The Hidden Costs of Mishandled Harassment Complaints — and How to Avoid Them
When an employee raises a complaint of harassment, how it is handled sends a powerful message.
A fair, empathetic response shows staff they can trust the organisation to keep them safe. But when complaints are mishandled, ignored, delayed, or treated superficially, the damage goes far beyond the individuals involved.
The costs of mishandled harassment don’t always show up on a balance sheet straight away, but they erode trust, culture, and retention over time. For HR professionals, recognising these risks and putting safeguards in place is critical to protecting both people and the organisation.
Reputational Damage That Lingers
News of a mishandled complaint can spread quickly, especially with social media and anonymous review sites. Even if a case never escalates to the courts, staff will talk to colleagues, friends, and peers in the industry.
Rebuilding trust externally is tough, but the internal impact can be even worse. Employees who no longer believe their concerns will be taken seriously stop reporting problems. Without psychological safety, issues fester under the surface until they explode into crises.
Talent Loss and Turnover
From our experience working with employees, many of them did not leave their employers because of harassment from a colleague but because they felt their company mishandled their complaint. A poor process signals to staff that their safety isn’t a priority. For top performers especially, the easiest solution is often to walk away and finding, hiring and onboarding replacements costs far more than investing in proper processes upfront.
Productivity and Morale Take a Hit
When harassment isn’t addressed fairly, morale suffers across teams. Productivity drops as employees become distracted, disengaged, or anxious about workplace dynamics. In some cases, teams may even split into factions, supporting different sides of a dispute, which further fractures collaboration.
The cost of “lost focus” may not be immediately visible, but over time it translates into missed deadlines and reduced innovation
Legal and Compliance Risks
From a compliance standpoint, mishandling a harassment complaint can expose a company to significant risk. Inadequate investigations, poor documentation, or failure to follow grievance procedures can all undermine the organisation’s defence if a claim escalates. Courts and regulators expect employers to comply with the Workplace Fairness Act 2025 regarding fair grievance management.
How HR Can Avoid These Costs
The good news is that the risks of mishandling complaints are avoidable with the right systems and training in place. Here are key steps HR can take:
Train Managers: Ensure line managers know how to respond empathetically and appropriately to first reports.
Update Policies: Clearly define harassment, reporting channels, and investigative procedures.
Document Everything: Keep thorough, objective records at every stage of the process.
Act Promptly: Delays erode trust and escalate risks.
Balance Compliance with Empathy: Employees remember not just what HR did, but how they were treated.
By approaching harassment complaints with both fairness and compassion, HR can protect the organisation from hidden costs while building a safer, stronger workplace.
Final Thoughts
Harassment complaints are always sensitive and often complex but mishandling them is far more costly in trust, culture, talent and compliance risk. By investing in clear processes, training and empathetic handling, HR professionals can ensure that employees feel heard, respected and supported.
At WorkWell Associates, we partner with organisations to strengthen their policies, train managers and HR teams, and provide independent investigations when needed. Our goal is simple: to help you handle these issues fairly, sensitively and in full compliance with the law, so you can focus on building a respectful workplace where people thrive.
