There are a lot of ways employers can improve employee engagement, including in a time when many are working from home. For example, using personalized intranets can improve employee engagement and productivity and a connectedness to the business. With that being said, employers don’t always recognize the problem they face when it comes to disengaged employees.
Gallup reports disengaged employees have a 37% higher rate of absenteeism. They have 18% lower productivity and 15% lower profitability. Based on those calculations, the cost of a disengaged employee could be 34% of their annual salary. That’s $3,400 for every $10,000 they make.
For an employer to take the necessary steps to fix the problems, they first need to see there is a problem. The following highlights other things to know about the cost of disengaged employees and how to calculate them in your organization.
How Many Employees Are Disengaged?
So by the above calculations, you’re losing around 34% of an employee’s yearly salary if they’re disengaged. To take that math a step further, the typical level of employee engagement in the U.S. is estimated at 32%. For a business, that could mean 68% of workers aren’t fully engaged. If you were to follow the Gallup formula, then you see how much money disengagement could be costing you. It’s staggering. Once you have a handle on those numbers, you can start to think more about where those costs are coming from. There’s a tendency among employers to think that if the employee is there every day, that’s good enough from an engagement standpoint, and that doesn’t reflect reality.
Turnover
When employees are happy, they’re engaged. Engaged employees are more likely to stay with their same employer long-term. Long-term employees and low turnover are cheaper than high churn rates. When you have to hire someone new to replace an employee, it can cost anywhere from 50 to 200% of the person’s salary. Employees leaving is inevitable, but you can control the rate at which it’s happening and how much it costs you.
Productivity Declines
One of the primary areas that you should be looking at when trying to figure out the cost of disengagement is the productivity declines it contributes to. If your employees aren’t productive, it’s easy to see how you’re losing money. They’re simply not getting enough work done. You also have to think about their lack of engagement could impact their outward-facing work. For example, is customer service taking a hit because of a lack of engagement and productivity? You have to think about how an actively disengaged employee could negatively affect your brand as a whole.
Culture
Employers have put a big emphasis on culture in the past ten years, but disengaged employees when nothing is done to remedy the problem can derail your corporate culture. Disengaged employees can discourage everyone around them. It can lead to more work for their coworkers, and even an engaged employee may end up feeling less engaged because of the lack of positivity in the workplace.
Direct Costs
Along with the costs that are tougher to measure and perhaps more abstract, there are many direct costs to employers that come with disengagement as well.
Direct costs include:
- Disengaged employees take more sick days and time off in general. Along with absenteeism, they also tend to be tardy more often.
- Employees who are disengaged are less likely to meet deadlines and meet goals, such as sales goals.
- Customer complaints tend to go up in correlation with disengagement.
- Highly profitable companies have been shown to have 50% more employee engagement than those that aren’t profitable.
- Teams that have high engagement levels sell more than 20% more than teams without high engagement.
What Can You Do?
Dealing with the costs of disengagement and working to remedy them relies on being strategic. It can take time, but some of the things you can do almost right away include having conversations with your management teams and your employees to start getting to the root of the problem. You can ask for feedback from both your engaged and disengaged employees, and you can start building a plan to deal with what you discover during this time. Don’t assume disengagement among employees is normal or unavoidable. It is neither of those things and you need to recognize the costs of the problem so you can then think about concrete steps to fix it. The longer the problem goes on, the more those costs will rise, and the more even your strongest employees will be impacted.
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