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What Unengaged Workers Are Really Costing You

Gallup’s report on the State of the American Workplace notes that 70 percent of employees in the United States are disengaged at work. They do not see their work as worthwhile, and the only meaningful time is quitting time. The primary reason for this organizational ennui is unhappiness on the job – and the expense is substantial, particularly for startups and entrepreneurial firms.

Real Costs That Impact Budgets
According to Gallup, these less-than-enthusiastic workers cost the U.S. up to $500 billion in lost productivity. The piper can demand payment starting with the employee’s first day at work. An article published by the Society for Human Resource Management (SHRM) found that “the average company is losing 1 in 6 of their new hires every month for the first three months.”

Often, the problem doesn’t lie in unsatisfactory wages or benefits, but rather poor fit. Studies show that approximately 90 percent of all new hires who leave before their second anniversary cite bad fit as the reason. These employees are disengaged almost at the outset. A McLean & Company study provides additional figures on the overall cost, concluding that disengaged workers cost firms an average of $3,400 per year for every $10,000 in annual salary.

Sources of direct costs to an organization because of employee disengagement include:

  • recruiting costs due to high turnover;
  • shrinkage and other employee theft;
  • additional production costs due to poor product quality; and
  • acts of employee sabotage.

Hopefully, an organization’s incidences of “employee sabotage” are few and far between, or better yet, nonexistent. These acts run the gamut, such as intentionally damaging all types of company property, and are performed by employees who simply do not care.

Indirect Costs are Present as Well
Generally speaking, human resources can monitor the healthcare costs and the absenteeism rate of an employee. It is difficult, however, to measure the indirect costs stemming from the absenteeism of disengaged employees.

Unlike motivated employees who display high morale and productivity, discouraged workers are not productive and are more likely to use more healthcare benefits. The cost could come in antidepressants or illness caused by depression. Mental health days can be especially costly, with some employees taking sick leave on a regular basis, perhaps one or two days every month. When they happen to be at work, they are not efficient. The McClean & Company research found that disengaged employees spend 55 percent of their work time on activities not related to their jobs. The consequences are deadlines not being met and sales figures dropping in a free fall.

Dealing with the Problem
No workplace is a perfect place to be, and no employee is going to be happy all the time. Management can expect that a certain number of employees will be disengaged. But, it’s essential to lower that percentage and decrease the subsequent costs of employees who are listless on the job. Here are some suggestions:

  • Concentrate on a good fit. When recruiting new hires, it’s important to focus on skills and expertise. But, it’s also crucial to ensure there’s a good fit between the candidate and the corporate culture.
  • Use employee surveys effectively. Management must keep a finger on the pulse of employees, and an employee opinion survey is a key tool in this process. The goal is to ask questions that can help identify whether low morale is affecting performance.
  • Create training opportunities. Millennials in particular respond well to training opportunities, such as seminars, courses and challenging assignments. The intent is to improve workforce skills and inspire employees to use them to the benefit of the company.

Employee disengagement should be taken seriously. The cost can cripple any organization, and must be avoided. Employers can lower the likelihood of disengagement by hiring the right fit, soliciting employee feedback, and offering development programs that encourage employee growth.

 

Date

April 3, 2017

Author

AXIOS HR

Category

Article Business Owners Under 50 Employees Culture

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