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Dr Sophie Henshaw is a work stress strategist, author and doctor of psychology with a particular interest in dysfunctional workplace relationships. For the latest articles, please refer to her latest blog site: www.freespiritedme.com

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Why A Workplace Bully Is Too Expensive To Keep

Posted by on in Essential Anti-Bullying Tips
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Bullied Manager 3

The most powerful argument you can make to get rid of a workplace bully is to build a financial case for why this person is just too expensive to keep. Surprisingly, it is a strategy that is rarely, if ever used and cost of bullying calculators are hard to find, hence I have put together my own for you to use. A financial case will take some time to prepare and requires due diligence in collecting the evidence. However, it trumps an emotional argument every time.

 

The person you should present your case to is almost always not the HR manager, but the person actually responsible for making financial decisions. You must go straight to the top and bypass the usual channels, to do this you will need to firstly ensure you have built a good working relationship with the powerbroker in your company. If the bully has already established a good relationship with this person, negotiating around that can be tricky.

 

Quite often in bully-prone organisations, there is an official organisational hierarchy, and then there is the shadow hierarchy. As part of your research, take the time to work out the shadow organisational chart depicting who the real power brokers are. For example, if the receptionist is sleeping with the CEO, then she may be much higher in the power hierarchy than her prescribed role in the official chart suggests.

Briefcase

By mapping who really has the power, if the person making the decision is not available to you, then the next best person to discuss your case with will be the one who holds the most influence with that person. You may not be a political animal, but the bully is and now it's time to play the game a little outside of your usual parameters.

 

One word of caution though: Be prepared for the organisation to not care about the bottom line about the cost of keeping the bully either. It always astonishes me when a company, who touts that profits for shareholders trump every other consideration, doesn't seem to care about this aspect of their bottom line. But it does happen.

 

Sometimes the denial runs so deep and the accompanying arrogance so grandiose, that there is no room for the truth to shine a light through the cracks. If what I've just described matches your experience, it's almost certain that the workplace is so toxic, you should give serious consideration to planning your most immediate exit to safeguard both your physical and mental health.

 

A great example of a powerful financial argument can be found in Bob Sutton's 2007 book, "The No Arsehole Rule". In it, he described a case in which a Silicon Valley tech company had an employee, Ethan (not his real name), who was consistently in the top 5% of sales performers. Unfortunately, he also regularly insulted and belittled co-workers, many of whom refused to work with him.

 

Within the space of five years, several co-workers had lodged "hostile workplace" complaints about him. To the company's credit, they did take action to remedy the problem. They quantified the costs of his bad behaviour over a year and deducted it from his bonus: it amounted to a total of $160,000.

 

The costs were actually underestimated though, because they didn't include all the fallout from his behaviour such as the physical and mental health effects on victims, time lost, impact on witnesses, negative effects of fear and the dysfunctional competition he provoked. However, the "Total Cost of Arseholes" (TCA) was calculated as follows:

 

Direct Costs Of "Total Cost of Arseholes (TCA)" (Sutton, 2007)

 

Time spent by Ethan’s direct manager – 250 hours:  

Time spent by HR professionals – 50 hours: 

Time spent by senior executives – 15 hours:  

Time spent by external consultants – 10 hours: 

Cost of recruiting and training new secretary:  

Overtime costs of Ethan’s last minute demands:  

Anger management training and counselling:

$25,000

$5,000

$10,000

$5,000

$85,000

$25,000

$5,000

TCA for one year:

$160,000

 

National Context: Statistics

We already know that the cost of bullying in Australia, has been estimated at somewhere between $6 billion to $36 billion per annum. From the research, we also understand that one in three workers have been bullied. Of those, 25% leave their job, most without doing anything about it.

 

Further, one in two workers witness bullying and 20% of witnesses leave their jobs. For every case reported, 8-20 cases go unreported. 44% say that organisation does nothing to resolve the issue and 18% say the organisation has made the situation worse. Over 70% of bullies are managers, yet they are often protected because (like Ethan) they are perceived to be high-value employees. In almost 50% of cases, bullying has gone on for more than a year and 30% of all bullying is mobbing where a person is targeted by a group of bullies rather than just one (Faure Brac, 2012).

 

Cost Of Bullying: An Example

Using these statistics as an a priori assumption, let's use the example of a small business with 10 employees (each with a $50,000 per annum salary) that turns over $1,500,000 per annum. Let's also assume the following:

  • The cost of employing staff is 1/3 x $1,500,000 = $500,000
  • Business expenses are 1/3 x $1,500,000 = $500,000
  • Business profits are 1/3 x $1,500,000 = $500,000
  • There is one bully in the team of 10
  • 30% staff are bullied = 3 employees directly affected
  • ==> 2 remaining bullied employees now only work at 40% productivity due to "presenteeism"
  • 5 employees witness it
  • Turnover is 1 target and 1 witness quit (but problem remains)
  • Lost productivity within the team means the remainder now work at 70% capacity. This is a conservative estimate based on the "soft" costs to business, that are not as easily gauged in a concrete way, but include:

==> Less innovation and creativity,

==> Less constructive ideas and feedback,

==> Less learning from mistakes

==> Less forthright discussion / honesty

==> Less motivation and energy

==> Reduced cooperation and cohesion

==> Employee potential blocked

==> Increase of physical and mental illness

==> Cost of retaliation

==> Management resources to deal with the bullying

==> Burnout (physical and mental)

==> Medical expenses

==> Loss of reputation

==> Failure to attract best and brightest staff

==> Less customer satisfaction

==> Less repeat business and referrals

 

Total loss of productivity within the entire remaining team (8 members) = -43%

 

Return On Investment (ROI) For Mental Health

In addition to calculating the cost of bullying, you may also want to make your case even more powerful by demonstrating how much more profitable mentally healthy workplaces are.

 

In fact, profitability has been shown to increase by 230%.  A ground-breaking study conducted by a Beyond Bullying Australian and Price Waterhouse Coopers collaboration demonstrated that for every dollar ($1) spent on implementing successful actions to improve mental health, there is on average $2.30 in benefits to be gained by the company. 

 

Other benefits were improved productivity, via reduced absenteeism and presenteeism as well as lower numbers of compensation claims.   When multiple targeted actions were implemented, the effects were cumulative and there were further increases in ROI.

 

Productivity gains from different actions varied depending on the industry and size of a company.  Actions were more effective in smaller companies because the most critical success factor was employee participation.   In large companies, actions were best implemented within distinct teams.  

 

However, leadership and management support were crucial for effective implementation and when it was present, there were substantial improvements in the culture and mental health of the workplace.

 

The full report on key findings can be downloaded here

 

 

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Dr Sophie has experienced bullying both personally and professionally.  As a new psychologist starting out in a government organisation that had “a zero tolerance to bullying”, she was the target of a serial bully who was never held to account.  Professionally, Dr Sophie has treated many clients suffering severe and chronic symptoms of depression and traumatic stress as a result of being bullied. She has also conducted numerous interventions in workplaces with organisational cultures vulnerable to bullying.


Dr Sophie graduated from Murdoch University in Perth, WA in 2000.  She initially worked in a variety of settings including maximum-security prisons, private hospitals and with GPs before going onto full-time private practice in 2005. 

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