The True Cost of Disengaged Employees

According to Gallup’s 2018 survey about employee engagement, 34% of employees classify themselves as ‘actively engaged’ - the highest percentage ever in the history of conducting this survey. But 13% list themselves as ‘actively disengaged’, and an additional 52% list themselves as ‘not engaged’ - meaning that, on average, 65% of your workforce is either not happy or is just phoning it in at work. 

This manifests itself in a variety of ways in the office - decreased productivity, lack of interest in collaboration, an attitude of doing the bare minimum, and then clocking out, causing employees to leave eventually - which can have a significant financial impact. In fact, Gallup states that the cost of disengaged employees ranges from an estimated $450 to $550 billion annually nationwide. 

 

Employee Engagement: The Definitive Guide

Everything you need to know about Employee Engagement

This might seem like an astronomical number, and it is. So let’s break that down further: Gallup found that actively disengaged employees cost their employers 34% of their annual salary, in other words: $3,400 for every $10,000 they earn. For your average employee making $60,000 a year, that’s $20,400. Multiply that by the average 13% of employees who are actively experiencing disengagement, and that adds up to hundreds of thousands of dollars in lost productivity. When was the last time you saw that on your organization’s finance report? 

Disengaged employees, defined by Gallup as “unhappy and unproductive at work and liable to spread negativity to coworkers”  don’t just bring negative attitudes to the workplace. They’re more likely to call in sick, be late to work, miss deadlines, and not meet their performance goals. This can severely hinder the productivity of your top performers who are actively engaged and working to drive the organization forward. 

There are a number of reasons why employees might experience disengagement, ranging from ineffective or weak management, lack of a clear direction, no recognition for accomplishments, and limited growth opportunities. 

We typically view the cost of disengaged employees through three lenses. Let’s break these disengagement lenses down a little bit further and see how they’re interconnected:

Lost Productivity 

Lost productivity is an obvious cost of disengaged employees. Imagine one of your team members is doing the bare minimum during the day to stay off your boss’s radar, browsing job boards or social media, or missing deadlines, forcing the rest of their team members to pick up the slack. 

Lost productivity can also appear through negative attitudes, especially towards clients or colleagues. Think of how an engaged team member acts in a meeting versus a disengaged one. Your engaged team member is probably asking questions and collaborating with others, while the disengaged employee is gruffly participating when prompted. These differences in demeanor also factor in lost productivity and low engagement. We’re not saying that every employee has to come into work every day with a huge smile on their face while singing a cheery song, but attitudes - positive or negative - rub off on people, so it helps to have an air of positivity and motivation around the office instead of disengagement vibes.

Employee Churn 

Employee churn is another cost of disengaged employees. This breaks down into two pieces: the cost of finding and hiring a capable new employee, and the time needed to get them up to speed on projects and company culture. On average, it costs between 50-200% of an employee’s salary to replace them. However, when disengaged employees leave the company, they also bring with them an in-depth knowledge of how the company works. It usually takes a new employee about a year to get to that same point of integration. 

Impact on Company Culture

Lost productivity and high attrition rates can both negatively impact an organization’s culture by bringing down morale. Employees that are disengaged spread discontent, and it’s hard to re-engage them after they’ve completely checked out. Decreased productivity and higher attrition rates come together to affect the overall mood of the company, which might cause potential employees to think twice before joining the organization. 

- Solutions: 

There are a number of metrics that can inform you of an engagement (or disengagement) issue within your organization. Retention metrics, employee engagement surveys, frequency of manager-employee conversations - these are all things that can help paint the picture of how your employees really feel. 

If you discover that there is in fact a disengagement problem at your organization - don’t fret! While it does require hard work to solve, it is solvable. Here are some suggestions to improve overall engagement: 

• Acknowledge the problem. If you notice that there is a trend of high turnover or decreased productivity within the organization, it’s time to dig into why that might be happening. Deeper conversations with employees and managers can lead you to the root cause of the problem. 
• Career conversations. One way to address disengagement is through career conversations. What kind of career conversations are you having at your company? How frequently are you having them? It’s crucial to understand your team’s short and long-term career aspirations to develop a plan for how to achieve career growth.  Hirebook’s check-in and 1-on-1 features are a pain-free way to start implementing these conversations into the fabric of your team. 
• Culture of growth and learning. Cultivating a culture of growth and learning is another great way to combat disengagement in the workplace. Upskilling your team members not only shows them that you value their development, but it also creates space for internal movement and collaboration leading to increased productivity. Set a development OKR for your employees to help them with this goal. 
• Develop managers & leaders. Strong work relationships can increase employee satisfaction by up to 50%. By fostering a sense of teamwork and collaboration, managers and their team members experience more happiness and less stress. Training managers in delegation, conflict management and communication pays off big - 70% of the variance in team engagement can usually be explained by the quality of the manager. 

• Setting clear expectations and OKRs. Creating clear expectations around performance is another way to reduce the cost of disengaged employees. Transparency - everyone has insight into how their work leaves an impact. These can tie back to career conversations as employees continue…. Investing their performance in company success. 
• Recognize achievements. Frequent check-ins allow managers the space to provide feedback on performance and recognize their team’s achievements. Positive feedback for a job well done goes a long way towards fighting disengagement by helping them feel seen for the work that they do. Employee recognition drives retention, engagement, and productivity.

There is a direct correlation between productivity, teams, and high levels of employee engagement. Successful and productive cultures are built through manager accountability, growth opportunities, and listening to your employees when they speak.  Promoting engagement initiatives will always be a strong investment with a high ROI. 

 

Employee Engagement: The Definitive Guide

Everything you need to know about Employee Engagement

When employees feel recognized, appreciated, and supported, they are able to go out and do their best work with a sense of psychological safety. I would say that you can’t put a price tag on that, but maybe you can - to the tune of $450-550 billion dollars. 

If you’re ready to improve employee engagement at your company, Hirebook’s performance and engagement suite of check-ins, one-on-ones, and OKRs helps your company achieve the next level of success. Sign up for a free trial of Hirebook today!