THE BUSINESS CASE for Workplace Violence Prevention

Jan 1, 2005 12:00 PM, By MICHAEL FICKES

Many companies do not appear to believe that the risks posed by workplace violence demand a workplace violence prevention program. They may draw this conclusion by evaluating two facts. First, workplace homicide occurs so infrequently that it probably won't happen at their company. Second, it occurs so unpredictably that it may not be possible to protect against it without going overboard with security precautions.

In light of the statistics about workplace homicide, such a determination may not be unreasonable. On the other hand, maybe the premise is wrong. Maybe workplace homicide is the wrong starting point for evaluating the problem of workplace violence.

Statistics indicate that fewer people are killed at work than are struck by lightning. Corporate executives who gamble that workplace homicide won't happen at their companies may well win their bets.

And most company executives do bet that lightning won't strike. A 2004 workplace violence survey by the American Society of Safety Engineers (ASSE) interviewed 755 members and found that 74% of respondents have not conducted a workplace violence risk assessment. About 80% of the companies surveyed have no written policy dealing with violence at work, and 74% have no plans to start a program.

At the same time, some of these companies appear to recognize workplace violence as a potential problem. Just over half report policies requiring that potentially violent employees be referred to employee assistance programs. Just under half provide training for managers and employees about warning signs that may lead to violent behavior.

Why don't more companies implement formal programs? “The fact that workplace homicides occur relatively infrequently gives companies the sense that it won't happen to them,” says W. Barry Nixon, executive director with the National Institute for the Prevention of Workplace Violence Inc. in Lake Forest, Calif.

“This is where companies use the wrong logic,” Nixon continues. “They look at the workplace homicide side of the formula and decide rolling the dice makes sense. But while the odds of a particular company having a homicide are low, there is a good chance of having a non-fatal incident. There are 1.7 to 2 million incidents of non-fatal workplace violence every year. These range from simple assaults where one person shoves another to someone hitting a co-worker with a baseball bat.”

Non-fatal incidents easily justify a workplace violence program on moral as well as legal and business grounds. It is right to protect employees from being threatened or punched at work. Federal and some state laws require employers to provide a safe workplace free of recognizable hazards. It is also smart to eliminate workplace problems that reduce productivity.

Seeing the invisible costs

“The more conflict in your workplace, the more money you lose,” says Dr. James Madero, president of Violence Prevention International in San Diego, Calif. “And these costs aren't always visible. If I work next to someone that threatens me, I'll use part of my workday avoiding that person. I may decide to take another job. Then you'll have to hire and train a new person. In the long run, companies with violence prevention programs end up saving money.”

Madero estimates that a comprehensive workplace violence prevention program will cost about $38,000 to set up. He pegs the annual cost to maintain the program at $14,000.

Madero also notes that workplace violence doesn't occur as a single incident. Instead, it emerges as a long running, extremely expensive affair. He offers the example of a six-month case during which one employee continually harassed another with comments and bullying threats. Madero estimates the cost of the 6-month incident at $88,600:

• $3,600 for two days per month of absenteeism for a person trying to avoid the harasser.

• $5,000 for work time lost by several other employees watching the incidents or comforting the victim.

• $30,000 in lost new business because of turmoil in the business unit.

• $20,000 in severance costs when a manager was fired for failing to control personnel.

• $30,000 to hire and train a new manager.

Granted, some of these costs are hypothetical. But it isn't unreasonable that some will occur at some point during the time a six-month workplace violence problem is allowed to run its course. It is also not unreasonable to assume that other more and less serious workplace violence problems will be happening simultaneously in a large company.

According to Madero, a low-cost workplace violence program will stop these kinds of incidents before they run their course. “You will have a better workplace,” he says. “And you may prevent a serious incident.”

Now think about workplace homicide

A program implemented to prevent non-fatal workplace violence may well prevent workplace homicide too.

“The majority of workplace homicides (committed by co-workers) don't happen out of the blue,” Madero says. “Other things happen first. A person may have made threats or been verbally abusive, and the problem escalates.”

A workplace violence program that cuts developing problems short not only saves time, money, and good employees, it helps to inoculate a company against the worst possible result of a drawn out feud between employees: a workplace homicide.

It is virtually impossible to communicate the horror of a workplace homicide. Someone's wife, husband, brother, sister, son, or daughter is dead. Families are left to grieve. Employees who witnessed the event or who were friends with the victim or victims are overwhelmed. “It is devastating,” Madero says.

Studies show that it can take as long as six weeks for the people in a business unit rocked by a workplace homicide to recover emotionally. A number of employees, especially those who were close to a victim, will find it impossible to return to work, given their emotional reaction to the scene and their co-workers. They'll quit and have to be replaced.

Then come the financial costs. “If you have an incident of homicide at your workplace, the data suggests that the average (direct) cost is probably around $1 million,” Nixon says. Medical expenses account for about $250,000 of the $1 million, Nixon continues. Add to that the costs for additional security required after an event. A company will also find itself paying substantial public relations fees aimed at overcoming a tarnished image. The greatest business cost for a workplace homicide may come from plummeting productivity in the wake of the incident.

While the direct costs will likely add up to about $1 million, other costs will likely raise the total. According to Nixon, companies will invariably face a lawsuit related to a workplace homicide. The cost of settling a workplace homicide case averages $500,000. Losing at trial will cost, on average, more than $3 million.

For public companies, stock prices will suffer. A study conducted by Oxford University and the Sedgwick Group studied stock values at 15 companies that had suffered some form of human-made disaster and found that stock values fell an average of 8 percent in the immediate wake of the disaster. While most of the stocks recovered their value in full within 50 trading days, some stock values languished at low values for as long as a year. According to the study's authors, the stocks that recovered within 50 days were associated with companies judged to have the management ability to deal with the aftermath of the event.

Of course, the business costs pale in comparison to the human costs.

The final logic: Workplace violence prevention programs won't prevent all workplace homicides or even all incidents of non-fatal workplace violence. But the problems they do prevent will pay for the programs. And if a program happens to prevent a homicide, who really cares how much the program costs?

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© 2008 Penton Media Inc.

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