What is the real cost of sexual harassment in the workplace?

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Nelly Mohale, head of human capital at Decusatio, and Ginen Moodley, founder of Moodley Attorneys, explain how sexual harassment in the workplace doesn’t only have financial implications, but also leads to emotional and reputational damage for both the parties and the organisation.

More than $20 million dollars: that’s how much WWE Boss, Vince McMahon spent on alleged sexual harassment accusations over the past two years. Despite the reported $3 million settlement he paid to a former employee after an alleged affair, McMahon agreed to reimburse the WWE for any expenses pertaining to the investigation of this allegation.

As of August 2023, McMahon had paid approximately $17.4 million to cover the costs… and that’s before WWE staffer Janel Grant accused McMahon of sexual assault, trafficking and abuse in a lawsuit in January of this year.

Unfortunately, sexual harassment is not confined to the entertainment industry and the US, it is a global phenomenon that is present across industries. In South Africa, for example, approximately 30 percent of women had experienced sexual harassment in the workplace according to a 2019 survey by the South African Human Rights Commission (SAHRC).

Despite the financial implications of these cases, sexual harassment cases lead to emotional and reputational damage, not only to the parties involved but to the organisation in question. Sexual harassment in the workplace is an urgent and pressing issue that demands unwavering attention.

Workplace sexual harassment defined

Sexual harassment in the workplace, as defined by the International Labour Law Association, is “any behaviour of a sexual nature that affects the dignity of women and men, which is considered as unwanted, unacceptable, inappropriate and offensive to the recipient, and that creates an intimidating, hostile, unstable or offensive work environment”.

It is important to raise awareness around this issue, as it educates employees and employers on unacceptable conduct in the workplace and fosters an understanding of respect. Sexual harassment can manifest in several forms, including physical behaviour of a sexual nature as well as verbal behaviour of a sexual nature.

Victims of sexual harassment are exposed to both emotional and psychological trauma that affects their personal lives as well as their work lives. This type of trauma can result in the onset of several mental health disorders if left untreated.

Workplace harassment can also erode trust and collaboration among employees. It has an impact on workplace culture that might negatively affect morale and operations. Employees need to feel safe in their workplace and feel as though they are treated with respect, and employers need to take the necessary steps to ensure that their workplace culture fosters inclusivity.

As a result of workplace harassment, employers will often see a decline in productivity as the employee’s morale and performance is affected. Toxic work environments foster negativity, low morale, and resentments.

Similarly, a sexual harassment case can have serious implications on a company’s reputation. Prospective employees and stakeholders are less likely to want to work with a company that has workplace harassment allegations held against them, as these companies could be perceived as providing an unsafe working environment for their employees.

Case in point

Take the sexual harassment case that was issued against Ford Motor Company of Southern Africa in 2023, as an example.

The National Union of Metalworkers of SA (Numsa) has publicly pressured Ford to take appropriate action against an accused manager. This case made the headlines of all the major South African news channels and put Ford in a bad light with their stakeholders, taking a toll on the company’s reputation.

There are several financial costs to the company that can come from workplace harassment suits. These can include the cost of ensuring that your company policy is up to date, and then ensuring that your employees are trained on this policy and have access to it. Should an incident occur within your business, normally it would be a part of your grievance policy.

An investigation would occur, preferably through a third party. A disciplinary hearing may ensue, and a claim for damages may arise which could run into millions of rands. It is in the business’s best interest to equip their employees with the appropriate policy and codes to prevent this kind of behaviour from occurring.

The Labour Relations Act and the Employment Equity Act prohibit sexual harassment in the workplace and simultaneously outline steps one can take when combatting this issue. Similarly, the Department of Labour issued the Code of Good Practice on the Handling of Sexual Harassment Cases (the Code). This Code is not a binding law, but rather a guideline for employers to learn how to appropriately deal with sexual harassment in the workplace.

According to Section 60 of the Employment Equity Act (EEA), “if the employer fails to take the steps necessary to deal with unfair discrimination or sexual harassment, the employer himself can be charged with unfair discrimination on the grounds of sexual harassment”.

There is a primary remedy available to victims of sexual harassment, which can be found in section 6(3) of the Employment Equity Act 55 of 1998, which treats sexual harassment as an incidence of unfair discrimination.

Prevention is better than cure

There are several steps employers and employees can take to prevent workplace harassment, including but not limited to:
1) conducting regular training sessions on sexual harassment. It is essential for employers to reiterate the consequences of such actions as well as outline the steps employees can take to file complaints.
2) developing a comprehensive sexual harassment policy. Having a clear policy that strictly outlines prohibited behaviour helps educate employees and provides reliable resources for reference when and if needed.
3) Involving management at all levels. It is important to ensure the commitment and support of all levels of management in implementing measures to prevent workplace harassment.
4) Promoting appropriate behaviour consistently. It is crucial to encourage all employees to maintain appropriate conduct at all times within the workplace.
5) Fostering a positive work environment. By cultivating an atmosphere where employees feel valued and heard, contributing to a positive and encouraging workplace is an important factor in preventing workplace harassment.

Perhaps other industries can learn from companies in the mining sector who are realising that ignorance is not bliss. By proactively reviewing workplace culture, these companies are bringing problems to light to put processes and mechanisms in place to solve them.

A review of the workplace culture at Gold Fields found half of the survey participants had experienced bullying, sexual discrimination, or racism in the past five years, while Rio Tinto, which counts Richards Bay Minerals among its subsidiaries, made headlines in 2022 when its external workplace survey found high levels of bullying, harassment and racism – as well as 21 incidents of actual or attempted rape or sexual assault.

Although these findings may seem gloomy, these companies now have the information they need to be better, and can be held accountable as they operate with transparency. Gold Fields’ interim CEO Martin Preece said in an interview with Media24 in August 2023 that growth comes from discomfort, and that he is certainly encouraged that they have the findings of the report out in the open – and that they are committed to building a better way forward.

The toll that sexual harassment takes on individuals, organisational culture, productivity, and the company’s reputation cannot be ignored. It is important for employers and employees to work collectively to cultivate environments that reject harassment, prioritise respect, and ensure the wellbeing of every employee.

By implementing appropriate prevention strategies as well as promptly addressing any incidents, companies can ensure that their ongoing efforts create workplaces where every individual feels valued, safe and empowered.

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