How much does workplace misconduct cost?

A recent report titled The Trust Gap provides an overview of how much misconduct costs based on a variety of factors. The results show that aside from monetary costs incurred by the company itself, wrongdoing in the workplace has a negative effect on employee productivity, organisational reputation, legal proceedings, as well as workplace absence and employee attrition rates.

Cost to companies, employees and the economy

Misconduct can certainly incur all kinds of costs, particularly if the process of exposing and addressing the problem proves lengthy. The report interrogating UK and US workers found that of those who personally witnessed or endured misconduct 66% experienced negative impacts on productivity, with 45% actually leaving their role. A further 49% reported they took time off of work and 66% said they experienced a negative impact on their personal well-being.

The report also calculates a £1.2 billion loss in unproductive hours in the UK per year, and $8.54 billion in the US. But this is not all. Rehiring costs associated with wrongdoing come out to £1.9 billion in the UK per year, and $20.2 billion in the US. The report also states that the cost of people leaving their jobs because of misconduct is 3.79 million unproductive days in the UK per year and 35 million in the US. The total cost per office-based employee was thus calculated to be £2218 in the UK and $4256 in the US.

Legal cost & risks

Furthermore, the workers who experienced or witnessed workplace misconduct estimate that 22% of cases resulted in legal proceedings, 24% in financial settlements and 31% in reputational damage. The costs pile up if the wrongdoing continues for a lengthy period of time. Additionally, 83% of UK human resources and compliance officers, and 85% of US human resources and compliance officers, believe their organisation to be at risk of at least one of the following due to an inability to adequately address cases of misconduct: reputational damage, financial settlements, legal proceedings, reductions in productivity, increases in workplace absences and employee attrition rates.

While these numbers can seem discouraging, a robust whistleblowing system can set organisations up for success and drive down the cost of wrongdoings. By harnessing the benefits of such a solution, organisations can simultaneously increase profit margins, retain and attract talent, as well as avoid the legal costs and risks. However, choosing the right platform is not enough in and of itself as the other part of the equation comes down to company culture. At Walor we have devised a cheap solution to in order to keep costs down. You can find your next Whistleblowing Solution here.