How Workplace Violence Impacts the Bottomline

By Gary Sheely | May 6, 2019

Workplace violence leaves chaos in its wake. Besides the psychic trauma, physical injuries and even sometimes fatalities, there are enormous financial impacts. Some are obvious, but many show up only with insightful analysis. Analysts have used statistics from workers’ compensation reports, law enforcement, and numbers from the Bureau of Labor Statistics, and have arrived at a minimum cost of many tens of billions of dollars per year.

This information is important, but most business leaders are more interested in the question, “Should a violent incident occur at my workplace or office, what are the possible financial impacts on my organization?” Answers to this question will range widely with variables such as the size of the organization, the nature of the violent incident, the type of industry, etc. However, it is possible to identify specific types of financial impact.

The Hidden Pre-Costs

There is one issue that no-one writes about in the context of this discussion, and it really should be a part of this conversation. Worker-on-worker violence does not happen in a vacuum or just out of the blue. In nearly all cases, abusive supervisory styles, bullying, and a sense of injustice have been part of the workplace culture. In turn, these elements of workplace culture are always associated with multiple hidden costs to the organization. Actively disengaged workers are less productive, intentionally undermine morale, call in sick more often, can perpetrate acts of passive or active sabotage, and contribute to employee turnover. This is the point: By the time a violent incident occurs, your organization has already been paying the hidden costs of the circumstances that have brought it about, often for years. It’s been said, “A good workplace is much cheaper to run than a bad one.”

Once Violence Happens

Differences in the size of the organization and the nature of the violence make it difficult to establish a useful range of financial impact for every case. However, the categories of impacts listed below will be true across the board. Given the many variables, it’s not practical to suggest figures, but the reader can easily apply these impacts to their organization.

Critical Incident Care. Even if there are no physical injuries, survivors of violent incidents often struggle to regain a sense of normalcy. Providing Critical Incident care for impacted employees is not only a moral and ethical obligation, it’s in the best interests of all concerned.

Temporary Closure of the Workplace. You can arrive at a ballpark figure for your organization by multiplying your estimated daily revenues by the number of days your office will be closed. This could be anywhere from one day to perhaps three or four.

Lost Revenue. Again, the magnitude of this impact is dictated by several things, including the nature of the violence, how many it impacted, and your organizations daily revenues. This impact is persistent and slow to resolve.

Healthcare Premium Increase Triggered by Need for Psychological Services. Even workers not directly affected by the violent incident will often experience an increase in anxiety and other negative impacts.

Rise in Workers’ Comp Premiums. These premiums are calculated based on the size of the workforce, the nature of their jobs, and your organization’s claims history. Violent incidents with injuries will raise the claims history index of your organization and result in an increase in premiums.

Costs of Litigation. These costs have risen substantially in the last decade. Jury awards of several million dollars are not uncommon.

Expenses Associated Employee Turnover. Studies have shown that employee turnover spikes after violent incidents, up to 10%.

There are other wildcard impacts such as impact on shareholder value, negative publicity, etc. When you consider all the ways a violent incident can impact the bottom line, prevention programs just make good sense.

About Gary Sheely

Sheely is an associate of the Safety Institute and Tactical Confrontation Specialist focusing on workplace violence issues. Website: safetyinstitute.com. Email: info@safetyinstitute.com.

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Insurance Journal West May 6, 2019
May 6, 2019
Insurance Journal West Magazine

Workers’ Compensation Report; Workers’ Comp Directory; Markets: Healthcare & Medical Professional Liability