86% of investors would keep clear of companies involved in bullying or harassment cases

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

The research from the impact software developer also reveals what types of scandals would deter investors from investing in a company; 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.

Gemma McCall, CEO, Culture Shift, comments: “The financial impact of toxic workplace culture shouldn’t be underestimated. Often, organisations presume that problematic behaviour only impacts those experiencing it, however our research shows otherwise. In fact, problematic workplace behaviour can have an impact on an investor’s decision on whether or not to provide funding, which can have a long-lasting impact on a business.”

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%)

“As well as impacting investment opportunities, problematic workplace behaviour also has a direct impact on the bottom line of a business”, adds Gemma. “From employee payouts and lost working hours, to having to recruit new employees and paying temporary staff to cover long term sick leave, toxic workplace culture can have a long-term impact on a business’s success.”

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.

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, with 61% of those who have experienced problematic workplace behaviour having had to take a period of long-term leave.

Over half (55%) say the emotional distress caused by problematic behaviour at work lasted up to two years, while a third (34%) say it lasted three to four years.

“Our research reveals that two in five employees across the UK have experienced negative behaviour at work, with 42% confirming toxic workplace culture has impacted their mental health. This is a concerning statistic and businesses need to address the issue before it’s too late”, added Gemma.

“Employees who feel valued and appreciated at work are known 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.”

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

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

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