Combating Workplace VIOLENCE
By Joanne Sammer
Workplace violence is on the rise and so are the costs to the companies it strikes. Major losses in worker’s compensation claims legal fees and awards, medical costs and reduced productivity are just the tip of the iceberg. A company’s reputation is also at risk
Last March, Matthew Beck, an accountant with the Connecticut Lottery Commission, reported for work with a gun and shot and killed four people before killing himself. The incident is just one of many reported on the front page of newspapers throughout the country. While most organizations will never come face to face with such mayhem, violence can and does occur in even the best of companies. And when it does, the financial and psychological costs can be huge.
Most companies are in denial when it comes to the risk of workplace violence, says Gary Salmans, vice president of risk services for Sedgwick of Colorado Inc., Denver. “The first thing victims say after a violent incident is, ‘I never thought it would happen here,’ “But the unhappy fact is, we live in a violent society in which individuals increasingly use violence to resolve conflict.
In general, there are two sources of workplace violence: external, usually with robbery as the motive, and internal, which includes current and former employees and the friends and families of current and former employees. “This distinction is important because external violence is somewhat easier to address,” according to Lynne McClure, president of McClure Associates Management Consultants Inc., Mesa, Ariz. Companies can minimize the risk of external workplace violence by installing security cameras, providing a well-lit workplace, placing adequate locks on doors, and never allowing employees to work alone in a retail environment.
Internal sources of workplace violence are somewhat more difficult to address. “You can do things to minimize potential violence through the physical layout of the workplace, such as installing metal detectors and having adequate security coverage, but it comes down to policy issues,” said McClure.
Three factors interact to create an internal violence incident: an employee prone to violence, an organizational culture that encourages (or at least doesn’t discourage) violent or aggressive behavior, and the “last-straw incident.” The key to prevention is to eliminate some or all of these factors.
Homicide is the leading cause of work-related deaths for men and the second leading cause of work-related deaths for women, according to the U.S. Department of Labor’s Bureau of Labor Statistics (BLS). In 1996, homicide accounted for 912 work-related fatalities, represent 15 percent of all work related deaths, according to the BLS. But homicide is just the tip of the iceberg. The U.S. Department of Justice (DOJ) estimates that each year nearly one million individuals are victims of violent crime when at work. Moreover, some experts estimate that more than half of the violent acts that occur in the workplace, including rape, assault and intimidation, go unreported.
While violent crime in the workplace concerns everyone, it should be of particular concern to financial managers. As guardians of the company’s financial health, controllers need to look beyond the tremendous physical and emotional impact of workplace violence to the inevitable monetary. “Workplace violence can be as devastating to a company financially as a natural disaster,” said Salmans. “But workplace violence is more likely to occur and, unlike a natural disaster, is predictable and preventable.”
Human and Financial Costs
The actual costs of workplace violence are difficult to determine. The DOJ estimates that workplace violence cost companies $6.2 billion in 1992 in lost wages, medical costs and support costs. (See Calculating the Cost of Workplace Violence on page 36.)
When workplace violence occurs, it can take a company months or years to recover. In some cases, workplace violence has been so devastating that the companies involved have not been able to recover at all.
Bruce Blythe, president and CEO of Crisis Management International Inc. in Atlanta, cities the example of a printing company that was able to keep running for a couple of years after a former employee shot and killed 13 employees and wounded eight others. However, the company was never able to get back on its feet and eventually went out of business, according to Blythe.
Of course, loss of life and suffering can’t be measured financially. But it is possible to put a price tag on sick time and worker’s compensation claims filed by injured employees. The DOJ estimates that employees involved in workplace violence miss an average of 3.5 days of work after a crime has occurred, and stabbing and shooting victims are out of work an average of five to six weeks. The National Council on Compensation Insurance found that companies paid out $126 million in worker’s compensation claims for workplace violence in 1995.
But those are just the so-called “hard” costs of workplace violence, which represents only about one-sixth of the total costs, according to Salmans. The “soft” costs are harder to measure and eminently more devastating. Consider the cost of reduced productivity in the aftermath of a violent act, or the damage to the company’s reputation as an employer and as a place of business. Current and prospective employees may be reluctant to work in what they may perceive to be a tainted work environment, and customers may be just as reluctant to conduct business there. “It’s difficult to put a price on a company’s reputation,” said Salmans.
W. Barry Nixon, president of the National Institute for the Prevention of Workplace Violence in Long Beach, Calif., estimates that a single incident of workplace violence can cost a company between $250,000 and $1 million, including worker’s compensation costs, disability benefits, direct and indirect medical care, lost work time, legal fees and reduced productivity.
Perhaps the biggest potential financial drain on a company is the potential legal liability if the victims of workplace violence or their families pursue civil litigation. Awards in such lawsuits have reached into the millions of dollars in some cases, said Gerald D. Skoning, senior partner with Seyfarth, Shaw, Fairweather & Geraldson in Chicago. In 1992, a California jury awarded $5.5 million to the family of a winery employee who was stabbed and killed by a fellow employee. The company had failed to conduct the necessary pre-employment background checks, and thus did not find out that the accused employee was a convicted murderer. Another California jury awarded $5 million to the family of one of the victims killed by an employee’s jealous husband because the company failed to provide adequate security to protect the employees. “Juries are very sympathetic in these cases and are readily inclined to award big bucks,” said Skoning.
How well and how far a company recovers from violence depends largely on how it handles the recovery phase. “At that point, the company needs to make order out of chaos, show employees and the public that it cares about what happened, and help employees make it through,” said Rick Gardner, vice president of ESIS Inc., a Philadelphia –based unit of Cigna Property & Casualty.
Assessing Your Company’s Risk
The best approach to workplace violence is to stop it before it happens. Unlike many other business risks, the risk of violence is often predictable. In many situations, people who have committed violent acts had been previously identified as a problem brewing. Therefore, the best way to prevent workplace violence is to focus on dealing with acts of aggression that can snowball into full-fledged violence. “Part of the problem in getting companies to deal with workplace violence is the word ‘violence,’ “ said John Byrnes, founder of the Center for Aggression Management in Winter Park, Fla. “Companies think that if no one gets shot, everything is fine. As a result, they adopt more of a reactive crisis management approach,” rather than proactively trying to manage the potential problem. But with that approach, “the company very quickly becomes an unpleasant place to be,” said Byrnes, “Aggression is far more insidious than most companies realize.”
Strong hiring and performance-management policies can help screen out employees prone to violence and protect a company somewhat from charges of negligent hiring in the event of a lawsuit. To help screen out potentially violent employees companies should require hiring managers to check all of a candidate’s references and conduct a background check to see if the candidate has a criminal record. The applicability of these precautions will vary by state – for example, in some states, employers can’t refuse to hire someone because of a prior criminal record. In addition, several court cases are pending which may extend protected disability status to psychological problems under the federal Americans With Disabilities Act.
From a cultural standpoint, companies need some communication channel through which troubled employees can seek counseling and victimized employees can report acts of aggression, as well as unusual or troubling behavior among their colleagues. “Some companies might as well have a target on the door because they have cultures that tolerate violent behavior, such as sexual harassment, they offer no counseling to employees, and they have no vehicle for employees to report a problem,” said Salmans. Other companies develop a strong anti-violence policy but don’t follow up with reporting and intervention guidelines, said Salmans. Without a mechanism to report trouble or abnormal behavior among employees, little goes to change.
Companies also need to give managers guidelines on how to handle these reports and make managers accountable for doing so. This way, managers can’t take the easy way out by ignoring a troubled employee, or worse, simply transferring the employee to a new area or department without addressing the root cause of the individual’s problem. A strong performance management program and grievance system can also help employees deal with work-related frustrations constructively. “Employee assistance programs (EAPs) are worth every penny of their cost,” said Skoning. Indeed, Salmans estimates that an EAP costs from $4 to $7 per employee per month – far less than the cost of a violent incident.
Companies should not overlook the impact domestic violence can have on the risk of workplace violence. Communicate to employees the importance of reporting threats of domestic violence so the organization can take adequate precautions. For example, when one company faced trouble as a result of domestic violence incidents in which estranged spouses came into the workplace and caused problems, it isolated the work area so that no outsiders were admitted without an escort. In addition, the company trained its employees, particularly its receptionist, in how to identify potentially threatening phone calls and how to handle potentially aggressive visitors.
Of course any initiative to minimize the risk of workplace violence must clear the high hurdle of management denial. “When they hear about a situation like the murders at the Connecticut Lottery Commission, management may want to do something about it,” said McClure. “But soon their enthusiasm dies down and the company ends up not doing anything.”
At the same time, functional managers may be confused as to who really owns workplace violence prevention: Human resources? Security? Risk management? The EAP? The answer is all of the above and then some. The reality is that the elements of workplace violence crop up on many different levels and areas within the company. Therefore, companies need a team of people to handle workplace violence prevention including representatives from all the relevant areas of the company.
The prevalence of workplace violence can be reduced, but companies must do it themselves. As Salmans puts it, “Employees bring too much personal baggage into the workplace to do otherwise.”
Joanne Sammer is a New Jersey-based business and financial writer.
To illustrate the cost of workplace violence, Barry Nixon, president of the National Institute for the Prevention of Workplace Violence in Long Beach, Calif., suggests financial managers factor in the following
1. Take a proactive approach by getting the commitment of senior management and making violence prevention a priority.
2. Form a management team to address workplace violence issues through focused and candid discussions. The team should audit the company’s existing HR policies to see how effective they are in preventing and dealing with workplace violence. The team should ultimately develop a workplace violence policy and prevention checklist.
3. Develop a process to carefully screen job applicants. This includes reference checking, pre- and post-employment drug testing and background checks.
4. Develop specific policies and procedures for responding if workplace violence does occur.
5. Develop a network of external resources, including psychological/psychiatric consultants and counselors, a security consultant, Employee Assistance Programs (EAPs) and local law-enforcement officials.
6. Train and educate managers and supervisors on early warning signs and procedures to follow in the event of a violent incident.
7. Use external resources when faced with the threat of violence, including restraining orders and psychological testing.
8. Assess and implement additional security measures.
9. Institute a complaint system or other means to proactively diffuse situations relating to morale and employee relations issues.
10. Take proper actions in the aftermath of a violent incident, including investigating and disciplining the offenders, providing trauma counseling to victims and witnesses, taking security precautions to prevent recurrence and pursuing criminal prosecution.
Source: Seyfarth, Shaw, Fairweather & Geraldson