You already know that sexual harassment hurts productivity and morale, damages reputations, ruins careers, leads to high rates of turnover, and can end up in expensive litigation. But did you know that it also can result in substantial drops in stock price and sharp declines in operating profitability? That’s what a 2020 study by three university business professors has found.
In the study, “How Much Does Workplace Sexual Harassment Hurt Firm Value?”, the authors looked at 1.65 million unique job reviews posted on Glassdoor.com and Indeed.com for nearly 1,100 different firms listed on NYSE, AMEX, or NASDAQ. This crowd-sourced, largely anonymous data was analyzed for mentions of sexual harassment. For verification, the authors compared their data against several external measures, including reports from the Equal Employment Opportunity Commission. The companies with the highest rates of harassment saw their stock prices plummet, with annual declines ranging from –8.4% to –21.2%. This caused losses in shareholder value of $0.9 billion to $2.2 billion per “harassment-prone firm.”
The authors observed that high rates of sexual harassment may well reflect “a corporate culture that inbreeds other forms of toxic work environments”, and concluded that their “evidence suggests that a hostile corporate social environment that tolerates sexual harassment has a large negative impact on firm value.” They further suggested that these estimates were likely to “understate the true extent of the damages from sexual harassment, to the extent that our SH score does not fully capture harassment at work.”
The study ends with this observation:
The magnitude of the firm value damage of sexual harassment we document is striking. It may even surprise some corporate executives, which helps to explain why they do not do more to stem toxic work environments. Thus, our evidence should offer fresh incentives for corporate governance, employee awareness, shareholder activism, and policy intervention to devote more resources and efforts to the detection, prevention, and punishment of workplace sexual harassment.
What this means to you:
Fair Measures’ interactive, instructor-led workplace harassment prevention training programs teach your managers and employees about how to recognize and prevent harassment, bullying, and discrimination. We include bystander training to keep your workplace a great place to work. Designed for a national audience, our programs meet the standards for all state and local harassment training laws.
There’s still time to meet your 2020 training requirements! Find out more about our national HR training programs or book a workshop by calling 800-458-2778 or emailing us.
Updated 11-11-2020
Information here is correct at the time it is posted. Case decisions cited here may be reversed. Please do not rely on this information without consulting an attorney first.