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 - 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.
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 disengaged, 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 be disengaged, 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 down a little bit further and see how they’re interconnected:
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 the team 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. 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.
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 a disengaged employee leaves 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. Disengaged employees 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.
There are a number of metrics that can inform you of an engagement 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 an engagement 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:
There is a direct correlation between highly engaged employees and teams and productivity levels. 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.
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!
BY Laura Iñiguez
BY Michelle Sheridan
BY Michelle Sheridan
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