Organizational Effects of Workplace Bullying

Helge Hoel, Cary L. Cooper and Stale Valvatne Einarsen

Introduction 209

Organizational Costs of Bullying: The Evidence 212

Absenteeism 212

Turnover 214

Productivity 217

Effects on Observers and Witnesses 219

Other Organizational Effects 220

Assessing the Financial Cost of Bullying 222

Discussion 225

Bibliography 227

Introduction

In 2018, the UK newspaper The Guardian reported that British business tycoon Topshop owner Sir Phillip Green had provided employees with seven-figure secret payouts to settle claims of bullying and harassment (Guardian, 26 October 2018). Likewise, Daily Mirror another major UK newspaper, wrote that Ministry of Defense in the UK (MOD) paid soldiers a total of £709,000 compensation for bullying (Daily Mirror, 12 April, 2015), while the Australian Mail Online on the 25th of October 2016 reported that a New South Wales Government Agency employee received a one million AUD payout for bullying by her bosses. The above media headlines, although somewhat sensationalist in their message, only appear to represent the tip of the iceberg of what is increasingly believed to be a very substantial and often increasing economic cost to many businesses and organizations (Evesson et al., 2015). Even without financial settlements, cases of workplace bullying may mount to considerable costs. For example, when Gerd Liv Valla, former leader of The Norwegian Trade Union Confederation (LO), stepped down from her position as a result of an accusation of bullying, the Union allegedly spent close to US $2 million in costs related to lawyers, investigations etc. (Tranpy. 2007). In addition to the personal tragedy this represented for Valla herself, and the political cost of losing what was considered the Norwegian trade union movement’s brightest and most influential strategist, the organizational and economic costs of the ‘case’ were immense, considering the internal upheaval and media attention that followed the case and her resignation (ibid. 2007).

Whilst much effort has gone into investigating and empirically exploring the individual effects of bullying, comparatively little attention has been paid to assessing the organizational consequences and economic costs of bullying. This is somewhat surprising given the combined effects of the very substantial scale or magnitude of the problem (see Zapf et al., this volume) and the effect this has on the individuals targeted (Mikkelsen et al., this volume; Nielsen and Einarsen, 2012). which undoubtedly would represent a substantial cost to the organization. In this respect, being exposed to bullying in whatever form is likely to manifest itself behaviourally and attitudinally (Hoel et al.. 2001), making targets constantly less able to cope with the requirements of the job and the necessity to collaborate, gradually reflected in reduced ability to cope with the job and well-being (e.g., Nielsen and Einarsen, 2012). as well as with reduced commitment to the organization (Hoel and Cooper, 2000).

Based on his own and other victims’ accounts. Field (1996) suggested that, ‘the person becomes withdrawn, reluctant to communicate for fear of further criticism. This results in accusations of “withdrawal”, “sullenness”, “not co-operating or communicating”, “lack of team spirit”, etc.’ (p. 128). Later research has concluded that exposure to bullying, even of a low-intensity, is associated with cognitive effects such as concentration problems, feelings of job insecurity and increased intentions to leave the organization (Glambek et al., 2014; O'Moore et al., 1998), which again may manifest itself in reduced motivation and creativity, as well as a rise in errors and risk of accidents. Whether deemed deconstructive, negative or maladaptive, many behavioural and attitudinal responses may have a bearing upon the organization by affecting levels of absenteeism. turnover and productivity as well as team and group performance (see also Mathisen et al., 2008).

Furthermore, any complaint or accusation of bullying is likely to subsequently affect the organization directly. Even where cases are seemingly satisfactorily resolved, there may be a price to pay in terms of organizational upheaval. Moreover, in cases where organizations deny targets the right to submit a complaint, where organizational procedures are not followed, or where organizational responses fail to satisfy the need of the complainant, litigation has increasingly become an option, often with negative implications for public relations.

In line with the Norwegian high-profile bullying case reported above, the organizational cost in monetary terms can be immense. In this respect the Swedish pioneer of bullying research Heinz Leymann (1990) argued that an average case of bullying may cost an organization around US $30,000 to US $100,000. Similarly, Knott et al. (2004) reported that official claims lodged due to bullying (24 claims in the period 1993— 2002) cost the Australian Correctional Services AUS $736,513. Equally, specifying the costs involved with a typical bullying case, Hoel et al. (2003) arrived at a sum of £28,109 (approximately US $50,000), which included a series of organizational costs in terms of absenteeism, replacement due to turnover and formal investigations, but not including loss of productivity, potential costs to observers and coworkers and harm to public relations.

The aim of this chapter is to draw a picture of the totality of potential organizational costs involved with bullying. For this purpose, we initially review the evidence and examine the theoretical explanation for the contribution of the various cost elements such as absenteeism, turnover and productivity, and the more recently acknowledged core cost factor, presenteeism. Based on previous cost models and findings from research on organizational costs related to bullying, harassment and other associated fields of research, e.g„ occupational stress, we will put forward an updated and integrated model and provide examples in monetary terms. This exercise, like other parts of the chapter, will benefit from more recent methodological progress in bullying research, where meta-analytical studies combined with greater use of longitudinal or prospective research designs provide us with a clearer empirical picture and more clarity with respect to causality between the variables (see also Nielsen and Einarsen, 2018). Finally, in a discussion section, we will reflect on some key issues and possible pitfalls associated with estimations of costs associated with intangible issues such as bullying.

Organizational Costs of Bullying: The Evidence

Absenteeism

From the evidence of the effects of bullying on targets’ health, one would intuitively expect that bullying would lead to increased sickness absenteeism. However, in the studies which have explored this relationship, the association between bullying and sickness absenteeism has been found to be relatively weak (Hoel and Cooper, 2000; Vartia, 2001), or even insignificant (Bowling and Beehr, 2006). Confirming this overall picture, in a meta-analytical review comprising nine cross-sectional studies Nielsen and Einarsen (2012) reported a significant overall correlation of 0.11. A similarly w'eak relationship was found across six prospective, or longitudinal studies, with a correlation of 0.12 emerging between bullying and absenteeism at a follow up time point. A slightly stronger association (odd ratio 1.58) was reported in a later meta-analytical study involving seventeen samples predominantly from the Nordic countries (Nielsen etal., 2016). In line with this, it is also worth noting that a European study involving data from 31 countries (Niedhammer et al., 2012), concluded that although the associations between various work-factors and absenteeism were generally weak, bullying was still the one factor w'hich most consistently was associated with increased absenteeism.

In light of the overall weak relationship between bullying and absenteeism, it is worth pointing out that many victims would rather stay at work in order to prevent any negative repercussions from the bully or indeed undermine their relationship with colleagues (Convey et al., 2016), and as such they would not show up in the statistics even when they are ill.

Notwithstanding the rather weak associations generally reported, an Irish telephone survey of a nationally representative sample (N = 3,500) found that 20% of respondents had taken sick leave directly as a result of bullying (O’Connel et al., 2007). A stronger relationship between bullying and sickness absenteeism was also reported in a Finnish study of hospital staff (Kivimaki et al., 2000) in which it was possible to match sickness absence records (certified and self-certified) to company records on absence. It emerged that the risk of medically certified sickness absence was 51%, or 1.5 times higher, for those who had been bullied. When adjusted for a baseline one year prior to the survey, the risk was still 1.2, or 26% more absences. The difference was smaller for self-certified sickness absence but still substantial (16%). In total, bullying accounted for 2% of total sickness absenteeism, at a cost of £125,000 annually (other related costs not incorporated).

Similarly. Hoel and Cooper (2000) found that victims of bullying took on average of seven days more sick leave per year than those who were neither bullied nor had witnessed bullying taking place. Based on a bullying rate of 10%, this would account for 18 million lost working days on a UK basis. Furthermore. Quine (2001), in a UK study of bullying among nurses, reported that 8% had taken time off due to bullying, whilst Vartia (2001), in a Finnish study of municipal employees, reported that 17% had taken time off for the same reason, 10% doing so several times. Moreover, among targets taking time off w'ork due to bullying, a substantial number reported prolonged sickness absence, with 29% being absent for more than 30 days and 13% for more than 6- days (UNISON, 2000).

When considering the costs of absenteeism in the broadest terms, it should be noted that the unpredictability and unexpectedness of unscheduled absenteeism may represent a particular problem for organizations, interfering with the normal operation of w'ork, and where applicable, the quality of service provision (Seago, 1996).

To make sense of absenteeism, we turn to Steer and Rhodes (1978), whose well-established theory still seems to have currency. In their view, absenteeism can be seen as a result of a combination of two factors: the possibility or opportunity to be present at work, and the motivation of the individual to go to work. As far as the first factor is concerned, the presence of illness would be a deciding factor for non-attendance. The motivation for attending work appears to hinge upon two factors: the degree of job satisfaction and the pressure to attend. Pressure to attend work, for its part, may relate to social norms or what may be described as normative commitment (Allen and Meyer, 1990) or ‘absence culture’ (Alexanderson. 1998), as well as organizational measures, in terms of absence control systems and punitive responses to non-legitimate absence. Following the model of Steer and Rhodes, the relatively strong relationship between bullying and ill health suggests that, for many of the victims, sickness absence may be a necessity and possibly a direct outcome of status of health. Health problems inflicted by perceived bullying may also undermine individuals’ motivation to attend work due to reduced job satisfaction. As the causal relationship between job satisfaction and absence may be reversible and dynamic, growing health problems resulting from bullying may gradually affect job satisfaction and motivation to attend, with absence as a possible result. However, real or perceived pressure to attend may act as a motivator, albeit a negative one, pushing targets to go to work even if, strictly speaking, they would be better off being absent. Using absence as a coping mechanism to recover from a stressful experience may also be considered counter-productive, contributing to ostracism and social isolation, whether real or perceived, with the bullying process escalating with their return to work. Also in organizational terms, such coping strategies may be considered ineffective and costly, an issue we will return to below. Indirectly this also supports a finding by Zapf and Gross (2001), who revealed that victims who successfully coped with their situation used frequent sickness absence significantly less often than victims who were unsuccessful.

Where organizational norms consider absence as deviance, targets may turn up for work to demonstrate their commitment and loyalty and to avoid being characterized as a malingerer, even if in terms of medical recovery they would benefit from staying at home (Convey et al., 2016). In some cases personal guilt in the guise of self-inflicted pressure may be another factor preventing people from taking time off. Even if such mechanisms are negative in their own right, they may actually be beneficial in bullying scenarios as they may prevent absenteeism or sick-leave turning into a form of self-exclusion from the work group or the workplace altogether.

Turnover

Among potential organizational outcomes of bullying, turnover has been of particular interest to researchers, with a number of studies reporting a positive relationship between bullying and intention to leave and turnover respectively (e.g.. Djurkovic etal., 2004,2008; Glambek etal., 2014,2015; Hoel and Cooper, 2000; Hogh et al., 2011; Quine, 2001). Similar conclusions have frequently been reached in studies of related concepts such as ‘abusive supervision' (Rodwell et al., 2014), ‘mistreatment’ (Boswell and Olson-Buchanan, 2004) and ‘incivility at work’ (Cortina et al., 2001), and supported by the results of several meta-analyses (Bowling and Beehr, 2006; Nielsen and Einarsen, 2012). Differently from the Bowling and Beehr (2006) study, which had a somewhat broader outlook, Nielsen and Einarsen (2012) incorporated only studies explicitly focusing on workplace bullying, of which 11 samples (N = 13,205) reported findings on turnover. Overall a moderately strong correlation of 0.28 was found for intention to leave. Some studies have even suggested that as many as one in four leave their organizations due to bullying (e.g., Rayner, 1997). To some extent substantiating such claims, O’Connel et al’s (2007) Irish study reported previously, 60% of respondents considered leaving whilst 15% actually left the organization.

More recently, several studies have focused on factors which mediate, or alternatively moderate, the relationship between bullying and turnover. In terms of mediation, a Norwegian study of restaurant employees (N = 200) (Mathisen et al.. 2008) found that bullying may have a negative impact on job-satisfaction and commitment which again increases targets’ intentions to leave. Similarly, Lashinger and Fida (2014), in a prospective study of 250 Australian public sector hospital nurses, reported that burnout, through its core component cynicism, mediated the relationship between bullying and intention to leave, as targets of bullying were more likely to withdraw socially by way of leaving their jobs. Furthermore, in a study of business professionals (N = 1,148), Salin and Notelaers (2017) found that psychological contract violations partially mediated the relationship between bullying and turnover, with the mediation effect stronger for those reporting benevolent behaviour. Whilst employees scoring high on benevolence measures were particularly strongly affected, severely bullied individuals were also affected in a similar way. By contrast, an Australian study of schoolteachers (Djurkovic et al., 2008) concluded that perceived organizational support moderated the effect of bullying on intention to leave. Similarly, exploring the impact of belief in a just world (BMJ), Ocel and Aydin (2012) in a Turkish study (N = 300), reported that BJM moderated the relationship between bullying and turnover intentions, with targets of bullying who scored high on the BJM measure being less likely to think about leaving, including in cases of severe bullying.

However, it is important to note that with a few exceptions, most studies have focused on ‘intention to leave’ information rather than actual turnover or quitting. This is noteworthy as although intention to leave is considered a key predictor of turnover (Begley, 1998), the shared variation between the two is modest, with Lee et al. (1999) reporting a figure of just 12%. A longitudinal study conducted in Norway showed that although some targets actually had left their organization two years after they first reported experiencing bullying at work, the majority of targets were still in the same job two years later (Berthelsen et al., 2009). By contrast, Hogh and colleagues (2011) who in a three-wave prospective study followed a large group (N = 2.154) of Danish health care workers from the time of their graduation (time-point one), found a strong relationship between exposure to bullying at time-point two and actually quitting at time-point three (Odd ration = 3.1). Similarly, Schwickerath and Zapf (2011) in a German study of victims of workplace bullying taking part in a therapeutic treatment programme, reported that 36% actually left their job for a position with another organization, whilst only 18% returned to their former job. Employing a national representative sample and a five-year time lag, Glambek and colleagues (2015) found that victims of bullying had two times higher risk of having changed employment five years later. Moreover, they had a three times higher risk of being on disability benefits, and as much as four times higher risk for being unemployed. Hence, a substantial number of victims leave the organization viewed over a longer-term perspective.

Since its emergence in the 1950s, theories of turnover have discussed the process in terms of ‘push and puli' factors (March and Simon, 1958). In this respect, push factors refer to a perceived wish or desire to leave, whilst pull factors are associated with ease of movements and perception of the availability of alternative jobs and other labour-market considerations, i.e., labour mobility. Later on, Lee et al. (2008) introduced a different approach, conceptualizing turnover in terms of a ‘shock’. In this respect, it is suggested that turnover processes, broadly speaking, fall into a few main categories or paths, one of which appears to correspond well with bullying processes. It is noted that such shocks can be perceived as positive or negative, being related to the job or not, as well as being internal or external to the individual. Different from most other paths, job-dissatisfaction appears to play a much lesser role. Instead, the turnover process is interpreted in the light of what is referred to as ‘image violation’, which is seen to offset negative feelings and reactions towards the organization leading to withdrawal. In this respect, the notion of shock appears to fit well with victims’ account of bullying, where the initial part of the process is often described in terms of surprise or shock, or even a series of shocks (Leymann, 1990).

Several factors may account for relatively strong associations reported between bullying and intention to leave: For some, leaving the organization may be seen as a positive coping strategy, as it removes them from the source of the problem altogether, or a turning point, achieving permanent separation from the perpetrator and the problem (Macintosh, 2012), something which resonates with the advice often given by victims to other victims (Zapf and Gross, 2001). In this respect, such a decision might be a consequence or outcome of receiving therapy (see Schwickerath and Zapf, this volume). Others may resign due to prolonged health problems (see Mikkelsen et al., this volume) although leaving may not be an effective way of managing or dealing with health problems (McCormack et al..

2009) with leavers likely to pay a price (Hogh et al.. 2011), as it ‘removes a reason for being’ (Macintosh. 2012, p. 765). In other cases, there may be little opportunity to take time off to provide a necessary breeding space (Zapf and Gross, 2001), resulting in quicker departure from the organization (Macintosh. 2012). Stigmatized victims may also be expelled from the organization (Leymann, 1996; Zapf and Gross, 2001), for example, where employers use bullying as a strategy to rid the organization of unproductive or un-cooperative employees (Ferris et al., 2007) or where the organization otherwise would have to pay redundancy compensation (Di Martino et al., 2003; Lee, 2000).

However, other factors such as tight labour markets and lack of mobility (Tepper, 2000) would work against leaving, thus contributing to explaining why the association between bullying and turnover is not even stronger. It also remains true that many victims would be reluctant to leave as long as they could cope (Berthelsen et al., 2009) or until they have achieved redress and justice. Moreover, where bullying behaviours occur intermittently, victims may also cling on to the belief that the problem will eventually disappear. In many cases this may also hold true as more organizations develop and implement policies on how to handle bullying cases in a constructive way.

Productivity

It is assumed that bullying would impact on factors such as job satisfaction, commitment, innovation and creativity (e.g„ Arenas et al., 2015; Evesson et al., 2015; Mathisen et al., 2008; Nielsen and Einarsen. 2012), as well as cognitive impairment in terms of reduced concentration (Kline and Lewis, 2018). Still, empirical evidence of a relationship between bullying and productivity is very sparse, in part due to the fact that productivity is hard to measure (Hoel et al., 2001). Furthermore, the few pieces of evidence that have emerged focus on selfreported measures of perceived change in performance due to bullying. Thus, in an early study of Norwegian trade union members (N = 2215), a total of 27% of respondents agreed with the statement ‘bullying at my workplace reduces our efficiency’ (Einarsen et al., 1994). When applied in a nationwide British study, the same measure yielded a figure of 33% (Hoel and Cooper. 2000). In the latter study, respondents were also asked to assess their performance, independently of their experience of bullying, as a percentage estimate of normal capacity. Applying this as a measure of productivity, a moderate negative correlation was found between self-rated performance and bullying, with the ‘currently bullied’ on average reporting a decrease of productivity of approximately 7% compared with those who were neither bullied nor had witnessed bullying taking place (Hoel. Sparks et al., 2001).

Likewise, Trepanier et al. (2015), in a longitudinal investigation of nurses (N = 699), concluded that employee work engagement was affected by exposure to bullying due to a drop in target dedication and vitality, a fact which, given that work engagement is linked to performance, is likely to enhance the risk of what is referred to as ‘suboptimal functioning’ (p. 8).

Where reduced commitment or withdrawal are used as a coping strategy, one would expect a negative impact on performance and productivity. Yet, in some cases targets of bullying may also respond by increasing their effort, at least in an early stage.

In this connection, it appears reasonable to invoke the concept of presenteeism. This concept refers to situations where individuals extend their time at work beyond their official working day, in order to demonstrate commitment to the organization, which according to Brun and Lamarche (2006) is likely to have the opposite effect, reducing output and lowering the standard of production. Thus, according to Caverley et al. (2007), sickness presenteeism, where employees are at work yet working less effectively due to health-related or medical problems, such as headaches, migraines and gastrointestinal problems, represents hidden costs of very substantial proportions, actually outstripping the cost of sickness absenteeism, or even doubling such cost altogether (Cooper and Dewe, 2008). They argue that presenteeism is particularly widespread where people work with or provide services to clients—for example, in the health service, where there is unlikely to be any cover, w'here w'ork tends to accumulate when one is away or in situations where organizations are undergoing downsizing. A positive association between bullying and sickness presenteeism has been reported in several studies (e.g., Eurofound, 2012; Janssen et al., 2016), with Janssen et al. suggesting that fear of isolation and destabilization prevent targets to take time off work when feeling ill. In a Danish two-year prospective study (N = 1331), a significant association between bullying and sickness presenteeism (SP), defined as working whilst ill, was found in the cross sectional studies at both time points, although not confirmed by the prospective design (Convey et al., 2016). According to the authors, the link between bullying and SP could be explained by ‘Conservation of resources theory’ which posits that people actively protect resources w'hich are considered valuable to them against any loss or threat of loss. With SP representing such an active coping strategy, they also argue that the relationship between bullying and SP may vary at different stages of the bullying process as SP becomes an increasingly ineffective coping response when bullying escalates and one’s coping resources are depleted and where more passive coping strategies take over, which is in line with Steer and Rhodes’ (1978) absenteeism theory referred to above. Focusing on depression, McTernan and colleagues (2013) in a large Australian prospective study were able to show that depression was linked to sickness absence and presenteeism resulting from job strain and bullying, making a business case for addressing workplace depression as well as bullying.

Effects on

Observers and

Witnesses

Many employees report having witnessed or observed bullying taking place (see Niven et al., this volume), with Olaffsson and Johannsdottir (2004) reporting a figure of 30% in an Icelandic survey, a figure which increased to 46.5% in Hoel and Cooper’s (2000) large-scale British national survey. Nevertheless, although it is assumed that witnessing or observing bullying would have a negative effect on these third parties, evidence is relatively scarce. In Hoel and Cooper’s study (ibid), respondents were divided into four groups: 'currently bullied’, ‘previously bullied’, ‘witnessed bullying only’ and ‘neither experienced nor witnessed bullying’. Those currently exposed to bullying were found to have the worst health, the highest sickness absenteeism and ‘intention to leave’ rates, and the lowest productivity as well as the lowest organizational satisfaction and commitment. The second most affected group were those who were ‘bullied in the past’, followed by ‘witnessed bullying only’. Similarly, in a study by Vartia (2001), observers of bullying reported higher levels of stress than those who had not experienced or observed bullying taking place. These findings lend support to the idea that bullying may affect third persons to the detriment of individuals as well as the organizations (e.g., Hoel and Cooper, 2000; Salin, 2009).

To the extent that adverse effects on witnesses have been systematically explored, it is particularly the impact on turnover intention which has caught researcher attention as also discussed above. Rayner et al. (2002), cited a study of public sector union members carried out by the lead author where one in five reported that they considered leaving their organization as a result of witnessing bullying. Rayner and colleagues explain these figures by pointing to the presence of a climate of fear in which employees considered reporting to be unsafe, where bullies have ‘gotten away with it’ previously despite management knowing of its presence. To some extent these findings are supported by a small Chinese study of manufacturing employees (N = 150) which found that intentions to leave from witnessing bullying was mediated by strain (Sim and Sun, 2012), Going one step further, Housemand and colleagues (2012), in a study of nurses, reported that simply working in an environment where bullying is widespread increases employees’ turnover intentions. Moreover, those working in units where bullying is prevalent w'ere found to be equally likely to consider leaving as those directly targeted by bullying.

Other

Organizational

Effects

Where national customs and practice allow victims to file a complaint or a grievance, then any subsequent investigation and/or hearing will tend to be time-consuming and a drain on organizational resources. Without proper policies and procedures in place, cases can remain unresolved for years, with organizational indecision and paralysis contributing to partiality and increasing animosity and internal conflict. However, even in cases where procedures are strictly adhered to and where cases are brought to a conclusion within a reasonable timescale, the process can be costly. Depending upon the seriousness of the case, in some instances the alleged offender might be suspended (normally on full pay) for the duration of the internal investigation, a provision which in some cases might be extended to the complainant (see Hoel and Einarsen, this volume). Throughout the investigation process and beyond, as part of any rehabilitation effort, counselling or other support mechanisms might have to be put in place with further costs to the organization (Evesson et al., 2015; Therani, 2011).

A typical outcome of a bullying complaint is the physical, permanent separation of the perpetrator and victim. In this respect, a German questionnaire study (Meschkutat et al., 2002) found that 11.1% of the victims reported that the bullies w'ere transferred within the company, whilst 8.2% of bullies were dismissed. In terms of physical separation, it has been reported that victims are often more likely to be moved, particularly where the perpetrator is a superior (Rayner et al., 2002). Such transfers can be costly as they may encompass replacement costs as well as extra training costs for two or more individuals (Dalton, 1997). And whilst some turnover may be beneficial to the organization, enforced transfers are, according to Dalton, entirely dysfunctional. As transfers are unlikely to take place without disruption, in this case involving tw'o w'ork groups, they would tend to affect productivity negatively. In some cases, a domino effect may result, as more than one move may be necessary to accommodate the situation with respect to relevant skills and experience. Replacing an individual may also lead to a chain reaction, with implications for other employees as well (Gordon and Risley, 1999), and with possible side effects for the organization.

The use of the legal system to settle work-related disputes and claims varies between countries and depends upon national litigation practices and the available legislation, as well as individual countries’ national industrial relation practices (Cox and Lippel, this volume, Yamada, this volume). There is evidence to suggest that cases associated with bullying are increasingly taken to court, be it industrial tribunals or labour courts (Yamada, this volume), resulting in increasing costs to the organization, with compensation for example in the UK approaching the £1 million mark. In a high-profile court-ruling, an employee of Deutsche Bank in the UK was awarded £800,000 in compensation for bullying inflicted by some of her peers and for the lack of intervention by her line manager. In another case, the company (Cantor Fitzgerald International) was ordered to pay the complainants close to £1 million for mistreatment the complainant suffered at the hands of the Company President (BBC, 2003). In addition to possibly incurring additional insurance premiums (Kline and Lewis, 2018), such cases are also likely to have further implications for the organizations involved in terms of negative publicity and damage to reputation, and potential loss of trade and customers as well reducing the pool of job applicants as potential employees look elsewhere for work (Giga et al., 2008; Kline and Lewis, 2018).

In some cases, bullying may also lead to industrial action and unrest as a result of alleged victimization (Beale, 2011). Similarly, it is also argued that perceptions of unfair treatment and bullying may increase the likelihood of organizational-targeted revenge in terms of theft and sabotage (Neuman and Baron, 2003) with abusive supervision offsetting what is referred to as ’dysfunctional resistance’ (Tepper, 2007)—for example, not following up supervisors’ requests. Hence, bullying may both lead to counter-aggression from the target (Lee and Brotheridge, 2006) as well as displaced aggression towards coworkers or the organization itself, sometime leading to ‘a spiral of deviance’ (Mitchell and Ambrose, 2007, p. 1165).

A further factor often overlooked due to its positive connotations is the cost associated with intervention (Giga et al., 2008; World Health Organization, 2004). According to Waters et al. (2004), by reducing levels of bullying and harassment by 1%, the costs to the National Health Service (UK) would amount to a saving of £9 million annually in costs associated with intervention programmes alone. However, it is important to bear in mind that intervention programmes may have objectives and positive outcomes beyond bullying reduction which may not easily be assessed. For example, in an evaluation of the Norwegian ‘Olweus programme' against bullying in schools, a range of positive side effects were documented in addition to the positive effects it had on levels of bullying. This school-based programme has been shown to reduce bullying by 50%, while simultaneously reducing other forms of antisocial behaviours (such as vandalism, fighting and truancy) and improving a range of positive aspects of the ‘social’ climate in the school (Olweus, 2003).

Assessing the Financial Cost of Bullying

Some attempts have been made to assess the costs of bullying at corporate as well as national levels as previously indicated. For example, Kivimaki et al. (2000), in a study of bullying at two Finnish hospitals, estimated that the annual cost of absence from bullying alone accounted for costs of £125,000. Similarly, based on an analysis of workplace bullying research, and taking into consideration prevalence and severity data, Sheehan et al. (2001), using what they considered to be a conservative prevalence estimate of 3.5%, demonstrated that workplace bullying cost Australian employers between AUS $6 and $13 billion every year (approximately US $5-10 billion). This figure included hidden and lost opportunity costs as well as costs that had been overlooked in previous studies.

Sheehan et al. (2001) then calculated a ‘unit cost’ per bullying case. They did so by dividing the annual total mentioned above by the relevant number of victims based on Australian working population data at that time. They argued that at the lower range of 3.5% prevalence rate, each case of bullying cost Australian employers at least AUS $16,977. At the higher prevalence rate of 15%, the cost equated to AUS $24,256.

Hoel, Sparks et al. (2001), in a report commissioned by the International Labour Organization (ILO), took this argument one step further and estimated the costs of bullying at a national level in Great Britain, concluding that costs related to absence and replacement due to bullying alone may account for close to £2 billion annually. Arriving at a similar number but for the National Health Service in England alone, Europe’s largest public sector organization, Kline and Lewis (2018) estimated the financial cost of bullying and harassment, based on a detailed calculation, to account for an overall figure of £2.281 billion, utilizing internal data and estimates provided in the literature.

We have listed below a number of cost factors which need to be considered when the financial cost is calculated. In this case it is worth bearing in mind that, in general, staff account for 50-80% of organizational costs (Cooper et al., 1996).

• • Sickness Absenteeism: Employers respond to absenteeism in many ways. The response might be through finding cover for the absentee by means of voluntary or compulsory cover by colleagues through overtime or through replacement. However, in most cases, the real cost of absenteeism is, by and large, linked to the cost of sick pay, bearing in mind that systems will vary from country to country (Gordon and Risley, 1999). Still, in some organizations such as the health service where cover is essential, premium rates would have to be paid through agency/ replacement staff or overtime, with additional management costs being anticipated (Kline and Lewis, 2018).
• • Turnover and Replacement Costs: These primarily comprise recruitment costs (advertising and selection), as well as the cost of induction, training and development. In addition to direct costs arising from these activities, administrative costs (e.g., testing, candidates’ travel expenses, termination of contracts, issuing of new contracts) will also have to be included in total costs. Replacement costs will tend to rise according to the experience and skills of the appointee. It should be noted that turnover is not necessarily dysfunctional to the effectiveness of an organization, as a certain amount of turnover allows the organization the opportunity to bring in new knowledge, skills and talents (Gordon and Risley, 1999). Turnover costs also include the lower initial efficiency of replacement employees until those employees reach the same level of performance as those replaced (Sheehan et al., 2001). Such an argument may also extend to situations where the person who has experienced being bullied transfers to a new position within the same organization. It also includes lost productivity among coworkers affected by workplace bullying, and the impact of absenteeism, such as supervisor time in managing the problem of absenteeism and other absenteeism effects, such as a reduction in the quality of the work output.

• • Impact on Productivity and Performance: Any impact of bullying is likely to be considerable, but largely intangible, and will require some element of ‘informed guessing’. Nonetheless, it is worth bearing in mind that earlier studies have reported a number of impacts relevant to calculating lost productivity as a result of poorer work performance by those who experience being bullied at work. They include reports of reduced efficiency, lower work output, decreased effort and decline in work quality (e.g., McCarthy and Barker, 2000; Mathiesen, et al., 2008. To make this picture complete, the negative impact on productivity may to some extent be cancelled out by compensatory behaviour by the targets as they put in extra effort, or do their best to demonstrate their commitment to the organization (Hoel et al., 1999). However, as such a strategy is unlikely to be effective in the long run, the overall effect on productivity is likely to be negative.
• • Grievance/Investigation/Compensation/Litigation: Practices will vary greatly between countries. It is worth noting that for every case which ends in court or an industrial or employment tribunal, there is likely to be a large number of cases resolved at the level of the organization, each one of which would carry substantial administrative costs, and loss of productivity. Grievance procedures may give rise to administrative costs in connection with the implementation of internal investigation and mediation procedures, where such procedures are in place, and these may in many cases be greater than any compensation package. With grievance procedures, there tends to be a range of hidden direct costs. Such costs include those associated with pursuing formal grievance procedures, other staff time in addressing bullying-related incidents, and employees’ compensation or settlements costs (Hoel et al., 2003; Kline and Lewis, 2018; Sheehan et al., 2001). There also are costs relating to counselling or employee assistance, mediation or grievance procedures, compensation claims or other actions (McCarthy and Barker, 2000).
• • Loss of Public Goodwill and Reputation: With the high profile of many individual compensation cases, the potential damage to reputation may motivate employers to deal with issues. The detrimental impact of the negative publicity that accompanies workplace bullying cases ought not to be underestimated, particularly in the current difficult economic climate where negative images of the behaviours of some managers in some organizations result in a negative perception of their organization and their profession. Such loss of reputation impact not only on staff, customers and suppliers but also on shareholders.

Discussion

There is no doubt that bullying may be costly to employers in a number of different ways. Yet, more research is still needed in this field to build an even better business case for employers and for the identification of factors that may reduce these costs. As shown by Einarsen and colleagues (2017), reduced job engagement following exposure to bullying may be counteracted if employees perceive that the ability of the organization to handle conflicts is predictable and to be trusted. The last of these denoted a strong climate of conflict management. Hence, the effect of bullying may not be straightforward.

Our initial examination of the various cost factors involved with bullying tended to look at each factor in isolation, although in reality, it is likely to be a dynamic relationship that interweaves those factors together. For example, if work colleagues are not replaced when absent, pressure is likely to mount on their coworkers to cover for those absences while simultaneously performing their own work. Such increased workload may contribute to some people possibly reaching their breaking point and. in turn, having to take time off to recuperate. Additional extra duties are likely to increase tension among coworkers, possibly reducing productivity, and increasing sickness absence and turnover rates. By contrast, in cases where a victim decides to be present, whilst strictly speaking, physically and mentally, they would benefit from being off work, they may be unproductive at work due to lack of concentration or for fear of making mistakes or drawing attention to themselves. This may also affect their relationship with coworkers and supervisors, possibly sharpening and broadening, rather than reducing and limiting, the conflict. Such outcomes will, in turn, impact on the total productivity of the work unit, increase absenteeism and turnover rates of third-parties, and increase the potential scale and scope of any investigation following a complaint in a never ending spiral of destruction weakening the individual and the organization.

When discussing the various cost factors involved with bullying, it emerged that the association between bullying and various organizational outcome variables remains in statistical terms relatively weak, or at best moderate. Despite this limitation, correlations of this order indicate an effect of considerable magnitude (Zapf et al., 1996). Use of self-reporting as a way of measuring performance may also weaken the true relationship, as individuals may underestimate their own absenteeism and overestimate their own productivity. This relatively weak relationship may also be an artifact of the cross-sectional method often applied in such studies, where performance is measured entirely at the level of the individual.

However, much of the more recent data and findings stem from improved research design by way of prospective or longitudinal studies. As such it is possible to a greater extent to infer causal relationships, which is not possible from data emerging from the earliest cross-sectional studies. In order to increase our understanding of organizational effects in connection with bullying and the complex interactions involved, studies of a qualitative nature may represent a way forward, not least to explore the significance to the individual of behaviours such as absenteeism and turnover. Diary studies could be one way forward (see Hoprekstad et al., 2019 as an example). Studies involving witnesses or observers may also throw important light on the complexity of the interaction between bullying, on the one hand, and factors such as absenteeism, productivity and turnover on the other.

Moreover, the calculations and assessments of costs involved with bullying in monetary terms can only be as good as the research on which they are based, and the many uncertainties exposed in previous studies means that such cost estimations at best represent what has been referred to as well-informed guesses (Giga et al., 2008; Hoel et al., 2001). Despite methodological reservations, and there are many, this chapter has presented evidence to suggest that it makes good business sense for organizations to prevent and stop workplace bullying. Such a view has also influenced the bullying debate in many countries and the extent to which researchers, practitioners and advocate groups have been able to engage employers or instill management motivation for action. Still, some may argue that some of the cost estimates entered into the public debate are inaccurate at best and spurious at worst. Still, it is noteworthy that employers have made little attempt to challenge such cost-estimates, suggesting that despite potential inaccuracies they are somewhat realistic in the sense that they refer to a widespread problem with multiple, interrelated organizational consequences which comes with a high price tag attached. Moreover, by presenting some tangible estimates of the financial damage caused to their organizations by workplace bullying, they offer employers a more realistic picture than those shaped by moral or ethical arguments alone which could act as motivation for action by management. Still, it is worth emphasizing that in some cases when bullying fulfills internal needs or objectives in terms of controlling the workforce or, indeed, to get rid of unwanted employees, employers may be willing to carry the cost bullying might incur (Beale and Hoel, 2011; Ferris et al., 2007).

Nevertheless, although organizational cost is an important rationale or reason for counteracting bullying in the workplace, we would like to emphasize that even if there were no financial costs attached, the problem should be challenged on the grounds of fairness and equality. The prevention and management of bullying is, therefore, first and foremost an ethical or moral issue, and in many countries, a legal issue as well, as bullying increasingly becomes prohibited and regulated by law (Yamada, this volume', Cox and Lippel, this volume). We also argue that where organizations succeed in preventing bullying from happening in the first place or successfully intervene when conflict escalates and bullying scenarios begin to unfold, it is more likely that employees’ energies, experiences, creativity and innovativeness may be utilized more effectively and productively than in those organizations where the issue is ignored.

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