The True Cost of Employee Disengagement

Employers need to take steps to properly incentivize their workers if they want them to be engaged, productive, and profitable

According to a Gallup poll, only 32% of employees were actively engaged with their work in 2015, with most American employees (slightly more than half) “not engaged.” Another category – more than 17% of American workers – is “actively disengaged” at work. This last group is simply “watching the clock,” contributing little in terms of productivity to their employer. And that lost productivity is more expensive than you might think. Research indicates that this disengagement may cost the American economy up to $550 billion per year.

According to Gallup, being engaged is about more than simple satisfaction; instead, it’s about workers “having an opportunity to do what they do best each day, having someone at work who encourages their development and believing their opinions count at work.” Research also indicates that engaged employees are more enthusiastic, involved, and committed to their employer than those who are not engaged, or worse, those whom are actively disengaged from their work.

The ROI of employee engagement and disengagement

According to government research conducted in the UK, firms with low employee engagement scores earn significantly less operating income – nearly a third less, on average. In contrast, businesses with a “highly engaged workforce” experienced nearly a 20% average increase in operating income per year.
Data from the Corporate Research Council indicates that globally, firms with engaged employees increase their profits up to 300% more quickly than their non-engaged or disengaged competitors.

Additionally, employees who are highly engaged at work are more than 85% less likely to quit their jobs. Considering the costs associated with turnover – including exit costs, client relationship issues, recruiting, and training – can seriously impact the bottom line, a greater degree of employee retention can save companies a lot of money.

What leads to disengagement and how it can be prevented

There are a variety of reasons for disengagement. For example, organizations will always hire a few employees that simply won’t be the right fit, even if both the worker and the hiring manager had the best of intentions at the outset of their professional relationship. Additionally, the nature of the work that some companies do – including jobs that require a lot of repetition or stress – may make it particularly difficult to increase employee engagement.

Despite these structural limitations, companies need to work with what they have to make the best of their current situation. That means dealing with the problems that they can fix and not the ones they can’t. One of the biggest ‘fixable’ causes of disengagement is the fact that many un-engaged or disengaged employees feel that they get little support from management. In order to address this issue, companies may need to re-think some of their policies.

This might mean encouraging employees to ask questions or raise concerns more often, or offering more resources, such as software, specialized employee training programs, or offering greater flexibility in work schedules.

Changing management practices is a good first step, but high-performing employees will often need more relevant incentives to stay engaged

Part of making sure that employees stay engaged is making sure that they feel properly compensated and rewarded for their hard work. While good starting salaries with regular increases can do a lot to address this, many employees, especially top-performing ones, are looking for individualized benefits. These can include specialized employee savings and investment accounts, customized disability plans for high income employees, and other non-financial incentives, such as additional workplace training, trips to industry conferences, or paid external education programs.

In addition, programs with incentives that are delayed and/or directly tied to a company’s performance will engage key personnel while also generating loyalty and enhancing your bottom line and growth.

Companies need to do more than simply offer a survey to make sure employees are optimally engaged at work

According to Gallup, some companies make the mistake of believing that simply issuing an employee engagement survey is enough to increase engagement. Experts warn that this is not at all the case; truly increasing engagement means assessing many core aspects of the workplace, including understanding how to properly incentivize employees.

To learn more about how to institute individualized employee benefits programs and other ways to properly incentivize your key employees, contact Karp HR Solutions today for a free consultation.