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People: Your Most Important Corporate Asset

For American businesses and corporations, even in an age when the internet has dramatically changed the structure of commerce on so many levels, the quality, talent and security of people still make all the difference. Technology alone does not drive the success of American business—people do.

People are any corporation’s most valuable asset—to the point that they invest millions of dollars in attracting, compensating, educating and retaining good, quality people. This challenge continues to grow in complexity, as economic forces of the last several years that have caused all of us to have to do more with less. The result: good people are more valuable than ever.

At the same time, the result of these trends is an unprecedented human capital challenge that is forcing organizations to rethink how they attract, retain, and continuously develop a pool of talented workers. Indeed, this is happening all over the globe. In a recent Accenture study, executives in the United States, Europe, and Australia listed workforce-related issues among their leading organizational priorities. Key issues cited by the respondents included: attracting and retaining skilled staff; reducing operational costs; improving employee retention and productivity, and improving workforce safety. [1]

According to the American Society for Training and Development (ASTD): “A high-knowledge, multi-skilled workforce is the most important competitive resource available to organizations today. Instead of an economy organized around mass production, recent years have witnessed the rise of an economy dominated by technology and service industries that emphasize innovation, speed, cross-functionality, and strong customer relations.” [2]

Thus, corporate growth and success will continue to rest upon the shoulders of its people, who work in a multitude of environments, engaging others inside and outside the organization. While successful commerce relies on this dynamic, today’s corporations must also consider the risks involved in this process, and endeavor to minimize them.

The Risks of Workplace Violence

Among these risks is the fact that community-based workers are significantly vulnerable to violence. These people include but are not limited to:

  • visiting nurses
  • home health aides
  • social service workers
  • child service workers
  • psychiatric evaluators
  • probation officers
  • gas and water utility workers
  • telecommunication workers
  • government inspectors
  • delivery people
  • retailers and foodservice operators
  • field-based sales professionals 

They are at higher risk for a few simple reasons:

  • they work alone or in small groups,
  • they may have to work late at night or early morning hours,
  • they often must travel to high-crime areas or work in community settings and homes which, by definition, involve extensive contact with the public. [3]  

Further, another group at risk consists of higher-tier level professionals and executives who travel overseas. Over the last fifteen years, in many other countries, particularly in Asia, Latin America, South America, and Africa, a “ransom trade” has emerged in which American business people are routinely kidnapped and held for ransom. As a result, today’s corporations must purchase “kidnap & ransom insurance” as a part of their risk management portfolios.   

Violence is a risk factor that reaches across a wide range of industries.  For example:

  • In September, 2005, the Journal of Environmental Health reported that violence and hostility was a common occurrence for many field inspectors all across the country, citing countless anecdotal evidence of non-fatal encounters, and profiling three murders within the past twelve years.
  • Also in September, 2005, the National Association of Realtors® (NAR) held its third annual REALTOR® Safety Week. In recent years, the real estate industry has taken a closer look at this issue. Realtors are vulnerable. They travel alone to vacant properties with strangers. Men are robbed; women are robbed and sometimes raped. And both sexes are murdered. According to the National Institute for Occupational Safety and Health (NIOSH), about 70 real estate agents were killed on the job between 1980 and 1992, the last year for which statistics are available. Further, an NAR safety survey from June 2003 revealed that one out of four Realtors® who responded was involved in dangerous incidents on the job. [4]  
  • Assaults occur nearly four times more often in health care than in all private sector industries combined. [5] The Bureau of Labor Statistics (BLS) reports that there were 69 homicides in the health services industry from 1996 to 2000. BLS data shows that in 2000, 48 percent of all non-fatal injuries from occupational assaults and violent acts occurred in health care and social services. As significant as these numbers are, the actual number of incidents is probably much higher. Incidents of violence are likely to be underreported, perhaps due in part to the persistent perception within the health care industry that assaults are part of the job. [6]
  • In May 2004, the American Society of Safety Engineers' (ASSE) survey on workplace violence reported that 44% of 750 respondents had indicated that their place of work had been victim to incidents of violence since 1998. (That same survey also revealed that 74% of the 750 respondents had not under-gone any education in formal risk assessment or management of the potential for violence in the workplace.) [7]  

As a result of the 5,500 reported incidents of workplace violence that occur every day, at least three people are murdered. On average, 17 workers are killed each week and 13,000 women are assaulted, stalked or murdered at work by a significant other each year. [8] It is the second greatest cause of death for men in the workplace, and the first greatest cause of death for women. [9]  

Recently, the U.S. Department of Labor reported that 2003 saw the first spike in workplace violence in three years. [10]   A March, 2004 FBI Report estimated that nearly 80% of workplace homicides are committed by criminals with no other connection to the workplace, who have committed robberies or other violent crimes. According to the Bureau of Justice Statistics, (BJS) US Department of Justice, in 2002 nearly 750,000 crimes of violence were committed each year against people at work or on duty and another 170,000 against people traveling to and from work. 

However, the sobering reality is that workplace homicides are only the tip of the iceberg—a much larger risk lied in the non-fatal workplace violence incidents. It has been estimated by the Bureau of Labor Statistics that between 1.5 and two million incidents occur each year, and many suspect that this is under-reported by approximately 50 percent. [11]   

American business cannot afford to take its human capital for granted. Today, the growth rate of the labor pool is slowing. The annual growth of the U.S. population as a whole has decreased from 1.3 percent in the 1980s to 1.1 percent today. The implications for the labor force are clear: current projections by the Employment Policy Foundation indicate that by 2008, 4.6 million jobs will remain unfilled—up from 2.3 million in 2004. [12]  

Business concerns aside, employers also have specific legal obligations, and there is little wiggle room. Occupational Safety and Health Administration rules require companies to provide a workplace “free from recognized hazards.” The courts interpret this to mean that to meet liability requirements, companies must:

  1. have a written policy on how the company will avoid workplace violence,
  2. educate employees and managers to avoid and deal with threats, and
  3. provide adequate security. [13]  

But even though these statistics underscore the growing value of human capital, as well as the threat posed to all U.S. companies from workplace violence, most employers are failing to mitigate the increased risk of such incidents. [14] Most employers are failing to take proactive measures to protect their most valuable assets: their people. 

Violence and the Financial Risks

When it comes to assessing risk, statistics can sometimes be deceiving. Executives and risk managers may examine regional and national data, compared with their own internal statistics, and deem the risk to be too low to merit attention. However, what is often underestimated is not the cost of action (proactive steps to avoid violence), but rather the cost of inaction: the widespread financial consequences when an incident occurs. [15]   

Just What Is Workplace Violence?

First, for clarification, let us define workplace violence. When one hears the term, one often has the image of what we see in the mainstream media, with the sensational, dramatic and rare types of violent assaults, such as those carried out by disgruntled employees. Unfortunately, this distracts attention from the real, very common issues, warning signs and dangers.

Workplace Violence, according to the U.S. Department of Labor, is “violence or threat of violence against workers. It can occur at or outside the workplace and can range from threats to verbal abuse to physical assaults and homicide (which is one of the leading causes of job-related deaths).” [16]

An alternate definition presented by The National Institute for the Prevention of Workplace Violence may be “Violent acts including assaults and threats which occur in, or are related to the workplace and entail a substantial risk of physical or emotional harm to individuals, or damage to an organizations resources or capabilities.” More specifically it includes:

  • Actual violence that causes or is intended to cause injury or harm to a person or property
  • Threatening remarks and/or behavior in which intent to harm is stated or implied or indicates a lack of respect for the dignity and worth of an individual.
  • Verbal abuse, mobbing, bullying, emotional abuse
  • Possession of a weapon while working or on company property [17]

 

What is the Cost of Workplace Violence?

The cost to American business from workplace violence is estimated at $120 billion a year. The average jury award, in subsequent liability cases where the employer failed to take proactive, preventive measures under the 1996 OSHA guidelines, is $3.1 million per person, per incident. [18]

So, what is the cost of violence? Of course, loss of life and suffering can't be measured financially. But we can put a price tag on sick time and workers’ 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. [19]

The National Council on Compensation Insurance found that companies paid out $126 million in workers' compensation claims for workplace violence in 1995. In 2003, NCCI updated and extended its earlier analysis on this violence in the workplace. The following are among the key findings:

  • In 2000, workplace assaults and homicides ticked up, although the long-term trend continues to suggest a moderation in both
  • Workers compensation claims involving a criminal act are 10 times more likely than nonviolence claims to involve a fatality
  • Among high-risk-of-violence occupations, incident rates remain high, particularly in health care, the retail trade, and other customer-facing industries
  • Men continue to make up the majority of workplace homicide victims, while women are the majority of workplace assault victims—primarily because there are more women in health care-related industries
  • Workers compensation claims (injuries) resulting from criminal violence differ substantially from claims where violence is not a factor [20]

Of course, compensation insurance, in both premiums paid to companies, and claims paid out to victims (which include both the injured and any other employees who witnessed or were traumatized by the violent incident), is only one of many costs of workplace violence, which include but are certainly not limited to:

  • Increase in medical claims for stress-related illnesses, as well as psychological counseling for all employees after a violent incident.
  • Management time taken up by managers' involvement in dealing with the press, meetings to help plan the company's reaction to a violent incident, meetings to help get the company back to normal, and other activities tied to a violent incident.
  • Lost time and absenteeism following a violent incident.
  • Loss of productivity in the wake of a violent incident.
  • Litigation costs.
  • Lost sales, which can occur if a company must close its site for a period of time after a violent incident and if customers cancel orders or postpone purchases in the wake of bad publicity.
  • Negative publicity, which is hard to quantify but can have a residual effect on the company.
  • The company’s reactive mode. In the wake of a violent incident, companies tend to go overboard when putting in programs to prevent a recurrence of workplace violence. These costs can include consultants' time, training programs, enhanced security and improved safety procedures. [21]

Prevention: The Best Defense

Every organization has the legal and moral obligation to provide a safe environment for its employees—even if the employees operate outside of the office.

In any conflict, the best defense is first a good offense. In other words, the proactive approach is preferable (and more cost effective) to a reactive one. In the case of combating workplace violence, the proactive approach is prevention. People must understand how and why violence occurs, and know how to avoid it.

The first step in prevention is for business leaders to understand the complexities of the problem. As indicated on pages 4 and 5, the common imagery of disgruntled employees “going postal” with a shotgun in hand is the rare case. Ironically, the term “violence” tends to become misleading. Many business leaders believe that if there is no record of employees getting shot or killed, there really isn’t a problem. The common image of violence masks the underlying behavior that most often precedes it—aggression.

Aggression occurs not just in overtly violent acts, but in threatening remarks and/or behavior in which intent to harm is stated or implied. It occurs in employee harassment or any other actions that show a lack of respect for the dignity and worth of an individual. This also includes verbal abuse, mobbing, bullying, or acts of emotional abuse that often go tolerated and unreported for far too long.

This is what distinguishes workplace violence from many other risks that American businesses face. Natural and economic threats often occur with little warning. On the contrary, the risk of violence is often predictable, and preventable. [22]  

There are many steps today’s businesses can take to prevent workplace violence—and it goes beyond “adopting a policy of zero-tolerance.” 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.

Communication is the second issue. Companies must have the channels in place through which employees can seek counseling, or a victimized employee can report incidence of aggression, or dangerous encounters out in the field.

Managers must also learn how to handle these reports, and they must be 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.

Most importantly, however, is the role that safety education plays in preventing violence. Business cannot always control or prevent occurrences from the outside. What they can control (or at least influence) are the choices their people make to:

1.      avoid potentially dangerous situations, and

2.      respond appropriately when danger occurs.

 

Who Owns the Problem?

From a practical standpoint, many mangers find themselves confused as to who really owns workplace violence prevention: Human resources? Security? Risk management?

The answer: 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.



[1] The Accenture High-Performance Workforce Study 2004 (Accenture, March 2004, page 61.).

[2] The Human Capital Challenge (ASTD Public Policy Council, August, 2003).

[3] OSHA, Fact Sheet No. 96-53

[4] Eng, Dinah, “Violent Crimes on the Job,” Realtor Magazine, September 1, 2004

[5] Clements, Paul T., “Workplace Violence and Corporate Policy for Health Care Settings,” Nursing Economics, May-June 2005,

[6] U.S. Department of Labor, Bureau of Labor Statistics, 2001.

[7] Fletcher, Meg, “Workplace Violence Concerns Not Being Addressed,” Business Insurance, 38.32, August 9, 2004, page 3.

[8] Viollis, Paul. “Most Workplace Violence Avoidable.” Business Insurance, April 11, 2005, page 10.

[9] Nater, Felix P., “Workplace Security and Corporate Responsibility,” Fairfield County Business Journal, April 11, 2005 v44 i15 page 20.

[10] Viollis, ibid.

[11] Bureau of Labor Statistics.

[12] Corporate Leadership Council, The State of Employment (Washington: Corporate Executive Board, August 2001).

[13] Durfee, Don, “Violent Reactions,” CFO Magazine, July 1, 2005, CFO Publishing Corporation.

[14] Viollis, ibid.

[15] Nixon, William B., The Financial Impact of Workplace Violence, The National Institute for the Prevention of Workplace Violence, 2002, page 4.

[16] U.S. Department of Labor—Occupational Safety and Health Administration Workplace Violence: OSHA Fact Sheet, , 2002.

[17] Nixon, page 1.

[18] Whitehead, Shelly, “Killings at Job Sites Soaring,” The Cincinnati Post, November 12, 2004, page A10.

[19] Sammer, Joanne, “Combating Workplace Violence,” Controller Magazine, June 1998, p.34.

[20] National Council on Compensation Insurance, “Violence in the Workplace: An Updated Analysis,” September 10, 2003.

[21] Sammer, ibid.

[22] Sammer, ibid.

 

 

 

 

   
 

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