Workplace discrimination refers to the unfair or unfavourable treatment of an individual because they possess or are affiliated with a safeguarded characteristic.  If you’re in the position of being an employer, you’re most likely aware of your duty to protect employees from workplace discrimination and have processes to respond to it adequately. There are many reasons why this is such an important responsibility and failing to do so can result in severe long-term repercussions for the victim.

However, it is easy to forget that the consequences of workplace discrimination also extend beyond the victim, to all other employees of the workplace and the organisation at large. In fact, analysis by Deloitte Access Economics for the Human Rights Commission found that sexual harassment in the workplace resulted in a $2.6 billion dollar loss in productivity and a $0.9 billion dollar loss in other financial costs in 2018 alone.

What are the consequences of workplace discrimination?

Understanding how the consequences of workplace discrimination can affect your workplace will help you to adapt your approach to preventing and responding to its occurrence and contributing to the development of a healthy and safe workspace. It’s also important to note that a lot of these consequences are tied to each other and interconnected in several ways, so whilst they’ve been broken down below, the lines between them often blur in reality. 

1. Physical and mental impacts to health

Several studies, for example the 2015 research conducted by the American Psychology Association, has shown that there is a direct correlation between workplace discrimination and negative changes to one’s physical and mental health. Considering that 55% of employees have experienced discrimination at their current workplace, this is undeniably concerning.

Physical impacts to an employee’s health have been known to include an increase in aches and pains, headaches, higher blood pressure and even an increased risk for cardiovascular disease.

A decline in mental health can result in the development or exacerbation of depression and anxiety disorders. This can manifest at work in many ways – for example, not feeling a sense of safety or belonging at work.

2. Legal costs

As an employer, you can be held viable to any legal consequences of workplace discrimination regardless of your personal involvement.

The penalty varies according to the form, severity, and duration of the discrimination as well where you are located and the size of your company. However,  employers bear about 70% of the financial costs as well as an approximate additional $5000 on each victim for their loss in wellbeing.  

3. Economic costs

Beyond the legal fees you may have to pay, there is also additional costs that arise from the less tangible consequences of workplace discrimination.

Employees who are being subjected to unfavourable treatment can have increased absences and a decline in the amount and/or quality of their work output. When each discrimination case emerges, this also means additional expenditure of time, money, and resources for the company. In fact, a single harassment case can cause multiple days of lost output.

4. Workplace engagement and satisfaction

The consequences of workplace discrimination also extend to the general atmosphere at work with decreased employee motivation, engagement and commitment to the company and their role.

Employees are more likely to feel undervalued and as if they are not appreciated for their work and contribution. This in turn means that there is an increased risk of counterproductive behaviour such as leaving early or arriving late, delaying deadlines on tasks and putting in less effort into their job. Furthermore, dissatisfaction at their current situation means that employees are more prone to seeking other job opportunities resulting in increased staff turnover.

5. Social costs

The consequences of workplace discrimination can also have social implications.

Because such experiences can cause a decline in one’s mental health, lowering their self-esteem and increasing stress and anxiety, it can then result in decisions that would have otherwise not been made. An example of this is earlier retirement – studies have shown that those who experienced age discrimination were more likely to stop looking for work and consider retirement.

Other social costs can include long term unemployment as a result of consistent discrimination, valuable skills being lost to the company and social exclusion. 

6. Company reputation

The reputation of a company also suffers when cases of discrimination occur as they shape how potential clients, partners, the public and their own employees view the organisation.

For employees in particular, it can negatively change how they view the actions of their fellow co-workers and managers, promoting a culture of distrust and wariness amidst workers. A negative reputation also means that qualified workers are less likely to seek employment there, customers are not as loyal and an inability for the company to charge premium prices on the grounds of better value provision.

How can companies recover from the consequences of workplace discrimination?

Employers are in a position of leadership within the company. When workplace discrimination has caused the workplace to suffer, beyond handling the actual case itself, it’s important to consider bigger, company-wide changes as well. To read more about the methods you can utilise, take a look at our article on responding and preventing workplace discrimination.

Beyond specific changes to policies and company procedures, using the leadership position to promote a culture of diversity and inclusion can also change how the consequences of workplace discrimination impact the company in the long term. 

By highlighting the worth that diversity provides to the team, not only do you increase employee awareness of its importance, but you also allow them to feel valued and heard. This can be  incredibly beneficial with studies showing that a workplace culture that celebrates diversity and inclusion has lower turnover rates and absenteeism.

To conclude, the consequences of workplace discrimination are not just limited to the parties involved in a particular case. It can damage a company economically, ruin its workplace culture, induce legal consequences and harm its reputation.

Knowing how far reaching these repercussions can be as an employer makes it all the more important to put in strategies to tackle the issue and prevent the consequences of workplace discrimination from harming the organisation irrevocably.