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Cost of Employee Disengagement

What Does Employee Disengagement Cost You?

I travel a lot, and as such, I am exposed to many people in the service and hospitality industry. Given the amount of travelling I do, I am not always looking for white glove butler service, but I am often aware when I meet people who lack engagement and who do not enjoy the work they do. I see it a lot, and I can’t help but think how much this disengagement is costing organizations.

Employee disengagement needs head, heart and hands I often speak about employee engagement using the mantra of “Head, Heart and Hands”. You can buy a person’s hands, you can train their head, but it is not until you have their heart that you are getting their discretionary effort – and their full engagement. In engagement surveys identify a variety of “employee types” I will keep the classification simple and summarize the groups in the following way.

  • Engaged employees – who go above and beyond and who are committed to helping your organization reach new levels. You have their head, their heart and their hands.
  • Somewhat engaged/disengaged employees – who to some degree do not have the same connection with your organization and, while they may be contributing are definitely not contributing to the full extent they could. You have their head and hands, but most likely not their whole heart.
  • Disengaged employees – not only are these people unhappy, they are spreading discontent within your organization. If you are lucky you have their hands, but not a lot more.

What could it cost your company if your employees are not engaged? Sales, reputation, customers, other coworkers, leadership headaches and grief – for starters. But what does it cost every day, week, year when employees only show up (“head and hands” or just “hands”)?

If we do some simplified number crunching for a company of 50 people.

  • The somewhat disengaged employee (according to global surveys – often around 60 % of the employee base or 30 people) they would lose on average of 5 hours of work efficiency per week (1 hour per day) – 150 hours.
  • The disengaged (according to global surveys – often around 19 % or 10 people) would lose on average 15 hours of work efficiency per week (3 hours per day), 150 hours.

So, 300 person-hours, multiplied by a conservative cost per hour (benefits included) of $30. This works out to $9000 per week or $468,000 annually. That is the COST of doing nothing. This is just the cost of “lost” labour, not the lost sales, customers or staff turnover costs.

Disengagement cost businesses A LOT – but it doesn’t have to be like this. Focusing on the key drivers of employee engagement goes a long way in improving engagement. These drivers include:

  • Trust in leadership and integrity of managers
  • Having a stimulating job
  • My effort makes a difference – A clear connection between employee performance and company performance
  • An opportunity to grow both personally and professionally
  • Having an environment of accountability with committed co-workers
  • Having a positive co-worker/manager relationship

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