Counting the Cost

In collaboration with Te Kāhui Tika Tangata - Human Rights Commission, KPMG has estimated the annual economic costs of bullying, sexual harassment, and racial harassment for employers across New Zealand. 

Their joint report builds on a study published by the Commission in 2022, analysing survey data from over 2,500 workers across New Zealand. This is the first time these costs have been estimated for New Zealand. 

Impacts on Employers 

As HR professionals, understanding the wide-ranging impacts on employers is crucial. These impacts include: 

• Increased Use of Sick and Annual Leave: Employees experiencing bullying or harassment are more likely to take additional leave, affecting overall productivity. 
• Decreased Work Performance: Mental and physical stress from such experiences can lower an employee’s work performance.
• Higher Turnover Rates: Lower employee engagement results in higher turnover, which incurs recruitment and training costs. 
• Increased Time on Internal Complaints: Addressing internal complaints takes significant time from employees, managers, and HR staff. 

Economic Costs 

The report estimates that workplace bullying and harassment cost New Zealand employers $1.34 billion over a 12-month period from June 2021 to June 2022.

Note: Totals may not add due to rounding. 

Key Findings

The $1.34 billion total cost arises from four main impact categories: 

1. Absenteeism: Workers taking extra leave due to bullying and harassment leads to lost productivity. About 13.3% of affected workers took sick leave, with half taking over two weeks off to recover. 

2. Presenteeism: Workers present but not performing at full capacity result in significant hidden costs. An estimated 57% of affected workers experienced reduced productivity at the time of the incident, dropping to 32% on an ongoing basis. 

3. Turnover and Replacement: 42% of the total cost comes from the turnover and replacement of affected workers. One in six affected workers resigned, leading to termination and recruitment costs and reduced productivity from new employees. 

4. Internal Procedures: 12.1% of affected workers made internal complaints, taking time away from productive work for employees, managers, and HR staff. 

Additionally, the report highlights that 58% of the total cost affects female workers, indicating that women are disproportionately impacted. Other groups, such as Tangata whenua, Pacific peoples, Asian workers, disabled workers, and bisexual workers, also experience higher rates of bullying and harassment, though the economic impacts on these groups require further research. 

Recommendations for HR Professionals

Proactive action is essential to mitigate the costs and improve workplace culture. HR professionals can implement several strategies: 

• Establish clear policies and procedures: Develop and enforce policies that prevent and address workplace bullying and harassment. 
• Implement comprehensive training programmes: Train employees and managers to recognise, prevent, and respond to bullying and harassment, fostering a culture of respect and inclusivity. 
• Foster an open and supportive environment: Ensure employees feel safe reporting incidents and have access to independent complaints services. Prompt and thorough investigations should follow any reports of bullying or harassment. 

Addressing workplace bullying and harassment is not just about compliance but about creating a positive work environment that enhances productivity and employee satisfaction. By taking these proactive measures, HR professionals can significantly reduce the economic costs associated with these negative workplace behaviors and contribute to a healthier, more productive workforce. 

Access the Full Report here: https://tikatangata.org.nz/our-work/report-counting-the-cost-estimating-the-economic-cost-of-workplace-bullying-and-harassment-on-nz-employers