Toxic workplace culture is costing UK businesses billions

Whether it’s a good work life balance, trust in their employers and colleagues, or simply being treated with respect in the workplace, the pandemic has led to employees being more aware of what is truly important to them.

It’s well known that employees who feel valued and appreciated at work are more likely to thrive, work better as a team and deliver better results. But, in contrast, those who are working in toxic environments are more likely to be impacted by absenteeism and presenteeism.

Our latest research reveals 61% of those who have experienced problematic workplace behaviour have had to take a period of long-term leave, with over half (55%) saying the emotional distress lasted up to two years, while a third (34%) say it lasted three to four years. 

The impact of toxic workplace culture shouldn’t be underestimated. Often, people presume that problematic behaviour only impacts those experiencing it, however our research shows otherwise. From the cost of legal proceedings, settlements and tribunal fees, to fines from the EHRC (Equality and Human Rights Commission), revenue lost to presenteeism and absenteeism, as well as the cost to replace good talent, problematic workplace culture can have a detrimental impact on a business’ bottom line.

We surveyed 1,000 UK employees to uncover the impact toxic culture is having on UK employees, whilst shining a light on how various industries are performing currently, when it comes to workplace culture. In addition, we surveyed 100 respondents who have experienced problematic behaviour, such as bullying or harassment at work, and have received a payout as a result, to uncover the true extent experiencing incidents of this nature has had on other areas of their lives. Lastly, 20 investors who have at least £100K in investments, who aren't angel investors and invest in FTSE100 companies, were surveyed to uncover the impact incidents of this nature have on their investment decisions.

The new research reveals that of those who have been impacted by problematic behaviour, such as bullying, harassment or discrimination at work, the average pay-out received was £381,350. While, on average, employees themselves are footing bills of £1,629 for things like therapy and legal fees.

However, two in three (65%) employees who have experienced toxic workplace culture say the compensation they received did not make up for the emotional distress caused. 

It’s not just the cost of legal fees and pay outs which businesses need to be aware of, but having a toxic workplace culture can directly impact their bottom line through lost working hours, having to recruit new employees and paying temporary staff to cover long term sick leave. 

Data from Deloitte and mental health charity, Mind, uncovered the UK’s presenteeism problem is considerable, costing employers between £26 billion and £29 billion annually through lost productivity. 

What’s more, the cost of recruiting is also putting a dent in the profits of businesses nationwide as analysis reveals that, on average, it costs £30,000 to recruit a new employee. 

Problematic workplace behaviour can also have a substantial impact on an investor’s decision to provide funding.

Almost nine in 10 (86%) investors say if they had invested in a company that was then embroiled in a workplace bullying or harassment case, they would rapidly distance themselves from the company.

For organisations hoping to secure investment, almost three quarters (71%) confirm they wouldn’t invest in a company that had a problematic workplace culture, while two thirds (64%) wouldn't invest in a company that has numerous NDAs with former employees. 

The general reputation of a company and how it treats its employees are the two most important non-financial factors which investors take into consideration when deciding where to invest. 

Ranking the most important non-financial factors investors take into consideration: 

  1. General reputation of the company (54%)
  2. Employee treatment (36%)
  3. Sustainability/environmental initiatives (36%)
  4. Relationships with customers (36%)
  5. Relationships with suppliers (32%)
  6. Workplace culture (25%)
  7. Meeting/being prepared for current/future legislation (14%)
  8. Employee churn/retention (7%)

From appealing to investors and a business’ profitability, to the cost of recruitment and legal action, there is only one-way businesses can avoid these added costs and that’s by looking after their people. 

Access our full ‘paying the price for problematic behaviour’ report here.

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