30% Club Hong Kong — a group of 60 chairman champions for gender diversity.

We are living in a fractured world where businesses will pay millions to solve a disgusting problem that they could have prevented in the first place. In creating a shared future, we need business leaders that stand firm and recognise the value of a zero-tolerance approach to sexual harassment at work and the value of this broader societal shift across society which will create greater equality in the home and the community.

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Jemima Lovatt is Council Secretary at The Law Society. A graduate of University College London, she was Development Director of the EDV Global Foundation, a world leading organisation in addressing domestic violence and working to see it eliminated. In January 2017, she was awarded an Associate Fellowship of the Royal Commonwealth Society for her international work on domestic violence. She now leads the One Young World Working Group on ending domestic abuse.