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Compensation Highlights: Workplace Harassment Can Impact Corporate Culture AND Compensation

Workplace Harassment Sexual Harassment #MeToo #TimesUp

As one of our valued clients, we want you to know that workplace harassment – which is not necessarily limited to sexual harassment – is being recognized as far too commonplace. It seems like every day, another high-profile person admits, or is accused of, improper behavior, misconduct, or worse. Now, the #MeToo and #TimesUp movements have given voice to victims and those who seek to empower the powerless. But workplace harassment isn’t just a Hollywood issue or a Fortune 500 problem or even merely a political hot potato; it’s a toxic reality that can poison any corporate culture and impact top-to-bottom compensation. Here’s why corporate leaders, HR departments, and compensation professionals must take workplace harassment seriously:


How Workplace Harassment Differs from Sexual Harassment

While sexual harassment is the issue most often spotlighted, it is not the only type of misconduct in the workplace that can jeopardize corporate culture and a company’s bottom line. Other forms of harassment your company could be liable for include bullying and tolerance of a “toxic” environment. Generally speaking, whenever a member of a protected legal class feels threatened, victimized, marginalized, demeaned or mistreated, workplace harassment could be a factor. However, even if an affected individual is not part of a protected class, your company could still be at risk for harassment claims and legal actions. At the very least, these could severely damage your brand and undermine the health of your corporate culture.


What Workplace Harassment Really is All About

Regardless of the type of harassment or misconduct in the corporate environment, it typically has, at its root, the issue of power. For example, harassment may be encountered when one person tries to use their position or influence to exert undue power over another in a way that leads the victim to feel threatened or helpless. In the past, many victims (most often, women) have believed they had no recourse to speak up or file a complaint. The #MeToo and #TimesUp movements have given many victims the knowledge that they are not alone; but those currently speaking out may be just the vocal minority, with many more still in the shadows.


How Workplace Harassment Could Impact Your Company’s Compensation

In addition to damaging your company’s brand and culture, employee and executive compensation could be at risk, too. After all, if your company must spend untold (and likely unbudgeted) funds to defend claims of workplace harassment, all financial buckets may need to be tapped to help pay for investigations or defense against the claims. Don’t count on Workers Compensation insurance to help defray bottom-line expenses related to workplace harassment, either. According to the Workplace Bullying Institute, in most states, Workers Compensation insurance is unlikely to cover claims of workplace harassment that have psychological causes and effects.

If harassment claims are found to be true, of course, monetary damages (actual and punitive) may be awarded to the victim or victims, further impacting corporate funds and compensation. And don’t forget that if your workplace is seen as discriminatory or toxic, your company may have a tougher time recruiting talent within market rates.


How to Minimize the Risks Associated with Workplace Harassment

With heightened awareness of the issue of workplace harassment and a new sense of empowerment for victims, it has never been more important to take positive and pre-emptive action. Gregory and Appel HR executive Karl Ahlrichs recommends some basic steps to help strengthen your company’s policies and practices. For example, he notes the importance of diversity and inclusion in “fostering a business culture that respects human dignity. He also recommends doing a “cultural audit” and using the findings to “shape more individualized training,” along with using other tools to “improve reporting, prevention and compliance.”

Ahlrichs emphasizes, too, that it is essential to “build trust in Human Resources,” so HR can be “seen as a trusted ally.” Obviously, this takes effort and commitment from corporate leaders and HR professionals.

Anti-harassment workplace training is also a good idea. Because the Equal Employment Opportunity Commission (EEOC) recently made prevention of “systemic harassment” a strategic Enforcement Plan goal, proactive training might help mitigate some level of corporate risk if a harassment claim is filed with the EEOC. How important is this to the EEOC? Their Plan notes that “more than 30% of the charges filed with EEOC allege harassment.” What’s more, the EEOC notes that “a claim by an individual or small group may fall within this priority if it raises a policy, practice, or pattern of harassment,” and that “the EEOC believes a concerted effort to promote holistic prevention programs, including training and outreach, will deter future harassment.” Thus, it seems prudent to conduct anti-harassment or workplace respect training annually or at least every two years.


Bottom Line:

Workplace harassment in all its forms, including sexual harassment, is a big problem that can no longer be kept quiet or swept under the rug – nor should it be! But as victims feel empowered to speak up, speak out, and demand justice, the risks for corporations are significant. Not only might their brands and corporate cultures suffer, they can also incur increased costs for recruiting and retention, even as funds must be diverted to defend harassment claims. So, it is crucial that corporate leaders take the issue seriously and commit to fostering workplace environments where employees feel valued and respected, but never threatened, marginalized or powerless.

To learn more about how your compensation programs might be at risk due to potential workplace harassment issues, contact us today at 317.589.8529.


Cassandra Faurote


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