How Bad Workplace Behavior Impacts the Bottom Line

March 24, 2017 Andrew Larsen

Bad behaviors in the workplace can have a butterfly effect. Even the smallest acts can set off a chain reaction that can lead to massive consequences. A frown, a rude comment, or employees avoiding communication with their manager can seem small, but eventually cripple a company’s culture and impact the bottom line.

As finance leaders are responsible for the financial well-being of an organization, they should take note of behaviors that could lead to potentially hazardous consequences. There are several metrics that can indicate the source of bad behaviors in the workplace.

Symptoms of bad behavior
Just as an illness has symptoms that provide clues about the nature and origin of the sickness, metrics can indicate the nature and origin of bad behavior in the workplace.

  • Excessive absenteeism: How often do employees call in sick? Finance leaders can check absenteeism rates to see patterns of consistent sick days among employees who report to the same manager. HR should investigate to see if there are issues between the employees and the manager.
  • High turnover: How often do you need to replace employees? If an organization’s turnover rate is high, then it should be a high priority for finance leader to discover the cause of the problem. While turnover rates won’t always correlate with bad behavior or poor management, it is worth checking to see if it is a contributor. 
  • Disengagement: Are projects being completed on time and do employees actively contribute in meaningful ways? If not, rather than assuming the employee has a performance issue, check to see if deadlines are unreasonable or if the employee is being micromanaged?
  • Low satisfaction: Employees who are not satisfied at work are less likely to contribute to company growth. A way to discover if a workforce if dissatisfied is with employee surveys. While surveys may not be the most accurate way to gather information, finance leaders can still catch glimmers of truth amongst all the inaccuracies. If employees feel they can trust management then a survey can not only indicate an issue but it also can diagnose the cause instantly.
  • Frequent presenteeism: There are several reasons why an employee won’t take a day off to rest when they need it. Among them is fear of disappointing a manager. If employees are pressured to come into work when they have a serious illness, this could indicate a problem with management that needs addressing.

If left untreated
Taken individually, some of these behaviors may seem benign. Patterns in the data, however, could point to far bigger problems than a missed deadline or a spreading illness. It could result in a direct hit to the company’s bottom line. 

  • Legal Costs: The average cost to defend an employment lawsuit is $250,000 and the average out of court settlement is $40,000. In 2016, the Equal Employment Opportunity Commission (EEOC) received 91,503 charges of discrimination. If managers are acting inappropriately, it could lead to litigation costs.
  • Bad PR: The news is always circulating stories of harassment or discrimination in the workplace, and customers are less and less likely to support organizations with managers who commit such acts. Investors will also be hesitant to invest in toxic workplaces. 
  • Lost Time: Holding a one hour training meeting or taking fifteen minutes to work with someone with bad behavior could spare HR the hours it would take to investigate and resolve workplace issues. The time HR devotes to resolving non-strategic issues will hamper its ability to drive growth by offering strategic solutions that benefit the bottom line. 
  • Poor Communication: If employees are avoiding managers or if managers refuse to share information with employees because bad behaviors drove a wedge between the two, then miscommunication can create unexpected costs. The Society for Human Resources Management (SHRM) reports that smaller companies with an average of 100 employees lose around $420,000 annually because of miscommunication. 
  • Customer Base Attrition: Employees who are frustrated with their workplace are more likely to have negative interactions with customers. Thus, bad behavior infects not only the workplace, but the customers who interact with it. As customers are treated poorly, more and more will turn to competitors who provide a better customer experience, resulting in a loss of revenue for an organization.

Simply recognizing the impact that behaviors have on the workplace is the first step for finance leaders. While bad behaviors can negatively impact an organization, it is important to note that the opposite is also true. Good behaviors can benefit the bottom line. As finance uses HR data to determine the state of its workforce, they will be able to mitigate the risks associated with bad behaviors in the workplace.


About the Author

Andrew Larsen

Andrew is the Marketing Communications Specialist for Zuman, the one solution for HR, payroll, and benefits administration that supports growing small to midsize businesses.

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