Although people are still subjected to overt sexual harassment, sexual harassment in the workplace often can be subtler. One of the first steps to managing sexual harassment in the workplace is to understand what it is. In addition to sexual innuendos, unwelcome sexual advances and requests for sexual favors, according to the Equal Employment Opportunity Commission (EEOC), offensive comments about a person's sex is also considered sexual harassment.

Financial Implications of Sexual Harassment

According to the EEOC, in 2015 alone, it recovered $164.5 million from employers on behalf of employees alleging harassment. While this includes all types of harassment, during fiscal year 2015, 45 percent of the approximately 28,000 charges filed against private employers and state and local government employers were for sexual harassment. In addition to the costs incurred to pay out judgments on lost lawsuits or settlements or to defend against such lawsuits, organizations incur other direct and indirect expenses tied to sexual harassment. Hostile workplaces can be demoralizing, which can lead to lower productivity and squelched creativity. The resulting turnover of harassed employees or those who do not appreciate the culture of harassment can lead to the need to recruit, hire and train more individuals, which can drive up the labor costs for financial leaders. In addition, the physical and emotional stress caused by sexual harassment can drive up physical and psychological health care costs.

Not having a robust policy can burden an organization in a number of ways. Lost faith in the brand, difficulty recruiting talent and government scrutiny by the EEOC and other agencies are some of the other adverse consequences of sexual harassment. These all can carry direct and indirect financial costs.

Pitfalls of Having No Sexual Harassment Policy

In addition to organizational liability, when the president and CEO or other business proxy sexually harasses an employee, they could be held directly liable. Organizations are strictly liable for any harassment committed by an individual's immediate supervisor who has direct authority over them. However, if the employer can show that it took immediate actions to stop the harassment and prevent further harassment from occurring and if the harassed employee did not follow the steps in the firm's sexual harassment policy, it can reduce or eliminate its liability. Therefore, not having a sexual harassment policy can increase the likelihood that a firm will need to pay out monies in the event a complaint, charge or lawsuit is filed.

Digging Deeper

However, just having a sexual harassment policy is not always sufficient to prevent sexual harassment. According to the EEOC, the biggest influence on workplace harassment is the workplace culture. A culture that engenders "commitment to a diverse, inclusive, and respectful workplace" — which starts at the top — does significantly more to prevent all forms of sexual harassment than policies alone.

According to Deloitte, diversity and inclusion are important work components. Because bias can be unconscious, programs to increase the awareness of this unconscious bias are becoming more and more popular. Some firms are digging deep by comparing job offer patterns and by comparing managers to their peers. Although training is important, to ensure that policies are all encompassing and covers the entire firm, more organizations are addressing the bias that exists in their processes, procedures and systems.

Diversity, Inclusion and Accountability

Accountability systems must be in place to hold all employees accountable for their actions. Therefore, according to the EEOC, "an organization's commitment to a harassment-free workplace must not be based on a compliance mindset, and instead must be part of an overall diversity and inclusion strategy." Thus, finance leaders must work with HR to create or modify existing sexual harassment policies to be all encompassing by incorporating accountability measures in at all organizational levels. This can also counteract the bystander effect, which occurs when observers do not believe they have the responsibility or the influence to speak up or take action. For financial leaders, building in this accountability could greatly improve their effectiveness in managing sexual harassment in the workplace and ensure that the organization has the ability to continually evolve and educate its employees.


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Tags: Diversity