What does bullying cost businesses?

While bullying is recognised by most as a serious issue within New Zealand workplaces, a recent report by the KPMG in collaboration with Human Rights Commission, highlights the significant costs to businesses from workplace bullying and harassment. The findings should reinforce to all employers that while actions to address bullying may at first appear expensive or challenging, the costs of not acting are much higher, even if they do not present as obviously on the balance sheet.

The report considered how businesses can be affected by way of:

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

While not assessed, the report also indicated that the impact of employment proceedings might also “significantly increase the total economic impact”. From our experience, we agree that this is a likely assumption.

Bullying is a billion dollar cost to New Zealand businesses

The Report found that a conservative estimate the annual cost of bullying to New Zealand employers was approximately $1.34 billion in 2022, therefore likely to now have increased to $1.5 billion due to increases in nominal wages and working population.[1] Notably, $568million of that figure comes from turnover and staff replacement costs.

Bullying disproportionately impacts women, night shift workers and minority groups.

Bullying has a significant and detrimental impact on productivity

The Report found that if a worker was affected by bullying, their productivity at the time of the bullying dropped by 57%. The Report also drew attention to previous studies which have found the productivity of the perpetrator of bullying behaviour may also reduce, by around 2%.

Where bullying does occur, the Report noted that 19.5% of female workers and 12.5% of male workers will resign at the time of the incident.

Other impacts of bullying

Bullying can create a work culture that deems this behaviour acceptable, therefore increasing the risk for more negative behaviour to occur. Within a business, this can lead to reduced innovation and creativity, increased anti-social behaviour, and decreased organisational diversity. The knock-on effects can also impact external stakeholders like investors and potential future staff, as well as broader society through increased use of the health and justice systems.

Measures to prevent and address bullying

The report reinforces the importance of a business leadership team setting an example and having proper resourcing to provide support. Respondents surveyed for the Report considered the most helpful measures that could be taken are:

1. Having an independent assessor look into workplace culture and policies; and
2. Having anti-bullying training in the workplace.

Like most bad behaviour, prevention should always be the preferred strategy to address bullying. Businesses should be working to create civil, constructive, working environments which foster positive relationships between workmates.

DTI Lawyers specialist employment law team are experienced and trained in all matters associated with bullying in the workplace, including training, drafting/review of workplace policies, investigations, and pursuing or defending claims of bullying.  

You can contact DTI Lawyers at reception@dtilawyers.co.nz or 07 282 0174.