Around the same time that Jeff Bezos’ Blue Origin launched Captain James T. Kirk into space (in the person of William Shatner), the company was accused by a former company leader and other employees of being “stuck in a toxic past,” rife with sexism and a culture that compromises safety. At risk? Huge amounts of Bezos’ money.
Even with the tsunami of news stories of sexual harassment and abuse in the workplace, the legal and moral arguments against these serious improprieties aren’t convincing some men to stop. What or who could convince them? How about profits?
Studies have found that sexual harassment is draining tons of cash from U.S. companies, depressing their stock prices. These numbers far, far exceed the settlements companies pay to women to keep their mouths shut.
Surveys in the U.S. have shown that 38% of working women have suffered from sexual harassment, and 58% say they have not filed a complaint. A shocking 80% of American women say they’ve experienced sexual harassment up-close, at home, in school, in sports, in relationships and, more often than not, on the job. Most women in the workplace already know that the worst abuses by sexual harassers lead to, as a group of academics found, “higher employee turnover, lower employee productivity and increased absenteeism and increased sick leave costs for companies.”
Think about this for a second. Abusing women forces dysfunction that distorts businesses processes end-to-end, sucking profits out of operations. Think about your investments, your retirement savings. How much are you losing to the abusers?
Ending sexual harassment and abuse benefits not only women who endure the consequences of such behavior but also the CEOs of companies who hire them. Treating women as professionals and with respect unclogs the cash drain and pushes profits and stocks higher. Consider the findings of this study, “Employee Sexual Harassment Reviews and Firm Value” as proof.
In 2019, a group of academics interviewed former employees of more than 1,500 firms in North America, gathered 1.65 million reviews of companies and then calculated the rate of sexual harassment and abuse incidents, matching them to profits and stocks.
Their findings were shocking. The study, published by Elsevier’s SSRN, found: “Companies with the highest incidences of sexual harassment underperform the U.S. stock market by approximately 19.9% the subsequent year.” It also found that the yearly loss in shareholder value in a company with sexual harassment problems is about 7,000 times larger than the maximum compensation of $300,000 to a victim of sexual harassment under existing federal law.
Return on assets and equity declined by about 4.2% and 10.9%, respectively, during the following two years for those found to be the worst sexually harassing firms. Labor costs rose on average by 7% for those firms across the same period. And, after doing the math, the academics found a loss of $2.1 billion for the firms employing men who touch, flirt with and discriminate against women.
They wrote, “The market capitalization of the 101 firms we identified as the worst sexual harassers had a combined market capitalization of approximately of $1.1 trillion in 2017 dollars. This translates to a total loss of $212.2 billion per year.”
Trillions. Billions. Numbers like these call for serious change, meaning that CEOs must change their thinking about the values, rules and consequences behind sexual harassment at work.
It doesn’t have to be complicated. A study by a team of University of Illinois Urbana-Champaign researchers found that, in the service industry, co-worker interventions moderated sexual harassment by customers. Encouraging men to stand by their female colleagues in the workplace by modeling behaviors of professionalism and respect to other men may be the single simplest and cheapest thing a company can do to protect women and profits.
Managers have to operate on the principle that incidents of sexual harassment in women’s lives aren’t marginal events that pop up in the media every now and then. They are mainstream, daily, constant. The crimes of the harassers are crimes against everyone. The profit distortions are too great for it to be otherwise.
Creating a work environment that doesn’t dismiss, discredit, harass and abuse women and encourages men to treat women fairly under the laws and ethics of our country is not just the right thing to do. For CEOs and their boards, it is the profitable thing to do. Smart, successful leaders will unleash the full potential of women in their workforce, scaling operations profitably and adding value for shareholders and employees. That’s a new world of profits worth exploring, and you don’t even need a spaceship.
Hinton is the author of the forthcoming book “Penis Politics.” She was former press secretary to Bill de Blasio and Andrew Cuomo. McInerney is managing director of North River Ventures and co-author of “FutureWealth.”
