The Business Cost of Bullying

In May, the Human Rights Commission and KPMG released a report on the cost to businesses of workplace bullying and harassment. The report considered how businesses can be affected by way of:

  • Affected workers taking extra leave
  • Affected workers being less productive
  • The cost of losing workers and retraining or hiring replacements
  • The cost of time taken to address bullying internally.

Due to a lack of available data, the report did not assess the impact of external mediations and employment tribunals but stated that such proceedings might “significantly increase the total economic impact” of workplace bullying in New Zealand.

Cost to businesses in the billions

The reports findings were that by a conservative estimate the cost of bullying to New Zealand employers on the four grounds from June 2021 to June 2022 was approximately $1.34 billion. This works out to be a cost on average of $1,618 per affected worker. Notably, just under half of the total comes from turnover and replacement costs alone.

Huge drop in produtivity

The report further showed that if a worker was affected by bullying, their productivity at the time of the bullying dropped by 57%. It was even noted that previous studies have found the productivity of the perpetrator of bullying may also reduce, by around 2%. Also, where bullying does occur, 19.5% of female workers and 12.5% of male workers will resign at the time of the incident.

Other impacts

The impact of workplace bullying is that it creates a work culture that deems such behaviour acceptable increasing the risk for more negative behaviour to occur. The knock-on effects of this include reduced innovation and creativity, increased anti-social behaviour and decreased organisational diversity. It can also impact external stakeholders like investors and potential future staff as well as the wider society through increased use of the health and justice systems.

Preventing bullying

The report noted several measures that could be taken to address bullying including having a leadership team who set an example and having proper resourcing to provide support. Respondents surveyed found the most helpful measures that could be taken were having an independent assessor look into workplace culture and policies and having anti-bullying training in the workplace.

The report highlights the need to adequately address workplace bullying for, if no better reason, the economic cost it can have on employers.

As the report says, while take actions to address bullying may seem expensive, “The costs of not acting are likely much higher, even if they do not show up as obviously on the balance sheet”.