What is the cost of employee disengagement?

 

 

According to research:

 

• On average, 17.2% of employees

are actively disengaged at work;

the cost of disengagement is 34%

of an employee's salary.  That means 

for every six employees salaried

at $50,000, you are losing $17,000.

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• The average economic cost of

replacing a single employee:

213% of one year’s compensation

for that position.

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• The Fortune list of 100 best companies to work for outperformed the Russell 1000 index throughout the decade ending in 2016 by nearly five percentage-points.

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• The top 40 public companies ranked best places to work in 2019 by Glassdoor beat the S & P by 400%.

 

• Potential increase to a company’s net value over a three year period from retaining a sales person for a third year: as much as $1.3 million.

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Compared with employees working for companies ranked in the bottom quartile for trust, employees working for companies in the top quartile reported:

 

• 106% more energy 

• 76% more engagement at work 

• 50% more productivity

• being 50% more likely to stay with their employer over the next year

• 88% more likely to recommend their company to family and friends as a place to work

• enjoying their jobs 60% more

• feeling 70% more aligned with their companies’ purpose

• feeling 66% closer to their colleagues

• 11% more empathy for their workmates

• being 41% less likely to depersonalize coworkers

• experiencing 40% less burnout from their work

• feeling 41% more accomplished

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(See HBR article "The Neuroscience of Trust" by Paul J. Zak, professor of economics, psychology, and management at Claremont Graduate University and founding director of the Center for Neuroeconomics Studies.)

 

• In 2008, the CCP Global Human Capital report estimated the annual loss in productivity to American businesses due to workplace conflict at $359 billion.

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• In 2012, Gallup estimated the annual loss due to disengagement at $450-550 billion.

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In an article for Huffpost, Lattice CEO Jack Altman offers the following example:

 

If you are a 150 person company with 11% annual turnover, your costs will be:

 

• $25k per person on hiring

• $10k on each turnover and development

• $50k average productivity opportunity cost when refilling a role

 

Your total annual cost of turnover would be: $1.57 million.

 

Reducing this by just 20% would immediately save you over $300,000. And that says nothing of the emotional headache and cultural drain felt from losing great people.