Divorce and Its Economic Impact on Corporations

Stats we should not ignore:

  • One in three marriages end in Divorce
  • Almost 40% of North American children will grow up in a single family home
  • The amount of unpaid Child Support in Canada totals more than 2.5 billion
  • 1.2 million annual US divorces cost taxpayers an estimated 30 billion in federal and state expenditures (Schramm, 2006)
  • Estimate of 6 billion is lost by North American businesses due to decreased productivity stemming from marriage and relationship difficulties (Forthofer, Markham, Cox, Stanley and Kessler, 1996)
  • Divorce can disrupt productivity of the worker for more than 3 years (Lavy, 2002)
  • In a year of divorce, employees lose an average of 168 hours of work time
  • A litigated divorce will likely last more than 3 years and will include time off to see lawyers, attend case conferences, court appearances etc.

The harsh reality is that divorce costs – big time. When we think of divorce in general terms we conjure up images of parents fighting, children crying, careers failing and bank accounts depleting. What we have not considered in this cost equation is the bottom line cost to the economy via our corporations.

Businesses have traditionally tried to stay out of the personal lives of their employees.  Therefore, the issues of dealing with divorce such as the loss of productivity at work, the danger of “absenteeism”, increased use of healthcare accounts due to stress and sickness have largely been ignored by companies.  However, times are changing and there is no longer a defined line between work and home.  People are less willing to compartmentalize their lives.  Social media such as Facebook brings work to home and home to work.   The younger generations do not have the same level of tolerance for “old school” rules of conduct and etiquette.  If their personal life is falling apart chances are that those they work with will know all about it – male or female.

So what does this mean for our companies?

It means that we must recognize that our organizations output is affected by our employee’s relationship status.  We now have stats to confirm that happily married people (people in healthy relationships) increase company profitability while unhappily married people decrease profitability.

While society as a whole has become more lenient and understanding of divorce our “system” as a whole has fallen way behind. Couples still fight it out in court believing in vindication.  They continue to have the illusion that fighting in court will bring them justice and fairness but unfortunately many destroy much of their net worth in the process.

The Canadian court system is starving for a way to reduce the backlog and dominance of family cases in their courts. Judges are left making “numerous child custody, access, matrimonial property, and support decisions every day on the basis of incomplete, subjective and highly emotional written evidence (called affidavits) with virtually no time to get to know the parents…” (Justice Harvey Brownstone in his book Tug of War).  While couples are finally choosing less costly (both emotionally and financially) alternatives like mediation, the large majority still get caught up the in the lawyer/client/fact vs. fiction triangle.

This is where Human Resource departments can help.  Companies can play an appropriate role in helping their employees navigate through these difficult times.

EAP programs can embrace the movement of “Taking Care in Divorce™”

“Taking Care in Divorce™”  is an acronym of simple steps that any Human Resource department can incorporate into their day-to day outreach to employees.  By incorporating steps such as teaching employees about divorce alternatives, or initiating health and wellness programs for families, not just the employee, Human Resource departments can drastically improve the negative impact of divorce on an employee and on the company’s bottom line.

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