This article was first published in the March 2018 International edition of Accounting and Business magazine.

It seems you can hardly turn on the news these days without some revelation of sexual misconduct or harassment on the part of a politician or a celebrity. The #MeToo campaign suggests this has become a pandemic.

But what do we, as senior finance executives, know about the repercussions of these incidents in the workplace? Aside from trying to understand the devastating consequences for victims of sexual harassment or assault, are we aware of its impacts on companies? These include increased turnover and absenteeism, lower individual and group productivity, loss of managerial time in investigating complaints, and reputational costs, including negative impacts on the attraction and retention of employees.

Some estimates suggest that annual costs to a typical Fortune 500 company from these impacts range from US$6.7m to US$14.02m (excluding reputational costs). But I would argue that these figures are grossly underestimated. 

In my effort to provide a few insights on this issue I began to look into the prevalence of sexual misconduct and assault in the workplace. I must admit I was shocked by my findings. 

While the generally accepted definition of workplace sexual harassment is clear – the American Association of University Women defines it as any ‘unwelcome sexual advances, requests for sexual favours, or other verbal or physical conduct of a sexual nature’ – it remains pervasive and largely undocumented, despite laws and policies put in place to protect those affected. 

In a 2015 Cosmopolitan magazine survey of 2,235 female employees, one in three women had experienced sexual harassment at work at some point in their life, but 71% didn’t report it. 

This is supported by data from the US Equal Employment Opportunity Commission (EEOC), a government agency responsible for processing sexual harassment complaints, which indicates that 75% of sexual harassment incidents are never documented. 

The EEOC cites data showing that unwanted physical touching was formally reported only 8% of the time; that sexually coercive behaviour was reported by only 30% of those who experienced it; and that 70% of those harassed never talked to a supervisor, manager or union representative about what happened.

The EEOC says: ‘Employees who experience harassment fail to report the harassing behaviour or to file a complaint because they fear disbelief of their claim, inaction on their claim, blame, or social or professional retaliation.’

So what does this mean for your job as a financial executive? 

As a respected professional, whether in a risk management, analyst or financial manager position, it’s important to take a leadership role, in cooperation with human resources, not only in uncovering these hidden costs but also in encouraging a safe culture where incidences of sexual harassment can not only be safely reported, but eliminated altogether. 

Ramona Dzinkowski is a Canadian economist and editor-in-chief of the Sustainable Accounting Review