The cost of bullying, harassment, and misconduct in the workplace

Do most people who notice signs of workplace misconduct deal with it in silence? Research from LRN suggests that when it comes to witnessing misconduct in the workplace, people who see something often do say something. Of the 40% of respondents to the LRN Benchmark of Ethical Culture who said they had seen unethical behavior or workplace misconduct in the past year, an overwhelming majority (80%) went on to report it to either management or HR.  

Unfortunately, that still leaves around 20% of employees who failed to report misconduct when they saw it. As a result, misconduct at work may go unnoticed. Bullying or harassment may continue. Employees may find themselves dealing with serious ethical violations and other problems as part of their regular workdays. Not only can this cause serious challenges to the employer's reputation, it may mean a high legal risk. 

The financial cost of failing to report misconduct can also be substantial for many businesses. In fact, workplace misconduct cost US businesses $20 billion in past year, according to a new study published by Vault Platform, a workplace misconduct reporting platform. The report, The Trust Gap: Expectation vs. Reality in Workplace Misconduct, surveyed 2,000 office staff across the US and UK to get a transatlantic understanding of misconduct in the workplace. In this article, we will unpack the report's key findings on how people experience and deal with workplace harassment and bullying to how people work to identify and prevent it.  

US and UK workers of all levels witness workplace misconduct  

Vault’s report found that around half of office workers have had to deal with some form of workplace misconduct at some point during their working lives: 51% of US workers and 49% of UK workers. For more than one-third of office workers in the UK (37%) and almost half of US office workers (48%), workplace misconduct is a regular occurrence in the workplace, with the survey respondents either experiencing or observing some type of workplace misconduct at least once a month.

In the US, harassment was the most common form of misconduct, with over a quarter (26%) of office workers having experienced this at some point in their careers. In the UK, on the other hand, bullying was the most common form of misconduct, with over a quarter (26%) of office workers reporting having experienced it. 

Age boundaries may have some influence on the likelihood of workplace misconduct. Young workers between 18 and 34 are significantly more likely (64%) to experience workplace issues than their older counterparts (age 35+) who have a 44% chance.

It's also critical to note that people in high-level positions throughout companies across the US and the UK were more likely to have experienced misconduct than junior-level workers. Director-level employees, however, have a greater likelihood of experiencing fraud, bribery, or corruption, and were more likely to note ethical malpractice or serious compliance failures: problems that might not come to the attention of junior-level employees.

There is a trust gap when it comes to reporting and investigating workplace misconduct 

Many workers simply do not trust that their employers will properly handle reports of misconduct in the workplace. According to the report, around 31% of UK office workers and 47% of those in the US think their organizations might brush off workplace misconduct that has the potential to impact the company's profits or external reputation.  

Surprisingly, many HR representatives and compliance teams actually agree with employees on this point. Around 33% of UK compliance and HR workers and 30% of US compliance and HR workers think their organization would try to ignore at least one common type of misconduct. As a result, 59% of UK office workers and 62% of US office workers surveyed described their business as either not ethical, transparent or authentic, or showing a lack of accountability or compassion. 

Employees who believe that their workplace won't do anything about misconduct may be less likely, in general, to report it. A worker who believes their concerns won't be heard may keep silent and simply walk away from the workplace, rather than trying to take action. Worse, observing misconduct, especially when the worker fears that the company will do nothing about it, may erode trust and performance. 

Workplace misconduct has a huge impact on workers and business performance 

Workplace misconduct can have a huge impact on the overall performance of workers affected by it. Vault looked at how employees who personally experienced or witnessed workplace misconduct have been impacted, finding that:

  • 66% saw a drop in productivity 
  • 45% chose to leave their roles sooner than initially intended 
  • 49% needed to take time away from work to deal with those challenges  
  • 66% found that workplace issues took their toll on personal wellbeing 

Not only can workplace misconduct have a heavy impact on workers, it may substantially impact the business as a whole. For example, Vault’s report found that US workers who had to take time off in 2021 due to their experience with workplace misconduct missed, on average, six days of work or 43 million sick days. This resulted in a $8.54 billion loss for the US economy. In addition, 9 million sick days related to workplace misconduct—approximately 5.8 days per employee—were recorded in the UK in the last 12 months. The toll on the UK economy equates to £1.2 billion each year in unproductive hours. Finally, workers that experienced or witnessed workplace misconduct estimate that:

  • 22% of workplace misconduct instances went on to legal proceedings 
  • 24% of the examples of workplace misconduct led to financial settlements 
  • 31% of workplace misconduct events led to damage to the company's reputation (which can have serious impacts for the business's long-term revenue) 

These costs can all add up substantially for many businesses, particularly when businesses suffer through regular misconduct and other challenges. 

The cost of workplace misconduct for businesses is rising 

Vault explained that the $20 billion could be a conservative number, as it is based on a five-year-old estimate. It uses what the Society of Human Resource Management said in 2016 was the average cost to hire a new worker ($4,129) as part of its calculations—a number that has risen substantially in recent years. Furthermore, that estimate does not include any legal or other financial consequences associated with an employee impacted by misconduct leaving the business. Replacing an employee today could cost more than half of that employee's annual salary, depending on the position that employee fills. Not only that, legal costs continue to rise for many companies. As a result, workplace misconduct may cost businesses more today than ever before. 

How ethics and compliance can build trust in reporting workplace misconduct 

It can be difficult to convince employees who do not have a high level of trust in your organization to report workplace misconduct when it occurs. The LRN Benchmark of Ethical Culture report, however, can help provide guidance that may make it easier to encourage trust in reporting workplace misconduct.  

1) Lay down a strong foundation of ethics and compliance

Start by clearly determining what ethical and compliance standards your business will adhere to. In many cases, you may have much stronger ethical standards than others in your field. If they aren't clearly laid out, however, employees, including management, have no way to know what those standards are or how to address it when someone does not adhere to them.

2) Make reporting workplace misconduct a simple, clear process

Do your employees know what their next steps should be after witnessing any type of workplace misconduct? If employees don't know where to go when they witness a problem, they may not turn that information in—and may end up putting up with their own workplace misconduct more than they should. Make sure your documentation is clearly deployed alongside larger programs designed to maintain ethics and compliance awareness.  

3) Listen to employees when they report misconduct in the workplace

As an organization, there are two steps you may need to take in order to ensure that you are meeting these clear standards and encouraging reports when employees witness misconduct.

  • Listen to what employees have to say, and take their concerns seriously. Make them feel valued.  
  • Listen to what is happening around you and deal with problems quickly. 

 4) Keep employees informed about the investigation

Many workplaces worry about sharing information that could be legally used against them after investigating and dealing with workplace misconduct. However, it's important to tell your employees what has happened and keep them informed about how you have handled any examples of misconduct. Use clear storytelling to let your employees know that you have dealt with any issues quickly and effectively.  

5) Maintain employee engagement

Your culture is a critical part of how your employees interact with you. A strong company culture can increase the odds that employees will feel confident confiding in you, especially when they see that your values genuinely contribute to overall behavior. On the other hand, if you do not address misconduct in the workplace quickly and promptly, or if you build a workplace culture that does not seem to adhere to your stated values, your employees may not have a high level of trust in you.  

The key takeaway  

Do you want to learn more about ethics and compliance in the workplace and how you can better encourage workplace reporting? Download the LRN Benchmark of Ethical Culture (US or UK version) for industry-specific data and best practices on improving reporting misconduct and creating a more ethical work culture.