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This posting is not about David Letterman and his alleged issues;

October 13, 2009

it’s about the other 99% of his or any company’s employees where this kind of activity is rumored to have taken place and the affect this has on their daily at-work wellbeing and hence, productivity.

As a turnaround artist, I’ve seen a lot when it comes to sexually charged workplaces – Intimate leather things charged by a CEO to her company credit card and describing the items in mixed company at staff meetings; a married President going out most nights to his favorite bar and wooing his favorite waitress on the company’s nickel –here too, describing his exploits in detail to his staff and encouraging them to do likewise, a VP-Sales dismissing an employee who by having an affair with his boss gets the VP-Sales fired instead and herself feared by other employees, an employee having an open affair with her boss who in turn channels sales to her at the expense of his other employees, employees knowing who is sleeping with the boss, and therefore being very careful of what they said in her presence.  By the time I got to each of these assignments, the employees were emotionally exhausted. Yes, this seems to be a litany of SMB company issues and examples, but rumors spread quickly and while an entire F10 company is unlikely to fall apart, an entire Division easily can if the most senior managers are involved.

The effect on uninvolved employees in a workplace where there is a sexual undertone cannot be minimized.  First comes the leering and laughing; then comes the pointing and snickering.  Finally, you can cut with a knife the tangible feelings of resignation and shame for working in such as environment. It’s not about sex in the workplace for these people.  It’s about a disparity in power and how it affects the 99% of employees not tied into whatever is going on.

Every organization has its formal and informal elements, and the ‘uninvolved 99%’ have now had a lesson in informal organizational power politics shoved in their faces. These employees take the train home and live by the Expense Manual guidelines while ‘others’ take black cars and eat dinners under the premise of a ‘sales call’ or ‘strategy session’. They know they are interfacing with a loose cannon of a boss and how powerless they are from 9 to 5.  It’s a classic Two Class organization.

A study published earlier this year in the Journal of Applied Psychology (January, 2009) found that a sexually charged workplace  is generally associated with negative work-related and psychological outcomes, regardless of whether it is quietly tolerated or openly disliked by both men and women. Bottom line – the ‘uninvolved 99%’ of employees are withdrawn, think of looking for a new job, have less productivity and tend to doubt their company’s mission and decisions.

What are the EBIDTA effects on the entire organization since the 99% of uninvolved employees are less productive?  While researching this posting, it became apparent that the legal implications and associated settlements/penalties involving a sexually charged workplace were all extensively covered (as it very well should be), but no one has put a price on how it affects the employer’s bottom line.  There’s the obvious – per the EEOC the average payout of a Sexual Harassment claim is $750K.  But less obvious is the cost of all those people who show up for work because they have to but are, as they would say, “depressed about where I work”.  The Social Scientists call this ‘presenteeism’ and it’s a big cost, spanning more mistakes, less throughput and even a higher chance of catching a communicable illness such as the flu.  It’s entirely feasible that a consulting company could come in looking for cost take out when, right under Management’s nose, the largest single cost could very well be presenteeism.

The Two Class organization isn’t new, i.e.

‘To be occupied … to be always on the watch, ears open, … to scan the faces of companions for signs of treachery, to smile at everybody and be mortally afraid of all’ – Etienne de La Boetie, circa 1552,

but how does a 16th Century organization compete in 2009?

Rich Eichen is a Managing Principal of Return on Efficiency, LLC, who’s website is www.growroe.com and is one of their senior turnaround leaders/CROs, Program and Interim Executives with over 25 years experience reshaping companies, Operations and key initiatives. He can be reached at richard.eichen@growroe.com

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