Diversity and Inclusion – Return on Investment, part 2: Employee Distraction Reduction

All workplace environments have distractions that divert employees’ attention and diminish productivity. Some of these distractions are simply a part of the human condition, our physical, intellectual, and social needs for diversionary activity. Others, however, are induced by workplace structures, policies, and employees (executives, managers, supervisors, and individual contributors). Of these, one of the most harmful yet preventable are the disrespectful and demeaning acts committed against employees.[wcm_restrict plans=”75943, 25542, 25653″]

Acts of incivility vary in their impact on employee productivity. At one extreme are the unintentional insults that are quickly recognized and frequently atoned for. These generate some, often short-lived, work distractions. Workplace bullying and other intentional disrespectful and demeaning acts lie at the other end of the spectrum. These later acts create a hostile work environment that drives employees to spend significant non-productive time worrying about and avoiding these situations.

Cost of Distraction

Employees not fully dedicating their time and energies to the achievement of the organization’s goals because of workplace incivility represent a real and significant opportunity cost to the company. In 2002, The Orlando Business Journal cited a survey of 9,000 federal employees that revealed a $90 million per year loss because of employee distractions associated with disrespectful and demeaning acts.³ These costs are derived from a multitude of sources including:

• Distraction from tasks on the part of the victim, bully and witnesses
• Absenteeism
• Time spent at work looking for different work
• Time spent at work talking about being bullied instead of working
• Time spent at work by others gossiping about the bully and his or her behavior
• Time spent by other employees and management calming and counseling victims
• Time spent by management appeasing, counseling or disciplining bullies
• Time spent soothing victimized customers, suppliers and other key outsiders
• Time spent reorganizing departments and teams
• Time spent interviewing, recruiting, and training replacements for departed victims, witnesses and bullies
• Anger management, communication, leadership and other training

And then there are other qualitative impacts that potentially distract employees including:

• Reduced psychological safety and associated climate of fear
• Loss of motivation and energy at work from victims and witnesses
• Stress induced psychological and physical illness
• Possible impaired mental ability⁴

Considering the large number of physical and mental distractions associated with these inappropriate workplace behaviors, it is easy to understand how an organization can incur considerable incivility-related employee distraction costs.

Acts of incivility are the unwelcome, unjustifiable, and unreasonable behaviors intended to create feelings of humiliation, hurt, embarrassment, and degradation. They can be exhibited by executives, managers and peers. Such acts differ in their intensity and severity. Some are blatant acts directed at a specific individual or group while others are unthoughtful or inconsiderate behaviors. Collectively, they represent a spectrum of uncivil actions:

Blatant Management Acts of Incivility

• Setting impossible deadlines
• Constantly changing targets
• Deliberately withholding work-related information or resources
• Continually giving tasks that are meaningless or beyond a person’s skill level

Blatant Acts of Incivility

• Losing one’s temper or yelling at someone in public
• Consistently criticizing
• Making someone the ongoing brunt of teasing, pranks, or practical jokes
• Rude or obnoxious behavior in the workplace
• Badgering or back-stabbing in the workplace
• Withholding important customer/client information
• Sabotaging a project or damaging someone’s reputation

Subtle Acts of Incivility

• Arriving late to a meeting
• Checking e-mail or texting during a meeting
• Not answering calls or responding to emails in a timely manner
• Ignoring or interrupting a colleague in the workplace
• Not saying “please” or “thank you”^{1, 2}

An Abusive Work Environment

A recent survey of 800 people by Christine Pearson and Christine Porath revealed that 10 percent of those interviewed witnessed acts of incivility in the workplace daily and 48 percent said they were treated uncivilly at least once per week.⁵ A similar study conducted by The Center for Human Capital Analytics established the link between these disrespectful and demeaning behaviors and workplace diversity:

• 54 percent perceived the behavior to be based on gender
• 43 percent perceived the behavior to be based on race
• 41 percent perceived the behavior to be based on age

These disrespectful and demeaning acts were also found to have a profoundly negative impact on employees:

• 10 percent reduced the effort they gave at work
• 12 percent considered leaving to avoid the bully
• 14 percent decreased their commitment to the organization
• 16 lost time worrying about the bully⁶

Clearly, acts of diversity related incivility result in lost productivity because of time spent worrying about and avoiding the bully.

Calculating Diversity and Inclusion’s Return On Investment – Employee Distraction Reduction

Workplace incivility contributes to employee distraction which in turn directly impacts the organization’s bottom line. These occurrences present leaders with an opportunity to realize financial benefits from investments aimed at improving the workplace environment. Estimating the return on investment for such initiatives involves the following steps:

1. Determine the portions of the workforce impacted by hearing about, witnessing, or experiencing workplace incivility weekly – This rate can be calculated using workforce surveys or interviews. Since surveys and interviews seldom cover the entire workforce, it is important the sample data taken be representative of the employee population as a whole.
2. Identify the amount of time per week impacted employees spend on non-productive time related to uncivil acts by impact category – This time can be calculated using workforce surveys or interviews, typically the same one used for Step 1. Again, since surveys and interviews seldom cover the entire workforce, it is important the sample data taken be representative of the employee population as a whole.
3. Identify the initiatives to be implemented in order to improve workplace civility – Expert advice from individuals/organizations specializing in the field of diversity and inclusion should be consulted to identify those initiatives best suited to address the organization’s unique needs and circumstances.
4. Estimate the cost of implementing these initiatives on an annual basis – Use standard project management cost estimation methods to determine the expected monetary cost of all resource expenditures expected to be made during implementation of these initiatives on an annual basis. Alternatively, expert advice from individuals/organizations specializing in the field of diversity and inclusion could be consulted to determine this variable.
5. Estimate the reduction in individuals impacted and distraction time caused by workplace incivility – This will vary based on the nature of the initiatives undertaken and their impact on the number of uncivil acts occurring per week. Expert advice from individuals/organizations specializing in the field of diversity and inclusion should be consulted to determine this variable. The derived value is likely to be largely related to the number of experienced incivility acts, moderately related to witnessed acts, and minimally related to discussions of the acts. Consider using category relationship data gathered in the survey/interview questions of Steps 1 and 2 to form a mathematical basis for the reduction estimate to be combined with the judgment and experience of expert advisors when determining the final value.
6. Determine the annual value of improving workplace civility through distraction reduction – Use the StrategyDriven Cost of Employee Distraction Nomograph to determine the annual cost reduction of employee distraction based on the size of the organization, percent of employees distracted, and the average employee salary. Care should be when selecting the appropriate nomograph to ensure the estimate can be made directly or extrapolated (a multiple or divisor of the nomograph’s output) based on the average employee distraction time reduction per week and the time basis of the nomograph.
7. Determine the component of Diversity and Inclusion’s return on investment value to the organization resulting from reduced distractions – Subtract the cost of the workplace civility initiatives determined in Step 4 from the annual value of improving workplace civility through distraction reduction determined in Step 6 and divide the result by the cost of implementing the workplace civility initiatives determined in Step 4. Multiply this value by 100 to convert to a return on investment percent.

Example Return On Investment Calculation for Employee Turnover Reduction

Background

Organization Size: 400 employees
Average Employee Salary: $43,000 / year
Length of Year: 50 weeks (average employee works 2000 hours per year)

Calculation (Illustrative)

1. Portion of the Workforce Discussing, Witnessing, or Experiencing One or More Acts of Incivility per Week: 58 percent
2. Average Amount of Time per Person Spent on Worrying About or Avoiding the Bully: 2.5 hours / week or 30 minutes / day
3. Workplace Civility Initiatives to be Implemented: workforce training, executive/management coaching, performance appraisal system upgrade, new diversity and inclusion organizational performance measures implemented, Diversity and Inclusion Council established
4. Annual Cost of Implementing Workplace Civility Initiatives: $300,000 / year
5. Estimated Reduction in Incivility-Related Distraction Time: 1.25 hours / week or 15 minutes / day
6. Annual value of Workplace Civility Initiatives from Employee Distraction Reductions: $311,750
7. Annual Return On Investment of Workplace Civility Initiatives: A 3.9 percent return on investment.

Final Thoughts…

Workplace civility improvement initiatives have a far more expansive impact than just reducing incivility related distractions. In previous and future articles, we’ll discuss how to calculate these benefits to determine the total financial benefit of these initiatives.

Lastly, we presented a strong financial case for implementing programs aimed at improving the workplace environment. However, we at StrategyDriven believe such programs are not only the financially prudent thing to do, they are the morally and ethically right thing to do. All employees should be treated with the utmost respect, not because it is financially beneficial to do so but because as fellow human beings they deserve to be treated as such. It is our sincere hope that all leaders will work to end workplace abuse, bullying, and discrimination and that they and their employees will respect and value their colleagues.

Sources

1. “The Brutus SyndromeTM,” Craig B. Clayton, Sr., The [email protected] Group, January 2005 (http://www.hrm-ri.org/whitepapers/dEPS_White_Paper_Ver.12.2005.v17.pdf)
2. “Workplace Incivility on the Rise: Four Ways to Stop It,” Diane Berenbaum, Human Resources iQ, March 23, 2010 (http://www.humanresourcesiq.com/article.cfm?externalid=2014)
3. “Workplace bullying’s high cost: $180M in lost time, productivity,” Liz Urbanski Farrell, Orlando Business Journal, March 15, 2002 (http://orlando.bizjournals.com/orlando/stories/2002/03/18/focus1.html?page=1)
4. “The Cost of Workplace Bullying: How much is your corporate bully costing you?,” Catherine Michael Mattice, NoWorkplaceBullies.com, July 2009 (http://noworkplacebullies.com/yahoo_site_admin/assets/docs/Whitepaper_CostofWorkplaceBullying.183131417.pdf)
5. “Workplace Incivility on the Rise: Four Ways to Stop It,” Diane Berenbaum, Human Resources iQ, March 23, 2010 (http://www.humanresourcesiq.com/article.cfm?externalid=2014)
    
   Note: Numeric survey findings taken from The Cost of Bad Behavior by Christine M. Pearson and Christine L. Porath
    
6. “The Brutus SyndromeTM,” Craig B. Clayton, Sr., The [email protected] Group, January 2005 (http://www.hrm-ri.org/whitepapers/dEPS_White_Paper_Ver.12.2005.v17.pdf)

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