Calculating Costs to Employers

Preliminary Considerations

Time period: Costs should be calculated for the weeks or months (or years) that the bullies operated with impunity. It will shock executives to learn how long the losses accumulated without being noticed or addressed.

Affected workers: Individually-based cost estimates calculated below should pertain to all the people directly targeted for bullying plus those who were aware of it and indicated a desire to quit, transfer or took time off to repair their health.

Turnover

Even in tough economic times, when job candidates outnumber positions open for hiring, employers still do not want turnover, especially the need to replace the best and brightest (the bullied ones).

Turnover costs include expenses to announce the job opening, headhunter/recruiting firm fees to recruit worthy candidates, time spent by managers and staff to meet all candidates at meetings while getting no work done, hiring bonuses/incentives, moving expenses (?), and the harder-to-calculate lost production during the entire process that must be made up by coworkers.

Use this calculator below to estimate the cost to your employer of sustaining bullies in the organization.

Essentially, it’s the cost to your employer of doing absolutely NOTHING.

References:

13% – from 2021 WBI U.S. Workplace Bullying Survey.
67% – from 2021 WBI U.S. Workplace Bullying Survey.
50% of salary (or full compensation value) of affected individuals, a very conservative estimate

Lost Opportunity Cost

We know that adults targeted for bullying at work pose a threat to their bullies. Envy and jealousy are two powerful motives for bullying. That means that when the more talented target is driven from work, either through termination or constructive discharge or quitting, the company loses the value that worker created.

In many industries, you can affix dollars and cents to the loss her or his departure represents. For instance, if that person was responsible for 5 clients that produced $1.4 million in revenue, that account and that money is lost to the employer. The bully (bullies) cost the company that much money by tormenting that target. Include the lost revenues attributable to the talented target to the total.

Absenteeism and Presenteeism

Targets tend to make one of two choices: use all paid time off (sick leave, vacations, holidays) or never take time off (for fear of losing their jobs while away).

Most American employers do not give PTO. Regardless, for the sake of their mental health, targets stay away from work to preserve their sanity.

Estimate the total number of days (and hours per each day) targets and others missed work to avoid being confronted by the bully.

To calculate the Absenteeism cost, multiply the hours away from the employer by the hourly rate. [For salaried exempt workers, divide the annual salary by 2020 to find the hourly rate of pay.]

Presenteeism, originally a reluctance to stay home sick, can also be considered the trend of bullied workers not being able to find another job elsewhere with equivalent pay. So, they stay, show up on a daily basis, but they are present only in body, not spirit. They are the antithesis of an “engaged” worker. They are disgruntled, disgusted and desperate (the “3-D”‘s) to be somewhere else.

One suggested Presenteeism cost estimate method would be to count the number of “3-D” employees, ascertain their hourly wage and number of hours worked during the entire bullying episode. Then cut that value in half. That would be the cost of unproductive workers.

Litigation, Settlements and Severances

An employer responding to a credible threat of litigation (bullying-related or not) will have to mount a defense. That defense may be done by an internal legal team, if the employer is large. In those cases, try to ascertain the hourly wage of the attorney-employees. Then, calculate how many of them are involved. Finally, estimate how much time they all spent dealing with the case — responding by letters, meetings, and mediation sessions. The total would represent the costs of mounting a defense.

Many employers compel bullied targets to participate in mediation or arbitration. Associated costs include the fee paid to the dispute resolution professional and hourly costs to prepare managers.

Smaller employers do not have legal staff. They retain an external legal firm when they are threatened with a lawsuit. Having dealt with this phenomenon as an expert witness many times, it is safe to estimate this cost at $50,000 at a minimum per complaint or lawsuit. Remember, those attorneys usually conduct complaint-related investigations.

If a complaint is actually filed in court and a lawsuit ensues, defense costs escalate rapidly. Filing costs, depositions, transcripts, investigation costs all combine to raise a modest defense to $60-100K years before a trial can be scheduled. Trial costs raise the totals even higher.

Because costs of litigation and pre-trial defense are so great, most employers are advised to settle. They pay complaining employees to shut up. They purchase silence with a “gag clause” in the settlement contract. Your goal is to find out who has been paid a settlement and for how much. Many will have left their jobs. They probably cannot tell you exactly what they were paid, but you can play the “hot/cold” game with them as you guess the approximate size of the settlement. Then, add all the settlement costs you discover.

Settlement payments are in addition to litigation defense costs estimated above.

Workers Compensation

and Disability

Insurance Claims

Workers compensation costs are covered by employee payroll deductions and employer insurance paid to state compensation systems. The same is true for disability insurance. However, employers willingly incur additional costs by challenging the WC and disability claims made by injured workers. The challenge is nearly automatic when the claim involves stress from the job, anything even remotely psychological. The WC or Disability claim is based on an inability to work.

The (always) doubting employer hires a firm to investigate “fraud.” The firms stalk the claimant and follow them every time she or he leaves home. Any outside activity is videotaped and provided to the employer who is looking for a way to discredit the claimant, to say the claim is fraudulent. Try to estimate such costs when you confirm that employees were filmed while they had pending WC or Disability claims. Call the firms and solicit their rates.

The Total Tab

Turnover + Opportunity Lost + Absenteeism + Presenteeism + Legal Defense Cost + Dispute Res. + Trial Costs + Settlements + WC/Disab Fraud Investig = The Routine Cost of Allowing Bullies to Harm Others with Impunity.

It all adds up.

What to do with your findings. Take the total estimate with cost breakdown in the various categories to the highest-ranking manager or executive you can find who is not loyal to, related to or known to be supportive of the bully (bullies). Do your homework. Try to find someone who still cares about the bottom line and running an honest enterprise. Ask for a 15 min. meeting with that person to “share ways to significantly cut costs for the company.” State your years of experience working there and familiarity with services and products. Present the figures. State that the losses are attributable to the named individual or group. Ask that they be sanctioned, punished. Ask that you be put out of harm’s way in a safe position with no loss of pay or status. If that is not offered to you, leave the company then and there because no one will stop the bully for you. You were too good of an employee to have given your talent for so long only to be dealt with as you have been. Leave with your head held high. Your departure is their loss.

Important

Caveat

It is critical that you control the nature of your departure. Do not leave without putting up a fight. After all, the bullying you neither sought nor deserved, denied you control of your work life. Reclaim that control by having the “business case” cost estimate available to use. Do not leave in silence. Blast them for the stupidity of losing so much money (profit motive in private sector, balanced budget with taxpayer dollars in government). All preventable losses that endangered the workplace culture.

The caveat is that we have seen over the years that C-suite dwellers and public sector administrators love their bullies more than being responsible for fiscal competence. That is, few seem to care about the financial losses attributable to bullying. To them, it’s a routine cost of doing business. Maybe the taxpayers and shareholders would be the more receptive audiences for the “business case” message.