Disengaged Employees Cost You Money

The war on talent. Lean organizations. Fierce competition. Business leaders know the challenges. But in today’s environment, there’s only one sustainable competitive advantage: A strong workplace culture with high employee engagement.

Disengaged employees cost money

We see employee engagement as a powerful connection. This contribution of discretionary effort and energy benefits both the organization and the individual. Engaged employees are passionate about what they do. They are dedicated to the organization, not out looking for new opportunities. Employees who give 110% because they want to.

Retention cost

Disengaged employees are far more likely to leave an organization. And make no mistake, employee turnover is costly. The cost to replace senior managers is 1.5 to 2 times their annual salary, according to research from Bersin by Deloitte. Similarly, the replacement cost for employees and team members is 70% of the annual salary by the time recruitment costs, productivity time, onboarding, etc., are considered, according to the Society for Human Resource Management.

Picture this: You’ve got 10 disengaged middle managers who left your organization for different opportunities. Conservatively speaking, that’s $750,000 worth of talent that just walked out the door. Ouch!

But even worse, what if they don’t leave? Imagine the same group of middle managers plopped in their chairs. They stay, disengaged, unenthusiastic, and lacking passion. They could also be compelled to undermine your efforts and spread their misery. Now that’s painful.

Productivity cost

Disengaged employees cost you in terms of productivity, too.  A high-engagement culture outperforms others by more than 20%. Assume you have five disengaged managers on your staff. With their unproductive dollars, you could acquire a new, engaged manager who kicks the strategy ball forward. But this leaves you with one true contributor when you should have had more.

Consider a larger organization with 100 disengaged employees. It could have acquired the talent to staff two full departments of ten, high-performing employees each — or opted to invest the money for a capital project or bonus distribution.

A lack of engagement will cost your organization in other ways, including customer ratings, safety incidents, shrinkage (theft), absenteeism and quality (defects), according to Gallup.

Tom Devane is principal workplace advisor at Energage, a Philadelphia-based research and consulting firm that surveyed more than 2 million employees at more than 7,000 organizations in 2019. Energage is The Washington Post’s research partner for Top Workplaces.

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