2022

What is the Cost of Disengaged Employees?

The modern workplace is quite different from even a decade ago. Today, employees are more empowered and in control than ever. What they think about you as an employer can, at times, make or break your business.

An engaged employee is a valuable asset. On the other hand, disengaged employees can affect the work environment and the business. In terms of numbers, disengaged employees cost money and can set back overall productivity and your profit margin, not to mention the chance of increasing your employee turnover rate. If you want to learn more via video, then watch below. Otherwise, skip ahead.

Disengaged Employee Costs: A Statistical Outlook

Here are some of the recent studies that show the cost of disengaged employees.

  • Gallup poll estimates the total cost of disengaged employees in the US is a whopping $450-500 billion each year.
  • According to Workest, 63.3% of businesses say find it harder to retain than to hire talent.
  • Another study shows that the average turnover costs are 33% of the annual salary.

What is the Impact of Disengaged Employees?

Despite global efforts to improve and increase human resources efforts, engagement rates remain lower than ideal.

The following are some ways in which disengaged employees can affect businesses:

Employee disengagement impacts

If you’re interested in learning how to improve employee engagement, check out our HR Certification Courses.

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Disengaged vs Engaged Employees

The following is a table that highlights the identifying factors of disengaged versus more engaged employees:

These indicators are visible in all actively disengaged employees, sometimes from the get-go.

How to Combat Employee Disengagement

Highly profitable companies are making employee engagement a priority. A worker is also more empowered now than ever. However, loyalty is becoming hard to earn and even harder to keep long-term.

The rate of change in active employee engagement is still below the ideal point.

This calls for modern idea-driven strategies to reduce the cost of actively disengaged employees and create a more robust workforce. These strategies can focus on team-building activities, career growth opportunities, and out-of-the-box solutions.

1. Encourage Skill Development and Diversity

An excellent way to combat low engagement is incentive programs. Training and skill development is the best way to create a strong worker. Encouraging employees and providing the means for them to gain skills in their functional areas can make them more committed and make them more valuable to the other teams they are working with.

For example, encouraging a copywriter to understand web development and graphic designing can make them re-engage with the entire team. It may also eliminate the need for a web developer, saving time and money for the company.

The increase in the skill set will make them more confident, thereby boosting morale. So, instead of investing in only rewards, organizations could invest in skill diversity and achieve similar results.

2. Create Career Growth

There are several ways to grow, and one great way is career conversations. Employees can take courses, get certifications, or learn to be more efficient from experts.

However, the best way is for managers and executives to guide their teams and provide them with the right tools through direct career conversations.

Managers can accomplish this through:

  • Creating growth-oriented goals, such as ‘reading X number of books, starting and maintaining a personal blog, or gradually adopting more roles,’ to be met alongside regular targets
  •  Arranging monthly, quarterly, or bi-annual, in-house training sessions with industry experts as guest speakers
  • Creating a ‘curriculum’ consisting of training guides, white papers, and other informational material relevant to an employee’s line of work
  • Keeping an open line of communication and providing regular constructive feedback on their performance

Learning or being guided by mentors on the job can be more effective than any course that employees can take.

3. Drive Creative and Out-of-the-Box Solutions

Often, a single set of tools is enough for a worker to complete a task. But after a while, even the best strategies and richest sources of ideas can dry out.

This is where a worker may need inspiration. The inspiration that they may not be getting from the same places.

To drive creativity, managers can encourage out-of-the-box idea generation during brainstorming meetings.

For example:

  • Marketers can look at product photography and videos for ideas on how to better market the company’s products.
  • To build a more creative sales approach, sales agents can look at major advertising campaigns (Super Bowl ads, billboards, clever print ads).
  • Restaurant managers can look at modern factory production lines for ideas on food preparation.
  • Product design staff can see art installations and vehicular design to create innovative design concepts.

This, while opening up an employee’s mind to new avenues, will also refresh their idea-generation ability, leading to a sense of achievement.

4. Provide Positive Feedback

Employee feedback and public praise are two of the most potent morale-boosting factors. Recognition among colleagues and peers increases confidence in the workplace, which encourages them to perform at an even higher rate. There are many different appreciation ideas that you can implement to recognize employees’ hard work and dedication.

Providing positive feedback in a public setting (during company-wide events, incorporate and/or social media groups, etc.) can increase employee engagement and worker-manager synergy and communication.

For example:

  • Shed light on an employee’s performance during a business review.
  • Arranging casual meetings outside of work to appreciate a team member.
  • Sending a department-wide email recognizing an employee’s efforts.
  • Celebrating an employee’s birthday or giving them a meaningful gift on behalf of the company.

Even small performance-based awards and consistent recognition can make a world of difference.

5. Introduce New Technology and Processes

Bringing new systems into a static workplace like employee engagement surveys is a great way to get more insight. Additionally, introducing new technology can offset employee disengagement as well.

It’s important to note that investing company money into these systems is not the only solution. Managers can also look into and introduce new software that makes employees’ lives easier.

For example:

  • Implement practices such as DevOps, which increases collaboration between teams.
  • Providing newer software versions and plugins to streamline their workflow.
  • Introducing automated systems and processes, which provide more time and ease.

Managers can also hold weekly, remote brainstorming sessions through video conferencing software such as Zoom, Microsoft Teams, ClickMeeting, etc. This can foster engagement between teams and individuals.

6. Gamify Target Achievement

Enterprise teams work best when there is some friendly competition between co-workers.

Awards and recognition are effective ways of positive reinforcement. Better yet, managers can turn each step of a goal-oriented process into a friendly competition, in which employees pick up points after completing each task.

For example:

  • Turning standard milestones into checkpoints where workers collect performance-based points for rewards later on.
  • Introducing challenges, ‘quests,’ and leaderboards into operations creates a game-like experience for employees.
  • Assisting struggling workers. This can be in the form of a refresher course or masterclass in the employee’s particular line of work.

These activities can encourage competition at various points of the product life cycle, resulting in a better product. And, of course, it will keep employees engaged.

7. Help Employees Struggling with Personal Issues

Problems in one’s personal life can be a massive cause of employee disengagement. Personal struggles are a leading cause of irritability and behavioral issues in the office.

According to the World Health Organization, over 300 million suffer from depression worldwide. This means that having at least one worker suffering from a mental illness is greater today than ever.

A single depressed worker can affect others around them in various ways, be it a lack of performance or outright bad behavior. An entire team may suffer because of one person.

This makes it paramount for HR personnel and managers to seek out such workers and help them overcome their struggles.

For example:

  • Consider enrolling disgruntled employees in a holistic mental health program.
  • Provide appropriate counseling during or after work (either through HR personnel or professional psychologists).
  • Alert key members of the employee’s team or department of the situation so that they can help the employee with their daily tasks.
  • Hold on-site mental healthcare seminars and/or courses to benefit all workers.

8. Provide Financial Assistance

Employees with financial struggles can sometimes cause discontentment in the workplace.

Maybe the individual thinks they are getting the bare minimum. Perhaps a person’s salary is not enough to cover their expenses. Or perhaps they’re fresh graduates with a huge student loan to pay off.

All of the above can cause low employee engagement.

While many companies provide some measure of financial assistance, most don’t cover all the areas where a worker may be struggling or need help. Evaluating those areas and creating custom programs can be an excellent remedy.

For example:

  • Providing transport/commuting allowances such as a prepaid fuel card.
  • Creating a co-payment system for vehicle financing, where the company pays a portion of each due payment.
  • Providing customized medical insurance that covers a wide range of conditions and cases.
  • Helping new and existing team members pay off student loan debt.

Including benefits such as a student loan repayment scheme can attract top talent and retain them for years (on the prospect of a full repayment in time).

Student Loan Assistance Programs

In 2019, about 60% of all students in the US had some amount of debt upon graduating. The average monthly payment was an estimated $393. This money is not just owed by fresh graduates but also by professionals who graduated up to 10 years ago.

These statistics are a cause for concern for employers today, as it means more of the incoming fresh workforce will be in debt.

As mentioned earlier, benefits such as a student loan assistance program will help any company get highly engaged workers who will be easier to retain.

Such programs can turn even the unhappiest staffers into motivated and active professionals.

Creating a Dedicated Workforce

Due to the wide range of assistance methods and resources available today, employers are now in the best position to increase employee satisfaction.

From personal to performance issues, to lack of creativity and drive, managers and HR personnel can now tackle almost any problem and return lost productivity. They can effectively make sure that an employee’s time spent in the workplace is pleasant and rewarding.

With so many methods to help employees at their disposals, such as on-site training or employee incentive programs, companies can address issues with dissatisfied employees with ease.

To compete and succeed in tomorrow’s business landscape, managers must make sure that employees working under them are happy with them, their position, and the company as a whole.

Conclusion

Same as an actively engaged staff works wonders for any company, so can high levels o disengagement ruin a business. Although the costs aren’t evident overnight, poor engagement culture cripples productivity.

To ensure the cost of disengaged employees doesn’t eat away at your organization, make your due diligence of keeping your workforce happy. Remember that more than just higher engagement, satisfied team members not only bring in profit but also save money.

Finally, a company that nurtures engagement will also attract the right talent to your company’s doorstep.

FAQs

Discover the most commonly asked questions about employee engagement and disengagement.

What are five indicators of disengagement?

The five most common indicators that employers should be wary of are decreased productivity, social withdrawal, late to work, negative behavior towards team members, and lack of proactivity.

How do you improve employee engagement?

There are multiple ways you can engage your staff. Some of the most common ways are supplying proper tools for the job, providing individual attention and coaching, actively listening to your employees, recognizing contributions, and organizing voluntary social events inside the office.


If you are new to Human Resources and are looking to break into an HR role, we recommend taking our HR Certification Courses, where you will learn how to build your skillset in human resources, build your human resources network, craft a great HR resume, and create a successful job search strategy.

Josh Fechter
Josh Fechter is the founder of HR.University. He's a certified HR professional and has managed global teams across 5 different continents including their benefits and payroll. You can connect with him on LinkedIn here.