What is the Cost of Disengaged Employees?

Updated on December 22nd, 2021
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. How (and 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 end, disengaged employees can affect both the workplace environment and the business. In terms of numbers, disengaged employees have an impact on the bottom line and can set back overall productivity and your profit margin, not to mention the chance of increasing your employee turnover rate. If you're interested in learning more via video, then watch below. Otherwise, skip ahead.

What is Employee Engagement?

Employee engagement is an approach an organization takes to create an environment and culture that results in happy, dedicated, and motivated employees. 

How well your employees work towards the company’s vision, how much they look forward to work every day, and how satisfied they are with their manager - are clear indicators of engaged employees.

Retaining employees is the primary focus for enterprises today, and creating more engaged employees is the way to do it.

The Cost of Disengaged Employees: A Statistical Outlook

According to recent findings, the cost of disengaged employees is significant.

  • One study estimates the total cost of disengaged employees in the US is a whopping $450-500 billion each year.
  • A Gallup poll shows an overall employee engagement rate of just 15%.
  • Gallup’s State of the American Workforce survey reveals that only 30% of employees want to grow within companies.
  • The cost of an employee leaving a company has been estimated at 33% of their annual salary.
  •  Only 25% of employers were found to have a working employee engagement strategy.

The Broader Impact of Disengaged Employees

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

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

  • Overall Productivity Reduced: Disengaged employees are costing companies hundreds of billions each year by being less productive.
  • Fewer Sales Generated: Disengagement causes workers to be less attentive, which keeps them from actively pursuing sales targets.
  • Drop in Team Morale: Employees are less enthusiastic about the company and their roles within it.
  • Employees Less inclined to Grow: Dissatisfied employees would rather quit their jobs than stay and improve.
  • Greater Resignation Numbers: Unhappy employees actively seek better opportunities and resign as soon as one comes up.
  • Drop in Overall Employee Retention: Disengaged employees affect the company’s employee retention goals.
  •  Increase in Absenteeism: Employees become prone to taking days off, often during critical stages.
  • Bad/Unprofessional Behavior at Work: A single disengaged employee can create an unsuitable, or even toxic, workplace environment.
  • General Loss of Likeability: The individual employee becomes less likeable, which reduces their chances of receiving positive feedback and encouragement. This makes them even more unhappy with the workplace and their superiors.

Employee Disengagement Effects on Sales and Customers

The negative effects of a disengaged employee don’t always stay within the workplace. The consequences are often carried out to the most vital source of business growth i.e. the customer.

A discontent sales agent can transmit their lack of enthusiasm to the customer, who may become just as unenthusiastic about buying.

Customers nowadays can pick up on and respond to employees that are clearly unhappy with their employer. An unhappy sales agent can give the impression of an incompetent employer, or a bad product. 

This could result in:

  • Losing out on major contracts due to client firms being dissatisfied with the sales agent
  • Negative word-of-mouth and customers not taking the company’s marketing efforts seriously

Overall, it has a major impact on brand loyalty and repeats business, with disengaged employees making it more difficult to foster sustainable customer relationships.

Since the sales and marketing departments are closest to the customer, it makes sense for employees in the respective departments to be engaged and satisfied at all times. Their engagement will increase customer loyalty in the long term.

If you're interested in learning more about employee engagement, then check out our HR Certification Courses.

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Recognizing Disengaged Employees

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

Take responsibility and initiativesRun from responsibility and provide their bare minimum
Concentrate on tasks and goalsAre distracted and easily lose focus
Produce high quality workDeliver satisfactory or ‘good enough’ work
Collaborate and interact with team and managersAvoid interaction, especially with managers
Are motivated themselves, and motivate othersAre constantly demotivated
Want to grow and progress in their current positionConstantly look for other jobs
Recommend their company/workplace to othersRarely/Never advocate for their company
Work to find creative solutions to difficult tasksComplain about the difficulty of given tasks
Admit their mistakes and strive to improveMake excuses for their errors and don’t make efforts towards improvement
Perform at their bestUnderperform often


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

How to Increase Employee Engagement

Human resources managers on a global scale are gradually making employee engagement a priority. An employee is also more empowered now than ever. However, employee loyalty is becoming hard to earn, and even harder to keep in the long term.

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

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

1)       Encourage Skill Development and Diversity

A good way of encouraging employees is to offer employee 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 not only make them more committed but also make them more valuable to the other teams they are working with. 

For example, encouraging a copywriter to gain a thorough understanding of web development and graphic designing can make them a complete team members. It may also temporarily eliminate the need for a web developer, saving time and money for the company.

Most of all though, it will make the employee feel like an important part of the team. The increase in their skill set will make them more confident, thereby boosting morale. So, instead of investing in only rewards, companies could invest in skill diversity and achieve similar results.

2)       Create Career Growth

There are several ways employees can grow and develop their own careers. They can take courses and get certified, or they can learn how to be more efficient from experts.

The best way, however, is for managers and executives to guide their teams and provide them with the right tools and direction to fuel their growth.

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 an employee 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.
  • Sales agents can look at major advertising campaigns (Super Bowl ads, billboards, clever print ads) to build a more creative sales approach.
  • Restaurant managers can look at modern factory production lines for ideas on how to make food preparation and serving more efficient.
  • 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 Publicly

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

Providing positive feedback in a public setting (during company-wide events, in corporate and/or social media groups etc.) can increase employee engagement, as well as, 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. This can be done by senior staff and team leaders.
  • 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 is like breathing life into a machine. The opportunity to learn and operate a brand new system can make an employee look forward to coming to work the next day.

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

For example:

  • Implement practices such as DevOps, which increases collaboration between teams.
  • Providing newer software versions and plugins to employees to streamline their workflow.
  • Introducing automated systems and processes, which provide employees 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 them. The same can be said for each worker.

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 employees collect points based on performance for rewards later on.
  • Introducing challenges, ‘quests,’ and leaderboards into operations to create a game-like experience for employees.
  • Providing assistance to struggling employees. This can be in the form of a refresher course or masterclass in the employee’s particular line of work.

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

7)       Help Employees Struggling with Mental Illnesses and Personal Issues

Problems in one’s personal life can be a massive cause for employee disengagement. In fact, personal struggles are a leading cause of irritability and behavioral issues in the workplace.

According to the World Health Organization, over 300 million suffer from depression around the world. This means that the chances of having at least one employee suffering from a mental illness are 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 just one person.

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

For example:

  • Consider enrolling disgruntled employees in a holistic mental health program.
  • Provide fair 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 employees.

8)       Provide Financial Assistance

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

Maybe the employee thinks they are not being paid enough. Perhaps their salary is not enough to cover their expenses. Or maybe they’re fresh graduates with a huge student loan to pay off.

All of the above can cause an employee to think more about making ends meet, instead of the tasks at hand.

While a number of companies provide some measure of financial assistance, most don’t cover all the areas where an employee may be struggling or need help. This can be solved by evaluating those areas, and creating custom programs.

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 employees pay off student loan debt.

Including benefits such as a *student loan repayment scheme* can not only attract top talent but retain them for years (on the prospect of a full repayment in time).

Student Loan Assistance Programs

In 2019, it is estimated that 60% of all students in the US have some amount of debt, upon graduating. The average monthly payment is 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 is bound to carry student debt.

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

In fact, such programs have the potential to turn even the unhappiest workers into motivated and active professionals.

Creating a Dedicated Workforce

Due to the wide range of employee assistance methods and resources available today, employers are now in the best position to help employees overcome issues that lead to disengagement.

From personal to performance issues, to lack of creativity and drive, managers and HR personnel can now tackle almost any issue an employee might face. 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 workers, with ease 

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


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.