Aug. 11, 2010 – Your mother was right: you can catch more flies with honey than with vinegar. It’s true even in Corporate America, where just being nice can save a company millions of dollars.
USC Marshall School of Business professor Christine Porath discovered that employee rudeness hurts the bottom line while researching “The Cost of Bad Behavior: How Incivility is Damaging Your Business and What to Do About It,” which was published earlier this summer. She co-wrote the book with Christine Pearson, who is a professor of management at Thunderbird School of Global Management.
Porath and Pearson state that job stress in the United States accounts for $300 billion in losses, as an uncivil workplace reduces productivity (aka “slacking off”) as workers spend time looking for other jobs or helping others to do so. In addition, according to Porath and Pearson’s research, 80 per cent of employees who were victims of insults or bullying in the workplace lost valuable work time worrying about the incident and 78 per cent said their commitment to the organization declined.
The authors combined various methodologies to reach their conclusions. First they gathered subjective data via various focus groups comprised of a cross-section of professionals – including attorneys, managers and emergency medical professionals – where they focused on what incivility was in the workplace, and what the implications were for employees and organizations. Porath and Pearson next surveyed nearly 800 employees where they found that one in eight would quit a job due to an abusive environment.
Porath, along with University of Florida management professor Amir Erez, also employed scientific experiments, discovering that “people literally did not perform as well, weren’t as creative and became more dysfunctional and aggressive” when someone was rude to them, Porath says.
But the impact of rudeness defined in the book as ranging from “taking credit for others’ efforts” to throwing a temper tantrum didn’t end there, as the authors discovered that even witnesses to an incident where someone was bullied had a negative effect. And if a customer witnesses incivility, that customer decides to not re-patronize the business 50 per cent of the time.
Porath and Pearson also employed case studies of companies that cultivate civility such as Cisco Systems and Microsoft to inspire other companies, Porath says, “to take a page from their notebook.”
In fact, Cisco leadership launched its first global workplace civility program – the first of its kind that Porath is aware of – after Porath and Pearson published some of their research in an earlier journal article. “They did the math,” Porath says, “saw how their bottom line was affected in the millions of dollars and were motivated to start the program.”
This year Fortune magazine ranked Cisco sixth among the 100 best companies to work for, with a voluntary turnover rate of only four per cent. Cisco’s low turnover rate helps their bottom line, for, as Porath discovered in her research, the costs of replacing employees ranges to up to four times their annual salaries.
So how do companies create a civil workplace? Porath and Pearson outline their top 10 solutions that include recommending that companies:
• Set zero tolerance expectations.
• Establish norms for all employees, including managers and executives, to live by.
• Weed out trouble early in the employee hiring process.
“It starts with the top,” Porath says, who’s taught these same concepts to executives through Marshall’s MBA Program for Professionals and Managers.
According to Porath, it’s important for executives to think about how good behaviour can fit into “each piece of the Human Resource cycle,” from the company’s mission statement, to its recruitment and training policies. “There should be a thread of civility,” Porath says, through everything a company does.
Otherwise, good employees will move on, much to the long-term detriment of the company. In terms of dollars, the cost of an exit is an estimated 150 per cent of a mid-level employee’s salary and talent loss.
According to Porath, even with a national unemployment rate of 9.5 per cent, there’s a “huge concern with human resource executives that there’s a shortage of talent. Businesses are fighting for talent. If you’re a good performer, you’ll be in demand. Focus on your performance and put yourself out there. Don’t just hunker down and take it. Think about other possibilities.”
Managers, take note. Maybe it’s more cost effective just to be nice.
For more information about the book, visit www.thecostofbadbehavior.com.