What does it cost a company when discrimination and harassment occurs
in the company workplace?

There are a wide range of costs associated with discrimination and
harassment in the workplace.  Some of these are easily quantifiable,
while others are more qualitative in nature.  However, the difficulty
in quantifying them exactly does not make them any less damaging to
companies.

Easily quantifiable costs are those associated with defending
lawsuits, along with payment of any settlements or judgments.  These
can be very expensive, ranging from tens of thousands of dollars to
millions of dollars.  Increases in liability insurance premiums may
also result, creating additional expenses.

Costs that are less easily quantified can nonetheless be significant. 
Discrimination and harassment can lead to  increased turnover,
necessitating greater expenditures on recruiting and training.  A firm
known for discrimination and harassment may find it difficult to
recruit ethnic minorities and women, thereby potentially denying the
firm needed skills and viewpoints.  Publicized discrimination and
harassment may create difficulties for the firm in the marketplace in
the form of consumer boycotts and reduced stock prices.  Decreased
morale may occur, decreasing employee productivity.  Considerable
management time may be devoted to dealing with discrimination and
harassment charges, creating an opportunity cost by preventing
managers from focusing on managing the business.

In addition to costs to the company, there are also costs to the
individual.  People who experience harassment and discrimination may
elect to be unemployed or underemployed to avoid such experiences,
thereby decreasing their economic well-being.  Lawsuits can be
expensive for plaintiffs as well, and may result in little or no
compensation.  Emotional harm may also occur, leading to depression,
anger, and/or anxiety.

Sincerely,

Wonko

Sources:

"Abra LearningAction® WHITE PAPER: Sexual Harassment and Other Legal
Issues: Why Training is Important" Pacific Data Marketing (2004)
http://www.pacificdm.com/california_anti_sexual_harassment_training.html

"Compliance Training Brings Superior ROI to Organizations" Employment
Law Learning Technologies and Littler Mendelson (April 11, 2002)
http://www.elt-inc.com/roi.html

"SEXUAL HARASSMENT, DISCRIMINATION & WRONGFUL TERMINATION" by David H.
Greenberg, The Successful
http://www.discriminationattorney.com/article.shtml

"Insuring the Employer Against Lawsuite for Harassment and
Discrimination In The Workplace" by David H. Greenberg, The Successful
(Spring, 1997) http://www.discriminationattorney.com/article-insurance.shtml

"Economic Violence - Life Interrupted: Sexual Harassment and the
Downward Spiral of the Working Women" G. Govline Consulting (March 5,
2005) http://www.govineconsults.com/VideoDetails.asp

Search terms: harassment discrimination cost

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Request for Answer Clarification by monticello-ga on 23 Nov 2005 12:11 PST

A good answer...perhaps there is also some Canadian data available?
Also, is there any information available on the cost to team
productivity and effectiveness of unaddressed/unresolved harassment
and discrimination?

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Clarification of Answer by wonko-ga on 23 Nov 2005 12:39 PST

"...[S]exual harassment was not given name or meaning in Canada until
1978, with the first case being in 1980."

"Aside from the cost to victims, the cost to employers includes a
poisoned work environment (which results in low morale, stress-related
absences/inefficiencies, and high staff turnover), and, potentially,
court costs, wage compensations, and punitive damages."

"Statistics Canada (Violence Against Women Survey, 1993) reports that
87% of women have experienced sexual harassment. An estimate from 2000
by the National Forum on Health gave a wide-ranging (thus, not
particularly useful) estimate that 42% to 80% of Canadian women
experience workplace sexual harassment. (In Canada, workplace sexual
harassment complaints are addressed through provincial/territorial
human rights commissions, but in Saskatchewan and Quebec, sexual
harassment is also handled as an occupational health and safety
issue.)"

"The Unexpected World of Sexual Harassment" By Cynthia M Piccolo,
MedHunters.com (August 14, 2004)
http://www.medhunters.com/articles/theUnexpectedWorldOfSexualHarassment.html

"One of the decisions rendered by the Canadian Human Rights Tribunal
during the past year involved the alleged harassment by her supervisor
of a summer student working for a federal employer. The Tribunal
concluded that as a result of this harassment, the student lost her
academic year and had to receive counselling. In addition to ordering
apologies, legal costs, and human rights training for supervisors, the
Tribunal also ordered the supervisor in question to pay compensation
for lost wages and the maximum penalty permissible for hardship. This
case serves to emphasize that harassment can result not only in
disciplinary action, but also a direct financial cost for the
harasser."

"HEALTH OF HUMAN RIGHTS IN CANADA" 2001 Annual Report Canadian Human
Rights Commission http://www.chrc-ccdp.ca/publications/2001_ar/page16-en.asp

You can find a lot of other interesting information relevant to Canada
on the Canadian Human Rights Commission's web site, such as complaint
statistics: "Complaints" Canadian Human Rights Commission
http://www.chrc-ccdp.ca/complaints/statistics_statitistiques-en.asp#total

I was unable to locate a specific resource describing statistics with
respect to team functioning.  It would certainly seem likely that team
productivity would be adversely affected by stress, low morale, and
frequent absences that tend to occur when harassment and/or
discrimination are present.

Sincerely,

Wonko

This is a very good answer and the thoughtful response to "Answer
Clarification" is much appecaited.