How Much Are Your Disengaged Employees Costing You?
May 8, 2019
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Here’s the good news: Employers who have struggled with employee turnover in recent years may experience a bit of a reprieve. According to data from Achievers, just 35% of employees are planning to look for a new job, a drastic decrease from the 74% who answered affirmatively to the same question last year.
But not so fast. Don’t confuse the fact that your employees have no immediate plans to leave as a sign of their loyalty or engagement. On the contrary, the same study found that only 21% of employees report that they are highly engaged at work. They’re just there for the paycheck. And that means they’re doing enough to avoid being fired but aren’t likely to go above and beyond their primary responsibilities.
That complacency is costing you. How much? According to Gallup, disengaged employees have 37% higher absenteeism, 18% lower productivity and 15% lower profitability. When that translates into dollars, you’re looking at the cost of 34% of a disengaged employee’s annual salary, or $3,400 for every $10,000 they make.
Let’s play a game called fun with math.
- The average annual salary in the United States is roundabout $47,000.
- 34% of $47,000 is $15,980.
A single disengaged employee at the average salary level is going to cost you almost $16,000 per year. Raise their salary to $60,000, and they will cost you $20,400 per year. Increase their salary to $80,000, and their disengagement is costing you $27,200 a year. You get the idea.
Now, here’s where it gets really scary: Let’s apply this formula to a whole organization.
- You lead a small business that employs around 250 people.
- Using the Achievers data (which states that only 21% of employees are engaged), we can calculate that around 198 of those 250 employees are disengaged and complacent in their work.
- Let’s say the average salary of those employees is $47,000.
- That means your employee complacency is costing you $3,164,040.
It just got real, didn’t it? Of a total payroll of $11,750,000 utilizing the average salary, your disengaged employees are costing you over $3 million a year. Play with the math and apply these numbers to your business. If your results don’t shock you, perhaps you should question your own complacency!
So, what do you do about it?
The first step towards fixing your engagement problem is acknowledging the problem exists, and committing to taking proactive steps to fix it. This may be a more significant stumbling block than you might think! According to the same Achievers study, just 9% say the leadership in their organizations is very committed to culture initiatives. Another 58% of respondents say that their leadership either takes no action regarding culture or is reactive not proactive.
If an organization’s leadership is complacent about creating a great place to work, then why should they have the expectation that their employees will be anything but complacent about their day-to-day responsibilities?
Once you’ve acknowledged that disengaged employees are a problem for you, the next step is to get the team involved. Make them a part of the process. Part of the problem is that many managers and leaders are not great at soliciting, listening to and responding to employee feedback. Achievers’ Chief Workforce Scientist Dr. Natalie Baumgartner explains that engaging with employee feedback doesn’t always need to be time-consuming. “Employees want to be heard and understood, even if the action [on the part of managers] is as simple as saying ‘I hear you and understand you.'”
Of course, taking the next step to show real change on the feedback is just as important as acknowledging that it’s been heard. Say you’ve just run your employee engagement survey. Your team members have taken the time to give you thoughtful input on what is and isn’t going well. Making that data visible to only a select few is one of the worst things you can do. You’re creating a context in which your team is likely to perceive that you’re doing nothing with their input.
Take action with this four-step process
Instead, show the team overtly that you are taking action by involving them in the process. In my presentation The Ultimate Employee Engagement Survey at the 2019 Society for Human Resources Management Talent & Development Conference, I suggested the following process:
- Be transparent. After you collect your data, be it through a formal survey for your whole organization or an informal conversation with members of a specific working group, analyze your results and make them transparently available to your team as soon as possible. Resist the urge to present only the good news and hold back the bad. Your team will be able to sniff out the inauthenticity.
- Get them involved. Once you’ve given your team time to think about the results (a week or so), bring them together to have a discussion. Your goal is to help the team decide on 1-3 committed actions they can take to improve. This makes everyone accountable for participating in the process. This part tends to work best in working groups, rather than in a company-wide meeting, to allow people more opportunity to contribute.
- Increase accountability. Check in with the team regularly to share what you’ve been doing. Hold them accountable for contributing what they said they would. You could also utilize pulse surveys to take the current temperature of the team. Ask a few quick, focused questions about the areas you are most interested in.
- Measure for continuous improvement. Complete your broader evaluation of your progress again in 4-6 months. This will tell you if your efforts have moved the broader needle. There’s no reason to check in on your employees only once a year. If they know that you are taking action and things are improving, they will be happy to provide their thoughts.
Remember, employee engagement is a fluid concept that many factors influence.
These range from compensation to doing exciting work to work/life balance. That’s why it’s so essential to make it a process of continuous improvement in which you’re consistently and actively looking for ways to improve rather than merely reacting to things as they come.
Does it take an investment of time and resources to do that? Yes. But is that investment higher than the 34% percent of the annual salary of the disengaged employees working for you that are actively complacent in their work? It doesn’t come anywhere close to it. The value of employee engagement is unquestionable. And slight gains in a more engaged workforce result in a significant return on investment when compared with the costs. The hard numbers make it a no-brainer for leaders interested in maximizing business performance.
Want to read more from me? Head over to my Forbes Contributor page. (A version of this article previously appeared on Forbes.com.)